U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K


Mark One

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

                     For the fiscal year ended June 30, 2009

[ ] 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: 000-33195


                                XINHUA CHINA LTD.
                 ______________________________________________
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)


             NEVADA                                              88-0437644
_________________________________                            ___________________
  (STATE OR OTHER JURISDICTION                                (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)                            IDENTIFICATION NO.)


                    B-26F, ORIENTAL KENZO DONGCHENG DISTRICT
                                 BEIJING 100027
                           PEOPLE'S REPUBLIC OF CHINA
                    ________________________________________
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


                        86-10-64168816 OR 86-10-64168916
                        ________________________________
                           (ISSUER'S TELEPHONE NUMBER)


SECURITIES REGISTERED PURSUANT TO SECTION         NAME OF EACH EXCHANGE ON WHICH
            12(b) OF THE ACT:                               REGISTERED:
                  NONE


          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                        COMMON STOCK, $0.00001 PAR VALUE
          ___________________________________________________________
                                (TITLE OF CLASS)


<PAGE>


Check whether the issuer is not required to file reports  pursuant to Section 13
or 15(d) of the Exchange Act.[ ]

Check  whether the issuer (i) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (ii) has been
subject to such filing requirements for the past 90 days.

                                 Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be  submitted  and posted  pursuant to Rule 405 of  Regulation  S-T  (Section
229.405 of this  chapter)  during the  preceding  12 months (or for such shorter
period that the registrant was required to submit and post such files.

                                 Yes [ ] No [ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

Indicate by check mark  whether the  registrant  is a large  accelerated  filed,
unaccelerated  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.

Large accelerated filer [ ]                        Accelerated filer        [ ]

Non-accelerated filer   [ ]                       Smaller reporting company [X]


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

State issuers revenues for its most recent fiscal year $ -0-.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified date within the past 60 days. October 1, 2009: $

      ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

                                       N/A


                                      -2-


<PAGE>


Check  whether the issuer has filed all  documents  and  reports  required to be
filed by Section 12, 13 and 15(d) of the  Securities  Exchange Act of 1934 after
the distribution of securities under a plan confirmed by a court. Yes [X] No [ ]

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

                                          Outstanding as
                        Class          of September 30, 2009
                    ________________________________________

                    Common Stock,           490,311,400
                    $0.00001

                       DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,  briefly describe them
and identify the part of the Form 10-K (e.g.,  Part I, Part II, etc.) into which
the document is incorporated:  (i) any annual report to security  holders;  (ii)
any proxy or information  statement;  and (iii) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities  Act of 1933 (the  "Securities  Act").  The
listed documents should be clearly described for  identification  purposes (e.g.
annual reports to security holders for fiscal year ended December 24, 1990).

                                       N/A

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]









                                      -3-


<PAGE>


                                XINHUA CHINA LTD.
                                    FORM 10-K

                                      INDEX

Item 1.     Business                                                           6

Item 1A.    Risk Factors                                                       8

Item 1B     Unresolved Staff Comments                                         16

Item 2      Properties                                                        17

Item 3.     Legal Proceedings                                                 17

Item 4      Submission of Matters to a Vote of Security Holders               17

Item 5      Market for Registrant's Common Equity, Related Stockholder
            Matters and Issuer Purchases of Equity Securities                 17

Item 6      Selected Financial Data                                           22

Item 7      Management's Discussion and Analysis of Financial Condition
            and Results of Operation                                          23

Item 7A     Quantity and Qualitative Disclosure About Market Risks            32

Item 8.     Financial Statements and Supplemental Data                        33

Item 9      Changes in and Disagreements With Accountants on Accounting
            and Financial Disclosure                                          36

Item 9A.    Controls and Procedures                                           36

Item 9A(T)  Controls and Procedures                                           39

Item 9B.    Other Information                                                 39

Item 10     Directors, Executive Officers and Corporate Governance            39

Item 11.    Executive Compensation                                            42

Item 12.    Security Ownership of Certain Beneficial Owners and
            Management and Related Stockholder Matters                        44

Item 13.    Certain Relationships and Related Transactions and Director
            Compensation                                                      45

Item 14.    Principal Accountant Fees and Services                            46

Item 15.    Exhibits and Financial Statement Schedules                        46


                                      -4-


<PAGE>


                           FORWARD LOOKING STATEMENTS

Statements  made in this Form 10-K that are not  historical or current facts are
"forward-looking  statements"  made  pursuant to the safe harbor  provisions  of
Section  27A of the  Securities  Act of 1933 (the  "Act") and Section 21E of the
Securities Exchange Act of 1934. These statements often can be identified by the
use  of  terms  such  as  "may,"  "will,"  "expect,"  "believe,"   "anticipate,"
"estimate," "approximate" or "continue," or the negative thereof. We intend that
such  forward-looking  statements  be  subject  to the  safe  harbors  for  such
statements.  We wish to caution  readers not to place undue reliance on any such
forward-looking  statements,   which  speak  only  as  of  the  date  made.  Any
forward-looking  statements represent  management's best judgment as to what may
occur in the future. However,  forward-looking  statements are subject to risks,
uncertainties  and important  factors beyond our control that could cause actual
results and events to differ  materially from  historical  results of operations
and events  and those  presently  anticipated  or  projected.  We  disclaim  any
obligation  subsequently  to revise any  forward-looking  statements  to reflect
events or  circumstances  after the date of such  statement  or to  reflect  the
occurrence of anticipated or unanticipated events.

AVAILABLE INFORMATION

Xinhua China Ltd. files annual,  quarterly,  current reports,  proxy statements,
and  other  information  with  the  Securities  and  Exchange   Commission  (the
"Commission"). You may read and copy documents referred to in this Annual Report
on Form 10-K that have been filed with the Commission at the Commission's Public
Reference  Room,  450  Fifth  Street,  N.W.,  Washington,  D.C.  You may  obtain
information  on the  operation  of the  Public  Reference  Room by  calling  the
Commission  at  1-800-SEC-0330.  You can also  obtain  copies of our  Commission
filings by going to the Commission's website at http://www.sec.gov.








                                      -5-


<PAGE>


                                     PART I

ITEM 1. BUSINESS

BUSINESS DEVELOPMENT

Xinhua  China Ltd.  was  incorporated  September  14, 1999 under the laws of the
State of Nevada as Camden Mines Limited  ("Camden").  Since its formation and up
to  September  4, 2004,  Camden was  considered  an inactive  development  stage
enterprise.  On October 12, 2004,  Camden  changed its name from  "Camden  Mines
Limited"  to its  current  corporate  name  "Xinhua  China  Ltd." The  change in
corporate  name  reflected  our  anticipation  of  acquiring  an interest in the
Chinese book  distribution  giant" Xinhua  Circulation &  Distribution  ("Xinhua
C&D").  Please note that  throughout  this Annual Report,  and unless  otherwise
noted, the words "we," "our," "us," or the "Company" refer to Xinhua China Ltd.

CURRENT SUBSIDIARIES

         PAC-POLY INVESTMENTS LIMITED

On  September  14,  2004,  we signed  two  separate  share  purchase  agreements
(collectively,  the "Share Purchase  Agreements"),  whereby we issued 35,000,000
shares  of our  restricted  common  stock in  exchange  for a 100%  interest  in
Pac-Poly  Investments  Limited,  a  company  incorporated  under the laws of the
International   Companies  Business  Act  Cap  291  of  British  Virgin  Islands
("Pac-Poly"),  and a 95%  interest  in Beijing  Boheng  Investments  Limited,  a
company  incorporated under the laws of China ("Beijing Boheng"),  respectively.
The  shareholders  of  Pac-Poly  and  Beijing  Boheng  received  16,387,000  and
18,613,000  shares of our restricted common stock,  respectively.  In accordance
with the  terms  and  provisions  of the Share  Purchase  Agreement,  one of our
shareholders  returned to us 35,000,000 shares of common stock held of record by
such  shareholder  and the shares  were  cancelled  and  returned  to  treasury.
Immediately  prior to consummation of the respective Share Purchase  Agreements,
Pac-Poly and Beijing  Boheng were under common  control.  Subsequently,  Beijing
Boheng spun off all of its business and net assets to its president and became a
non-operating  shell company.  Pac-Poly had no significant  operations since its
inception.

As of the date of this Annual  Report,  we hold of record  10,000,000  shares of
common stock at $1.00 par value,  which constitutes 100% of the total issued and
outstanding  shares  of  Pac-Poly.   Therefore,  Pac-Poly  is  our  wholly-owned
subsidiary. Pac-Poly is an investment holding company.

         BEIJING JOANNES INFORMATION TECHNOLOGY CO. LT.

On May 9,  2006,  we formed  Beijing  Joannes  Information  Technology  Co.  Lt.
("Beijing Joannes"), as our Chinese wholly owned subsidiary, to launch a digital
media  content  initiative.  We hold of  record  100% of the  total  issued  and
outstanding  shares of  Beijing  Joannes.  Beijing  Joannes  was  formed for the
purpose  of  launching  a digital  media  content  initiative  with the web site
branded  WWW.GEEPIP.COM.  The business focus is building online communities with
connectivity  to an ecommerce  engine,  which allows for the online  purchase of
e-books,  e-audio, and computer games. Hard copies of books can also be purchase
through the portal. A unique customer loyalty program and digital  redemption or
trade-in strategy will be a market differentiator.


                                      -6-


<PAGE>


As of the date of this  Annual  Report,  we hold of record  1,250,000  shares of
common stock at $1.00 par value,  which constitutes 100% of the total issued and
outstanding  shares  of  Beijing  Joannes.  Therefore,  Beijing  Joannes  is our
wholly-owned subsidiary.

CURRENT BUSINESS OPERATIONS

We are a  company  establishing  ourselves  as a  leader  in the  digital  media
industry. As discussed below, we have refocused our strategic business operation
plans to maximize our strategic position in the publishing industry.

DIVESTURE OF INTEREST IN XINHUA CIRCULATION & DISTRIBUTION

During  September  2004,  pursuant to the terms and  provisions of an investment
agreement (the "Investment  Agreement") among our two subsidiaries  Pac-Poly and
Beijing  Boheng and Xinhua  Bookstore  (Main  Store)  ("Xinhua  Bookstore"),  we
acquired a 57.67%  interest  in the  publication  distribution  business  in the
People's  Republic of China.  In accordance with the terms and provisions of the
Investment Agreement,  Xinhua Bookstore transferred the publication distribution
business  into a newly  formed  Chinese  company  called  Xinhua  Circulation  &
Distribution   ("Xinhua  C&D").   Xinhua  C&D  is  presently  primarily  a  book
distribution  enterprise.  As of May 31, 2006, we reduced our ownership interest
in Xinhua C&D to 7.98%.  We had  originally  intended  to help guide  Xinhua C&D
through the modernization and growth of its systems and distribution strategies.
Realizing  the  large  investment  in  real  estate,  equipment,   fixed  assets
requirements  to achieve  modernization  and growth,  as well as the shifting of
reading habits to a digital format and a dynamic and growing  digital youth (age
12-25) comprising over 50% of the population, our management, after very careful
consideration,  effective  May 31, 2006,  revised our business  focus to instead
concentrate  on  the  growing   opportunity  in  online  content   distribution,
co-publishing,  and digital rights management. While executing this strategy, we
will continue to maximize our strategic  position in the publishing  industry by
utilizing the  connections  and channels we have  established as a result of our
interest in Xinhua C&D.

As a result of the decision to focus on digital media and co-publishing, we were
able to  renegotiate  our  financial  commitment to Xinhua C&D and eliminate the
requirement to invest a further $16,700,000 into Xinhua C&D. This change reduced
our equity  interest in Xinhua C&D to 7.98%.  Xinhua C&D will remain  focused on
traditional  distribution services for Chinese book publishers throughout China,
and is  expected  to provide  procurement  services  for our  online  e-commerce
initiative.

CONTRACTUAL RELATIONSHIPS

Management of the Company believes that it will be able to establish itself as a
leader in the digital media industry. In accordance with our refocused strategic
plan, we intend to enter into certain contractual relationships.


                                      -7-


<PAGE>


ITEM 1A. RISK FACTORS

An investment in our common stock involves a number of very  significant  risks.
You should carefully  consider the following risks and uncertainties in addition
to other  information  in this  prospectus  in  evaluating  our  company and its
business before  purchasing  shares of our company's common stock. Our business,
operating  results and financial  condition could be seriously harmed due to any
of the following  risks. The risks described below are all of the material risks
that we are currently aware of that are facing our company. Additional risks not
presently  known to us may also impair our business  operations.  You could lose
all or part of your investment due to any of these risks.

WE HAVE  INCURRED  LOSSES AND  SUBSTANTIAL  DOUBT  EXISTS  ABOUT OUR  ABILITY TO
CONTINUE AS A GOING CONCERN.

We have a history of operating losses,  expect to continue to incur losses,  and
may never be profitable.  We have incurred a net loss of ($2,503,735) for fiscal
year ended June 30, 2009. We had a working  capital  deficit of  $1,900,404  and
shareholders'  deficit of ($8,848,570) as of June 30, 2009.  These factors raise
substantial  doubt  about  our  ability  to  continue  as a going  concern.  The
auditors'  report in our  financial  statements as at June 30, 2009 and June 30,
2008 includes an  explanatory  paragraph  that states that we have generated net
losses and have a shareholders'  deficit factors which raise  substantial  doubt
about our ability to  continue as a going  concern.  We have been  dependent  on
sales of our equity securities and debt financing to meet our cash requirements.
Further,  we do not expect  positive cash flow from operations in the near term.
There  is no  assurance  that  actual  cash  requirements  will not  exceed  our
estimates. In particular,  additional capital may be required in the event that:
(i)  operating  costs  may be more  than  we  currently  anticipate;  or (ii) we
encounter greater costs associated with general and  administrative  expenses or
offering costs.

WE ARE OPERATING IN A DEVELOPING  MARKET AND THERE IS  UNCERTAINTY  AS TO MARKET
ACCEPTANCE OUR TECHNOLOGY AND PRODUCTS.

We researched the markets for our products involving the digital media industry.
We have  conducted  limited  test  marketing  and thus  have  relatively  little
information on which to estimate our levels of sales,  the amount of revenue our
planned operations will generate and our operating and other expenses. There can
be no assurance that we will be successful in our efforts to market our products
or to develop our markets in the manner we contemplate  within the digital media
industry.

The markets for our products and technology are developing and rapidly  evolving
and are  characterized  by an  increasing  number  of market  entrants  who have
developed  or are  developing a wide  variety of products  and  technologies,  a
number of which offer certain of the features that our products  offer.  Because
of these factors, demand and market acceptance for new products are subject to a
high level of  uncertainty.  There can be no assurance  that our  technology and
products will become widely  accepted.  It is also difficult to predict with any
assurance  the  future  growth  rate,  if  any,  and  size of the  market.  If a
substantial  market  fails to develop,  develops  more  slowly than  expected or
becomes  saturated  with  competitors  or if our products do not achieve  market
acceptance,  our business,  operating  results and financial  condition  will be
materially and adversely affected.


                                      -8-


<PAGE>


OUR DIGITAL MEDIA INDUSTRY AND MARKET IS CHARACTERISED BY NEW ENTRANTS AND RAPID
TECHNOLOGICAL CHANGE.

The digital  media  industry  and market for our  products is  characterized  by
rapidly changing technology and frequent new product introductions.  Our success
will depend in part on our ability to enhance our  technologies and products and
to  introduce  new  products  and   technologies   to  meet  changing   customer
requirements.  We are  currently  devoting,  and intend to  continue  to devote,
significant  resources  toward the  development of digital media  technology and
products.  There can be no  assurance  that we will  successfully  complete  the
development of these  technologies  and related  products in a timely fashion or
that our current or future  products will satisfy the needs of the digital media
industry.  There  can also be no  assurance  that  digital  media  products  and
technologies  developed  by others  will not  adversely  affect our  competitive
position or render our products or technologies non-competitive or obsolete.

IF WE ARE UNABLE TO COMPETE IN THE  DIGITAL  MEDIA  MARKET,  YOU MAY LOSE ALL OR
PART OF YOUR INVESTMENT.

The  digital  media  market is highly  competitive  and highly  fragmented.  Our
competitors may have substantially greater financial, technological,  marketing,
personnel and research and development  resources than we currently have.  There
are direct  competitors who have  competitive  technology and products.  Many of
these  competitors may have significant  advantages over us,  including  greater
financial,  technical,  marketing and  manufacturing  resources,  more extensive
distribution channels,  larger customer bases and faster response times to adapt
new or emerging technologies and changes in customer requirements.  As a result,
our competitors may develop superior products or beat us to market with products
similar to ours. Further,  there can be no assurance that new companies will not
enter our markets in the future.  Although we believe that our products  will be
distinguishable   from  those  of  our   competitors   on  the  basis  of  their
technological  features and  functionality at an attractive  value  proposition,
there  can be no  assurance  that  we  will  be  able  to  penetrate  any of our
anticipated  competitors' portions of the market. There can be no assurance that
we will be able to compete successfully against currently  anticipated or future
competitors  or that  competitive  pressures  will not have a  material  adverse
effect on our business, operating results and financial condition. If we are not
successful in competing  against our current and future  competitors,  you could
lose your entire investment.

Moreover,  foreign direct  investment in China has increased rapidly in the last
twenty years and the investment  environment  has further  improved to encourage
foreign and local  investors to invest in fields other than those  considered by
the government of the Peoples'  Republic of China to be sensitive.  Distribution
channels  have been  opened up to new  foreign  investment  subject to  Peoples'
Republic of China  government  guidelines.  Many  companies  are involved in the
electronic  and  traditional   publishing  and   distribution  of  literary  and
entertainment  material.  There is no guarantee that other  competitors will not
become  involved  in  business  similar to ours.  If this  occurs,  there may be
competitors  with  greater  financial  resources  and to the  extent  that  such
competitors  compete  on the basis of price,  this could  affect our  results of
operations and our ability to continue operations.


                                      -9-


<PAGE>


WE HAVE LIMITED MARKETING CAPABILITY.

We have limited marketing capabilities and resources. In order to achieve market
penetration we will have to undertake  significant  efforts and  expenditures to
create awareness of, and demand for, our technology and products. Our ability to
penetrate the market and build our customer base will be substantially dependent
on our marketing efforts, including our ability to establish strategic marketing
arrangements.  No assurance  can be given that we will be able to enter into any
such  arrangements or if entered into that they will be successful.  Our failure
to successfully develop our marketing capabilities,  both internally and through
third-party  alliances,  would have a material  adverse  effect on our business,
operating results and financial  condition.  Further,  there can be no assurance
that, if developed, such marketing capabilities will lead to sales.

WE WILL NEED TO RESTRUCTURE OUR BUSINESS TO MAXIMIZE OUR  PROFITABILITY AND CASH
FLOW.

We may experience significant  fluctuations in our operating results and rate of
growth.  Due to our limited  operating  history and our evolving business model,
and the  unpredictability  of the future of our industry,  we may not be able to
accurately  forecast our rate of growth.  We base our current and future expense
levels and our investment  plans on estimates of future net sales.  Our expenses
and  investments  are to a large extent fixed,  and we may not be able to adjust
our spending quickly enough if our net sales fall short of our expectations.

Our revenue and  operating  profit  growth  depends on the  continued  growth of
demand for books  offered by our  customers  and  partners,  and our business is
affected by business  conditions in China and,  indirectly,  worldwide.  Revenue
growth may not be sustainable and our  company-wide  percentage  growth rate may
decrease in the future.

OUR BUSINESS IS EXPOSED TO RISKS  ASSOCIATED WITH ONLINE  COMMERCE  SECURITY AND
CREDIT CARD FRAUD WHICH COULD REDUCE OUR REVENUES.

A fundamental  requirement for online commerce and  communications is the secure
transmission of confidential  information,  such as credit card numbers or other
personal  information,  over  public  networks.  Our  security  measures  may be
inadequate  and, if any  compromise of security  were to occur,  it could have a
detrimental  effect on our  reputation  and  adversely  affect  our  ability  to
maintain our existing travelers and/or attract new travelers.

Consumer concerns over the security of transactions conducted on the Internet or
the privacy of users may inhibit the growth of the Internet and online commerce.
To  transmit  confidential  information  such as customer  credit  card  numbers
securely,  we rely on encryption and  authentication  technology.  Unanticipated
events or developments  could result in a compromise or breach of the systems we
use to protect customer  transaction  data. Our servers and those of our service
providers  may be  vulnerable  to  viruses  or other  harmful  code or  activity
transmitted  over the Internet.  A virus or other harmful activity could cause a
service disruption.

In addition,  we bear  financial  risk from products or services  purchased with
fraudulent credit card data. Although we have implemented anti-fraud measures, a
failure  to  control  fraudulent  credit  card  transactions   adequately  could
adversely  affect our business.  Because of our limited  operating  history,  we


                                      -10-


<PAGE>


cannot  assure  you that our  anti-fraud  measures  are  sufficient  to  prevent
material  financial  loss.  Since we cannot exert the same level of influence or
control over our sales agents as we could were they our own employees, our sales
agents could fail to comply with our policies and procedures, which could result
in claims  against us that  could harm our  financial  condition  and  operating
results.  We are not in a  position  to  directly  provide  the same  direction,
motivation  and  oversight for our sales agents as we would if such sales agents
were our own  employees.  As a result,  there can be no assurance that our sales
agents  will  participate  in our  marketing  strategies  or plans,  accept  our
introduction  of new  products  and  services,  or comply with our  policies and
procedures.

Moreover,  our  processing,  storage,  use and disclosure of personal data could
give rise to liabilities as a result of government regulation, conflicting legal
requirements or differing views of personal privacy rights. In the processing of
our traveler  transactions,  we receive and store a large  volume of  personally
identifiable  information.  This  information  is also  increasingly  subject to
legislation and  regulations in numerous  jurisdictions  around the world.  This
government  action is  typically  intended  to protect  the  privacy of personal
information  that  is  collected,  processed  and  transmitted  in or  from  the
governing  jurisdiction.  We could  be  adversely  affected  if  legislation  or
regulations  are  expanded to require  changes in our  business  practices or if
governing  jurisdictions interpret or implement their legislation or regulations
in ways that negatively affect our business,  financial condition and results of
operations. As privacy and data protection have become more sensitive issues, we
may also become exposed to potential  liabilities as a result of differing views
on the privacy of travel data.  These and other  privacy  developments  that are
difficult to anticipate could adversely affect our business, financial condition
and results of operation.

WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY,  PARTICULARLY IN LIGHT OF
CHINESE INTELLECTUAL PROPERTY LAWS.

Intellectual   property   rights  are  evolving  in  China,   trending   towards
international  norms,  but are by no  means  fully  developed.  We have  not had
significant  involvement in  intellectual  property to date. The  application of
intellectual property rights to protect our foreign clients' and partners' media
will  likely  be  necessary  in the  future.  Protection  is needed at a minimum
against  piracy;  legal action may be needed and all legal action  involves risk
and  expenses.

WE MAY NOT BE ABLE TO HIRE AND  RETAIN  THE  PERSONNEL  WE NEED TO  SUSTAIN  OUR
BUSINESS.

We depend on the  continued  services of our  executive  officers  and other key
personnel.  The loss of or failure to attract key personnel could  significantly
impede our financial plans,  growth,  and other objectives.  We believe that our
future  success  will  depend in large part on our ability to attract and retain
additional  highly  skilled and  qualified  personnel  and to expand,  train and
manage our  employee  base.  We may not continue to be  successful  in doing so,
because the competition for qualified  personnel in China is intense.  If we are
unable  to  attract  and  retain  qualified  personnel,  we  may  never  achieve
profitability.


                                      -11-


<PAGE>


WE MAY NOT BE ABLE TO ENTER NEW MARKETS, WHICH MAY IMPAIR OUR ABILITY TO GROW.

Our  ability to enter into new markets is  dependent  upon the  availability  of
quality  products and demand of these  products in China.  Thus, it is important
for us to develop  relationships  with  publishers and  distributors  of foreign
(mainly  English-language)  books and media  contents to expedite  their import,
translation  and  distribution   through  electronic  and  traditional  channels
nationwide  in China.  There is no guarantee  that we can develop  relationships
with foreign  publishers and  distributors.  Currently,  foreign books and media
contents are not  commonly  available  in China,  therefore,  we are not able to
quantify  the demand of foreign  books and media  contents in China.  As such we
cannot predict our probability of success in this new market.

THE SUCCESS OF OUR BUSINESS  DEPENDS ON CONTINUED GROWTH OF ONLINE DIGITAL MEDIA
PRODUCTS AND ATTRACTING CUSTOMERS IN A COST-EFFECTIVE MANNER.

Our sales and  revenues  will not grow as we plan if  consumers  do not purchase
significantly  more digital media products  online than they currently do and if
the use of the  Internet  as a medium of  commerce  for such  products  does not
continue to grow or grows more slowly than expected. The success of our business
is dependent  on  significant  increase in the number of  consumers  who use the
Internet to purchase digital media products.

Our  business  strategy  depends on our  ability  to  broaden  the appeal of our
website to consumers and business and to increase the overall number of consumer
transactions  conducted on our website in a cost-effective  manner.  In order to
increase the number of consumer  transactions,  we must attract more visitors to
our website and convert a larger number of these visitors into paying customers.
Our ability to offer  products  and  services  that will  attract a  significant
number of consumers  to use our  services is not certain.  If it does not occur,
our growth may be limited.  It may be necessary to spend substantial  amounts on
marketing  and  advertising  to enhance  our brand  recognition  and attract new
customers to our website,  and to  successfully  convert these new visitors into
paying  customers.  We cannot  assure  you that our  marketing  and  advertising
efforts  will be  effective  to  attract  new  customers.  If we fail to attract
customers  and  increase  our  overall  number  of  consumer  transactions  in a
cost-effective  manner,  our  ability  to  grow  and  become  profitable  may be
impaired.

Moreover, we rely on the Internet  infrastructure which may be unable to support
increased  levels of demand.  The  internet  infrastructure  may not expand fast
enough to meet the  increased  levels of demand.  In  particular,  the  expected
benefits from our online  operations  may be reduced if internet  usage does not
continue to grow.  In addition,  activities  that  diminish the  experience  for
internet  users,  such as spyware,  spoof e-mails,  viruses and spam directed at
internet users, as well as viruses and "denial of service"  attacks  directed at
internet companies and service  providers,  may discourage people from using the
internet,  including  for  commerce.  If consumer use  diminishes  or grows at a
slower  rate,  then our business  and results of  operations  could be adversely
affected.

WE HAVE SUBSTANTIAL DEBT OBLIGATIONS, INCLUDING CERTAIN DEBT OBLIGATIONS SECURED
BY ALL OF OUR ASSETS. IF WE ARE UNABLE TO REPAY SUCH  OBLIGATIONS,  OUR BUSINESS
WILL LIKELY FAIL.

Our  current   liabilities  were  $2,244,936  as  of  June  30,  2009  of  which
approximately  $1,490,911  is due within  the next year  unless  extended.  Such
substantial debt obligations could affect our status as a going concern and also


                                      -12-


<PAGE>


represent  a  concentration  of risk  which  could pose a serious  concern.  Our
ability to repay debt will be  dependent  on cash flow from the business and our
ability  to raise  new  funds in the form of  loans,  debt or equity in the next
year.  We have  $7,003,322  in long term debt of which  $1,250,000  is due on or
before  November 23, 2010 and  $2,000,000  is due on or before March 23, 2011 in
connection  with recent  convertible  debenture  financings  with Highgate House
Funds,  Ltd.  and  Cornell  Capital  Partners,  LP.  See  "Item 7.  Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operation -
Material Commitments."

CHINESE TAX AND OTHER LAWS MAY NEGATIVELY IMPACT OUR BUSINESS RESULTS.

We conduct our business in China through our subsidiaries. China currently has a
number of laws  related to various  taxes  imposed by both  federal and regional
governmental  authorities.  Applicable taxes include  value-added tax, corporate
income tax, and payroll and worker and welfare  taxes,  along with others.  Laws
related to some of these taxes have not been in force for a significant  period,
in  contrast  to more  developed  market  economies  and  regulations  for their
implementation  are often  unclear  or  incomplete.  Often,  differing  opinions
regarding legal interpretation exist both among and within government ministries
and  organizations;  thus  creating  uncertainties  and areas of  conflict.  Tax
declarations,  together with other legal compliance areas (as examples,  customs
and  currency  control  matters)  are subject to review and  investigation  by a
number of authorities,  who are enabled by law to impose severe fines, penalties
and interest charges.  These facts create tax risks in China  substantially more
significant than typically found in countries with more developed tax systems.

We believe that we are in substantial compliance with the tax laws affecting our
operations;  however,  the risk remains that the relevant authorities could take
differing  positions with regard to interpretive  issues and the effect could be
significant. The fact that a year has been reviewed does not close that year, or
any tax declaration applicable to that year, from further review.

Chinese  company  law  as it  applies  to  foreign  invested  corporations  (our
subsidiaries)  requires  them to maintain  dedicated  reserves  which  include a
general reserve and a reserve for enterprise  expansion.  The dedicated reserves
are  appropriated  from net income  after taxes,  determined  under the relevant
Chinese accounting  regulations,  at a rate set by the Board of Directors of the
respective  subsidiaries,  and record as a component  of  shareholders'  equity.
These  reserves  are  not  distributable,   other  than  upon  liquidation.   No
appropriation has been made for the year as our subsidiaries recorded losses.

Similar  provisions  of Chinese  company law require our Board of  Directors  at
their  discretion to transfer a certain  amount of their annual net income after
taxes, as determined under the relevant  Chinese  accounting  regulations,  to a
staff welfare and bonus fund.  No such transfer was made for the fiscal  period,
as the subsidiaries recorded losses.

ELIMINATION OF TAX HOLIDAYS

Effective  January 1, 2008,  the People's  Republic of China  implemented  a new
standard 25% tax rate for all  business  enterprises  regardless  of whether the
enterprise is a domestic or foreign enterprise, without any tax holiday. The tax


                                      -13-


<PAGE>


holiday  is  defined  as  "two-year   exemption   followed  by  three-year  half
exemption",  which had previously been enjoyed by tax payers within the People's
Republic of China.  Therefore,  as a result of the new tax law of a standard 25%
tax rate, tax holidays terminated as of December 31, 2007. However, the People's
Republic of China has  established a set of transition  rules to allow  business
enterprises  that had already  commenced use of tax holidays  before  January 1,
2008,  to continue  enjoying the tax  holidays  until all tax holidays are fully
utilized.

EXCHANGE RATE FLACTUATIONS MAY NEGATIVELY IMPACT OUR BUSINESS.

Our reporting  currency is the United States Dollar but our functional  currency
in China is the Renminbi.  As such, rate fluctuations may have a material impact
on our consolidated  financial  reporting and make realistic revenue projections
difficult.  Additionally,  as  Renminbi  is the  functional  currency of Beijing
Joannes,  Xinhua C&D and Beijing  Boheng,  the  fluctuation of exchange rates of
Renminbi may have positive or negative impacts on our results of operations.

CHINESE   FUNDS   REMITTANCE   POLICIES   MAY  NOT  ALLOW  US  TO  MAXIMIZE  OUR
PROFITABILITY.

Pursuant to Chinese company law applicable to foreign investment companies, such
as our Chinese  subsidiaries,  as well as our minor  interest in Xinhua C&D, are
required to maintain dedicated reserves,  which include a general reserve and an
enterprise expansion reserve. The dedicated reserves are to be appropriated from
net  income  after  taxes,  determined  under the  relevant  Chinese  accounting
regulations  at a rate  determined  by the board of directors of the  respective
subsidiaries, and recorded as a component of shareholders' equity. The dedicated
reserves  are not  distributable  other than upon  liquidation.  As our  Chinese
subsidiaries  and Xinhua C&D have recorded losses for the fiscal year ended June
30,  2008,  no  appropriation  to the  dedicated  reserves  was made.  Moreover,
pursuant to the same Chinese company law, our Chinese  subsidiaries are required
to transfer at the discretion of their boards of directors,  a certain amount of
its annual net income  after  taxes as  determined  under the  relevant  Chinese
accounting  regulations  to a staff  welfare and bonus  fund.  Since our Chinese
subsidiaries  and Xinhua C&D have recorded losses for the fiscal year ended June
30, 2009, no transfer to the staff welfare and bonus fund was made.

AS A RESULT OF A MAJORITY OF OUR DIRECTORS AND OFFICERS BEING RESIDENTS OF OTHER
COUNTRIES  OTHER THAN THE UNITED  STATES,  INVESTORS  MAY FIND IT  DIFFICULT  TO
ENFORCE  WITHIN  THE  UNITED  STATES ANY  JUDGMENTS  OBTAINED  AGAINST US OR OUR
DIRECTORS AND OFFICERS.

We do not  currently  maintain a permanent  place of business  within the United
States.  In addition,  a majority of our  directors  and officers are  nationals
and/or  residents  of  countries  other  than the  United  States,  and all or a
substantial  portion of such  persons'  assets are  located  outside  the United
States.  As a result,  it may be difficult for  investors to enforce  within the
United  States any  judgments  obtained  against our company or our  officers or
directors, including judgments predicated upon the civil liability provisions of
the securities  laws of the United States or any state  thereof.


                                      -14-


<PAGE>


NEVADA LAW AND OUR  ARTICLES OF  INCORPORATION  MAY PROTECT OUR  DIRECTORS  FROM
CERTAIN TYPES OF LAWSUITS.

Nevada law provides that our officers and directors  will not be liable to us or
our  stockholders  for monetary  damages for all but certain types of conduct as
officers and directors. Our Bylaws permit us broad indemnification powers to all
persons  against all damages  incurred in  connection  with our  business to the
fullest extent provided or allowed by law. The  exculpation  provisions may have
the effect of  preventing  stockholders  from  recovering  damages  against  our
officers  and  directors  caused by their  negligence,  poor  judgment  or other
circumstances.  The indemnification provisions may require us to use our limited
assets to defend our officers and directors  against  claims,  including  claims
arising out of their negligence, poor judgment, or other circumstances.

A DECLINE IN THE PRICE OF OUR SHARES OF COMMON STOCK COULD AFFECT OUR ABILITY TO
RAISE FURTHER WORKING CAPITAL AND ADVERSELY  IMPACT OUR OPERATIONS.

A prolonged decline in the price of our shares of common stock could result in a
reduction in the  liquidity of our shares of common stock and a reduction in our
ability to raise  capital.  Any reduction in our ability to raise equity capital
in the future  would force us to  reallocate  funds from other  planned uses and
would have a significant  negative  effect on our business plans and operations,
including  our  ability  to  develop  our  business  and  continue  our  current
operations.  If the stock price declines,  there can be no assurance that we can
raise  additional  capital or generate funds from operations  sufficient to meet
our obligations.

IF WE ISSUE ADDITIONAL SHARES OF COMMON STOCK IN THE FUTURE,  THIS MAY RESULT IN
DILUTION  TO OUR  EXISTING  STOCKHOLDERS.

Our articles of incorporation, as amended, authorize the issuance of 500,000,000
shares of common stock.  As of the date of this Annual Report,  our total issued
and outstanding shares of common stock are 490,311,400.  Therefore,  we may need
to  obtain  shareholder  approval  to amend our  articles  of  incorporation  to
increase the  authorized  capital stock in order to be able to issue  sufficient
shares in the future in accordance with our contractual  obligations.  Our board
of directors has the authority to issue additional  shares of common stock up to
the  authorized  capital stated in the articles of  incorporation.  Our board of
directors  may choose to issue some or all of such shares to acquire one or more
businesses or to provide additional financing in the future. The issuance of any
such shares may result in a reduction  of the book value or market  price of the
outstanding  shares of our common  stock.  It will also cause a reduction in the
proportionate ownership and voting power of all other stockholders.

BECAUSE OUR COMMON STOCK IS SUBJECT TO PENNY STOCK RULES,  THE LIQUIDITY OF YOUR
INVESTMENT MAY BE RESTRICTED.

Our common stock is now,  and may  continue to be in the future,  subject to the
penny  stock  rules  under the  Securities  Exchange  Act of 1934.  These  rules
regulate  broker/dealer  practices for  transactions  in "penny  stocks."  Penny
stocks  generally  are equity  securities  with a price of less than $5.00.  The
penny  stock  rules  require  broker/dealers  to  deliver  a  standardized  risk
disclosure document that provides  information about penny stocks and the nature


                                      -15-


<PAGE>


and  level of risks in the  penny  stock  market.  The  broker/dealer  must also
provide the customer with current bid and offer  quotations for the penny stock,
the  compensation of the  broker/dealer  and its salesperson and monthly account
statements  showing the market value of each penny stock held in the  customer's
account.  The bid and offer  quotations and the  broker/dealer  and  salesperson
compensation  information  must be given to the  customer  orally or in  writing
prior to completing the transaction and must be given to the customer in writing
before or with the customer's  confirmation.  In addition, the penny stock rules
require  that prior to a  transaction,  the  broker  and/or  dealer  must make a
special written  determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's  written agreement to the transaction.
These  additional  penny stock  disclosure  requirements  are burdensome and may
reduce the trading  activity in the market for our common stock.  As long as the
common  stock is subject to the penny stock  rules,  holders of our common stock
may find it more difficult to sell their securities.

NASD SALES PRACTIVE  REQUIREMENTS MAY ALSO LIMIT A STOCKHOLDER'S  ABILITY TO BUY
AND SELL OUR SHARES OF COMMON  STOCK.

In addition to the "penny stock" rules described above, the National Association
of Securities  Dealers Inc. has adopted rules that require that in  recommending
an investment to a customer,  a broker-dealer  must have reasonable  grounds for
believing  that  the  investment  is  suitable  for  that  customer.   Prior  to
recommending  speculative  low  priced  securities  to  their  non-institutional
customers,  broker-dealers  must make reasonable  efforts to obtain  information
about the customer's  financial status,  tax status,  investment  objectives and
other   information.   Under   interpretations  of  these  rules,  the  National
Association of Securities Dealers Inc. believes that there is a high probability
that  speculative  low priced  securities will not be suitable for at least some
customers. The National Association of Securities Dealers Inc. requirements make
it more difficult for  broker-dealers  to recommend that their customers buy our
shares of common stock,  which may limit your ability to buy and sell our shares
of common stock and have an adverse effect on the market for its shares.

TRADING  ON THE OTC  BULLETIN  BOARD MAY BE  SPORADIC  BECAUSE IT IS NOT A STOCK
EXCHANGE, AND STOCKHOLDERS MAY HAVE DIFFICULTY RESELLING THEIR SHARES.

Our common stock is quoted on the OTC Bulletin Board. Trading in stock quoted on
the OTC Bulletin Board is often thin and  characterized by wide  fluctuations in
trading  prices,  due to many  factors  that  may  have  little  to do with  the
Company's  operations  or business  prospects.  The OTC Bulletin  Board is not a
stock  exchange,  and trading of securities  on the OTC Bulletin  Board is often
more sporadic than the trading of securities  listed on a quotation  system like
Nasdaq or a stock  exchange  like  Amex.  Accordingly,  you may have  difficulty
reselling any of our shares you purchase.

ITEM 1B. UNRESLOVED STAFF COMMENTS

Not applicable as we are a non-accelerated filer.


                                      -16-


<PAGE>


ITEM 2. DESCRIPTION OF PROPERTY

We maintains our registered agent's office at 101 Convention Center Drive, Suite
700,  Las Vegas,  Nevada  89109 and our  principal  executive  office at YuanJia
International  Apartment,  Building  #1,  Suite 304,  No. 40  Dongzhong  Street,
Dongcheng District, Beijing.

ITEM 3. LEGAL PROCEEDINGS.

Management  is  not  aware  of  any  legal   proceedings   contemplated  by  any
governmental  authority or any other party involving us or our properties.  None
of our  directors,  officers or affiliates  are (i) a party adverse to us in any
legal  proceedings,  or  (ii)  has  an  adverse  interest  to  us in  any  legal
proceedings.  Management is not aware of any other legal proceedings  pending or
that have been threatened against us or our properties.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During  fiscal  year  ended June 30,  2009,  no matters  were  submitted  to our
stockholders for approval.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER   MATTERS

MARKET FOR COMMON EQUITY

Shares of our common stock are traded on the OTC Bulletin Board under the symbol
"XHUA".  The market for our common stock is limited,  and can be  volatile.  The
trading  volume over the past three months has averaged  13,288  shares per day.
While  management  has a goal of  improving  corporate  value,  share  price and
liquidity, there is no guarantee this will occur. The following table sets forth
the high and low sales prices  relating to our common stock on a quarterly basis
for the last two fiscal years as quoted by the NASDAQ.  These quotations reflect
inter-dealer prices without retail mark-up,  mark-down, or commissions,  and may
not reflect actual transactions.

          QUARTER ENDED                HIGH BID          LOW BID

          June 30, 2009                $0.0022           $0.0013
          March 31, 2009               $0.0013           $0.0005
          December 31, 2008            $0.001            $0.0004
          September 30, 2008           $0.0029           $0.0014
          June 30, 2008                $0.019            $0.0016
          March 31, 2008               $0.014            $0.004
          December 31, 2007            $0.034            $0.007
          September 30, 2007           $0.058            $0.033


                                      -17-


<PAGE>


As of  September  26, 2009,  we had 30  shareholders  of record,  which does not
include  shareholders  whose  shares  are held in street or  nominee  names.  We
believe  that  there are  approximately  1,000  beneficial  owners of our common
stock.

DIVIDEND POLICY

No  dividends  have ever been  declared by the Board of  Directors on our common
stock.  Our  losses  do not  currently  indicate  the  ability  to pay any  cash
dividends,  and we do not indicate the intention of paying cash dividends either
on our common stock in the foreseeable future.  There are no restrictions in our
articles of incorporation  or by-laws that prevent us from declaring  dividends.
The Nevada Revised Statutes,  however,  do prohibit us from declaring  dividends
where, after giving effect to the distribution of the dividend,  we would not be
able to pay our debts as they become due in the usual  course of business or our
total assets would be less than the sum of our total liabilities plus the amount
that would be needed to satisfy the rights of stockholders who have preferential
rights superior to those receiving the distribution.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS

We have one equity  compensation  plan, the Xinhua China Ltd. Stock Option Plan.
On September 4, 2004, our Board of Directors  unanimously  approved and adopted,
and on September 6, 2004 our  shareholders  holding a majority of our issued and
outstanding common stock, approved a stock option and incentive plan (the "Stock
Option Plan").  The purpose of the Stock Option Plan is to advance our interests
and  our  shareholders  by  affording  our  key  personnel  an  opportunity  for
investment  and the  incentive  advantages  inherent in stock  ownership  in us.
Pursuant to the  provisions  of the Stock  Option  Plan,  stock  options,  stock
awards,  cash awards or other  incentives  (the "Stock Options and  Incentives")
will be  granted  only to our  key  personnel,  generally  defined  as a  person
designated by the Board of Directors upon whose judgment, initiative and efforts
we may rely including any of our directors, officers, employees,  consultants or
advisors.  A maximum of  20,000,000  shares of common  stock have been  reserved
under the Stock Option Plan. Options may be granted for a term not exceeding ten
years  from the date of  grant.  Under  the  Stock  Option  Plan,  the  Board of
Directors  previously  authorized  the grant of 4,255,000  Stock  Options to our
employees  and   consultants  on  September  23,  2004  and  October  27,  2004,
respectively.  The entire 4,255,000 Stock Options have expired by their terms as
of June 30, 2007.

The table set forth below presents the  securities  authorized for issuance with
respect to the Stock Option Plan under which equity  securities  are  authorized
for issuance as of June 30, 2009:


                                      -18-


<PAGE>

<TABLE>
<CAPTION>

EQUITY COMPENSATION PLAN INFORMATION

                                                                                  WEIGHTED-AVERAGE       NUMBER OF SECURITIES
                                                     NUMBER OF SECURITIES TO     EXERCISE PRICE OF     REMAINING AVAILABLE FOR
                                                     BE ISSUED UPON EXERCISE        OUTSTANDING         FUTURE ISSUANCE UNDER
                                                     OF OUTSTANDING OPTIONS,     OPTIONS, WARRANTS    EQUITY COMPENSATION PLANS
                                                       WARRANTS AND RIGHTS           AND RIGHTS         (EXCLUDING COLUMN (A))
                                                  (A)                      (B)                      (C)
<S>                                                           <C>                       <C>                           <C>

PLAN CATEGORY

EQUITY COMPENSATION PLANS
APPROVED BY SECURITY HOLDERS

Stock Options                                                     -0-                                        20,000,000

Total Stock Options                                               -0-                                        20,000,000

EQUITY COMPENSATION PLANS NOT
APPROVED BY SECURITY HOLDERS

Warrants                                                      622,690                   $4.60                         0

                                                              835,000                $0.00001                         0

                                                              100,000                   $1.47                         0

Total warrants                                              1,557,690

Total                                                       1,557,690

</TABLE>


XINHUA CHINA LTD. STOCK OPTION PLAN

The Stock Option Plan is to be  administered  by our Board of  Directors,  which
shall determine (i) the persons to be granted Stock Options and Incentives; (ii)
the Fair  Market  Value of our  shares;  (iii) the  exercise  price per share of
options  to be  granted;  (iv) the  number of shares to be  represented  by each
option or incentive  award; (v) the time or times at which options and incentive
awards shall be granted; (vi) the interpretation of the Stock Option Plan; (vii)
whether to prescribe,  amend and rescind rules and  regulations  relating to the
Stock Option Plan;  (viii) the term and  provisions or each option and incentive
award granted (which need not be identical) and, with the consent of the grantee
thereof,  modify or amend  such  option or  incentive  award;  (ix)  whether  to
accelerate  or defer (with the consent of the grantee) of the  exercise  date of
any  option or  incentive  award;  (x) the  person to  execute on our behalf any
instrument  required to  effectuate  the grant of an option or  incentive  award
previously  granted by the Board;  (xi) whether to accept or reject the election
made by a grantee  pursuant to Section 7.5 of the Stock Option  Plan;  and (xii)
all other determinations deemed necessary or advisable for the administration of
the Stock Option Plan. The Stock Option Plan provides authorization to the Board
of Directors to grant Stock  Options and  Incentives to a total number of shares
of our common stock,  not to exceed Twenty  Million  (20,000,000)  shares of our
common  stock as at the date of adoption by the Board of  Directors of the Stock
Option Plan.

In the  event  an  optionee  who is one of our  directors,  officers,  employees
(employee also encompasses consultants and advisors where such is appropriate or
where such is  intended  by the Board or by a  particular  grant under the Stock
Option Plan) (each an "Employee") has his employment terminated by us, except if
such  termination  is voluntary or occurs due to retirement  with the consent of
the Board or due to death or  disability,  then the Stock Option,  to the extent
not exercised,  shall  terminate on the date on which the Employee's  employment
with us is terminated.  If an Employee's  termination is voluntary or occurs due
to  retirement  with the consent of the Board,  then the  Employee may after the
date such Employee ceases to be one of our employees, exercises his Stock Option


                                      -19-


<PAGE>


at any time  within  three (3) months  after the date he ceases to be one of our
Employees,  but only to the extent  that he was  entitled  to exercise it on the
date of such  termination.  To the extent that the  Employee was not entitled to
exercise  the Stock  Option at the date of such  termination,  or if he does not
exercise such Stock Option option (which he was entitled to exercise) within the
time specified herein, the option shall terminate. In no event may the period of
exercise  in the case of  Incentive  Options  extend  more than three (3) months
beyond termination of employment.

In the event an  Employee  is unable to  continue  his  employment  with us as a
result of his permanent and total  disability (as defined in Section 22(e)(3) of
the Internal  Revenue Code), he may exercise his Stock Option at any time within
six (6)  months  from the date of  termination,  but only to the  extent  he was
entitled to exercise it at the date of such  termination.  To the extent that he
was not entitled to exercise the Stock Option at the date of termination,  or if
he does not exercise such option (which he was entitled to exercise)  within the
time specified  herein,  the Stock Option shall  terminate.  In no event may the
period of exercise in the case of an Incentive  Option  extend more than six (6)
months beyond the date the Employee is unable to continue employment due to such
disability.

In the event an optionee  dies during the term of the Stock Option and is at the
time of his death an  Employee  who shall have been in  continuous  status as an
Employee  since  the  date of grant  of the  option,  the  Stock  Option  may be
exercised at any time within six (6) months  following  the date of death by the
optionee's  estate or by a person who  acquired  the right to exercise the Stock
Option by bequest or  inheritance,  but only to the extent that an optionee  was
entitled to exercise the Stock Option on the date of death, or if the optionee's
estate, or person who acquired the right to exercise the Stock Option by bequest
or  inheritance,  does not exercise  such Stock Option (which he was entitled to
exercise) within the time specified herein, the Stock Option shall terminate. In
no event may the period of exercise in the case of an  Incentive  Option  extend
more than six (6) months beyond the date of the Employee's death.

Except to the extent  otherwise  expressly  provided  in an award,  the right to
acquire  shares or other assets under the Stock Option Plan may not be assigned,
encumbered  or  otherwise  transferred  by an  optionee  and any  attempt  by an
optionee to do so will be null and void.  However Stock  Options and  Incentives
granted under this Stock Option Plan may be  transferred  by an optionee by will
or the laws of descent and  distribution  or  pursuant  to a qualified  domestic
relations  order  as  defined  by the  Internal  Revenue  Code or Title I of the
Employee  Retirement  Income Security Act, as amended,  or the rules thereunder.
Unless  assigned  in  accordance  with the terms of an award,  options and other
awards  granted  under this Stock  Option  Plan may not be  exercised  during an
optionee's  lifetime  except by the optionee or, in the event of the  optionee's
legal incapacity,  by his guardian or legal representative acting in a fiduciary
capacity on behalf of the optionee under state law and court supervision.

SECTION 15(G) OF THE SECURITIES EXCHANGE ACT OF 1934

Our shares are covered by Section 15(g) of the Securities  Exchange Act of 1934,
as amended that imposes additional sales practice requirements on broker/dealers
who sell such  securities  to  persons  other  than  established  customers  and
accredited investors (generally institutions with assets in excess of $5,000,000


                                      -20-


<PAGE>


or individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with their spouses).  For  transactions  covered by
this  Section  15(g),  the  broker/dealer   must  make  a  special   suitability
determination  for the  purchase  and  have  received  the  purchaser's  written
agreement to the transaction prior to the sale. Consequently,  Section 15(g) may
affect the ability of  broker/dealers to sell our securities and also may affect
your ability to sell your shares in the  secondary  market.

Section  15(g)  also  imposes   additional   sales  practice   requirements   on
broker/dealers who sell penny securities. These rules require a one page summary
of certain  essential  items.  The items  include the risk of investing in penny
stocks in both public offerings and secondary  marketing;  terms important to in
understanding  of the  function  of the penny  stock  market,  such as "bid" and
"offer"  quotes,  a  dealers  "spread"  and  broker/dealer   compensation;   the
broker/dealer   compensation,   the  broker/dealers  duties  to  its  customers,
including the disclosures  required by any other penny stock  disclosure  rules;
the   customers   rights  and  remedies  in  causes  of  fraud  in  penny  stock
transactions;  and, the NASD's toll free telephone number and the central number
of  the  North  American  Administrators  Association,  for  information  on the
disciplinary history of broker/dealers and their associated persons.

RECENT SALES OF UNREGISTERED SECURITIES

As of the date of this Annual Report and during fiscal year ended June 30, 2009,
to provide capital, we sold stock in private placement  offerings,  issued stock
in exchange  for our debts or pursuant to  contractual  agreements  as set forth
below.

FORBEARANCE AND SETTLEMENT AGREEMENT

Effective  December 29, 2006, we entered into a forbearance  and settlement (the
"Forbearance  and Settlement  Agreement")  with Cornell Capital  Partners,  L.P.
("Cornell") and Highgate House Funds, Ltd. ("Highgate").  In accordance with the
terms and provisions of the Forbearance and Settlement  Agreement,  we agreed to
make  certain  payments to Cornell and Highgate  with respect to the  securities
purchase  agreement  dated  November 23, 2005, as amended on March 23, 2006 (the
"Securities  Purchase  Agreement")  previously  entered  into with  Cornell  and
Highgate. See "Item 6. Management's Discussion and Analysis or Plan of Operation
- Material Commitments."

In  addition,  Highgate  shall  exercise its rights to purchase  warrant  shares
pursuant to the Warrant issued to it under the Securities  Purchase Agreement on
a cashless basis. During fiscal year ended June 30, 2009, we issued an aggregate
of 266,655,667  shares of our common stock to Highgate  pursuant to the exercise
by Highgate of its rights to purchase warrant shares pursuant to the Warrant.

DEBT SETTLEMENT

Our Board of Directors, pursuant to a written consent resolutions dated July 13,
2009,  approved and  authorized  the settlement of an aggregate of $3,426,444 in
current indebtedness (the "Debt Settlement").  The Debt was incurred as a result
of our founder and  President/Chief  Executive  Officer,  Xianping Wang, loaning
sums of money to us for financing and working capital  purposes.  As of March 1,
2008,  we had incurred an aggregate of  $3,426,444  in Debt due and owing to Mr.


                                      -21-


<PAGE>


Wang  based  upon the loan of such  funds to us as  evidenced  by those  certain
financial  statements  dated March 31, 2008. We agreed with Mr. Wang at the time
of the Debt as of March 1, 2008 that, in the event the Corporation was unable to
repay the Debt,  the Debt  would be  satisfied  by  conversion  of the Debt into
shares of our common  stock at $0.0001 per share.  We entered  into a settlement
agreement  with Mr.  Wang  dated  July 13,  2009 (the  "Settlement  Agreement").
Subsequently,  Mr. Wang  assigned a portion of his right,  title and interest in
and to the Debt to that certain assignee, Lily Wang (the "Assignee").

As of the date of this Annual  Report,  Mr. Wang or his Assignee has converted a
portion of the Debt into 125,000,000 shares of our common stock. The shares were
issued in reliance on Rule 903 of Regulation S promulgated  under the Securities
Act. The securities  issued have not been registered under the Securities Act or
under  any  state  securities  laws  and may  not be  offered  or  sold  without
registration  with the United States  Securities  and Exchange  Commission or an
applicable exemption from the registration requirements.

ITEM 6. SELECTED FINANCIAL DATA

The  summarized  consolidated  financial  data set forth in the tables below and
discussed in this section  should be read in conjunction  with our  consolidated
financial  statements and related notes for fiscal years ended June 30, 2009 and
2008, which financial statements are included elsewhere in this Annual Report.

<TABLE>
<CAPTION>

________________________________________________________________________________________________
                                                 FOR FISCAL YEAR ENDED     FOR FISCAL YEAR ENDED
                                                     JUNE 30, 2009             JUNE 30, 2008
                                                       (AUDITED)                 (AUDITED)
________________________________________________________________________________________________
<S>                                                   <C>      <C>              <C>    <C>

Revenue
    Net Revenue                                       $       -0-               $     -0-
    Net cost of sales                                         -0-                     -0-
    Gross Profit                                              -0-                     -0-
Operating Expenses
   Selling, general and administrative                    680,536                 374,767
   Operating loss                                        (680,536)               (374,767)
Other Income (Expenses)
    Other income                                          179,621                     -0-
    Interest income                                           -0-                  55,127
    Gain on debt restructuring                             73,427                  12,644
    Interest expense                                     (451,247)               (383,928)
    Impairment Loss on Boheng investment               (1,625,000)                    -0-
Loss Before Minority Interest and Income Tax           (2,503,735)               (690,924)
Net Loss                                               (2,503,735)               (690,924)
________________________________________________________________________________________________

</TABLE>


                                      -22-


<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

RESULTS OF OPERATION

FOR FISCAL YEAR ENDED JUNE 30, 2009 COMPARED TO FISCAL YEAR ENDED JUNE 30, 2008.

         REVENUES AND GROSS MARGIN

During  fiscal year ended June 30, 2009,  we had net revenue of $-0- as compared
to net revenue of $-0- during fiscal year ended June 30, 2008.

         OPERATING EXPENSES

Our total  operating  expenses were $680,536 for fiscal year ended June 30, 2009
as compared to total  operating  expenses of $374,767 for fiscal year ended June
30, 2008 (an increase of $305,769).  During fiscal year ended June 30, 2009, our
selling,  general  and  administrative  expenses  consisted  of:  (i)  legal and
professional fees of $106,275 (2008: $108,111);  (ii) office expenses of $73,481
(2008: $14,162);  (iii) salaries and benefits of $169,698 (2008: $99,117);  (iv)
management fees of $150,000 (2008:  $-0-);  (v) vehicle expense of $6,779 (2008:
$13,595); and (vii) other expenses of $174,303 (2008: $139,782). The increase in
operating  expenses  during fiscal year ended June 30, 2009 as compared June 30,
2008 was due to the increase in scope and scale of business operations.

Selling,  general and  administrative  expenses  primarily  increased based on a
substantial increase in office expenses to $73,481,  management fees to $150,000
and salaries and benefits to $169,698. These expenses increased because after we
moved office  location,  we re-organized  our  subsidiaries  and personnel.  The
increase of salaries and benefits  was due to  severance  pay to employees  that
were laid off. And, after our Board of Directors held a meeting, they decided to
accrue the  management  fee that was due to Mr. Wang for services he provided to
us during fiscal years ended December 31, 2008 and December 31, 2007.

         GAIN ON DEBT RESTRUCTURING

On December  29,  2006,  we completed  the debt  restructuring  with Cornell and
Highgate  under the terms  and  provisions  of the  Forbearance  and  Settlement
Agreement.  In accordance  with the terms and provisions of the  Forbearance and
Settlement Agreement, we agreed to make certain payments to Cornell and Highgate
with respect to the Securities  Purchase Agreement  previously entered into with
Cornell and  Highgate on November 23, 2005 and as amended  March 23,  2006,  and
those  certain  convertible  debentures  in the amount of $1,250,000 to Highgate
dated  November  23,  2005 and  $2,000,000  to  Cornell  dated  March  23,  2006
(collectively, the "Convertible Debentures"). See "--Material Commitments."

As a result of the debt restructuring arrangement, during fiscal year ended June
30, 2007, our  liabilities on warrants,  conversions,  discounts were discharged
resulting in a net gain of $1,500,132 attributable as follows:

         Liabilities on Conversion Discharged         $ 2,334,198
         Liabilities on Warrants Discharged               891,537
         Loans Discharged                                 225,000
         Unamortized Discounts                         (1,950,603)
                                                      ___________
                                                      $ 1,500,132


                                      -23-


<PAGE>


         INTEREST EXPENSE

We incurred  ($451,247)  in interest  expense  during fiscal year ended June 30,
2009 as compared to ($383,928)  incurred as interest  expense during fiscal year
ended June 30, 2008.  Interest expense of ($451,247) incurred during fiscal year
ended June 30,  2008  consisted  of: (i)  $39,826  (2008:  $49,628)  in interest
expense  from the  amortization  of  deferred  financing  cost and  discount  on
convertible;  (ii) $372,751 (2008:  $314,865)  imputed interest charged on loans
from shareholders;  and (iii) $13,768 (2008:  $19,435) in interest on loans from
related parties.

         IMPAIRMENT LOSS ON BOHENG INVESTMENT

As a result of the  termination  by the purchaser of the  acquisition of Beijing
Boheng  Investments and Management  Co., Ltd., we repossessed  Boheng as our 95%
interest subsidiary on August 25, 2008 at a value of $1,625,000, which was equal
to the unpaid  purchase price due by the purchaser.  After the  repossession  of
Boheng,  we conducted an evaluation of our carrying value and determined that an
impairment  loss in the amount of $1,625,000 was incurred  although Boheng still
owns a 7.98% equity interest in Xinhua C&D. This impairment loss was accordingly
reflected in the income statement for the quarter ended December 31, 2008.

Therefore,  our net loss during fiscal year ended June 30, 2009 was ($2,503,735)
compared to a net loss of ($690,924)  incurred during fiscal year ended June 30,
2008.  The  increase in net loss was due  primarily  to the  impairment  loss on
Boheng investment and the increase in operating expenses.

LIQUIDITY AND CAPITAL RESOURCES

FISCAL YEAR ENDED JUNE 30, 2009

Our financial  statements have been prepared assuming that we will continue as a
going  concern  and,  accordingly,  do not include  adjustments  relating to the
recoverability  and realization of assets and classification of liabilities that
might be necessary should we be unable to continue in operation.

As at fiscal year ended June 30, 2009,  our current assets were $344,532 and our
current  liabilities were $2,244,936,  resulting in a working capital deficit of
$1,900,404. As at fiscal year ended June 30, 2009, current assets were comprised
of: (i) $45,769  (2008:  $38,733)  in cash and cash  equivalents;  (ii)  $74,228
(2008:  $411,782) in net accounts receivable;  (iii) $-0- (2008:  $1,625,000) in
note  receivable;  and (iv) $224,535 (2008:  $223,231) in other  receivables and
prepayments.

As at fiscal year ended June 30, 2009, our total assets were $399,688  comprised
of: (i) $344,532 (2008:  $2,298,746) in current assets;  and (ii) $55,156 (2008:
$73,786) in net  property,  plant and  equipment.  The  decrease in total assets
during  fiscal year ended June 30, 2009 from fiscal year ended June 30, 2008 was
primarily  due to  non-recording  of  the  note  receivable  in  the  amount  of


                                      -24-


<PAGE>


$1,625,000.  The note receivable  represented the sales proceeds receivable from
the  disposal of Beijing  Boheng.  Pursuant to the  provisions  of that  certain
disposal agreement,  the sales proceeds were receivable in five installments and
were due in full no later than July 31, 2008. The note receivable was released.

As at fiscal year ended June 30, 2009, our current  liabilities  were $2,244,936
comprised  of: (i) $754,025  (2008:  $1,095,538);  (ii) $-0- (2008:  $18,355) in
deferred revenue;  and (iii) $1,490,911 (2008:  $1,635,443 in current portion of
loans payable.

As at fiscal year ended June 30, 2009,  our total  liabilities  were  $9,248,258
comprised of: (i) $2,244,936  (2008:  $2,749,336) in current  liabilities;  (ii)
$1,058,261  (2008:  $1,058,261) in loans payable;  and (iii)  $5,945,061  (2008:
$5,410,256) in loans from shareholders. The slight increase in total liabilities
during  fiscal year ended June 30, 2009 from fiscal year ended June 30, 2008 was
primarily due to the increase in loans from shareholders.

Stockholders'   deficit  increased  from  ($6,845,321)  for  June  30,  2008  to
($8,848,570) for June 30, 2009.

         OPERATING ACTIVITIES

We have not generated  positive  cash flows from  operating  activities.  During
fiscal year ended June 30, 2009, net cash flow used in operating  activities was
($2,112,945)  compared  to  net  cash  flow  used  in  operating  activities  of
($111,775)  during  fiscal  year  ended  June 30,  2008.  Net cash  flow used in
operating  activities during fiscal year ended June 30, 2009 consisted primarily
of a net loss of ($2,503,735)  adjusted by $412,577 in imputed interest expense,
$13,768 in  amortization of deferred  imputed  interest from note receivable and
$26,585  in  depreciation.  Changes  in assets and  liabilities  consisted  of a
decrease of $337,554 in accounts receivable, an increase of $381,339 in accounts
payable and accrued liabilities, and an increase of $18,355 in deferred revenue.

Net cash flowed used in operating  activities  during fiscal year ended June 30,
2008  consisted  primarily of a net loss of  ($690,924)  adjusted by $466,703 in
imputed  interest  expense  and  $13,768 in  amortization  of  deferred  imputed
interest from note receivable. Changes in assets and liabilities consisted of an
increase of $226,536 in accounts  receivable and of $22,045 in other receivables
and prepayments and of $55,072 in deferred  revenue,  and a decrease of $402,331
in accounts payable and accrued liabilities.

         INVESTING ACTIVITIES

During  fiscal  year  ended  June 30,  2009,  net cash  flow  used in  investing
activities  was  $1,617,044  compared to net cash flow  sourced  from  investing
activities of ($59,692) for fiscal year ended June 30, 2008.  Net cash flow used
in investing activities during fiscal year ended June 30, 2009 was primarily the
result of the loss on impairment  of asset of  $1,625,000  and purchase of plant
and  equipment  in the amount of  ($7,956)  compared  to  purchase  of plant and
equipment in the amount of ($59,692) during fiscal year ended June 30, 2008.


                                      -25-


<PAGE>


         FINANCING ACTIVITIES

During  fiscal year ended June 30, 2009,  net cash flow  sourced from  financing
activities  was  $503,459  compared  to net cash  flow  sourced  from  financing
activities  of $178,067 for fiscal year ended June 30, 2008.  Net cash flow from
financing  activities during fiscal year ended June 30, 2009 pertained primarily
to: (i) $3,915 in proceeds from  convertible  debenture;  (ii) $547,132 in loans
from shareholders; (iii) $109,444 in additional paid-in capital; and (iv) offset
by  ($157,032)  in  repayment  of loan  payable.  Net cash flow  from  financing
activities  during  fiscal  year  ended June 30,  2008  pertained  primarily  to
$329,826  received  as  loans  from  shareholders  and  $441  in  proceeds  from
convertible debenture offset by ($152,200) in repayment of loan payable.

PLAN OF OPERATION

The local and  regional  distribution  business  for  books is  competitive  and
fragmented in the People's  Republic of China.  Estimates  range up to 500 as to
the number of  entrants  in this  field.  It is our plan that  economy of scale,
relationships  with  Chinese  publishers  and  also  with  sub-distributors  and
retailers and our nationwide scope which allows us the flexibility to distribute
books in any region will assist us in maintaining  and enhancing our competitive
position.

Our goal is to expand our  business to include  electronic  sales,  delivery and
distribution of media contents.  We also plan to partner with foreign publishers
to provide  foreign  media  contents in China.  We seek to achieve our goal on a
national  scale to  maximize  opportunities  in one of the  largest  and fastest
growing economies in the world.

To execute on our strategy to become a digital  media  company we formed our new
subsidiary, Beijing Joannes. Beijing Joannes is intended to be our digital media
company and it is expected to distribute all digital  content for Xinhua C&D and
others.  Beijing  Joannes has  anticipated in operating its business to consumer
(B2C)  e-commerce  portal as  www.geezip.com,  and expects to allow customers to
purchase electronic and hard copies of books on-line.

We expect  to also  establish  a  co-publishing  company  which  anticipates  on
co-publishing  agreements with both domestic and foreign publishers,  publishing
both hard copy and digital works.

Existing  working  capital,  further  advances  and possible  debt  instruments,
warrant exercises, further private placements,  monetization of existing assets,
and  anticipated  cash flow are  expected to be adequate to fund our  operations
over the next two  months.  We have no lines of credit or other  bank  financing
arrangements.  Generally,  we  have  financed  operations  to date  through  the
proceeds of the private  placement of equity and debt  securities and loans from
our  shareholders.  In connection with our business plan,  management will delay
additional increases in operating expenses and capital  expenditures.  We intend
to utilize our best  efforts to settle  current  finance  accounts  payables and
liabilities  with  further  issuances  of  securities,  debt  and  or  advances,
monetization of existing assets,  and revenues from operations.  We will need to
raise  additional  capital  and  increase  revenues  to meet both short term and
long-term  operating  requirements.  We  have  undertaken  certain  actions  and


                                      -26-


<PAGE>


continue to  implement  changes  designed to improve our  financial  results and
operating cash flows.  The actions involve certain  cost-saving  initiatives and
growing  strategies,  including:  (i)  reductions  in  headcounts  and corporate
overhead  expenses;  and (ii) continue to develop  e-commerce  business  through
Beijing Joannes.  We believe that these actions will enable us to improve future
profitability and cash flow in our continuing  operations through June 30, 2009.
Furthermore, the restructure of debt pertaining to Cornell and Highgate has been
advantageous  to our over financial  outlook.  Ultimately,  we have released the
burden on cash flow for further  contribution and intend to put our resources in
co-publishing and e-commerce business opportunities.

The report of the independent registered public accounting firm that accompanies
our June 30, 2009 and June 30, 2008 consolidated  financial  statements contains
an  explanatory  paragraph  expressing  substantial  doubt  about our ability to
continue as a going concern.  The  consolidated  financial  statements have been
prepared "assuming that we will continue as a going concern," which contemplates
that we will realize our assets and satisfy our  liabilities  and commitments in
the ordinary course of business.

MATERIAL COMMITMENTS

LOANS PAYABLE/CONVERTIBLE DEBENTURE
During  2009/10,  a material  commitment for us relates to the  Forbearance  and
Settlement  Agreement  with  Cornell and  Highgate.  On December  29,  2006,  we
completed the debt restructuring with Cornell and Highgate under the Forbearance
and Settlement Agreement.  Pursuant to the Forbearance and Settlement Agreement,
we agreed to make certain  payments to Cornell and Highgate  with respect to the
Securities  Purchase  Agreement  previously  entered into by us with Cornell and
Highgate  dated  November  23, 2005 and amended on March 23,  2006,  and the two
convertible  debentures in the amounts of $1,250,000 to Highgate  dated November
23, 2005 and  $2,000,000  to Cornell  dated March 23,  2006  (collectively,  the
"Convertible  Debentures") in accordance with the terms and conditions set forth
in the Forbearance and Settlement Agreement.

In further accordance with the Forbearance and Settlement  Agreement,  we agreed
to use the proceeds  from the disposal of Beijing  Boheng to repay the principal
and interest due to Cornell and Highgate  under the  Convertible  Debentures  in
exchange  for the  agreement of Cornell and Highgate to: (i) waive on a one-time
basis only any accrued liquidated damages owing to Cornell and Highgate; (ii) no
application  of the  redemption  premium  on  the  scheduled  repayments;  (iii)
conversion  of the  Convertible  Debentures  in an amount  equal to at least the
amount  of  a  scheduled  repayment  subject  to  certain  conditions;  (iv)  no
additional  liquidated  damages  accruing during the term of the Forbearance and
Settlement Agreement;  (v) permitting us to withdraw the registration  statement
filed on  March  28,  2006  with  the  Securities  and  Exchange  Commission  in
connection  with  the  Convertible  Debentures;  (vi)  during  the  term  of the
Forbearance and Settlement Agreement,  waiving the requirement for us to receive
written  consent of  Cornell  and  Highgate  for any  organizational  change (as
defined in the  Securities  Purchase  Agreement)  to be directly  or  indirectly
consummated by us, and that we will not effectuate any stock splits for at least
nine months without the consent of Cornell and Highgate;  and (vii)  terminating
the provisions  for security  shares as set forth in Section 9 of the Securities
Purchase  Agreement  and in Section 2 of the transfer  agent  instructions  upon
receipt by Cornell and Highgate of the first scheduled repayment amount.


                                      -27-


<PAGE>


The payment plan under the Forbearance and Settlement Agreement is as follows:

                                           CONVERSION OF
     PAYMENT DATE         CASH PAYMENT       DEBENTURE

     March 10, 2007        $  250,000          250,000
     June 30, 2007            375,000          375,000
     October 31, 2007         375,000          375,000
     January 31, 2008         250,000          250,000
     July 31, 2008            625,000          625,000
                          ___________        _________
                           $1,875,000        1,875,000
                          ===========        =========

As of June 30,  2007,  we paid  $250,000  for the payment due March 10, 2007 and
issued  100,000  shares and 125,000  shares of our common stock on March 1, 2007
and April 18, 2007,  respectively,  pursuant to exercise  rights.  During fiscal
years ended June 30, 2009 and June 30, 2008,  Cornell and Highgate  converted an
aggregate  of  266,655,668  and  44,016,843  shares,  respectively,  against the
outstanding  amount  at a total  conversion  price  of  $144,532  and  $152,200,
respectively.

LOANS FROM SHAREHOLDERS

During fiscal year 2009/10,  a material  commitment  for us relates to the loans
from shareholders. The outstanding amount of $5,945,061 represents cash advanced
to  us  from  our   shareholders.   These   shareholder   loans  are  unsecured,
interest-free and not repayable within the next twelve months.  For fiscal years
ended June 30, 2009 and June 30, 2008, we calculated imputed interest expense of
$342,847 and $328,711,  respectively,  in relation to interest-free shareholders
loans at its effective  interest  rate and accounted for it in the  consolidated
financial  statements.  During fiscal year ended June 30, 2009, the shareholders
converted an aggregate of 125,000,000 shares against the shareholders' loan at a
total conversion price of $12,500.

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any  significant  equipment  during the next twelve
months.

CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements are prepared in accordance with accounting
principles  generally  accepted in the United States.  The  preparation of these
financial  statements  require us to make estimates and assumptions  that affect
the  reported  amounts of assets and  liabilities  at the date of the  financial
statements and the reported  amounts of revenues and expenses during the periods
presented.  Refer  to  Note  3 to the  Consolidated  Financial  Statements.  The
following  paragraphs include a discussion of the critical areas that required a
higher degree of judgment or are considered complex.


                                      -28-


<PAGE>


BASIS OF CONSOLIDATION

The  interest  of the  Company  in the  subsidiaries  was  acquired  by means of
exchange of shares in the  Company  pursuant to a share  exchange  agreement  on
September 14, 2004. The  transaction is considered a transfer  between  entities
under common control, within the meaning of US GAAP. Accordingly, the assets and
liabilities  transferred  have been accounted for at historical cost or at their
"fair value" at the date of their original acquisition and have been included in
the foregoing financial statements as of the beginning of the periods presented.

The consolidated  financial  statements include the financial  statements of the
Company  and its  subsidiaries.  Subsidiaries  are those  entities  in which the
Company,  directly  or  indirectly,  controls  more than one half of the  voting
power; has the power to govern the financial and operating policies;  to appoint
or remove the  majority  of the  members of the board of  directors;  or to cast
majority of votes at the meeting of  directors.  All  significant  inter-company
balances  and   transactions   within  the  Company  have  been   eliminated  on
consolidation.

INVESTMENT IN UNCONSOLIDATED ENTITIES

The investments in and the operating results of  50%-or-less-owned  entities not
required  to  be  consolidated  are  included  in  the  consolidated   financial
statements on the basis of the equity method of accounting or the cost method of
accounting, depending on specific facts and circumstances.

The Company has an investment  in a privately  held entity in the form of equity
instruments  that are not  publicly  traded  and for which  fair  values are not
readily  determinable.  The Company  records its  investment in a private entity
under the cost method of  accounting  and assesses the net  realizable  value of
this entity on a quarterly basis to determine if there has been a decline (other
than  temporary) in the fair value of the entity,  under  Statement of Financial
Accounting  Standards ("SFAS") No. 115,  "ACCOUNTING FOR CERTAIN  INVESTMENTS IN
DEBT AND EQUITY SECURITIES".

REVENUE RECOGNITION

Sales revenue is recognized when persuasive  evidence of an arrangement  exists,
the price is fixed and final,  delivery  has  occurred  and there is  reasonable
assurance of collection of the sales  proceeds.  The Company  generally  obtains
purchase authorizations from its customers for a specified amount of products at
a specified  price and  considers  delivery to have  occurred  when the customer
takes  possession  of the  products.  The  net  sales  incorporate  offsets  for
discounts and sales  returns.  Revenue is  recognized  upon  delivery,  risk and
ownership  of the title is  transferred  and a  reserve  for  sales  returns  is
recorded  even  though   invoicing  may  not  be  completed.   The  Company  has
demonstrated  the ability to make reasonable and reliable  estimates of products
returns in  accordance  with SFAS No.  48,  "REVENUE  RECOGNITION  WHEN RIGHT OF
RETURN EXISTS".

Shipping and  handling  fees billed to  customers  are included in sales.  Costs
related  to  shipping   and  handling   are  part  of  selling,   general,   and
administrative expenses in the consolidated  statements of operations.  EITF No.
00-10,  "ACCOUNTING  FOR SHIPPING AND  HANDLING  FEES AND COSTS"  allows for the
presentation of shipping and handling  expenses in line items other than cost of
sales. For the year ended June 30, 2007, $0 (2006 and 2005 $149,173 and $70,666,
respectively)  related to shipping and  handling  costs was included in selling,
general and administrative expenses in the accompanying  consolidated statements
of operations.


                                      -29-


<PAGE>


EQUITY BASED COMPENSATION

The Company adopts SFAS No. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION" using
the fair value method.

The Company uses the  Black-Scholes  Option  Pricing  Model to estimate the fair
value of options.  The weighted average fair value of options granted during the
years ended June 30, 2007, 2006, and 2005 was $0.32, $1.02, and $1.54 per share,
respectively.  Weighted average  assumptions used in the valuation for the years
ended June 30, are summarized below:

                                                  2007       2006         2005

     Risk free interest rate (%)                   4.07%       5.01%      3.26%
     Dividend yield (%)                            0.00%       0.00%      0.00%
     Expected life of option grants (years)        2.38%       5.00%      3.77%
     Expected volatility of option grants (%)     1,181%      80.00%     80.00%

The Company has issued stock  options to  directors,  officers,  employees,  and
consultants. As such, the Company records compensation expense for stock options
and awards only if the exercise  price is less than the fair market value of the
stock on the measurement date.

Detailed movement of stock-based  compensation has been disclosed in the note 14
to consolidated  financial  statements.

CONVERTIBLE DEBENTURE ISSUED WITH STOCK PURCHASE WARRANTS

The Company  accounts for the issuance of and  modifications  to the convertible
debt  issued  with  stock  purchase  warrants  in  accordance  with APB No.  14,
ACCOUNTING FOR CONVERTIBLE  DEBT AND DEBT ISSUED WITH STOCK PURCHASE  WARRANTS ,
EITF No. 98-5, ACCOUNTING FOR CONVERTIBLE  SECURITIES WITH BENEFICIAL CONVERSION
FEATURES OR  CONTINGENTLY  ADJUSTABLE  CONVERSION  RATIOS,  and EITF No.  00-27,
APPLICATION OF ISSUE NO. 98-5 TO CERTAIN  CONVERTIBLE  INSTRUMENTS  and SFAS No.
15, ACCOUNTING BY DEBTORS AND CREDITORS FOR TROUBLED DEBT RESTRUCTURINGS .

Due to the  indeterminate  number of  shares,  which  might be issued  under the
embedded  convertible  host debt  conversion  feature of these  debentures,  the
Company  is  required  to record a  liability  relating  to both the  detachable
warrants and embedded  convertible feature of the notes payable (included in the
liabilities  as  a  "derivative  liability").

The  accompanying   consolidated   financial   statements  comply  with  current
requirements  relating to warrants and embedded derivatives as described in SFAS
133 as follows:

     o    The Company  treats the full fair market value of the  derivative  and
          warrant liability on the convertible  secured debentures as a discount
          on the debentures  (limited to their face value).  The excess, if any,
          is recorded as an increase  in the  derivative  liability  and warrant
          liability with a  corresponding  increase in loss on adjustment of the
          derivative and warrant liability to fair value.


                                      -30-


<PAGE>


     o    Subsequent to the initial  recording,  the change in the fair value of
          the detachable  warrants,  determined under the  Black-Scholes  option
          pricing  formula  and the  change  in the fair  value of the  embedded
          derivative (utilizing the Black-Scholes option pricing formula) in the
          conversion  feature of the  convertible  debentures  are  recorded  as
          adjustments to the liabilities as of June 30, 2006.

     o    The expense  relating to the change in the fair value of the Company's
          stock  reflected  in the change in the fair value of the  warrants and
          derivatives  is  included  in  interest  expense  in the  accompanying
          consolidated statements of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally  Accepted
Accounting  Principles"  ("SFAS  162").  SFAS  162  identifies  the  sources  of
accounting principles and the framework for selecting the principles used in the
preparation  of  financial  statements  of  nongovernmental  entities  that  are
presented in conformity with generally accepted accounting  principles (the GAAP
hierarchy).  Statement  162 will become  effective 60 days  following  the SEC's
approval of the Public  Company  Accounting  Oversight  Board  amendments  to AU
Section  411,  "The  Meaning  of Present  Fairly in  Conformity  With  Generally
Accepted Accounting Principles."

In May 2008,  the FASB  issued FSP  Accounting  Principles  Board  ("APB")  14-1
"Accounting for Convertible  Debt  Instruments  That May Be Settled in Cash upon
Conversion  (Including  Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1
requires the issuer of certain  convertible debt instruments that may be settled
in cash (or other assets) on conversion to separately  account for the liability
(debt) and equity  (conversion  option) components of the instrument in a manner
that reflects the issuer's  non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years  beginning  after  December 15, 2008 on a retroactive
basis.

In September  2008, FASB issued FSP No. 133-1 and FIN 45-4,  "Disclosures  about
Credit Derivatives and Certain  Guarantees",  an amendment of FASB Statement No.
133 and FASB  Interpretation  No. 45; and Clarification of the Effective Date of
FASB Statement No. 161. This FSP is intended to improve disclosures about credit
derivatives by requiring more information about the potential adverse effects of
changes in credit risk on the financial  position,  financial  performance,  and
cash flows of the sellers of credit derivatives.  The provisions of the FSP that
amend  Statement 133 and FIN 45 are effective for reporting  periods  (annual or
interim) ending after November 15, 2008.

This FSP amends FASB Statement No. 133,  ACCOUNTING  FOR DERIVATIVE  INSTRUMENTS
AND HEDGING ACTIVITIES, to require disclosures by sellers of credit derivatives,
including  credit  derivatives  embedded  in hybrid  instruments.  This FSP also
amends FASB Interpretation  (FIN) No. 45, GUARANTOR'S  ACCOUNTING AND DISCLOSURE
REQUIREMENTS FOR GUARANTEES,  INCLUDING  INDIRECT  GUARANTEES OF INDEBTEDNESS TO
OTHERS,  to require an  additional  disclosure  about the current  status of the
payment/performance  risk of a guarantee.  The  provisions of the FSP that amend
Statement 133 and FIN 45 are effective for reporting periods (annual or interim)
ending after November 15, 2008.


                                      -31-


<PAGE>


Finally,  this FSP  clarifies  the  effective  date in FASB  Statement  No. 161,
DISCLOSURES ABOUT DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. The disclosures
required by Statement 161 should be provided for any reporting period (annual or
quarterly  interim)  beginning  after November 15, 2008. For example,  an entity
with a March 31 fiscal  year-end  should provide the  disclosures for its fourth
quarter  interim  period  ending  March 31, 2009,  in its 2009 annual  financial
statements.  This  clarification  of the  effective  date  of  Statement  161 is
effective upon issuance of the FSP.

The  Company  does not  consider  the  adoption of the above  recent  accounting
pronouncements  having  any  material  impact  on its  consolidated  results  of
operations  and  financial  condition.

ITEM 7A.  QUANTITATIVE  AND  QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial  position,
results of  operations or cash flows due to adverse  change in foreign  currency
and  interest  rates.

EXCHANGE RATE

Our reporting  currency is United States Dollars  ("USD").  The Chinese Renminbi
("RMB")  has  been  informally  pegged  to the  USD.  However,  China  is  under
international pressure to adopt a more flexible exchange rate system. If the RMB
were no longer pegged to the USD, rate  fluctuations  may have a material impact
on the Company's  consolidated  financial  reporting and make realistic  revenue
projections difficult. Recently (July 2005) the Renminbi was allowed to rise 2%.
This has not had an  appreciable  effect on our operations and seems unlikely to
do so.

As Renminbi is the functional  currency of Xinha C&D and Boheng, the fluctuation
of exchange  rates of  Renminbi  may have  positive  or negative  impacts on the
results of  operations  of the  Company.  However,  since all sales  revenue and
expenses of these two subsidiary companies are denominated in Renminbi,  the net
income effect of  appreciation  and  devaluation of the currency  against the US
Dollar will be limited to the net operating results of the subsidiary  companies
attributable  to us.

INTEREST RATES

Interest rates in China are low and stable and inflation is well controlled, due
to the habit of the  population  to deposit  and save money in the banks  (among
with other reasons,  such as the People's  Republic of China's perennial balance
of trade  surplus).  Our loans  relate  mainly to trade  payables and are mainly
short-term. However our debt is likely to rise with physical plant in connection
with  expansion  and, were interest  rates to rise at the same time,  this could
become a significant impact on our operating and financing activities.

We have not entered into derivative  contracts either to hedge existing risks or
for speculative purposes.


                                      -32-


<PAGE>


ITEM 8. FINANCIAL STATEMENTS

INDEX TO THE FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm dated August 1, 2009.

Consolidated Balance Sheet as of June 30, 2009 and 2008.

Consolidated Statement of Income For the Year Ended June 30, 2009 and 2008.

Consolidated Statement of Stockholders' Equity as of June 30, 2009 and 2008.

Consolidated Statement of Cash Flows For the Year Ended June 30, 2009 and 2008.

Notes to Consolidated Financial Statements.























                                      -33-


<PAGE>

















                                XINHUA CHINA LTD.

                    AUDITED CONSOLIDATED FINANCIAL STATEMENTS

                             JUNE 30, 2009 AND 2008

                             (STATED IN US DOLLARS)






















                                      -34-


<PAGE>


                                XINHUA CHINA LTD.

                                    CONTENTS

                                                                           PAGES

Report of Registered Independent Public Accounting Firm                      F-1

Consolidated Balance Sheets                                              F-2 - 3

Consolidated Statements of Income                                            F-4

Consolidated Statements of Stockholders' Equity                              F-5

Consolidated Statements of Cash Flows                                        F-6

Notes to the Consolidated Financial Statements                          F-7 - 23






















                                      -35-


<PAGE>


Board of Directors and Stockholders
Xinhua China Ltd.


             REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM


We have audited the  accompanying  consolidated  balance  sheets of Xinhua China
Ltd. and its subsidiaries  ("the Company") as of June 30, 2009 and 2008, and the
related   consolidated   statements   of   income,   stockholders'   equity  and
comprehensive income and cash flows for the years then ended. These consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  an  audit  to  obtain  reasonable   assurance  about  whether  the
consolidated financial statements are free of material misstatement. The Company
is not  required  to  have,  nor  were we  engaged  to  perform  an audit of the
Company's  internal  control  over  financial  reporting.   Our  audit  includes
consideration  of  internal  control  over  financial  reporting  as a basis for
designing audit  procedures that are appropriate in the  circumstances,  but not
for the purpose of expressing an opinion on the  effectiveness  of the Company's
internal  control  over  financial  reporting.  Accordingly,  we express no such
opinion. An audit includes examining,  on a test basis,  evidence supporting the
amounts and  disclosures  in the  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of the
Company as of June 30, 2009 and 2008 and the consolidated  results of operations
and cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
consolidated  financial statements,  the Company has incurred substantial losses
and has a working capital deficit,  all of which raise  substantial  doubt about
its  ability to continue as a going  concern.  Management's  plans in regards to
these  matters  are  also  described  in Note 2.  These  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.



South San Francisco, California                     Samuel H. Wong & Co., LLP
August 1, 2009                                      Certified Public Accountants


                                      F-1


<PAGE>

<TABLE>
<CAPTION>

                                XINHUA CHINA LTD.
                           CONSOLIDATED BALANCE SHEETS
                          AS OF JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)

                                                        NOTES                 2009                2008
                                                        _____              ___________         ___________
<S>                                                      <C>               <C>                 <C>

ASSETS
        CURRENT ASSETS
          Cash and cash equivalents                      3D                $    45,769         $    38,733
          Accounts receivable, NET                       3E                     74,228             411,782
          Note receivable                                                            -           1,625,000
          Other receivables and prepayments               4                    224,535             223,231
                                                                           ___________         ___________
             Total Current Assets                                              344,532           2,298,746

        LONG-TERM ASSETS
          Property, plant & equipment, NET              3F,5                    55,156              73,786
                                                                           ___________         ___________
             Total Long-term Assets                                             55,156              73,786

             Total Assets                                                  $   399,688         $ 2,372,532
                                                                           ===========         ===========

LIABILITIES & STOCKHOLDERS' EQUITY

        LIABILITIES
          CURRENT LIABILITIES
          Accounts payable and accrued liabilities        6                $   754,025         $ 1,095,538
          Deferred revenue                                                           -              18,355
          Current portion of loans payable               3S,7                1,490,911           1,635,443
                                                                           ___________         ___________
             Total Current Liabilities                                       2,244,936           2,749,336

          LONG-TERM LIABILITIES
          Loans payable                                  3S,7                1,058,261           1,058,261
          Loans from shareholders                         8                  5,945,061           5,410,256
                                                                           ___________         ___________
             Total Long-term Liabilities                                     7,003,322           6,468,517

             Total Liabilities                                             $ 9,248,258         $ 9,217,853
                                                                           ===========         ===========


         SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

</TABLE>


                                      F-2

<PAGE>

<TABLE>
<CAPTION>

                                XINHUA CHINA LTD.
                           CONSOLIDATED BALANCE SHEETS
                          AS OF JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)



                                                     NOTE                 2009                  2008
                                                     ____              ___________           ____________
<S>                                                   <C>               <C>                    <C>

STOCKHOLDERS' EQUITY

   Common Stock $0.00001 Par Value 500,000,000        9                 $    4,903             $      987
   Shares Authorized;
   490,311,400 and 98,655,733 shares
   issued and outstanding at June 30, 2009
   and 2008, respectively.
   Additional paid in capital                                           11,399,960             10,903,997
   Accumulated other comprehensive income                                   38,756                 38,149
   Accumulated deficit                                                 (20,292,189)           (17,788,454)
                                                                       ___________           ____________
       Total Stockholders' (Deficit)/Equity                             (8,848,570)            (6,845,321)

   Total Liabilities & Stockholders' Equity                            $   399,688           $  2,372,532
                                                                       ===========           ============









         SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

</TABLE>


                                      F-3

<PAGE>

<TABLE>
<CAPTION>

                                XINHUA CHINA LTD.
                        CONSOLIDATED STATEMENTS OF INCOME
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


                                                        NOTE                   2009                      2008
                                                        _____              _____________             ____________
<S>                                                     <C>                <C>                       <C>

REVENUE

      Revenue, NET                                                         $           -             $          -
      Revenue, NET - related parties                                                   -                        -
      Cost of Sales, NET                                  3H                           -                        -
      Cost of Sales, NET - related parties                3I                           -                        -
                                                                           _____________             ____________
         Gross Profit                                                                  -                        -

OPERATING EXPENSES

      Selling, General, and Administrative                14                     680,536                  374,767
      Expenses
         Total Operating Expense                                                 680,536                  374,767
                                                                           _____________             ____________

      Operating Income/(Loss)                                                   (680,536)                (374,767)

OTHER INCOME (EXPENSES)
      Other Income                                                               179,621                        -
      Interest Income                                                                  -                   55,127
      Gain on debt restructuring                          17                      73,427                   12,644
      Interest Expense                                    18                    (451,247)                (383,928)
      Impairment Loss on Boheng investment                                    (1,625,000)                        -
                                                                           _____________             ____________
         Loss before minority interest and income tax                         (2,503,735)                (690,924)


Loss before Income Tax                                                        (2,503,735)                (690,924)

Income Tax                                              3M,19                          -
                                                                                                                -

                                                                           _____________             ____________
Net Loss                                                                   $  (2,503,735)            $   (690,924)
                                                                           =============             ============

Basic & Diluted Earnings Per Share                      3N,23              $      (0.016)            $    ( 0.011)


Weighted Average Shares Outstanding                                          375,084,602               65,400,512


         SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

</TABLE>


                                      F-4

<PAGE>

<TABLE>
<CAPTION>

                                XINHUA CHINA LTD.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                          AS OF JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)

                                                          ADDITIONAL                      OTHER
                                    NUMBER OF    COMMON    PAID IN     COMPREHENSIVE   COMPREHENSIVE   ACCUMULATED
                                     SHARES      STOCK     CAPITAL     INCOME(LOSS)     INCOME(LOSS)     DEFICIT        TOTAL
                                   ______________________________________________________________________________________________
<S>                                 <C>            <C>    <C>           <C>                    <C>     <C>            <C>

Balance, July 1, 2007               54,638,890     546    10,423,526    (17,088,780)           8,749   (17,097,530)   (6,664,709)
Additional Paid-in Capital                   -       -       151,760              -                -             -       151,760
Imputed interest on interest
free advances from related party             -       -       328,711              -                -             -       328,711
Issuance of shares to Highgate      44,016,843     441             -              -                -             -           441
Foreign Currency translation                 -       -             -         29,400           29,400             -        29,400
Net Loss for year                            -       -             -       (690,924)               -      (690,924)     (690,924)
                                   ______________________________________________________________________________________________
Balance, June 30, 2008              98,655,733     987    10,903,997    (17,750,304)          38,149   (17,788,454)   (6,845,321)
                                   ==============================================================================================

Balance, July 1, 2008               98,655,733     987    10,903,997    (17,750,304)          38,149   (17,788,454)   (6,845,321)
Additional Paid-in Capital                   -       -       109,444              -                -             -       109,444
Imputed interest on interest
free advances from related party             -       -       386,519              -                -             -       386,519
Issuance of shares to Highgate     266,655,667   2,666             -              -                -             -         2,666
Issuance of shares to Xianping
Wang                               125,000,000   1,250             -              -                -             -         1,250
Foreign Currency translation                 -       -             -            607              607             -           607
Net Loss for year                            -       -             -     (2,503,735)               -    (2,503,735)   (2,503,735)
                                   ______________________________________________________________________________________________
Balance, June 30, 2009             490,311,400   4,903    11,399,960    (20,253,432)          38,756   (20,292,189)   (8,848,570)
                                   ==============================================================================================

</TABLE>


<TABLE>
<CAPTION>

                        ACCUMULATED COMPREHENSIVE INCOME

                                                    JUNE 30, 2009         JUNE 30, 2008
                                                    _____________         _____________
<S>                                                 <C>                   <C>

COMPREHENSIVE INCOME(LOSS)

Net Loss                                            $  (2,503,735)        $   (690,924)

OTHER COMPREHENSIVE INCOME

Foreign Currency Translation Adjustment                       607               29,400
                                                    _____________         ____________
Total Comprehensive Income                          $  (2,503,128)        $   (661,524)
                                                    =============         ============


         SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

</TABLE>


                                      F-5

<PAGE>

<TABLE>
<CAPTION>

                                XINHUA CHINA LTD.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    FOR THE YEAR ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)

                                                                                     2009                2008
                                                                                 ____________         __________
<S>                                                                              <C>                  <C>

CASH FLOW FROM OPERATING ACTIVITIES:
       Net Loss/(Loss)                                                           $ (2,503,735)        $ (690,924)
       Adjustments to reconcile net earnings to net cash provided by
       operating activities:
            Depreciation                                                               26,585                  -
            Imputed interest expense                                                  412,577            466,703
            Amortization of deferred imputed interest from note receivable             13,768             13,768

       CHANGES IN ASSETS AND LIABILITIES:
            Decrease/(Increase) Accounts receivable                                   337,554           (226,536)
            Decrease/(Increase) Other receivables and prepayments                           -            (22,045)
            Decrease/(Increase) Accounts Payable and accrued liabilities             (381,339)           402,331
            Decrease/(Increase) in Deferred Revenue                                   (18,355)           (55,072)
                                                                                 ____________         __________
       Cash Sourced/(Used) in Operating Activities                                 (2,112,945)          (111,775)

CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchase of plant and equipment                                                 (7,956)           (59,692)
       Impairment loss on impairment of asset                                       1,625,000                  -
                                                                                 ____________         __________
       Cash Used/(Sourced) in Investing Activities                                  1,617,044           (59,692)

CASH FLOWS FROM FINANCING ACTIVITIES:
       Proceeds from convertible debenture                                              3,915                441
       Repayment of Loan Payable                                                     (157,032)          (152,200)
       Loans from shareholders                                                        547,132            329,826
       Additional Paid-in Capital                                                     109,444                  -
                                                                                 ____________         __________
       Cash Sourced/(Used) in Financing Activities                                    503,459            178,067

NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS FOR THE YEAR                         7,035              6,600

EFFECT OF CURRENCY TRANSLATION                                                           (523)            29,400

CASH & CASH EQUIVALENTS AT BEGINNING OF YEAR                                           38,733              2,733

CASH & CASH EQUIVALENTS AT END OF YEAR                                           $     45,769         $   38,733


Cash paid for interest expenses                                                  $          -         $   55,217


         SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

</TABLE>


                                      F-6

<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


1.   ORGANIZATION AND BUSINESS BACKGROUND

Xinhua  China  Ltd.  (the   "Company",   formerly   Camden  Mines  Limited)  was
incorporated in the State of Nevada,  United States of America, on September 14,
1999.  Until September  2004, the Company was a non-operating  shell company and
considered as a development stage enterprise since its inception. Effective from
October  12,  2004,  the  Company  changed  to its  current  name.  The  Company
established an office in Vancouver, Canada; however, this office was closed down
in December  2006. The Company  established  its principal  executive  office at
B26-F, Oriental Kenzo, No. 48 Dongzhimenwai Street, Dongcheng District,  Beijing
100027 People's Republic of China.

As of May 31, 2006, the Company  reduced its equity  interest in Xinhua C&D from
56.14% to 7.98%.  Subsequent to the  deconsolidation  of Xinhua C&D, the Company
commenced  the internet  book  distribution  business  through  Beijing  Joannes
Information   Technology  Co.,  Ltd.  ("Joannes").   Details  of  the  Company's
subsidiaries as of June 30, 2009 are described below:

<TABLE>
<CAPTION>

_________________________________________________________________________________________________________________
                                        PLACE OF
                                     INCORPORATION                                  PARTICULARS OF      EFFECTIVE
                                      AND KIND OF          PRINCIPAL ACTIVITIES    ISSUED/REGISTERED     INTEREST
             NAME                     LEGAL ENTITY        AND PLACE OF OPERATION     SHARE CAPITAL         HELD
_________________________________________________________________________________________________________________
<S>                            <C>                        <C>                          <C>                       <C>

Pac-Poly Investment Ltd.       British Virgin Islands, a   Investment holding,   10,000,000 ordinary       100%
                                  company with limited             PRC           shares of US$1 par
                                       liability                                 value

Beijing Joannes Information   PRC, a company with limited       Sales and        Registered capital        100%
Technology Co., Ltd.                   liability             distribution of     US$1,250,000
                                                                books, PRC
_________________________________________________________________________________________________________________

</TABLE>


2.   GOING CONCERN UNCERTAINTIES

These consolidated financial statements have been prepared assuming that Company
will continue as a going concern,  which  contemplates the realization of assets
and the  discharge  of  liabilities  in the normal  course of  business  for the
foreseeable future.

As of June 30, 2009, the Company had no working capital but current  liabilities
exceeding current assets by $1,900,404 and an accumulated deficit of $20,292,189
due to the fact that the Company continued to incur losses over the past several
years.  Management has taken certain  action and continues to implement  changes
designed to improve the Company's  financial  results and operating  cash flows.
The actions involve  certain  cost-saving  initiatives  and growing  strategies,
including (a) reductions in headcount and corporate overhead  expenses;  and (b)
development of e-commerce business.  Management believes that these actions will
enable  the  Company  to  improve  future  profitability  and  cash  flow in its
continuing  operations  through  June  30,  2010.  As a  result,  the  financial
statements do not include any adjustments to reflect the possible future effects
on  the   recoverability  and  classification  of  assets  or  the  amounts  and
classification  of liabilities that may result from the outcome of the Company's
ability to continue as a going concern.


                                      F-7


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A.   BASIS OF PRESENTATION

          These  accompanying   consolidated   financial  statements  have  been
          prepared in accordance with generally accepted  accounting  principles
          in the United States of America ("US GAAP").

     B.   USE OF ESTIMATES

          In preparing these consolidated financial statements, management makes
          estimates and assumptions  that affect the reported  amounts of assets
          and liabilities in the balance sheets and revenues and expenses during
          the year reported. Actual results may differ from these Estimates.

     C.   BASIS OF CONSOLIDATION

          The interest of the Company in the  subsidiaries was acquired by means
          of  exchange of shares in the  Company  pursuant  to a share  exchange
          agreement  on September  14, 2004.  The  transaction  is  considered a
          transfer between entities under common control,  within the meaning of
          US GAAP. Accordingly, the assets and liabilities transferred have been
          accounted for at historical  cost or at their "fair value" at the date
          of their original  acquisition and have been included in the foregoing
          financial statements as of the beginning of the periods presented.

          The consolidated financial statements include the financial statements
          of the Company and its  subsidiaries.  Subsidiaries are those entities
          in which the Company,  directly or indirectly,  controls more than one
          half of the voting  power;  has the power to govern the  financial and
          operating  policies;  to appoint or remove the majority of the members
          of the board of directors; or to cast majority of votes at the meeting
          of directors. All significant  inter-company balances and transactions
          within the Company have been eliminated on consolidation.

     D.   CASH AND CASH EQUIVALENTS

          Cash and cash  equivalents  are carried at cost and represent  cash on
          hand,   demand   deposits   placed  with  banks  or  other   financial
          institutions  and all  highly  liquid  investments  with  an  original
          maturity  of  three  months  or less as of the  purchase  date of such
          investments.

     E.   ACCOUNTS RECEIVABLE, NET

          Accounts  receivable  are recorded at the  invoiced  amount and do not
          bear interest.  The Company extends  unsecured credit to its customers
          in the ordinary course of business, but mitigates the associated risks
          by performing  credit checks and actively  pursuing past due accounts.
          An allowance for doubtful accounts is established and determined based
          on   managements'   assessment   of  known   requirements,   aging  of
          receivables,   payment   history,   the   customer's   current  credit
          worthiness, and the economic environment.


                                      F-8


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


     F.   PROPERTY, PLANT, AND EQUIPMENT, NET

          Property,  plant,  and equipment  are stated at cost less  accumulated
          depreciation and accumulated  impairment losses, if any.  Depreciation
          is calculated on the straight-line  basis over the following  expected
          useful lives from the date on which they become fully operational.

               ASSET CLASSIFICATION              DEPRECIABLE LIFE

               Land Use right                          50 years

               Buildings                               50 years

               Motor vehicles                      8 - 10 years

               Equipment and machinery              5 - 8 years

               Leasehold improvement                    2 years

          Expenditure for  maintenance and repairs is expensed as incurred.  The
          gain or loss on the disposal of property,  plant, and equipment is the
          difference  between the net sales proceeds and the carrying  amount of
          the relevant assets and is recognized in the consolidated statement of
          operations.

     G.   IMPAIRMENT OF LONG-LIFE ASSETS

          In accordance  with SFAS No. 121,  "ACCOUNTING  FOR THE  IMPAIRMENT OF
          LONG-LIVED  ASSETS AND FOR  LONG-LIVED  ASSETS TO BE  DISPOSED  OF', a
          long-lived assets and certain identifiable  intangible assets held and
          used by the Company are reviewed  for  impairment  whenever  events or
          changes in circumstances indicate that the carrying amount of an asset
          may  not  be   recoverable.   For  the  purposes  of  evaluating   the
          recoverability  of  long-lived  assets,  the  recoverability  test  is
          performed using  undiscounted net cash flows related to the long-lived
          assets.  The Company reviews  long-lived  assets, if any, to determine
          whether the carrying values are not impaired.

     H.   REVENUE RECOGNITION

          Sales revenue is recognized when persuasive evidence of an arrangement
          exists, the price is fixed and final,  delivery has occurred and there
          is  reasonable  assurance of  collection  of the sales  proceeds.  The
          Company generally obtains purchase  authorizations  from its customers
          for a specified  amount of products at a specified price and considers
          delivery to have  occurred when the customer  takes  possession of the
          products.  Net  sales  incorporate  offsets  for  discounts  and sales
          returns.  Revenue is recognized  upon delivery,  risk and ownership of
          the title is  transferred  and a reserve for sales returns is recorded


                                      F-9


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


          even  though   invoicing  may  not  be  completed.   The  Company  has
          demonstrated the ability to make reasonable and reliable  estimates of
          products returns in accordance with SFAS No. 48, "REVENUE  RECOGNITION
          WHEN RIGHT OF RETURN  EXISTS".

          Shipping and handling  fees billed to customers are included in sales.
          Costs  related to shipping and handling are part of selling,  general,
          and  administrative   expenses  in  the  consolidated   statements  of
          operations. EITF No. 00-10, "ACCOUNTING FOR SHIPPING AND HANDLING FEES
          AND COSTS"  allows  for the  presentation  of  shipping  and  handling
          expenses  in line items  other than cost of sales.  For the year ended
          June 30, 2008,  there were no shipping and handling  costs included in
          selling,  general  and  administrative  expenses  in the  accompanying
          consolidated statements of operations.

     I.   COST OF SALES

          Cost of sales includes depreciation of property,  plant, and equipment
          and purchase costs to publishers.

     J.   VALUE-ADDED TAX

          The Company is subject to value  added tax ("VAT")  imposed by the PRC
          on sales.  The output VAT is charged to customers  who purchase  books
          from the Company and the input VAT is paid when the Company  purchases
          books  from  publishers.  The VAT rate is 13%.  The  input  VAT can be
          offset against the output VAT.

     K.   ADVERTISING EXPENSES

          The Company expenses  advertising costs as incurred in accordance with
          the  American  Institute  of Certified  Public  Accountants  ("AICPA")
          Statement of Position 93-7, "REPORTING FOR ADVERTISING COSTS". For the
          period ended June 30, 2009, advertising expenses amount to zero.

     L.   COMPREHENSIVE INCOME

          SFAS No. 130, "REPORTING COMPREHENSIVE INCOME",  establishes standards
          for reporting and display of comprehensive income, its components, and
          accumulated  balances.  Comprehensive  income as defined  includes all
          changes in equity during a period from non-owner sources.  Accumulated
          comprehensive  income,  as presented in the accompanying  statement of
          changes in owners' equity consists of changes in unrealized  gains and
          losses on foreign currency  translation.  This comprehensive income is
          not included in the computation of income tax expense or benefit.

     M.   INCOME TAXES

          The Company uses the accrual  method of  accounting  to determine  and
          report its  taxable  reduction  of income  taxes for the year in which
          they are available. The Company has implemented Statement of Financial


                                      F-10


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


          Accounting  Standards  (SFAS) No. 109,  Accounting  for Income  Taxes.
          Income tax  liabilities  computed  according to the United  States and
          People's  Republic  of China (PRC) tax laws are  provided  for the tax
          effects of  transactions  reported  in the  financial  statements  and
          consists of taxes currently due plus deferred taxes related  primarily
          to differences between the basis of fixed assets and intangible assets
          for  financial  and  tax  reporting.   The  deferred  tax  assets  and
          liabilities  represent  the future tax  return  consequences  of those
          differences,  which  will be either  taxable  or  deductible  when the
          assets and liabilities  are recovered or settled.  Deferred taxes also
          are  recognized  for  operating  losses that are  available  to offset
          future  income  taxes.  A valuation  allowance  is created to evaluate
          deferred  tax assets if it is more  likely  than not that these  items
          will  either  expire  before the  Company is able to realize  that tax
          benefit, or that future realization is uncertain.

          In respect of the  Company's  subsidiaries  domiciled  and operated in
          China:

               o    Beijing Joannes Information  Technology Co., Ltd. is located
                    in the PRC and  Pac-Poly  Investment  Ltd. is located in the
                    British Virgin Islands; all of these entities are subject to
                    the relevant tax laws and regulations of the PRC and British
                    Virgin  Islands in which the related entity  domiciled.  The
                    maximum  tax  rates  of  the  subsidiaries  pursuant  to the
                    countries in which they domicile are: -

<TABLE>
<CAPTION>
                    SUBSIDIARY                      COUNTRY OF DOMICILE     INCOME TAX RATE
<S>                 <C>                             <C>                         <C>

                    Beijing Joannes Information
                    Technology Co., Ltd.            PRC                         25.00%

                    Pac-Poly Investment Ltd.        British Virgin               0.00%
                                                    Islands
</TABLE>

               o    Effective January 1, 2008, PRC government  implemented a new
                    25% tax rate across the board for all enterprises regardless
                    of whether  domestic or foreign  enterprise  without any tax
                    holiday which is defined as "two-year  exemption followed by
                    three-year half exemption"  hitherto  enjoyed by tax payers.
                    As a result of the new tax law of a  standard  25% tax rate,
                    tax holidays  terminated  as of December 31, 2007.  However,
                    PRC government has established a set of transition  rules to
                    allow  enterprises   already  started  tax  holidays  before
                    January 1, 2008, to continue enjoying the tax holidays until
                    being fully utilized.

               o    The  Company is subject to United  States Tax  according  to
                    Internal Revenue Code Sections 951 and 957. Corporate income
                    tax is imposed on progressive rates in the range of: -


                                      F-11


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


                                    TAXABLE INCOME

     RATE        OVER        BUT NOT OVER          OF AMOUNT OVER

      15%              0          50,000                      0
      25%         50,000          75,000                 50,000
      34%         75,000         100,000                 75,000
      39%        100,000         335,000                100,000
      34%        335,000      10,000,000                335,000
      35%     10,000,000      15,000,000             10,000,000
      38%     15,000,000      18,333,333             15,000,000
      35%     18,333,333               -                      -

          Based on the consolidated net income for the year ended June 30, 2009,
          the Company shall not be subject to income tax.

     N.   LOSS PER SHARE

          The Company calculates loss per share in accordance with SFAS No. 128,
          "EARNINGS PER SHARE". Basic loss per share is computed by dividing the
          net loss by the weighted-average  number of common shares outstanding.
          Diluted  loss per share is  computed  similar to basic loss per share,
          except  that the  denominator  is  increased  to include the number of
          additional  common  shares  that  would have been  outstanding  if the
          potential  common  stock  equivalents  had  been  issued  and  if  the
          additional  common  shares were  dilutive.  The effect of  outstanding
          stock options,  stock  purchase  warrants and  convertible  debenture,
          which could result in the issuance of  490,311,400  of common stock at
          June 30, 2009 is  anti-dilutive.  As a result,  diluted loss per share
          data does not  include  the  assumed  exercise  of  outstanding  stock
          options,   stock  purchase  warrants,  or  conversion  of  convertible
          debenture and has been presented jointly with basic loss per share.

     O.   FOREIGN CURRENCIES TRANSLATION

          The  functional  and  reporting  currency of the Company is the United
          States  dollars  ("U.S.  dollars").   The  accompanying   consolidated
          financial   statements  have  been  expressed  in  U.S.  dollars.

          The functional  currency of the Company's foreign  subsidiaries is the
          Renminbi  Yuan ("RMB").  The balance  sheet is translated  into United
          States  dollars  based on the rates of exchange  ruling at the balance
          sheet date. The statement of operations is translated using a weighted
          average rate for the year.  Translation  adjustments  are reflected as
          cumulative translation adjustments in stockholders' equity.

          EXCHANGE RATES                             6/30/2009     6/30/2008

          Year end RMB : US$ exchange rate             6.8319       6.8718

          Average yearly RMB : US$ exchange rate       6.8355       7.0726


                                      F-12


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


     P.   FAIR VALUE OF FINANCIAL INSTRUMENTS

          The  carrying  value of the  Company's  financial  instruments,  which
          include cash and cash equivalents, accounts receivables, other payable
          and  accrued  liabilities,  approximate  their fair  values due to the
          short-term maturity of these instruments.

     Q.   RELATED PARTIES

          For the purposes of these financial statements, parties are considered
          to be related if one party has the ability, directly or indirectly, to
          control the party or exercise significant  influence over the party in
          making financial and operating decisions,  or vice versa, or where the
          Company  and the  party  are  subject  to  common  control  or  common
          significant  influence.  Related  parties may be  individuals or other
          entities.  All material related part  transactions have been disclosed
          in Note 16 - Related Party Transactions.

     R.   EQUITY-BASED COMPENSATION

          The  Company  adopts  SFAS  No.  123,   "ACCOUNTING   FOR  STOCK-BASED
          COMPENSATION"  using  the fair  value  method.

          The Company uses the  Black-Scholes  Option  Pricing Model to estimate
          the fair value of options.

          The  Company  has  issued  stock  options  to   directors,   officers,
          employees, and consultants.  As such, the Company records compensation
          expense for stock  options and awards  only if the  exercise  price is
          less than the fair market value of the stock on the measurement  date.

          The weighted  average fair value of options  granted  during the years
          ended  June 30,  2007,  and 2006,  was  $0.32,  and  $1.02 per  share,
          respectively. Weighted below:

                                                        2007       2006

          Risk free interest rate (%)                   4.07%      5.01%
          Dividend yield (%)                            0.00%      0.00%
          Expected life of option grants (years)         2.38       5.00
          Expected volatility of option grants (%)     1,181%     80.00%

          No options were granted during the year ended June 30, 2009.

          Detailed  movement of stock-based  compensation  has been disclosed in
          the Note 11-Stock Option Plan.


                                      F-13


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


     S.   CONVERTIBLE DEBENTURE ISSUED WITH STOCK PURCHASE WARRANTS

          The Company  accounts  for the  issuance of and  modifications  to the
          convertible  debt issued with stock  purchase  warrants in  accordance
          with APB No. 14,  ACCOUNTING FOR CONVERTIBLE DEBT AND DEBT ISSUED WITH
          STOCK PURCHASE  WARRANTS , EITF No. 98-5,  ACCOUNTING FOR  CONVERTIBLE
          SECURITIES  WITH  BENEFICIAL   CONVERSION   FEATURES  OR  CONTINGENTLY
          ADJUSTABLE CONVERSION RATIOS, and EITF No. 00-27, APPLICATION OF ISSUE
          NO.  98-5  TO  CERTAIN  CONVERTIBLE   INSTRUMENTS  and  SFAS  No.  15,
          ACCOUNTING BY DEBTORS AND CREDITORS FOR TROUBLED DEBT  RESTRUCTURINGS.

          Due to the indeterminate number of shares, which might be issued under
          the  embedded  convertible  host  debt  conversion  feature  of  these
          debentures,  the Company is required to record a liability relating to
          both the detachable  warrants and embedded  convertible feature of the
          notes  payable   (included  in  the   liabilities   as  a  "derivative
          liability").

          The accompanying consolidated financial statements comply with current
          requirements   relating  to  warrants  and  embedded   derivatives  as
          described in SFAS 133 as follows:

          o    The Company  treats the full fair market value of the  derivative
               and warrant liability on the convertible  secured debentures as a
               discount on the  debentures  (limited to their face  value).  The
               excess,  if any, is  recorded  as an  increase in the  derivative
               liability and warrant liability with a corresponding  increase in
               loss on adjustment  of the  derivative  and warrant  liability to
               fair value.

          o    Subsequent to the initial recording, the change in the fair value
               of the detachable  warrants,  determined under the  Black-Scholes
               option  pricing  formula  and the change in the fair value of the
               embedded derivative  (utilizing the Black-Scholes  option pricing
               formula) in the conversion feature of the convertible  debentures
               are recorded as  adjustments  to the  liabilities as of September
               30, 2006.

          o    The  expense  relating  to the  change  in the fair  value of the
               Company's  stock reflected in the change in the fair value of the
               warrants and  derivatives is included in interest  expense in the
               accompanying consolidated statements of operations.

     T.   RECENTLY ISSUED ACCOUNTING STANDARD

          In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally
          Accepted Accounting  Principles" ("SFAS 162"). SFAS 162 identifies the
          sources of accounting  principles  and the framework for selecting the
          principles  used  in  the  preparation  of  financial   statements  of
          nongovernmental   entities  that  are  presented  in  conformity  with
          generally  accepted   accounting   principles  (the  GAAP  hierarchy).
          Statement  162 will  become  effective  60 days  following  the  SEC's
          approval of the Public Company  Accounting  Oversight Board amendments
          to AU Section 411, "The Meaning of Present  Fairly in Conformity  With
          Generally Accepted Accounting Principles."

          In May 2008, the FASB issued FSP Accounting  Principles  Board ("APB")
          14-1  "Accounting for Convertible Debt Instruments That May Be Settled
          in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB
          14-1").  FSP APB 14-1 requires the issuer of certain  convertible debt
          instruments  that  may  be  settled  in  cash  (or  other  assets)  on
          conversion to separately  account for the liability  (debt) and equity


                                      F-14


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


          (conversion  option)  components  of the  instrument  in a manner that
          reflects the issuer's  non-convertible  debt  borrowing  rate. FSP APB
          14-1 is effective for fiscal years  beginning  after December 15, 2008
          on a retroactive basis.

          In  September   2008,   FASB  issued  FSP  No.  133-1  and  FIN  45-4,
          "Disclosures  about Credit  Derivatives  and Certain  Guarantees",  an
          amendment of FASB  Statement No. 133 and FASB  Interpretation  No. 45;
          and  Clarification  of the Effective  Date of FASB  Statement No. 161.
          This FSP is intended to improve  disclosures about credit  derivatives
          by requiring more information  about the potential  adverse effects of
          changes  in  credit  risk  on  the   financial   position,   financial
          performance,  and cash flows of the sellers of credit derivatives. The
          provisions  of  the  FSP  that  amend  Statement  133  and  FIN 45 are
          effective  for  reporting  periods  (annual or interim)  ending  after
          November 15, 2008.

          This FSP amends FASB  Statement  No. 133,  ACCOUNTING  FOR  DERIVATIVE
          INSTRUMENTS AND HEDGING ACTIVITIES,  to require disclosures by sellers
          of credit derivatives, including credit derivatives embedded in hybrid
          instruments.  This FSP also amends FASB  Interpretation  (FIN) No. 45,
          GUARANTOR'S  ACCOUNTING AND DISCLOSURE  REQUIREMENTS  FOR  GUARANTEES,
          INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS TO OTHERS, to require an
          additional    disclosure    about   the   current    status   of   the
          payment/performance  risk of a guarantee.  The  provisions  of the FSP
          that  amend  Statement  133 and  FIN 45 are  effective  for  reporting
          periods (annual or interim) ending after November 15, 2008.

          Finally,  this FSP clarifies the effective  date in FASB Statement No.
          161, DISCLOSURES ABOUT DERIVATIVE  INSTRUMENTS AND HEDGING ACTIVITIES.
          The  disclosures  required by Statement 161 should be provided for any
          reporting  period  (annual  or  quarterly   interim)  beginning  after
          November  15,  2008.  For  example,  an entity  with a March 31 fiscal
          year-end should provide the disclosures for its fourth quarter interim
          period ending March 31, 2009, in its 2009 annual financial statements.
          This clarification of the effective date of Statement 161 is effective
          upon issuance of the FSP.

          The  Company  does not  consider  the  adoption  of the  above  recent
          accounting   pronouncements   having  any   material   impact  on  its
          consolidated results of operations and financial condition.


4.   OTHER RECEIVABLES AND PREPAYMENT

                       2009          2008
                     _________     _________

     Prepayments     $ 224,535     $ 223,231

     The carrying amounts of prepayments approximate their fair value.


                                      F-15


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


5.   PROPERTY, PLANT, AND EQUIPMENT, NET

     Property, plant, and equipment as of June 30, 2009 and 2008 consists of the
     following:

                                          2009          2008
                                        _________     _________

     Equipment and machinery            $  53,418     $  53,108
     Motor vehicles                        47,007        39,458
     Leasehold Improvement                 16,306        16,211
                                        _________     _________
                                          116,731       108,777
     LESS: Accumulated Depreciation       (61,576)      (34,991)
                                        _________     _________
                                        $  55,156     $  73,786
                                        =========     =========

         Depreciation expense for 2009 and 2008 was $26,585 and $10,157.

6.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

     Accounts  payable  and  accrued  liabilities  as of June 30,  2009 and 2008
     consists of the following:

                                              2009         2008
                                         __________     ___________

     Accounts payable                    $  754,025     $ 1,095,538

7.   LOANS PAYABLE/CONVERTIBLE DEBENTURE

     On November 23, 2005, the Company  entered into a debt financing  agreement
     (the  "Agreement") with an institutional  investor,  and on March 23, 2006,
     the Agreement was modified to include an additional institutional investor,
     who  is  an  affiliate  of  the  original   institutional   investor  (both
     institutional  investors collectively referred to as "the Investors").  The
     Investors  committed to purchase up to $4,000,000 of a secured  convertible
     debenture ("the  debenture")  that shall be convertible  into shares of the
     Company's common stock.

     After two  closings on December  13, 2005 and March 23,  2006,  the Company
     received gross  proceeds of $3,250,000  (net proceeds  $2,989,460)  for the
     secured convertible  debenture.  The Company and debenture-holders  entered
     into a Forbearance and Settlement Agreement on December 29, 2006 because of
     default in debt  service,  whereby the Company  agreed to make cash payment
     and to grant  rights to the  creditors to cashless  purchase the  Company's
     common  stock by  exercising  the warrant at 200,000  shares in every three
     month  period  beginning on December  29, 2006  according to the  following
     payment plan:


                                      F-16


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


                                             CONVERSION OF
     PAYMENT DATE           CASH PAYMENT       DEBENTURE
     ____________           ____________     _____________

     March 10, 2007         $    250,000         250,000

     September 30, 2007          375,000         375,000

     October 31, 2007            375,000         375,000

     January 31, 2008            250,000         250,000

     July 31, 2008               625,000         625,000
                            ____________       _________

                            $  1,875,000       1,875,000
                            ============       =========

     The  Company  paid  $250,000  for the  payment  due March 10,  2007 and the
     debenture  holders  exercised 100,000 shares and 125,000 shares on March 1,
     2007 and April 18, 2007, respectively. During the years ended June 30, 2009
     and 2008, the debenture holders converted 266,655,668 and 44,016,843 shares
     against  outstanding  loan at a total  conversion  price  of  $144,532  and
     $152,200,  respectively.

     Loans Payable outstanding as of June 30, 2009 amount to $2,549,172 of which
     $1,490,911 and $1,058,261 were attributed to current portion and long-term,
     respectively.

     Loans Payable outstanding as of June 30, 2008 amount to $2,693,704 of which
     $1,635,443 and $1,058,261 were attributed to current portion and long-term,
     respectively.

8.   LOANS FROM SHAREHOLDERS

     The total  outstanding  amount of $5,945,061  represents cash advanced from
     shareholders of the Company.

     These  shareholders'  loans are unsecured and not repayable within the next
     twelve  months.  For the year  ended  June 30,  2009 and  2008,  there  was
     $342,847  and  $328,711  imputed  interest,  at 6.00% per annum,  recorded.
     During the year ended June 30, 2009, the shareholders converted 125,000,000
     shares against  outstanding  shareholders' loan at a total conversion price
     of $12,500.

9.   COMMON STOCK AND WARRANTS

     A.   COMMON STOCK

          During 2005,  the  authorized  capital stock of the Company  increased
          from $1,000  consisting of  100,000,000  shares of common stock of par
          value  $0.00001  each to $5,000  consisting of  500,000,000  shares of
          common stock of par value $0.00001 each.


                                      F-17


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


     B.   WARRANTS

          (1)  The Company  completed a private  placement  in 2005 with certain
               individuals  for  622,690  units at $3.25 per unit for total cash
               proceeds of $2,023,800. Each unit consists of one share of common
               stock  and  one-half  of  one  non-transferable   share  purchase
               warrant. The warrant will expire on the earlier of:

               (i)  two years from the date of issuance; and

               (ii) fifteen  business  days from date that the Company  provides
                    notice  in  writing  to the  subscriber  that the  Company's
                    common  shares have been  trading or traded at a price of $7
                    or more for a period of ten days.

               The  warrant  shares  shall have an  exercise  price of $4.50 per
               warrant share for the first twelve months, and if still available
               after twelve  months,  the warrant  shares shall have an exercise
               price of $4.60 per warrant share starting on the first day of the
               second  twelve month period and  increasing by $0.10 on the first
               day of each subsequent  month  thereafter until expiration of the
               warrants.

          (2)  SHARE PURCHASE WARRANT ISSUED FROM CONVERTIBLE DEBENTURE

               On December  13,  2005,  the Company  issued to the holder of the
               convertible  debenture  1,035,000  warrants.  One share  purchase
               warrants is  exercisable  for one common  share at  $0.00001  per
               share,  until  expiration  on November 22,  2010.  As of June 30,
               2009,  835,000 warrants issued to convertible  debenture  holders
               were  outstanding  which will lead to the  issuance of a total of
               313,331,642  additional shares of common stock if fully exercised
               at June 30, 2009.

          (3)  SHARE WARRANT ISSUED FOR SERVICE

               On May 1, 2006, the Company issued 100,000  warrants at $1.47 per
               share to Mr.  Peter  Shandro,  the VP  Business  Strategy  of the
               Company,  in  association  with the planning and execution of the
               on-line ecommerce initiative of the Company. Compensation expense
               of $94,775 was recorded with the issuance of these warrants.

10.  STOCK OPTION PLAN

     The board of directors  approved a Stock Option Plan (the "Plan") effective
     on September 4, 2004 pursuant to which directors,  officers,  employees and
     consultants  of the Company are  eligible to receive  grants of options for
     the  Company's  common  stock.  The plan has a life of ten (10)  years  and
     expires on September 4, 2014. A maximum of  20,000,000  common  shares have
     been  reserved  under the plan.  Each stock  option  entitles its holder to
     purchase one common share of the Company. Options may be granted for a term
     not exceeding ten years from the date of grant. The plan is administered by
     the board of directors.

     Under  the Plan,  the  Board of  Directors  authorized  to grant  4,255,000
     options to the  employees  and  consultants  of the  Company,  respectively
     basically  on  September  23, 2004 and  October 27, 2004 with an  estimated


                                      F-18


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


     value of $1.00 per share, using the Black-Scholes Option Pricing Model with
     the  weighted  average  assumptions.  However,  the whole of the  4,255,000
     options have been expired as of June 30, 2007.

11.  CHINA CONTRIBUTION PLAN

     Full-time  employees of the Company are entitled to staff welfare  benefits
     including  medical  care,  welfare  subsidies,  unemployment  insurance and
     pension benefits through a China government-mandated multi-employer defined
     contribution  plan.  The Company is  required to accrue for these  benefits
     based  on  certain  percentages  of  the  employees'  salaries.  The  total
     contributions  made for such employee benefits were $53,457 and $23,854 for
     the years ended 2009 and 2008, respectively.

12.  STATUTORY RESERVES

     The  Company  is  required  to  make   appropriations  to  reserves  funds,
     comprising the statutory surplus reserve, statutory public welfare fund and
     discretionary surplus reserve,  based on after-tax net income determined in
     accordance with generally  accepted  accounting  principles of the People's
     Republic of China (the "PRC GAAP").  Appropriation to the statutory surplus
     reserve  should be at least 10% of the after-tax  net income  determined in
     accordance  with  the PRC GAAP  until  the  reserve  is equal to 50% of the
     Company's registered capital. Appropriation to the statutory public welfare
     fund is 10% of the after-tax net income  determined in accordance  with the
     PRC GAAP.  Appropriations to the discretionary  surplus reserve are made at
     the discretion of the Board of Directors. The statutory public welfare fund
     is  established  for providing  employee  facilities  and other  collective
     benefits  to  the  employees  and  is   non-distributable   other  than  in
     liquidation.  The Company made no appropriations to the statutory  reserve,
     as it did not have a pre-tax profit.

13.  SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

                                       2009          2008
                                     _________     _________

     Legal and professional fees     $ 106,275     $ 108,111
     Management Fee                    150,000             -
     Office expenses                    73,481        14,162
     Salaries and benefits             169,698        99,117
     Vehicle expense                     6,779        13,595
     Other expenses                    174,303       139,782
                                     _________     _________
                                     $ 680,536     $ 374,767
                                     =========     =========


                                      F-19


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


14.  GAIN ON DEBT RESTRUCTURING

     On December 29, 2006, the Company completed a debt  restructuring  with its
     Investors,  namely Cornell Capital Partners,  L.P. ("Cornell") and Highgate
     House  Funds,  Ltd.  ("Highgate")  under  the  Forbearance  and  Settlement
     Agreement (the  "Forbearance  and Settlement  Agreement").  Pursuant to the
     Forbearance  and Settlement  Agreement,  the Company agreed to make certain
     payments  to  the  Investors,  with  respect  to  the  Securities  Purchase
     Agreement (the "Securities  Purchase  Agreement")  entered into between the
     Company and the  Investors on November  23,  2005,  as amended on March 23,
     2006,  on the  convertible  debentures  in the  amounts of  $1,250,000  (to
     Highgate  on November  23,  2005) and  $2,000,000  (to Cornell on March 23,
     2006)  (the  "Convertible  Debentures")  in  accordance  with the terms and
     conditions set forth in the Forbearance and Settlement Agreement.

     In accordance with the Forbearance  and Settlement  Agreement,  the Company
     agrees  to use the  proceeds  from the  disposal  of  Boheng  to repay  the
     principal  and  interest  due  to  the  Investors   under  the  Convertible
     Debentures in exchange for the Investors agreeing to:

          (i)  Waive on a one-time  basis only any  accrued  liquidated  damages
               owing to the Investors;

          (ii) Not apply the redemption premium on the scheduled repayments;

          (iii) Converting the  Convertible  Debentures in an amount equal to at
               least the  amount of a  scheduled  repayment  subject  to certain
               conditions;

          (iv) No additional  liquidated damages accruing during the term of the
               Forbearance and Settlement Agreement;

          (v)  Permitting  the Company to withdraw  the  Registration  Statement
               filed on March  28,  2006  with  the SEC in  connection  with the
               Convertible Debentures;

          (vi) During  the term of the  Forbearance  and  Settlement  Agreement,
               waiving  the  requirement  for the  Company  to  receive  written
               consent of each Buyer for any  organizational  change (as defined
               in  the  Securities   Purchase   Agreement)  to  be  directly  or
               indirectly  consummated by the Company, and that the company will
               not  effectuate any stock splits for at least nine months without
               the consent of the Investors; and

          (vii) Terminate  the  provisions  for security  shares as set forth in
               Section 9 of the Securities  Purchase  Agreement and in Section 2
               of the Transfer Agent  Instructions upon receipt by the Investors
               of the first scheduled repayment amount.

     As  a  result  of  the  debt  restructuring   arrangement,   the  Company's
     liabilities on warrants,  conversions,  discounts were discharged resulting
     to a net gain of $1,500,132 attributable as follows:

          o    Liabilities on Conversion discharged $ 2,334,198

          o    Liabilities on Warrants discharged       891,537

          o    Loans discharged                         225,000

          o    Unamortized discounts                 (1,950,603)
                                                    ___________

                                                    $ 1,500,132
                                                    ===========


                                      F-20


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


15.  INTEREST EXPENSE

                                                     2009          2008
                                                   _________     _________

     Interest expense from the amortization of
     deferred financing cost and discount on
     convertible debenture                         $  39,826     $  49,628

     Imputed interest charged                        372,751       314,865

     Interest on loans from related parties           13,768        19,435
                                                   _________     _________

                                                   $ 451,247     $ 383,928
                                                   =========     =========

16.  INCOME TAX

     The Company is subject to U.S.  corporate taxes at a rate of 35%.  Pac-Poly
     is a BVI company and is not  subject to income  taxes.  Pursuant to the PRC
     Income Tax Laws, the PRC subsidiaries  are generally  subject to enterprise
     income tax ("EIT") at a statutory rate of 33% (30% national income tax plus
     3% local income tax).  Effective January 1, 2008, PRC government  adopted a
     new uniform tax rate of 25% applicable to domestic and foreign enterprise.

     Neither the Company nor its subsidiaries had any assessable  income for the
     period and so neither  provision  nor benefit for EIT was  recorded for the
     year ended June 30, 2008.

     Subject to the approval of the relevant  tax  authorities,  the Company had
     tax losses carry-forward against future years' taxable income.

     As of June 30,  2009 and  2008,  valuation  allowances  of  $2,503,735  and
     $690,924  were  provided to the deferred tax assets due to the  uncertainty
     surrounding their realization.

17.  CONCENTRATION OF RISK

     (A). MAJOR CUSTOMERS AND VENDORS

          100% of the Company's  revenues were derived from customers located in
          the PRC, and there are no customers and vendors who account for 10% or
          more of revenues and purchases.  The Company's  assets are all located
          in the PRC.

     (B). CREDIT RISK

          There are no concentrations of credit risk because the Company,  while
          in  operation,  entered  into large  number of cash sale  transactions
          without deploying financial  instruments,  which may potentially drive
          to significant concentrations.


                                      F-21


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


18.  IMPAIRMENT LOSS ON BOHENG INVESTMENT

     As a  result  of the  termination  of the  acquisition  of  Beijing  Boheng
     Investments and Management Co., Ltd. by Purchaser,  the Company repossessed
     Boheng as its 95%  interest  subsidiary  on August  25,  2008 at a value of
     $1,625,000  equal to the unpaid purchase price due by the Purchaser.  After
     the  repossession  of Boheng,  the Company  conducted an  evaluation of its
     carrying  value  and  determined  that  an  impairment  loss in  amount  of
     $1,625,000 was incurred although Boheng still owns 7.98% equity interest in
     Xinhua C&D. This impairment  loss was  accordingly  reflected in the income
     statement for the quarter ended December 31, 2008.

19.  COMMITMENT AND CONTINGENCIES

     The Company leases an office premise under a non-cancelable operating lease
     for a term of three years from January 1, 2009 to December  31,  2011.  The
     cost incurred under this operating  lease is recorded as rental expense and
     totaled  $65,944 for the year ended June 30, 2009.  Future  minimum  rental
     payments due according to the operating lease until termination at December
     31, 2011 are:

          Within one year                     $  70,280

          Within year two until termination     105,418
                                              _________

                                              $ 175,698
                                              =========

20.  NET LOSS PER SHARE

     Basic net loss per share is computed  using the weighted  average number of
     the ordinary shares outstanding during the year. Diluted net loss per share
     is  computed  using the  weighted  average  number of  ordinary  shares and
     ordinary share equivalents outstanding during the year.

     The  following  table sets forth the  computation  of basic and diluted net
     loss per share for the year indicated:

                                                        2009             2008
                                                    ____________     ___________

Basic and diluted net loss per share calculation:

(a). Numerator:
  Net loss used in computing basic net loss
  per share                                            2,503,735         690,924

(b). Denominator:
  Weighted average ordinary shares outstanding       375,084,602      65,400,512


Basic and diluted net loss per share                $      0.016     $     0.011


                                      F-22


<PAGE>


                                XINHUA CHINA LTD.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2009 AND 2008
                             (STATED IN US DOLLARS)


     For the year  ended  June 30,  2009 in which  the  Company  had a net loss,
     inclusion  of  warrants  outstanding  would  have  been  anti-dilutive  and
     therefore not included in the computation of diluted losses per share.

21.  COMPARATIVE AMOUNTS

     Certain amounts included in prior years' consolidated balance sheet and the
     consolidated statements of operations and cash flows have been reclassified
     to conform to the current year's presentation.  These reclassifications had
     no effect on reported total assets,  liabilities,  stockholders' equity, or
     net income.




















                                      F-23


<PAGE>


ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

Effective on July 25, 2007,  our Board of Directors  appointed  Samuel H. Wong &
Co.,  LLP  ("Wong  &  Co.")  as  our  principal  independent  registered  public
accounting firm.

The report of Wong & Co. on our financial statements for fiscal years ended June
30, 2009 and June 30, 2008 did not contain an adverse  opinion or  disclaimer of
opinion,  nor was it  modified  as to  uncertainty,  audit  scope or  accounting
principles,  other  than to  state  that  there is  substantial  doubt as to our
ability to continue as a going  concern.  During our fiscal years ended June 30,
2009 and June 30, 2008, there were no  disagreements  between us and Wong & Co.,
whether or not resolved,  on any matter of  accounting  principles or practices,
financial statement  disclosure,  or auditing scope or procedure,  which, if not
resolved to the satisfaction of Wong & Co., would have caused Wong & Co. to make
reference  thereto  in  their  reports  on our  audited  consolidated  financial
statements.

In connection  with our  appointment  of Wong & Co. as our principal  registered
accounting firm, we have not consulted with Wong & Co. on any matter relating to
the  application  of  accounting  principles to a specific  transaction,  either
completed or  contemplated,  or the type of audit opinion that might be rendered
on our financial statements.

The address and telephone number of our principal registered accounting firm is:
Samuel H. Wong & Co.,  LLP, 400 Oyster  Point  Boulevard,  Suite 122,  South San
Francisco, California 94080, telephone 415.732.1288, fax 415. 397.9028 and email
SWONGCPA@AOL.COM

ITEM 9A. CONTROLS AND PROCEDURES

FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain  disclosure controls and procedures that are designed to ensure that
information  required to be disclosed in our reports filed under the  Securities
Exchange  Act of 1934 , as  amended,  is  recorded,  processed,  summarized  and
reported  within the time  periods  specified  in the  Securities  and  Exchange
Commission's  rules and forms,  and that such  information  is  accumulated  and
communicated  to our  management,  including our  president  (also our principal
executive  officer) and our  secretary,  treasurer and chief  financial  officer
(also our  principal  financial  and  accounting  officer)  to allow for  timely
decisions regarding required disclosure.


                                      -36-


<PAGE>


As of June 30, 2009,  the end of our fiscal year covered by this Annual  Report,
we carried out an evaluation,  under the supervision and with the  participation
of our president (also our principal executive officer), and our chief financial
officer  (also  our  principal   financial  and   accounting   officer)  of  the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures.  Based on the foregoing,  our president and chief financial  officer
concluded  that our  disclosure  controls and  procedures  were not effective in
providing  reasonable assurance in the reliability of our corporate reporting as
of  the  end of  the  period  covered  by  this  annual  report  due to  certain
deficiencies  that existed in the design or  operation of our internal  controls
over  financial  reporting as disclosed  below and that may be  considered to be
material weaknesses.

EVALUATION OF INTERNAL CONTROLS AND PROCEDURES OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal
control over financial  reporting,  as required by Sarbanes-Oxley  (SOX) Section
404 A. Our internal control over financial reporting is a process designed under
the  supervision  of our Chief  Executive  Officer/Chief  Financial  Officer  to
provide reasonable  assurance  regarding the reliability of financial  reporting
and the  preparation  of our  financial  statements  for  external  purposes  in
accordance with U.S. generally accepted accounting principles.

As of June 30,  2009,  management  assessed  the  effectiveness  of our internal
control over financial  reporting  based on the criteria for effective  internal
control over financial  reporting  established  in Internal  Control--Integrated
Framework  issued by the Committee of Sponsoring  Organizations  of the Treadway
Commission  ("COSO") and SEC guidance on conducting such  assessments.  Based on
that  evaluation,  we concluded that,  during the period covered by this report,
such internal  controls and  procedures  were somewhat  effective but not by all
criteria  utilized.  Therefore  conclusions  were  that  internal  control  over
financial reporting was not effective to detect the inappropriate application of
US GAAP rules as more fully described below.  This was due to deficiencies  that
existed  in the design or  operation  of our  internal  control  over  financial
reporting  that  adversely  affected  our  internal  controls  and  that  may be
considered  to be material  weaknesses.  To some degree  however,  a  mitigating
factor was the relatively minor scale of operations during the year that did not
warrant a more elaborate system to reduce risks further.

The matters  involving  internal  controls and  procedures  that our  management
considered to be continuing material weaknesses under COSO and SEC rules were:

(1)  inadequate segregation of duties consistent with control objectives;

(2)  insufficient  written  policies and procedures for accounting and financial
     reporting with respect to the  requirements  and application of US GAAP and
     SEC disclosure requirements;


                                      -37-


<PAGE>


(3)  infrequent  ongoing  monitoring and a lack of separate  evaluations when an
     effective   monitoring  and  evaluative  system  is  deemed  necessary  for
     corporate integrity;

(4)  a lack of country specific controls and written protocols leading to timely
     reporting of previously budgeted expenditures.

(5)  ineffective   controls  over  period  end  financial  close  and  reporting
     processes.

The  aforementioned  material  weaknesses were identified by our Chief Executive
Officer / Chief  Financial  Officer in connection  with the  preparation  of our
financial  statements  as of June 30, 2009 and  communicated  the matters to our
management and board of directors.

Management  believes that the material  weaknesses set forth in items (1) to (5)
above did not have a material affect on our financial results due to our current
scale and scope of operations.

We are  committed  to  improving  our  financial  organization.  As part of this
commitment,  we intend to create control situations resulting in the segregation
of duties  consistent  with control  objectives  and will increase our personnel
resources and technical accounting expertise within the accounting function when
funds are available to us to:

     i)   define,   document,   implement,  and  monitor  written  policies  and
          procedures for accounting and financial  reporting with respect to the
          requirements  and application of US GAAP , and create country specific
          controls and protocols,

     ii)  prepare and implement sufficient written policies and checklists which
          will set forth procedures for accounting and financial  reporting with
          respect  to the  requirements  and  application  of US  GAAP  and  SEC
          disclosure requirements, and

     iii) ineffective  controls  over period end  financial  close and reporting
          processes.

In addition,  management  believes that  preparing and  implementing  sufficient
written  policies and checklists will remedy the following  material  weaknesses
(i)  insufficient  written  policies and procedures for accounting and financial
reporting with respect to the  requirements  and  application of US GAAP and SEC
disclosure requirements;  and (ii) These procedures coupled with the appointment
of additional  outside directors will greatly decrease any control and procedure
issues the Company may encounter in the future.

We will  continue to monitor and  evaluate  the  effectiveness  of our  internal
controls and procedures and our internal controls over financial reporting on an
ongoing  basis and are  committed  to taking  further  action  and  implementing
additional enhancements or improvements, as necessary and as funds allow.


                                      -38-


<PAGE>


CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no significant  changes in our internal  controls over financial
reporting  that  occurred  during  fiscal  year  ended  June 30,  2009 that have
materially or are reasonably likely to materially  affect, our internal controls
over financial reporting.

INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS

Internal control over financial reporting has inherent limitations which include
but is not  limited  to the use of  independent  professionals  for  advice  and
guidance,  interpretation  of existing  and/or  changing  rules and  principles,
segregation of management duties, scale of organization,  and personnel factors.
Internal  control over  financial  reporting is a process which  involves  human
diligence  and  compliance  and is subject to lapses in judgment and  breakdowns
resulting from human failures.  Internal  control over financial  reporting also
can be circumvented by collusion or improper management override. Because of its
inherent limitations,  internal control over financial reporting may not prevent
or detect  misstatements on a timely basis,  however these inherent  limitations
are known  features  of the  financial  reporting  process and it is possible to
design into the process safeguards to reduce,  though not eliminate,  this risk.
Therefore,  even those  systems  determined  to be  effective  can provide  only
reasonable  assurance  with  respect  to  financial  statement  preparation  and
presentation.  Projections of any evaluation of  effectiveness to future periods
are subject to the risk that controls may become  inadequate  because of changes
in conditions,  or that the degree of compliance with the policies or procedures
may deteriorate.

This  Annual  Report does not include an  attestation  report of our  registered
public  accounting firm, Wong & Co.,  regarding  internal control over financial
reporting.  Management's report was not subject to attestation by our registered
public  accounting firm pursuant to temporary rules of the Security and Exchange
Commission  that permit us to provide  only  management's  report in this Annual
Report.

ITEM 9A(T)

Not applicable.

ITEM 9B. OTHER INFORMATION

Not applicable.

ITEM  10.  DIRECTORS,   EXECUTIVE  OFFICERS,   PROMOTERS  AND  CONTROL  PERSONS;
           COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

All of our directors  hold office until the next annual  general  meeting of the
shareholders or until their  successors are elected and qualified.  Our officers
are  appointed  by our board of directors  and hold office  until their  earlier
death, retirement, resignation or removal.


                                      -39-


<PAGE>


As of the date of this Annual Report our directors and executive officers, their
ages, positions held are as follows:

NAME              AGE                    POSITION WITH THE COMPANY

Xianping Wang      48     President/Chief Executive Officer/Chief Financial
                          Officer and a director

BACKGROUND OF OUR OFFICERS AND DIRECTORS

XIANPING WANG.  Mr. Wang has been one of our directors  since August 5, 2004 and
has been our President and Chief  Executive  Officer since September 4, 2004. He
has been our Chief Financial Officer since August 7, 2007. In addition, Mr. Wang
is the President of Asia-Durable  (Beijing)  Investments  Co., Ltd. from 2002 to
2004,  which is a company that has  successfully  invested in  construction  and
development projects as well as biotechnology  research.  From 1997 to 2002, Mr.
Wang was the President of Beijing New Fortune  Investment Co., Ltd.,  which is a
company that has invested in real estate and other  profitable  projects such as
Chongqing Wanli Storage Battery Co., Ltd. and Shenzhen  Technology Co., Ltd. Mr.
Wang helped  Chongqing Wanli Storage  Battery Co., Ltd. and Shenzhen  Technology
Co.,  Ltd. to become  publicly  listed  companies  on Chinese  stock  markets in
Shanghai and Shenzhen.  Mr. Wang received an  Engineering  Bachelor  Degree from
Navy Engineering  Institute in 1978 and an Economics Master Degree from Tsinghua
University in 1990.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

To our knowledge,  during the past five years,  no present or former director or
executive officer: (1) filed a petition under the federal bankruptcy laws or any
state  insolvency  law,  nor had a  receiver,  fiscal  agent or similar  officer
appointed  by a court for the  business  or  present  of such a  person,  or any
partnership  in which he was a general  partner at or within two yeas before the
time of such filing, or any corporation or business  association of which he was
an executive  officer  within two years before the time of such filing;  (2) was
convicted  in a  criminal  proceeding  or named  subject  of a pending  criminal
proceeding (excluding traffic violations and other minor offenses);  (3) was the
subject of any order, judgment or decree, not subsequently  reversed,  suspended
or vacated, of any court of competent  jurisdiction,  permanently or temporarily
enjoining him from or otherwise limiting the following activities: (i) acting as
a futures commission  merchant,  introducing broker,  commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, associated
person of any of the foregoing, or as an investment advisor, underwriter, broker
or dealer in securities,  or as an affiliated person, director of any investment
company, or engaging in or continuing any conduct or practice in connection with
such activity; (ii) engaging in any type of business practice; (iii) engaging in
any  activity  in  connection  with  the  purchase  or sale of any  security  or
commodity or in  connection  with any  violation of federal or state  securities
laws or federal  commodity  laws; (4) was the subject of any order,  judgment or
decree, not subsequently reversed, suspended or vacated, of any federal or state
authority  barring,  suspending or otherwise  limiting for more than 60 days the
right of such person to engage in any activity  described above under this Item,
or to be associated with persons engaged in any such activity;  (5) was found by
a court of competent  jurisdiction  in a civil action or by the  Securities  and
Exchange Commission to have violated any federal or state securities law and the


                                      -40-


<PAGE>


judgment in subsequently reversed, suspended or vacate; (6) was found by a court
of competent  jurisdiction in a civil action or by the Commodity Futures Trading
Commission  to have  violated any federal  commodities  law, and the judgment in
such civil action or finding by the Commodity Futures Trading Commission has not
been subsequently reversed, suspended or vacated.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires our  directors and officers,  and the
persons who  beneficially own more than ten percent of our common stock, to file
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission.  Copies of all filed  reports  are  required to be  furnished  to us
pursuant to Rule 16a-3  promulgated  under the Exchange Act. Based solely on the
reports received by us and on the  representations of the reporting persons,  we
believe that these persons have complied with all applicable filing requirements
during the fiscal year ended June 30, 2009.

COMMITTEES OF THE BOARD OF DIRECTORS

AUDIT COMMITTEE

As of the date of this  Annual  Report,  we do not have any members on our audit
committee.  We have not appointed  additional  members to the Board of Directors
and, therefore,  the respective role of an audit committee has been conducted by
our  Board of  Directors.  When new  members  are to be  appointed  to the audit
committee, the audit committee's primary function will be to provide advice with
respect  to our  financial  matters  and to  assist  our board of  directors  in
fulfilling its oversight  responsibilities  regarding finance,  accounting,  and
legal compliance. The audit committee's primary duties and responsibilities will
be to: (i) serve as an independent  and objective party to monitor our financial
reporting  process and  internal  control  system;  (ii) review and appraise the
audit  efforts of our  independent  accountants;  (iii)  evaluate our  quarterly
financial performance as well as our compliance with laws and regulations;  (iv)
oversee  management's  establishment  and enforcement of financial  policies and
business  practices;  and (v) provide an open avenue of communication  among the
independent accountants, management and the board of directors.

Our Board of Directors has  considered  whether the provision of such  non-audit
services  would  be  compatible  with  maintaining  the  principal   independent
accountant's  independence.  Our  Board  of  Directors  considered  whether  our
principal independent accountant was independent, and concluded that the auditor
for the fiscal year ended June 30, 2009 was independent.

CODE OF ETHICS

We have  adopted a  corporate  code of ethics.  We believe our code of ethics is
reasonably  designed to deter wrongdoing and promote honest and ethical conduct;
provide full, fair,  accurate,  timely and  understandable  disclosure in public
reports;  comply with applicable laws; ensure prompt internal  reporting of code
violations; and provide accountability for adherence to the code.


                                      -41-


<PAGE>


DISCLOSURE COMMITTEE AND CHARTER

We have a disclosure  committee and disclosure committee charter. Our disclosure
committee  is  comprised  of our  officers  and  directors.  The  purpose of the
committee is to provide  assistance to the Chief Executive Officer and the Chief
Financial   Officer  in   fulfilling   their   responsibilities   regarding  the
identification and disclosure of material information about us and the accuracy,
completeness and timeliness of our financial reports.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth  information with respect to compensation paid by
us to the Chief Executive Officer and the other highest paid executive  officers
(the Named Executive Officer) during the three most recent fiscal years.

<TABLE>
<CAPTION>

SUMMARY COMPENSATION TABLE
________________________________________________________________________________________________________________________________

                                                                    LONG TERM COMPENSATION
                                  ANNUAL COMPENSATION               AWARDS                        PAYOUTS
(A)                       (B)     (C)       (D)      (E)            (F)            (G)            (H)        (I)
                                                                                     SECURITIES
                                                      OTHER ANNUAL    RESTRICTED     UNDERLYING                    ALL OTHER
NAME AND PRINCIPAL                 SALARY   BONUS     COMPENSATION  STOCK AWARD(S)  OPTIONS/SARS     LTIP       COMPENSATION ($)
POSITION                  YEAR      ($)      ($)          ($)            ($)            (#)        PAYOUTS ($)
________________________________________________________________________________________________________________________________
<S>                       <C>     <C>         <C>            <C>            <C>            <C>        <C>             <C>

Xianping Wang (1)         2009    120,000     0              0\             0              0          0               0
President, CEO and        2008    120,000     0              0              0              0          0               0
Director                  2007    120,000     0              0              0              0          0               0

Clement Wu (3)
CFO, Secretary,           2008      -0-       0              0              0              0          0               0
Treasurer and
Director                  2007    45,231      0              0              0        150,000          0               0

Peter Shandro (5)
VP Business Strategy      2008      -0-       0              0              0              0          0               0
and Director              2007    71,121      0              0              0              0          0               0
________________________________________________________________________________________________________________________________

<FN>

(1)  Mr.  Xianping Wang was appointed as a director on August 5, 2004 and as our
     President and Chief Executive Officer on September 4, 2004.

(2)  Mr.  Xianping Wang was to receive  $10,000 per month  starting  Feb.  2005.
     However,  this  amount has been  accrued by Mr.  Wang.  Therefore,  for the
     fiscal  years  ended  June 30,  2009,  2008 and 2007,  we have  outstanding
     obligations of $120,000 owing to Mr. Wang for each year.

(3)  Mr. Clement Wu was appointed a director and our Chief Financial  Officer on
     January 1, 2006 and as our Secretary and Treasurer on May 19, 2006.  Mr. Wu
     resigned  as a  director  and as our Chief  Financial  Officer on August 6,
     2007.

(4)  Mr.  Clement  received  $5,938  per month  starting  on January 1, 2006 and
     received a total of $45,231as  compensation  for the fiscal year ended June
     30, 2007.

(5)  Mr. Peter  Shandro was appointed a director on September 3, 2004 and as our
     Vice-President for Business Strategy on April 1, 2006. Mr. Shandro resigned
     from both positions on August 1, 2007.

(6)  Mr.  Peter  Shandro  received a total of $71,121  as  compensation  for the
     fiscal year ended June 30, 2007.

</FN>
</TABLE>


                                      -42-


<PAGE>


No long term incentive plan awards were made to any executive officer during the
fiscal years ended June 30, 2009 and June 30, 2008.

Our officers and  directors  may be reimbursed  for any  out-of-pocket  expenses
incurred by them on our behalf.  As of the date of this Annual  Report,  none of
our  officers or  directors  are a party to  employment  agreements  with us. We
presently have no pension, health, annuity, insurance, profit sharing or similar
benefit plans.

There were no formal  arrangements under which our directors were compensated by
us during the most recently  completed  fiscal year for their services solely as
directors.

STOCK OPTIONS/SAW GRANTS IN FISCAL YEAR ENDED JUNE 30, 2009

The  following  table sets forth  information  as at June 30,  2009  relating to
options that have been granted to the Named  Executive  Officers  during  fiscal
year ended June 30, 2009:

<TABLE>
<CAPTION>

____________________________________________________________________________________________________________________________________

                                                  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

                                 OPTION AWARDS                                                       STOCK AWARDS
____________________________________________________________________________________________________________________________________
                                                                                                                       Equity
                                                                                                        Equity         Incentive
                                                                                                        Incentive      Plan Awards:
                                                                                              Market    Plan Awards:   Market or
                                             Equity                                           Value of  Number of      Payout Value
                 Number of    Number of      Incentive Plan                       Number of   Shares    Unearned       of Unearned
                 Securities   Securities     Awards: Number                       Shares or   or Units  Shares, Units  Shares, Units
                 Underlying   Underlying     of Securities                        Units of    of Stock  or Other       or Other
                 Unexercised  Unexercised    Underlying        Option    Option   Stock That  That      Rights That    Rights That
                 Options      Options        Unexercised       Exercise  Expira-  Have Not    Have Not  Have Not       Have Not
                 Exercisable  Unexercisable  Unearned Options  Price     tion     Vested      Vested    Vested         Vested
Name                 (#)          (#)            (#)             ($)     Date       (#)        ($)        (#)            (#)
____________________________________________________________________________________________________________________________________
<S>                  <C>           <C>            <C>                                                       <C>             <C>


Xianping Wang,
Chief Executive
Officer/
President           -0-           -0-            -0-            --        ---      ---         ---         -0-             -0-

Clement Wu,
prior
Chief Financial
Officer/
Treasurer            -0-          -0-            -0-             --        --       --          --          -0-             -0-
____________________________________________________________________________________________________________________________________

</TABLE>


                                      -43-


<PAGE>


The following table sets forth information  relating to compensation paid to our
directors during fiscal year ended June 30, 2009:

<TABLE>
<CAPTION>

_____________________________________________________________________________________________________________________

DIRECTOR COMPENSATION TABLE

                                                                        Change in
                                                                        Pension
                                                                        Value and
                Fees                                 Non-Equity         Nonqualified
                Earned or                            Incentive          Deferred                All
                Paid in       Stock      Option      Plan               Compensation           Other
                Cash          Awards     Awards      Compensation       Earnings            Compensation        Total
Name              ($)          ($)         ($)             ($)              ($)                  ($)              ($)
_____________________________________________________________________________________________________________________
<S>                 <C>          <C>        <C>           <C>                <C>                 <C>               <C>

Xianping Wang      -0-          -0-        -0-           -0-                -0-                 -0-               -0-
_____________________________________________________________________________________________________________________

</TABLE>


INDEMNIFICATION

Pursuant to the articles of incorporation and bylaws of the corporation,  we may
indemnify  an  officer  or  director  who is  made a  party  to any  proceeding,
including a lawsuit, because of his position, if he acted in good faith and in a
manner he reasonably  believed to be in our best interest.  In certain cases, we
may advance expenses  incurred in defending any such  proceeding.  To the extent
that the officer or director is successful on the merits in any such  proceeding
as to which such person is to be indemnified,  we must indemnify him against all
expenses  incurred,  including  attorney's  fees.  With  respect to a derivative
action, indemnity may be made only for expenses actually and reasonably incurred
in defending the  proceeding,  and if the officer or director is judged  liable,
only by a court  order.  The  indemnification  is  intended to be to the fullest
extent permitted by the laws of the state of Nevada.

Regarding  indemnification  for liabilities  arising under the Securities Act of
1933 which may be permitted to directors or officers  pursuant to the  foregoing
provisions,  we are informed that, in the opinion of the Securities and Exchange
Commission,  such  indemnification is against public policy, as expressed in the
Act and is,  therefore  unenforceable.

ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

The  following  table  sets  forth  certain  information  with  respect  to  the
beneficial  ownership of our common stock by each stockholder  known by us to be
the  beneficial  owner of more  than 5% of our  common  stock and by each of our
current  directors  and  executive  officers.  Each  person has sole  voting and
investment power with respect to the shares of common stock, except as otherwise
indicated.  Beneficial  ownership consists of a direct interest in the shares of
common  stock,  except as  otherwise  indicated.  As of the date of this  Annual
Report, there are 490,311,400 shares of common stock issued and outstanding.


                                      -44-


<PAGE>


________________________________________________________________________________

NAME OF BENEFICIAL       AMOUNT AND NATURE                              PERCENT
OWNER                    BENEFICIAL OWNER    POSITION                   OF CLASS
________________________________________________________________________________

Xianping Wang            2,500,000(1)        President,                    Nil
B-26F Oriental Kenzo,                        Chief Executive Officer
No. 48                                       and and a director
Dongzhimenwai,
Dongcheng District,
Beijing,  China

ALL OFFICERS AND         2,500,000 (1)                                     Nil
DIRECTORS AS A GROUP
 (1 PERSON)
________________________________________________________________________________

(1)  These are restricted shares of common stock. Under Rule 13d-3, a beneficial
     owner of a  security  includes  any person  who,  directly  or  indirectly,
     through  any  contract,   arrangement,   understanding,   relationship,  or
     otherwise  has or shares:  (i) voting  power,  which  includes the power to
     vote, or to direct the voting of shares;  and (ii) investment power,  which
     includes the power to dispose or direct the disposition of shares.  Certain
     shares may be deemed to be beneficially  owned by more than one person (if,
     for example, persons share the power to vote or the power to dispose of the
     shares).  In  addition,  shares  are deemed to be  beneficially  owned by a
     person if the person has the right to acquire the shares (for example, upon
     exercise  of an  option)  within  60  days  of the  date  as of  which  the
     information  is provided.  In  computing  the  percentage  ownership of any
     person, the amount of shares outstanding is deemed to include the amount of
     shares  beneficially  owned by such person (and only such person) by reason
     of these  acquisition  rights.  As a result,  the percentage of outstanding
     shares of any person as shown in this table  does not  necessarily  reflect
     the person's actual ownership or voting power with respect to the number of
     shares of common stock  actually  outstanding as of the date of this Annual
     Report. As of the date of this Annual Report,  there are 490,311,400 shares
     issued and outstanding.

CHANGES IN CONTROL

We are unaware of any contract, or other arrangement or provision, the operation
of which may at a subsequent date result in a change of control.

ITEM  13.  CERTAIN   RELATIONSHIPS   AND  RELATED   TRANSACTIONS   AND  DIRECTOR
           COMPENSATION

None of our directors, officers or principal stockholders,  nor any associate or
affiliate  of the  foregoing,  have any  interest,  direct or  indirect,  in any
transaction to the date of this Annual Report, or in any proposed  transactions,
which has materially affected or will materially affect us.

It is  possible,  however,  that debts  owed to Mr.  Wang,  our  President/Chief
Executive Officer and sole director, could be demanded and cause us serious harm
if we are unable to pay and must settle in some  manner.  The  aggregate  amount
owed to Mr. Wang up to June 30, 2009 is $5,945,061  (not including his salary of
$120,000 in 2009 and 2008 which remains  accrued and unpaid).  The  shareholders
loan is interest free, but the loan accrues  interest at the rate of 6% annually
and has been recorded as additional paid in capital. Adjustments, conversions or
other action could be taken as to his debt,  including the recent  conversion of
$12,500.00 into  125,000,000  shares of common stock by the Assignee.  Moreover,
Mr. Wang was to receive  $10,000 per month  starting Feb.  2005.  However,  this
amount has been accrued and is due and owing to Mr. Wang. Therefore,  for fiscal
years ended June 30, 2009, June 30, 2008 and June 30, 2007, we have  outstanding
obligations of $120,000 owing to Mr. Wang.


                                      -45-


<PAGE>


ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

AUDIT FEES

The aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal  accountant for our audit of annual financial
statements  for  fiscal  year ended  June 30,  2009 and review of our  financial
statements  for quarters ended  September 30, 2008,  December 31, 2008 and March
31, 2009 or services that are normally  provided by the accountant in connection
with statutory and regulatory  filings or engagements for those fiscal years was
$50,000 to Wong & Co.

The aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal  accountant for our audit of annual financial
statements  for  fiscal  year ended  June 30,  2008 and review of our  financial
statements  for quarters ended  September 30, 2007,  December 31, 2007 and March
31, 2008 or services that are normally  provided by the accountant in connection
with statutory and regulatory  filings or engagements for those fiscal years was
$55,000 to Wong & Co.

AUDIT RELATED FEES

The aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountants that are reasonably related to the
performance  of the  audit or  review of our  financial  statements  and are not
reported in the preceding paragraph was $-0- to Wong & Co.

TAX FEES

The aggregate fees billed in each of the last two fiscal years for  professional
services  rendered by the principal  accountant for tax compliance,  tax advice,
and tax planning was $-0- to Wong & Co.

ALL OTHER FEES

The aggregate  fees billed in each of the last two fiscal years for the products
and  services  provided by the  principal  accountant,  other than the  services
reported in paragraphs (1), (2), and (3) was $-0- to Wong & Co.

When  existing , our audit  committee's  pre-approval  policies  and  procedures
described in paragraph  (c)(7)(i) of Rule 2-01 of  Regulation  S-X were that the
audit  committee  pre-approve  all accounting  related  activities  prior to the
performance of any services by any accountant or auditor.

The  percentage of hours  expended on the principal  accountant's  engagement to
audit  our  financial  statements  for the most  recent  fiscal  year  that were
attributed to work  performed by persons  other than the principal  accountant's
full time, permanent employees was 0%.

ITEM 15. EXHIBITS

The following exhibits are filed with this Annual Report on Form 10-K:


                                      -46-


<PAGE>


ITEM 15. EXHIBITS

The following exhibits are filed as part of this Annual Report:

Exhibit

23.1             Consent of Independent Registered Public Accounting Firm
31.1             Certification under Rule 13a-14(a).
31.2             Certification under Rule 13a-14(a).
32.1             Certification under Section 1350.
32.2             Certification under Section 1350.


SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                       XINHUA CHINA LTD.


Dated: October 9, 2009                 By: /s/ XIANPING WANG
                                           _____________________________________
                                               Xianping Wang
                                               President/Chief Executive Officer


Dated: October 9, 2009                 By: /s/ XIANPING WANG
                                           _____________________________________
                                               Xianping Wang
                                               Chief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities.


SIGNATURES               TITLE                                   DATE

/s/ XIANPING WANG        President, Chief Executive Officer,     October 9, 2009
__________________       Chief Financial Officer
    Xianping Wang        and a Director


                                      -47-