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

                                   FORM 10-QSB
(Mark One)
                (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15
                   (d) OF THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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
      of incorporation                                  Identification No.


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


<PAGE>












                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005










<PAGE>



                          INDEX TO FINANCIAL STATEMENTS



Condensed Consolidated Balance Sheet as of September 30, 2006 (Unaudited)


Condensed Consolidated Statements of Income and Accumulated Other
   Comprehensive Income for the Nine and Three Months Ended
    September 30, 2006 and 2005 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the Nine Months
    Ended September 30, 2006 and 2005 (Unaudited)

Notes to Condensed Consolidated Financial Statements

















<PAGE>


NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
 CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2006 (UNAUDITED)
(IN US$)


                                     ASSETS

Current Assets:
  Cash and cash equivalents                             $        19,053
  Accounts receivable                                            77,604
  Inventories                                                    39,437
  Loan receivable                                               634,535
  Prepaid expenses and other current assets                      47,594
  Due from related parties                                      975,802
                                                                -------

    Total Current Assets                                      1,794,025
                                                              ---------

  Fixed assets, net of depreciation                           9,399,358
                                                              ---------

Other Assets:
  Long-term assets                                           16,624,817
  Deferred tax assets                                           376,316
                                                           ------------

    Total Other Assets                                       17,001,133
                                                             ----------

TOTAL ASSETS                                               $ 28,194,516
                                                           ============

                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES
Current Liabilities:
  Accounts payable and accrued expenses                  $      877,737
  Taxes payable                                               2,889,371
                                                          -------------

      Total Current Liabilities                               3,767,108
                                                          -------------

Commitments and contingencies

      Total Liabilities                                       3,767,108
                                                           ------------

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                                           6,816,952
  Accumulated other comprehensive income (loss)               1,085,965
                                                          -------------

      Total Stockholders' Equity                             24,427,408
                                                           ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $ 28,194,516
                                                           ============

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



<PAGE>


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

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

                                                                 NINE MONTHS ENDED             THREE MONTHS ENDED
                                                                   SEPTEMBER 30,                 SEPTEMBER 30,
                                                               2006           2005             2006           2005
                                                           ------------------------------ -----------------------------

OPERATING REVENUES
   Catering and hotel related services income              $2,732,847     $2,721,445        $1,012,110       $ 902,754
   Management, rental and laundry income                    1,234,031      1,034,550           434,658         308,747
                                                           -----------    -----------       -----------      ----------

      TOTAL OPERATING REVENUES                              3,966,878      3,755,995         1,446,768       1,211,501

COST OF REVENUES                                              679,328        653,215           255,957         243,414
                                                           -----------    -----------       -----------      ----------

GROSS PROFIT                                                3,287,550      3,102,780         1,190,811         968,087
                                                           -----------    -----------       -----------      ----------
OPERATING EXPENSES
   Salaries and wage related expenses                         268,948        261,590           121,403         100,698
   General and administrative fees                            710,168        723,597           227,798         286,194
   Depreciation, amortization and impairment                  341,018        391,035            86,026         143,097
                                                           -----------    -----------       -----------      ----------
       Total Operating Expenses                             1,320,134      1,376,222           435,227         529,989
                                                           -----------    -----------       -----------      ----------

INCOME BEFORE OTHER INCOME (EXPENSE)                        1,967,416      1,726,558           755,584         438,098

OTHER INCOME (EXPENSE)
   Interest income                                                759            815               202             607
   Loss on disposal of assets                                  (9,502)             -                 -               -
                                                           -----------    -----------       -----------      ----------

       Total Other Income (Expense)                            (8,743)           815               202             607
                                                           -----------    -----------       -----------      ----------

NET INCOME BEFORE PROVISION FOR INCOME TAXES                1,958,673      1,727,373           755,786         438,705
Provision for Income Taxes                                   (332,462)      (673,223)           97,915        (268,030)
                                                           -----------    -----------       -----------      ----------

NET INCOME APPLICABLE TO COMMON SHARES                     $1,626,211     $1,054,150        $  853,701       $ 170,675
                                                           ===========    ===========       ===========      ==========

NET EARNINGS PER BASIC AND DILUTED SHARES                  $     0.10     $     0.06        $     0.05       $    0.01
                                                           ===========    ===========       ===========      ==========

WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING                                     17,027,328     17,027,328        17,027,328      17,027,328
                                                           ===========    ===========       ===========     ===========
COMPREHENSIVE INCOME
    Net income                                             $1,626,211     $1,054,150        $  853,701       $ 170,675
    Other comprehensive income
      Currency translation adjustments                        549,083        338,553           322,948         338,553
                                                           -----------    -----------       -----------      ----------
Comprehensive income                                       $2,175,294     $1,392,703        $1,176,649       $ 509,228
                                                           ===========    ===========       ===========      ==========

</TABLE>


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

<PAGE>


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

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


                                                               2006           2005
                                                          ------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                             $   1,626,211    $   1,054,150
                                                          --------------   --------------
   Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation, amortization and impairment                  341,018          391,035
     Loss on disposal of fixed assets                             9,502                -

  Changes in assets and liabilities
     (Increase) in accounts receivable                          (57,618)          (7,533)
     (Increase) decrease  in inventory                            4,629           (4,763)
     (Increase) in prepaid expenses and other
       current assets                                            (8,217)         (39,295)
     Increase (decrease) in accounts payable
       and accrued expenses                                      35,082          (75,497)
     Increase in income taxes payable                           893,937          832,907
     (Increase) decrease in deferred taxes                     (417,185)         599,067
                                                          --------------   --------------

     Total adjustments                                          801,148        1,695,921
                                                          --------------   --------------

     Net cash provided by operating activities                2,427,359        2,750,071
                                                          --------------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES
   (Increase) in advances to related parties                   (267,147)        (270,098)
   (Increase) in loans receivable                              (634,535)               -
   (Increase) in long-term assets                            (1,389,668)      (2,537,211)
   (Acquisitions) disposals of fixed assets                    (734,442)        (314,257)
                                                          --------------   --------------

      Net cash (used in) investing activities                (3,025,792)      (3,121,566)
                                                          --------------   --------------

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

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

Effect of foreign currency translation                          549,083          338,553
                                                          --------------   --------------

NET (DECREASE) IN
  CASH AND CASH EQUIVALENTS                                     (49,350)         (56,105)

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

CASH AND CASH EQUIVALENTS - END OF PERIOD                 $      19,053    $      37,189
                                                          ==============   ==============

</TABLE>


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

<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     SEPTEMBER 30, 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.

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


<PAGE>

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

NOTE 1-     ORGANIZATION AND BASIS OF PRESENTATION CONTINUED)
            --------------------------------------

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

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            Principles of Consolidation

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

            Use of Estimates

            The preparation of financial statements in conformity with
            accounting principles generally accepted in the United States of
            America requires management to make estimates and assumptions that
            affect the reported amounts of assets and liabilities and disclosure
            of contingent assets and liabilities at the date of the financial
            statements and the reported amounts of revenues and expenses during
            the reporting period. On an on-going basis, the Company evaluates
            its estimates, including, but not limited to, those related to bad
            debts, income taxes and contingencies. The Company bases its
            estimates on historical experience and on various other assumptions
            that are believed to be reasonable under the circumstances, the
            results of which form the basis for making judgments about the
            carrying value of assets and liabilities that are not readily
            apparent from other sources. Actual results could differ from those
            estimates.

            Economic and Political Risks

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

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



<PAGE>


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

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Cash and Cash Equivalents

            The Company considers all highly liquid debt instruments and other
            short-term investments with an initial maturity of three months or
            less to be cash equivalents. The Company maintained $2,225 as of
            September 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.




<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 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 September 30, 2006 and 2005 were 7.880 and 8.3,
            respectively, and the average period RMB to the US dollar for 2006
            and 2005 were 7.94 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 nine months ended September 30, 2006
            and 2005, the Company recorded approximately $549,083 and $338,553
            in transaction gains 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 September 30, 2006.

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





<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 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 nine months ended September
            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.




<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 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:

                                      September 30,      September 30,
                                          2006               2005
                                      -------------      -------------

Net income                            $  1,626,211       $  1,054,150
                                      -------------      -------------
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.




<PAGE>


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

                                                   Nine Months Ended
                                                      September 30,
                                                  2006           2005
            Net income:
              As reported                        $1,626,211    $1,054,150

              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                                   (-)           (-)
                                                 ------------  -----------
               Pro forma                         $1,626,211    $1,054,150
               Net earnings per share:
              As reported:
                Basic                                 $0.10         $0.06
                Diluted                               $0.10         $0.06
              Pro forma:
                Basic                                 $0.10         $0.06
                Diluted                               $0.10         $0.06

            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.








<PAGE>

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


<PAGE>

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

NOTE 3-     FIXED ASSETS

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

                                        Estimated
                                          Useful
                                          Lives
                                         (Years)

            Land use right                40-68     $2,894,525
            Buildings                       40       6,301,928
            Building improvements           15       2,128,280
            Electrical equipment            12       1,341,704
            Furniture and fixtures          15         390,805
            Vehicles and other equipment    10       1,050,609
                                                    ----------

                                                    14,107,851
            Less: accumulated depreciation           4,708,493
                                                    ----------
            Property and equipment, net             $9,399,358
                                                    ==========

            There was $341,018 and $391,035 charged to operations for
            depreciation expense for the nine months ended September 30, 2006
            and 2005, respectively. There was no impairment for these assets
            during the nine months ended September 30, 2006 and 2005.

NOTE 4-     LONG-TERM ASSETS

            The balance as of September 30, 2006 included payments of
            $16,624.817 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 $1,616,537 through September 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 September
            30, 2006.


<PAGE>

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

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 September 30, 2006 has been advanced $610,423 from
            Shaanxi New Taohuayuan Economy Trade Company and $289,113 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.

            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 nine months ended September
            30, 2006 and 2005, the Company earned $1,234,031 and $1,034,550 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 nine months ended September 30, 2006 and 2005 were
            $25,960 and $38,105, 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 nine months ended
            September 30, 2006.



<PAGE>

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


NOTE 6-     STOCKHOLDERS' EQUITY (DEFICIT)

            Preferred Stock

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

            Common Stock

            As of September 30, 2006, the Company has 50,000,000 shares of
            common stock authorized with a par value of $.001. As of September
            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.

            Options and Warrants

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




<PAGE>

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

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 September 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 approximately $961.638.

NOTE 9-     PROVISION FOR INCOME TAXES

            In accordance with the relevant tax laws and regulations of PRC, the
            corporate income tax rate is 33% for the nine months ended September
            30, 2006 and 2005, respectively.

                                    Nine months ended
                                      September 30,
                                  2006             2005
                                ------------------------

Current tax expense            $ 752,728       $ 1,419,882

Deferred tax expense (benefit)  (420,266)         (746,659)

                               $ 332,462         $ 673,223
                               ============================


            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                             -            15
            Other non-temporary differences            (16)          (9)
                                                    -----------  ------------
                                                       17%           39%
                                                    ===========  ============







<PAGE>

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

NOTE 9-     PROVISION FOR INCOME TAXES

            Deferred Taxes - the Company

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

            At September 30, 2006, deferred tax assets consist of the following:

            Welfare payable                      $(33,621)
            Depreciation adjustments              307,151
            Other                                 102,786
                                                ----------
                                                 $376,316
                                                ==========

            Value Added Tax

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





<PAGE>




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

      You should read the following discussion and analysis of our financial
condition and results of operations in conjunction with our financial statements
and the related notes included elsewhere in this report. Our financial
statements have been prepared in accordance with U.S. GAAP. The following
discussion and analysis contains forward-looking statements that involve risks
and uncertainties. Actual results could differ materially from those projected
in the forward-looking statements.

Overview
--------

      We own and operate hotels and resorts in the Shaanxi province of China.

      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 nine months ended September 30, 2006
-----------------------------------------------------------------

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

      Net income per share for the nine months ended September 30, 2006 was
$0.10 as compared to $0.06 for the comparable period in 2005.

Liquidity and Capital Resources
-------------------------------

      During the nine months ended September 30, 2006 our operations generated
cash of $2,427,359.

      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 September 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.



<PAGE>


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 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



<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.



<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.





<PAGE>


                                     PART II

                                OTHER INFORMATION





Item 6. Exhibits



(a)   Exhibits



            Number        Exhibit

            31            Rule 13a-14(a) Certifications

            32            Section 1350 Certifications














<PAGE>




                                  SIGNATURES


      In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on November 15, 2006.

                               NEW TAOHUAYUAN CULTURE TOURISM CO., LTD.



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




<PAGE>