UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

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

                                             or

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

                          Commission File Number: None

                    NEW TAOHUAYUAN CULTURE TOURISM CO., LTD.

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

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

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

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports)  and  (2)  had  been  subject  to such  filing
requirements for the past 90 days.     Yes  [X]      No ____

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

      Large accelerated filer [  ]                Accelerated filer [  ]

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

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

         Class of Stock       No. Shares Outstanding                Date

            Common               June 15, 2008                  18,727,327

<PAGE>

                                TABLE OF CONTENTS


                                                                        Page

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

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

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

Notes to unaudited consolidated financial statements                    4-16

<PAGE>


               NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED AND SUBSIDIARY
                                CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                                               December 31,
                                             June 30, 2008         2007
                                           ----------------------------------
Current assets                              (Unaudited)

  Cash and cash equivalents                  $    36,179        $    45,680
  Accounts receivable, net[                       16,382             34,178
  Inventories                                     84,743            127,182
  Prepaid expenses and other current assets        1,574                385
  Due from related parties                       546,922            476,552
                                           ----------------------------------
         Total Current Assets                $   685,800        $   683,977

Property & equipment, net                      6,362,091          6,713,733

Construction-in-progress                      10,431,850          7,944,945

Land use right, net                            3,081,665          2,463,522

Other assets
  Deposit for construction-in-progress                 -         16,452,000
                                           -------------        -----------
Total assets                                $ 20,561,406        $34,258,177
                                           =============        ===========

                            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Accounts payable and accrued expenses    $     478,984         $  495,825
  Deferred revenue                                11,770             52,105
  Taxes payable                                4,433,079          4,070,480
                                           -------------         ----------
    Total Current Liabilities                  4,923,833          4,618,410

Stockholders' equity
  Common stock, $.001 par value, 50,000,000
    shares authorized, 18,727,327 issued and
    outstanding                                   18,727             18,727
  Preferred stock, $.001 par value, 10,000,000
    shares authorized, none shares issued
    and outstanding                                    -                  -
  Additional paid in capital                  15,855,727         15,855,727
  Statutory reserve                            2,018,901          2,018,901
  Other comprehensive income                   4,667,688          3,207,587
  Accumulated deficit                         (6,923,470)         8,538,825
                                           -------------         ----------
 Total stockholders' equity                   15,637,573         29,639,767
                                           =============         ==========
Total liabilities and stockholders' equity $  20,561,406        $34,258,177
                                           =============        ===========


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


                                       1
<PAGE>

          NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED AND SUBSIDIARY
      CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
        FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2008 AND 2007
                                   (UNAUDITED)
<TABLE>
<S>                   <C>                   <C>             <C>              <C>            <C>
                                         For the three month periods      For the six month periods
                                               ended June 30,                  ended June 30,
                                            2008             2007           2008            2007
                                         -----------      ----------     ----------       --------
Net revenue
 Catering and hotel related services
    income                              $ 1,171,976       $  943,292     $ 2,198,624     $1,824,154
 Management fee income                      496,489          449,414         978,696        892,974
                                        -----------       ----------     -----------     ----------
    Total net revenue                     1,668,465        1,392,706       3,177,320      2,717,128

Cost of revenue                             370,516          241,413         689,682        462,430
                                        -----------       ----------     -----------     ----------
Gross                                     1,297,949        1,151,293       2,487,638      2,254,698

Operating expenses
 General and administrative expenses        336,326          227,129         640,692        489,894
 Depreciation and amortization              135,022          146,970         297,496        292,010
 Impairment - Deposit                             -                -      17,020,800              -
                                        -----------       ----------     -----------     ----------
    Total operating expenses                471,348          374,099      17,958,988        781,904
                                        -----------       ----------     -----------     ----------
Income (loss) from operations               826,601          777,194     (15,471,350)     1,472,794
                                        -----------       ----------     -----------     ----------
Other (Income) expense
 Interest income                               (315)            (256)           (762)          (566)
 Other income, net                           (3,763)               -          (8,293)             -
                                        -----------       ----------     -----------     ----------
    Total other income                       (4,078)            (256)         (9,055)          (566)
                                        -----------       ----------     -----------     ----------
Income (loss) before income taxes           830,679          777,450     (15,462,295)     1,473,360
 Provision for income taxes                       -          257,848               -        482,199
                                        -----------       ----------     -----------     ----------
Net income (loss)                           830,679          519,602     (15,462,295)       991,161

Other comprehensive item:
 Foreign currency translation gain          327,072          387,435       1,460,101        670,883
                                        -----------       ----------     -----------     ----------
Net comprehensive income (loss)           1,157,751          907,037    $(14,002,194)    $1,662,044
                                        ===========       ==========    ============     ==========
Earning (loss) per share:
 Basic & diluted earning (loss)
    per share                                 0.044            0.028    $     (0.826)    $    0.053
                                        ===========       ==========    ============     ==========

Weighted average number of shares
outstanding:
 Basic & diluted weighted average number
   of shares                             18,727,327       18,727,327      18,727,327     18,586,444
                                         ==========       ==========     ===========     ==========
</TABLE>

The basic and diluted shares are the same because they are no diluted shares

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


                                       2
<PAGE>

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

                                                     For the six month periods
                                                           ended June 30,
                                                        2008           2007
                                                    ---------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                               $(15,462,295)   $  991,161
   Adjustments to reconcile net income to
     net cash provided by operating activities:
    Depreciation and amortization                       313,580       292,010
    Impairement of deposit                           17,020,800             -
    (Increase) / decrease in current assets:
       Accounts receivables                               3,764        13,055
       Inventory                                         49,194        (2,314)
       Other receivables                                 (1,132)      (15,512)
      Increase/(Decrease) in current liabilities:
       Accounts payable and accrued expenses            (47,105)       (3,047)
       Taxes payable                                     98,509       604,870
       Deferred revenue                                 (42,464)       (8,191)
                                                   ------------- -------------

    Total Adjustments                                17,395,146       880,871
                                                   ------------- -------------

    Net cash provided by operating activities         1,932,851     1,872,032
                                                   ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
    Payment for construction-in-progress             (1,921,932)            -
    Advances to related parties                         (23,007)      (15,315)
    Purchase of property & equipment                          -        (1,170)
    (Increase) in long-term assets                            -    (1,870,126)
                                                   ------------- -------------
    Net cash used in investing activities            (1,944,939)   (1,886,611)
                                                   ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
    Proceed from stock issuance                               -        85,000
    Net cash provided by financing activities                 -        85,000

    Effect of exchange rate changes on cash and
    cash equivalents                                      2,587         4,720

    Net increase (decrease) in cash and cash
    equivalents                                          (9,501)       75,141

    Cash and cash equivalents, beginning balance         45,680        46,394
                                                   ------------- -------------

    Cash and cash equivalents, ending balance      $     36,179  $    121,535
                                                   ============= =============

SUPPLEMENTAL DISCLOSURES:

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

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



                                       3
<PAGE>

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


NOTE 1 - ORGANIZATION

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

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

     Pursuant to an agreement and plan of migratory  merger  between the Company
     and Shaanxi NTHY on November 5, 2004, the Company  acquired Shaanxi NTHY by
     issuing 17,027,328 shares of its common stock to the original  shareholders
     of Shaanxi NTHY in exchange  for 100% of their  membership  interests  (the
     "Merger").  As a  result,  the  controlling  member  of  Shaanxi  NTHY  has
     effective  and  actual  operating  control of the  Company.  The Merger was
     approved by the Shaanxi  Ministry of Commerce on November 24,  2004.  Since
     then,  Shaanxi NTHY has become a wholly owned subsidiary of the Company and
     its status has changed to a wholly owned foreign owned enterprise.

     Since the Company had no operations or net assets prior to the acquisition,
     the  acquisition  was considered to be a capital  transaction in substance,
     rather than a business  combination  and no goodwill  was  recognized.  For
     financial  reporting  purposes,  the  acquisition  was treated as a reverse
     acquisition  whereby  Shaanxi  NTHY  is  considered  to be  the  accounting
     survivor and the operating entity while the Company is considered to be the
     legal survivor.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Unaudited Interim Financial Information
     ---------------------------------------

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


                                       4
<PAGE>

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

     Basis of Presentation
     ---------------------

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

     Foreign currency transactions and comprehensive income (loss)
     -------------------------------------------------------------

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

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

     Use of Estimates
     ----------------

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

     Principles of Consolidation
     ---------------------------

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


                                       5
<PAGE>

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

     Revenue Recognition
     -------------------

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

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

     Income Taxes
     ------------

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

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

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

                                       6
<PAGE>

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


     Statement of Cash Flows
     -----------------------

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

     Segment Reporting
     -----------------

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

     Risks and Uncertainties
     -----------------------

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

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

     Contingencies
     -------------

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

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


                                       7
<PAGE>

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


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

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

     Allowance for Doubtful Accounts
     -------------------------------

     Management  reviews  the  composition  of  accounts  receivable,  loans and
     prepaid expense and analyzes historical bad debts, aging analysis,  current
     economic trends and changes in payment patterns to evaluate the adequacy of
     these   reserves.   Reserves   are   recorded   primarily   on  a  specific
     identification  basis.  Allowance for doubtful accounts amounted to $28,872
     and $27,130 at June 30, 2008 and December 31, 2007 respectively.

     Intangible Assets
     -----------------

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

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


                                       8
<PAGE>

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

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

     Recent Accounting Pronouncements
     --------------------------------

     In December 2007, the FASB issued SFAS No. 160,  "Noncontrolling  Interests
     in Consolidated Financial Statements",  which is an amendment of Accounting
     Research  Bulletin  ("ARB")  No.  51.  This  statement   clarifies  that  a
     noncontrolling  interest in a subsidiary  is an  ownership  interest in the
     consolidated  entity that should be reported as equity in the  consolidated
     financial  statements.  This  statement  changes  the way the  consolidated
     income statement is presented, thus requiring consolidated net income to be
     reported at amounts  that include the amounts  attributable  to both parent
     and the noncontrolling interest. This statement is effective for the fiscal
     years, and interim periods within those fiscal years, beginning on or after
     December 15, 2008. Based on current conditions, the Company does not expect
     the  adoption  of SFAS 160 to have a  significant  impact on its results of
     operations or financial position.

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

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


                                       9
<PAGE>

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

     derivative  instruments  and  related  hedged  items  affect its  financial
     position, financial performance, and cash flows.

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

     In May 0f 2008,  FSAB issued  SFASB  No.162,  The  Hierarchy  of  Generally
     Accepted  Accounting  Principles.   The  pronouncement  mandates  the  GAAP
     hierarchy  reside in the  accounting  literature  as  opposed  to the audit
     literature.  This has the practical  impact of elevating FASB Statements of
     Financial  Accounting  Concepts in the GAAP hierarchy.  This  pronouncement
     will become effective 60 days following SEC approval.  The company does not
     believe this pronouncement will impact its financial statements.

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

NOTE 3 - DEPOSIT FOR LAND USE RIGHT

     The company had deposit  balance as of June 30, 2008  comprised of land use
     cost  of  $17,508,000  made  to  the  local  government  in  2006  for  the
     acquisition  of a piece of land in PRC.  The Company  acquired the land for
     new project's development.  To obtain the land use right the Company has to
     pay the demolish fee associated  with the acquisition of the land use right
     and as a result the official title of land use right is not  transferred to
     the Company as of June 30, 2008.

     As of June 30, 2008, the Company  determined  that the deposit for land use
     right is impaired as the  transfer of the title of land use right could not
     be assured based the Company's  assessment of the title  transfer  process.
     Therefore,  the  accompanying   consolidated  financial  statements  showed
     impairment  loss of  $17,020,800.  Pursuant  the  Chinese  law,  the  local
     government  may take back the land for  which was being  idle for more than
     two years.


                                       10
<PAGE>

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


NOTE 4 - PROPERTY AND EQUIPMENT

     As of June 30, 2008 the property and equipment of the Company  consisted of
     the following:

                                             June 30, 2008   December 31, 2007
                                             -------------   -----------------

            Buildings                        $  7,170,248       $  7,970,697
            Infrastructure and Leasehold
                 Improvement                    1,777,098          1,669,912
            Furniture and fixtures              1,633,595            401,163
            Equipments                          1,970,458          1,768,132
            Automobiles                           312,230            293,399
                                             -------------   -----------------
                                               12,863,629         12,103,303
            Accumulated Depreciation           (6,501,538)        (5,389,570)
                                             -------------   -----------------
            Property and Equipment, net      $  6,362,091    $     6,713,733


     The Company had depreciation expenses of $282,379, and $292,010 for the six
     month periods ended June 30, 2008 and 2007 respectively.

NOTE 5 - LAND USE RIGHT

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

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

                                            June 30, 2008   December 31, 2007
                                            -------------   -----------------

            Land use rights                  $3,327,721       $ 3,127,008
            Accumulated amortization           (246,056)         (663,486)
                                            -------------   -----------------
                 Land use rights, net        $3,081,665       $ 2,463,522
                                            =============   =================


                                       11
<PAGE>

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

     The Company had amortization expenses of $31,201 and $0 as of June 30, 2008
     and 2007. The amortization  expenses for land use right for next five years
     after June 30, 2008 are as follows:

             One year after June 30, 2008           $ 62,000
             Two years after June 30, 2008            62,000
             Three years after June 30, 2008          62,000
             Four years after June 30, 2008           62,000
             Five years after June 30, 2008           62,000
                                                   ---------
                Total                               $310,000
                                                   =========


NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

                                            June 30, 2008   December 31, 2007
                                            -------------   -----------------

             Accounts payables                $  77,612         $ 130,828
             Other payables                     290,968           268,302
             Accrued payroll                     30,639            28,791
             Accrued expenses                    79,765            67,905
                Total accounts payables and
                     accrued expenses         $ 478,984         $ 495,825

NOTE 7 - DEFERRED REVENUE

     The company has recorded deferred revenue of $11,770 and $52,105 as of June
     30, 2008 and December 31, 2007.  Deferred revenue represents  advances from
     customers  for using the resort  facilities  within the next  twelve  month
     period.

NOTE 8 - TAX PAYABLES

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

                                           June 30, 2008   December 31, 2007
                                           -------------   -----------------

            Income tax payable              $ 3,510,392       $ 3,456,655
            Business tax payable                801,403           497,146
            VAT payable                              60            12,669
            Other taxes payable                 121,224           104,010
                                           -------------   -----------------
                 Tax payable                $ 4,433,079      $  4,070,480
                                           =============   =================


                                       12
<PAGE>

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

NOTE 9 - INCOME TAXES

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

     The  provision for income taxes from  operations on income  consists of the
     following for the years ended June 30, 2008 and 2007:

     US Current Income Tax Expense (Benefit)

                                             June 30, 2008   December 31, 2007
                                             -------------   -----------------

            Federal                           $         -       $        -
            State                                       -                -
                                             -------------   -----------------
                                                        -                -
            PRC Current Income Expense (Benefit)        -          482,199
                                             -------------   -----------------

            Total Provision for Income Tax    $         -       $  482,199
                                             =============   =================

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

                                               June 30, 2008   December 31, 2007
                                               -------------   -----------------

      Tax expense (credit) at statutory
        rate - federal                                34%               34%
      State tax expense net of federal tax             6%                6%
      Valuation allowance                            (40%)             (40%)
      Foreign income tax - PRC                        25%               33%
      Tax expense (benefit) at actual rate             0%               33%


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

     As of June 30,  2008,  the Company in the United  States had  approximately
     $7,500 in net  operating  loss carry  forwards  available to offset  future
     taxable  income.  Federal net  operating  losses can  generally  be carried
     forward 20 years. The deferred tax assets for the United States entities at
     June 30, 2008 consists mainly of net operating loss carry forwards and were
     fully reserved as the  management  believes it is more likely than not that
     these assets will not be realized in the future.


                                       13
<PAGE>

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

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


                                             June 30, 2008   December 31, 2007
                                             -------------   -----------------

           Net operation loss carry forward   $  941,000       $         -
           Total deferred tax assets             319,940                 -
           Less: valuation allowance            (319,940)                -
                                             -------------   -----------------
           Net deferred tax assets$                    -       $         -
                                             =============   =================

     People's Republic of China (PRC)
     --------------------------------

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

     Deferred income tax assets
     --------------------------

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

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

                                            June 30, 2008    December 31, 2007
                                            -------------    -----------------

        Net operation loss carry forward     $15,462,295        $         -
        Total deferred tax assets              3,865,574             66,005
        Less: valuation allowance             (3,865,574)                 -
                                            -------------   ----------------
        Net deferred tax assets              $         -        $    66,005
                                            =============   ================



                                       14
<PAGE>

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

Note 10 - Management Fee Agreement

     The  Company  entered  into five  management  agreements  with  Shaanxi New
     Taohuayuan  Economy Trade Company  Limited and Shaanxi Wenhao Group and its
     subsidiary  on  various  time  for a  period  of five  years.  Shaanxi  New
     Taohuayuan  Economy Trade Company  Limited and Shaanxi Wenhao Group and its
     subsidiary are related  parties.  The annual  management  fees are fixed at
     approximately $1,400,000. For the six month periods ended June 30, 2008 and
     2007,  the  Company  earned  $978,696  and  $892,974  in  management  fees,
     respectively.  There is a bonus  management  fee  clause  contained  in the
     agreement  calculated  at 15% on the  excess  of the  actual  revenue  over
     targeted  revenue,  as defined therein.  No bonus management fees have been
     earned to date (See notes #M for details).

Note 11 -RELATED PARTIES TRANSACTIONS

     The Company has identified the following related parties:

     Chen Jingmin - a director and stockholder of the Company.

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

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

     Shaanxi  Wenhao  Zaliang Shifu  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(pound)(0)

            Shaanxi Wenhao Dongjin Taohuyuan - part of Wenhao Group.
            Shaanxi Wenhao Naner Huan Wenhao - part of Wenhao Group.
            Shaanxi Wenhao Xijiao Wenhao - part of Wenhao Group.
            Shaanxi Wenhao Yuan Taizu - part of Wenhao Group

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

     The Company as of June 30, 2008 had receivable  from Shaanxi New Taohuayuan
     Economy Trade  Company,  $419,053 to the Wenhao Group,  $127,869 to Dongjin
     Taoyuan.  These  advances are  unsecured,  interest-free  and have no fixed
     repayment  terms.  The Company has classified these advances as receivables
     from related parties under current assets.

     As of June 30, 2008,  amounting of $3,479,715  and $5,347,235 had been paid
     to Shaanxi Traditional Decoration Co. Ltd and Shannxi Qinghua Green Project



                                       15
<PAGE>

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

     Co.,Ltd   respectively,   which  are  both  related  parties,  for  Lantian
     Xingtianyou Project included in construction in progress.

Note 12 -- COMMITMENTS

     Following are some of the  significant  commitments as of June 30, 2008 and
     2007.

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

     On January  15,  2004 the  Company  signed two  five-year  agreements  with
     Shannxi New Taohuayuan  Tourism & Trading Co. Ltd - Dongjin  Taoyuan Branch
     and Xi'an Taoyuan Nanlu Branch to manage the restaurants.  The company will
     perform management and operation function including advertising, marketing,
     human  resources and accounting on monthly basis.  The Company will receive
     RMB  3,500,000  from each of the  restaurant  respectively  as basic annual
     management fees, paid quarterly. In addition, if the annual revenue exceeds
     the targeted amount,  the company will be compensated for additional 15% of
     the revenue as bonus.  The agreements  will expire on Jan 14, 2009. For the
     six month period ended June 30, 2008, the  management fee earned  amounting
     to $496,440 based upon the agreements.

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

     On January 10, 2006 the Company  signed  three  five-year  agreements  with
     Shaanxi  Wenhao  Zaliang  Co. Ltd - Xi'an  Nanerhuan  Branch and  Yuantaizu
     Branch  respectively  to manage the  restaurants.  The company will perform
     management and operation function including advertising,  marketing,  human
     resources  and  accounting on monthly  basis.  The Company will receive RMB
     3,600,000,  RMB 1,800,000 and RMB 1,400,000 from each of these  restaurants
     respectively as basic annual management  compensation,  paid quarterly.  In
     addition,  if the annual revenue exceeds the targeted  amount,  the company
     will be  compensated  for  additional  15% of the  revenue  as  bonus.  The
     agreements will expire on Jan 09, 2010. For the six month period ended June
     30, 2008,  the  management  fee earned  amounting  $482,256  based upon the
     agreements.

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

     On Mar. 15, 2006,  the company  signed a decoration  agreement with Shannxi
     Traditional  Decoration  Co.  Ltd for  Shannxi  Lantian  Xintianyou  Garden
     Decoration Project.  The company hired the Shannxi  Traditional  Decoration
     Co. Ltd., to do decoration  work on its property with the commitment to pay
     RMB  80,000,000  as total  compensation.  The  company  will pay 30% of the
     amount  at the  beginning  of the  construction,  30%  will  be paid on 50%
     completion  and 40% after the  project is  completed.  The  company is also
     responsible  for  appointing  the third party as  supervisor to monitor the
     project and to protect the surrounding environment.  The project started on


                                       16
<PAGE>

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

     April 1st,  2006 and will be finished  in 2008.  As of June 30,  2008,  the
     Company has paid $3,479,715 to the said contractor included in construction
     in progress.

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

     On May 15, 2007, the company signed an agreement with Shannxi Qinghua Green
     Co. Ltd for the afforesting project of Lantian Xintianyou Garden Green. The
     company  hired   Shannxi   Oinghua  Green  Project  Co.  Ltd.,  to  perform
     afforesting work on the garden with the commitment to pay RMB 50,000,000 as
     total compensation. The company will pay 30% of the amount at the inception
     of the  construction,  35% will be paid on 50% completion and 30% after the
     project  completes.  The final 5% will be held as project quality insurance
     deposit. After the project completed, Shannxi Qinghua Green Co.,Ltd will be
     responsible  for the maintenance of the garden and the company will pay RMB
     1,250,000 as annual compensation for services.  The project started on Oct.
     6, 2007 and will be finished at the end of 2008.  As of June 30, 2008,  the
     Company has paid $5,347,235 to the said contractor included in construction
     in progress.

     5. Lantian Xintianyou Garden Project

     The Company  entered an agreement with Lantian County,  Xian City,  Shaanxi
     Province to offer a new project's development - Lantian Xingtianyou Project
     in 2003.  The  Company  acquired  a land  (4512 Mu) in  Lantian  County and
     committed  to finish the project in one year.  The project has been started
     since 2004. However, the Company paid amount of $17,136,000 as land cost in
     2006 but the title is not yet transferred to the Company without paying the
     demolish fee associated with the project (See note C for details).

NOTE 13 - STATUTORY RESERVE AND STATUTORY COMMON WELFARE FUND

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

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

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

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

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


                                       17
<PAGE>

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

     In  accordance  with the Chinese  Company  Law, the company did not reserve
     statutory fund as of June 30, 2008.

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

NOTE 14 - RETIREMENT PLAN

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

NOTE 15 - STOCKHOLDERS' EQUITY

     In January 2007,  the Company  entered into an agreement with outside third
     party to provide  consulting  services.  As part of  agreement  the Company
     agreed to issue  1,699,999  shares of common stock at discount at $0.05 per
     share or $85,000 for cash. The consulting  company will provide  consulting
     service to the Company during the six months period starting  January 2007.
     The fair market value of the common  stocks of the company was $0.55 on the
     agreement  date.  Accordingly  the Company booked  $850,000 as compensation
     expense after  accounting  for the shares issued at discount price of $0.05
     for the said stock issuance as of December 31, 2007.

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

NOTE 16 - OTHER COMPREHENSIVE INCOME

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



                                       18
<PAGE>

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


                                                   Foreign Currency
                                                Translation Adjustment
                                                ----------------------

            Balance at December 31, 2007             $  3,207,587
                Change in 2008                          1,460,101
                                                    --------------
            Balance at June 30, 2008                 $  4,667,688
                                                    ==============

NOTE 17- SEGMENT REPORTING

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

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

                                                        The six-month periods
                                                             ended June 30,
                                                        ----------------------
                                                          2008          2007
                                                        --------      --------
      Revenues :
        Resort income from unaffiliated customers    $  2,198,624  $  1,824,154
        Management fee income from affiliated
         customers                                        978,696       892,974
                                                     ------------- -------------
            Consolidated                             $  3,177,320  $  2,717,128
                                                     ============= =============

      Operating income (loss)
        Resort income                                $    578,254  $    579,820
        Management fee income                             978,696       892,974
        Corporation (1)                               (17,028,300)            -
                                                     ------------- -------------
            Consolidated                             $(15,471,350) $  1,472,794
                                                     ============= =============

      Net income (loss):
        Resort income                                $    587,309  $     98,187
        Management fee income                             978,696       892,974
        Corporation (1)                               (17,028,300)            -
                                                     ------------- -------------
            Consolidated                             $(15,462,295) $    991,161
                                                     ============= =============


                                       19
<PAGE>

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


      Identifiable assets:
        Resort income                                $ 11,243,706  $ 11,830,219
        Management fee income                                   -             -
        Corporation (1)                                 9,317,700    19,749,964
                                                     ------------- -------------
            Consolidated                             $ 20,561,406  $ 31,580,183
                                                     ============= =============

      Depreciation and amortization:
        Resort income                                $    313,580  $    292,010

      Capital expenditures:
        Resort income                                $  1,944,939  $  1,886,611
        Management fee income                                   -             -
        Corporation (1)                                         -             -
                                                     ------------- -------------
            Consolidated                             $  1,944,939  $  1,886,611
                                                     ============= =============


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







                                       20
<PAGE>


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

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

                                    OVERVIEW

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

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

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

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

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

     Our business is not seasonal in nature.

Results of Operations

Six Months Ended June 30, 2008
------------------------------

     Material  changes of certain items in our  Statement of Operations  for the
six months  ended June 30,  2008,  as compared to the six months  ended June 30,
2008, are discussed below:


<PAGE>

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

Operating Revenue           I          Increase in customers due to improvements
                                       made to our facilities and services.

Operating Expenses          I          Write off of deposit  for land use rights
                                       associated with our commercial and
                                       residential development in Lantian. See
                                       Note 3 to the financial statements
                                       included as part of this report for more
                                       information.

Liquidity and Capital Resources

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

         Cash provided by operations                            $1,932,851
         Payment for land use rights, building improvements,
             and of equipment                                   (1,921,932)
         Loans from related parties                                (23,007)
         Changes in foreign currency exchange rate                   2,587
         Cash provided by cash in bank at January 1, 2008            9,501

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

         Cash provided by operations                            $1,872,032
         Payment for land use rights, building improvements,
           and equipment                                        (1,871,296)
         Loans to related parties                                   15,315
         Sale of stock                                              85,000
         Changes in foreign currency exchange rate                   4,720


     We intend  to  develop a 150 room  hotel and  resort in Xi'an.  We have not
started actual construction work on this project.

     We have  financed  our  operations  to date  through the sale of our common
stock and cash generated by our operations. As of June 30, 2008 expenditures for
our Xi'an  project 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 Xi'an project  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  project  may take  additional  time or we may be  unable to
develop the  project.  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, 2008 balance sheet.


                                       2
<PAGE>

Restrictions on Currency Exchange

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

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

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

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

Reserves

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


                                       3
<PAGE>

integral  component of the financial  reporting  process,  actual  results could
differ from those  estimates.  Some of our  accounting  policies  require higher
degrees of judgment than others in their  application.  We consider the policies
discussed below to be critical to an understanding  of our financial  statements
as their application assists management in making their business decisions

Revenue recognition

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

Foreign currency translation

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

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

     For translation of financial statements into the reporting currency, assets
and  liabilities  are translated at the exchange rate at the balance sheet date,
equity  accounts are  translated at  historical  exchange  rates,  and revenues,
expenses,  gains and losses are  translated  at the  weighted  average  rates of
exchange prevailing during the period.  Translation  adjustments  resulting from
this process are  recorded in  accumulated  other  comprehensive  income  (loss)
within stockholders' equity.

Property, plant and equipment and depreciation

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

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

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



                                       4
<PAGE>

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

ITEM 4.T.  CONTROLS AND PROCEDURES

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

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




                                       5
<PAGE>

                                     PART II
                                OTHER INFORMATION


Item 6. Exhibits

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

31          Rule 13a-14(a) Certifications

32          Section 1350 Certifications










<PAGE>


                                   SIGNATURES


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

                                       NEW TAOHUAYUAN CULTURE TOURISM CO., LTD.


August 15, 2008                        By:  /s/ Cai Danmei
                                           ----------------------------------
                                           Cai Danmei, Chief Executive Officer
                                           and Principal Financial and
                                           Accounting Officer