|   |                                                                                                                                 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|
| x      | Quarterly                  report under Section 13 or 15(d) of the Securities Exchange Act                  of                  1934 |
|   |                                                                                                                                 |
|   | For                  the quarterly period ended June                  30, 2007                                                       |
|   |                                                                                                                                 |
| o      | Transition                  report under Section 13 or 15(d) of the Exchange Act                                                     |
|   |                                                                                                                                 |
|   | For                  the transition period from _____________ to                  _____________                                      |

| Cayman                Islands                                                                |   | N/A                                                                |
|----------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|
| (State                or other Jurisdiction of Incorporation                or Organization) |   | (I.R.S.                Employer Identification                No.) |

| 70                Cao Bao Rd., Building C, Suite 1302, Shanghai, China |
|------------------------------------------------------------------------|
| (Address                of Principal Executive Office)                 |

| 650-521-6800                                                                          |
|--------------------------------------------------------------------------------------------|
| (Issuer’s                Telephone Number, Including Area                Code)  |

----

|                                                   |                                                                           | Page  |
|--------------------------------------------------------|--------------------------------------------------------------------------------|------------|
|                                                   |                                                                           |       |
| Part                I. Financial Information:     |                                                                           |
|                                                   |                                                                           |       |
| Item                1.                                 | Financial                Statements (Unaudited):                               | 2          |
|                                                   |                                                                           |       |
| Balance                Sheet                           | 2                                                                         |
|                                                   |                                                                           |       |
| Statements                of Operations                | 3                                                                         |
|                                                   |                                                                           |       |
| Statement                of Stockholders’ Equity | 4                                                                         |
|                                                   |                                                                           |       |
| Statement                of Cash Flows                 | 5                                                                         |
|                                                   |                                                                           |       |
| Notes                to Financial Statements           | 6                                                                         |
|                                                   |                                                                           |       |
| Item                2.                                 | Management’s                Discussion and Analysis or Plan of Operation | 12    |
|                                                   |                                                                           |       |
| Item                3.                                 | Controls                and Procedures                                         | 14    |
|                                                   |                                                                           |       |
| Part                II. Other Information:             | 15                                                                        |
|                                                   |                                                                           |       |
| Item                2.                                 | Unregistered                Sales of Equity Securities and Use of Proceeds     | 15    |
|                                                   |                                                                           |       |
| Item                6.                                 | Exhibits                                                                       | 15    |
|                                                   |                                                                           |       |
| Signatures                                             | 16                                                                        |

----

**China      Discovery Acquisition Corp.**

**(a        corporation in the development stage)**

**Unaudited        Balance Sheet**

|                                                                                                                                   |   |                               |       |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|------------|
|                                                                                                                                   |   | June                30, 2007  |       |
|                                                                                                                                   |   |                               |       |
| **ASSETS**                                                                                                                             |   |                               |       |
|                                                                                                                                   |   |                               |       |
| **CURRENT                ASSETS -**                                                                                                    |   | $                                  | 192,117    |   |
| Cash                                                                                                                                   |   |                               |       |   |
| Cash                and cash equivalents held in Trust Account                                                                         |   |                               | 29,081,925 |   |
| Total                assets                                                                                                            |   |                               | 29,274,042 |   |
|                                                                                                                                   |   |                               |       |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                          |   |                               |       |   |
|                                                                                                                                   |   |                               |       |   |
| **CURRENT                LIABILITIES**                                                                                                 |   |                               |       |   |
| Deferred                underwriters’ fees                                                                                       |   | $                                  | 300,000    |   |
| Accrued                offering costs                                                                                                  |   |                               | 25,917     |   |
| Accrued                expenses                                                                                                        |   |                               | 7,001      |   |
| Total                current liabilities                                                                                               |   |                               | 332,918    |   |
| Common                stock, subject to possible conversion, 1,499,500 shares                                                          |   |                               |            |   |
| at                conversion value                                                                                                     |   |                               | 8,721,669  |   |
|                                                                                                                                   |   |                               |       |   |
| **COMMITMENTS**                                                                                                                        |   |                               |       |   |
|                                                                                                                                   |   |                               |       |   |
| **STOCKHOLDERS’                EQUITY**                                                                                          |   |                               |       |   |
| Preferred                shares, $.0001 par value                                                                                      |   |                               |       |   |
| Authorized                1,000,000 shares; none issued                                                                                |   |                               | —    |   |
| Ordinary                shares, $.0001 par value                                                                                       |   |                               |       |   |
| Authorized                25,000,000 shares                                                                                            |   |                               |       |   |
| Issued                and outstanding 6,250,000 shares (which includes 1,499,500 shares                subject to possible conversion) |   |                               | 625        |   |
| Additional                paid-in capital                                                                                              |   |                               | 20,221,350 |   |
|                                                                                                                                   |   |                               |       |   |
| Deficit                accumulated during the development stage                                                                        |   |                               | (2,520     | ) |
|                                                                                                                                   |   |                               |       |   |
| Total                stockholders’ equity                                                                                        |   |                               | 20,219,455 |   |
|                                                                                                                                   |   |                               |       |   |
| Total                liabilities and stockholders’ equity                                                                        |   | $                                  | 29,274,042 |   |

*See      accompanying notes to financial      statements.*

----

**China          Discovery Acquisition Corp.**

**(a          corporation in the development stage)**

**Unaudited          Statements of Operations**

|                                                                                                             |   |                                                                                        |      |                                                                                                      |   |
|------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|-----------|-----------------------------------------------------------------------------------------------------------|--------|
|                                                                                                             |   | For                the   Three              Months EndedJune                  30, 2007 |      | Period                fromJanuary                8, 2007 (inception) to June                30, 2007 |   |
|                                                                                                             |   |                                                                                        |      |                                                                                                      |   |
| Formation                costs                                                                                   |   | $                                                                                           | 0         |                                                                                                      | $      | 2,500 |   |
| Operating                expenses                                                                                |   |                                                                                        | 7,128     |                                                                                                      |   | 7,275 |   |
| Operating                loss                                                                                    |   |                                                                                        | (7,128    | )                                                                                                         |   | (9,775 | ) |
|                                                                                                             |   |                                                                                        |      |                                                                                                      |   |   |   |
| Other                income:                                                                                     |   |                                                                                        |      |                                                                                                      |   |   |   |
| Investment                income                                                                                 |   |                                                                                        | 7,032     |                                                                                                      |   | 7,255 |   |
| Net                (loss) for the period                                                                         |   |                                                                                        | (96       | )                                                                                                         | $      | (2,520 | ) |
|                                                                                                             |   |                                                                                        |      |                                                                                                      |   |   |   |
|                                                                                                             |   |                                                                                        |      |                                                                                                      |   |   |   |
| Accretion                of Trust Account relating to common stock subject                to possible conversion |   |                                                                                        | (2,076    | )                                                                                                         |   | (2,076 | ) |
| Net                (loss) attributable to other common shareholders                                              |   |                                                                                        | (2,172    | )                                                                                                         | $      | (4596 | ) |
|                                                                                                             |   |                                                                                        |      |                                                                                                      |   |   |   |
| Weighted                average shares outstanding                                                               |   |                                                                                        | 1,321,000 |                                                                                                      |   | 1,379,000 |   |
|                                                                                                             |   |                                                                                        |      |                                                                                                      |   |   |   |
| Basic                and diluted net loss per share                                                              |   | $                                                                                           | —   |                                                                                                      | $      | — |   |

*See      accompanying notes to financial      statements*

----

**China      Discovery Acquisition Corp.**

**(a      corporation in the development stage)**

**Unaudited      Statement of Stockholders’Equity**

|                                                                                                                                                                                                |   |                               |      |        |   |            |   |                          |       |       |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|-----------|-------------|--------|-----------------|--------|-------------------------------|------------|------------|--------|
|                                                                                                                                                                                                |   |                               |      |        |   |            |   |                          |       |       |   |
|                                                                                                                                                                                                |   |                               |      |        |   |            |   | **Deficit**                   |       |       |   |
|                                                                                                                                                                                                |   |                               |      |        |   |            |   | **Accumulated**               |       |       |   |
|                                                                                                                                                                                                |   |                               |      |        |   | **Additional**  |   | **During                the** |       |       |   |
|                                                                                                                                                                                                |   | **Ordinary                Shares** |      | **Paid-In** |   | **Development** |   | **Stockholders’**       |       |
|                                                                                                                                                                                                |   | **Shares**                         |      | **Amount**  |   | **Capital**     |   | **Stage**                     |       | **Equity** |   |
| Ordinary                shares issued January 8, 2007at                $.0200 per share                                                                                                             |   |                               | 1,250,000 |        | $      | 125             |   | $                             | 24,875     |       |   |   |   | $ | 25,000 |   |
|                                                                                                                                                                                                |   |                               |      |        |   |            |   |                          |       |       |   |   |   |   |   |   |
| Sale                of 5,000,000 units at $6.00 per share,net                of underwriters’ discount and offering expenses (1,499,500 shares subject                to possible conversion) |   |                               | 5,000,000 |        |   | 500             |   |                          | 27,668,044 |       |   | — |   |   | 27,668,544 |   |
| Proceeds                from issuance of underwriters’options                                                                                                                                 |   |                               | —   |        |   | —         |   |                          | 100        |       |   | — |   |   | 100 |   |
| Proceeds                subject to possible conversion of1,499,500                shares                                                                                                            |   |                               | —   |        |   | —         |   |                          | (8,719,593 | )          |   | — |   |   | (8,719,593 | ) |
| Proceeds                from private placement to initialstockholders                                                                                                                               |   |                               | —   |        |   | —         |   |                          | 1,250,000  |       |   | — |   |   | 1,250,000 |   |
| Accretion                of trust fund relating to commonstock                subject to possible conversion                                                                                        |   |                               | —   |        |   | —         |   |                          | (2,076     | )          |   |  |   |   | (2,076 | ) |
| Net                loss for the period ended June 30, 2007                                                                                                                                          |   |                               | —   |        |   | —         |   |                          | —    |       |   | (2,520 | ) |   | (2,520 | ) |
| Balance                at June 30, 2007                                                                                                                                                             |   |                               | 6,250,000 |        | $      | 625             |   | $                             | 20,221,350 |       | $      | (2,520 | ) | $ | 20,219,455 |   |

*See      accompanying notes to financial      statements*

----

**China      Discovery Acquisition Corp.**

**(a      corporation in the development stage)**

**Statement      of Cash Flow**

|                                                                                                                    |   |   |        |
|-------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|
| **CASH                FLOWS FROM OPERATING ACTIVITIES**                                                                 |   |   |        |
| Net                loss                                                                                                 |   | $      | (2,520      | ) |
| Adjustments                to reconcile net loss for the period to net cash used inoperating                activities: |   |   |        |   |
| Increases                in accrued expenses                                                                            |   |   | 7,001       |   |
| Net                cash provided by operating activities                                                                |   |   | 4,481       |   |
|                                                                                                                    |   |   |        |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES**                                                                 |   |   |        |   |
| Cash                and cash equivalents held in Trust Account                                                          |   |   | (29,081,925 | ) |
| Net                cash used in investing activities                                                                    |   |   | (29,081,925 | ) |
|                                                                                                                    |   |   |        |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                                                                 |   |   |        |   |
| Gross                proceeds from initial public offering                                                              |   |   | 30,000,000  |   |
| Proceeds                from underwriters’ purchase option                                                        |   |   | 100         |   |
| Proceeds                from sale of ordinary shares to founding stockholders                                           |   |   | 25,000      |   |
| Proceeds                from private placement to founding stockholders                                                 |   |   | 1,250,000   |   |
| founding                stockholders                                                                                    |   |   |        |   |
| Proceeds                from stockholder notes payable                                                                  |   |   |        |   |
| Deferred                costs associated with initial public offering                                                   |   |   |        |   |
| Accrued                offering costs                                                                                   |   |   | 25,917      |   |
| Payment                of costs of initial public offering                                                              |   |   | (2,031,456  | ) |
| Net                cash provided by financing activities                                                                |   |   | 29,269,561  |   |
|                                                                                                                    |   |   |        |   |
| **NET                INCREASE IN CASH**                                                                                 |   |   | 192,117     |   |
|                                                                                                                    |   |   |        |   |
| **CASH                AT BEGINNING OF PERIOD**                                                                          |   |   | —     |   |
|                                                                                                                    |   |   |        |   |
| **CASH                AT END OF PERIOD**                                                                                |   | $      | 192,117     |   |
|                                                                                                                    |   |   |        |   |
| **SUPPLEMENTAL                SCHEDULE OF NON-CASH FINANCING ACTIVITIES:**                                              |   |   |        |   |
|                                                                                                                    |   |   |        |   |
| Accrual                of deferred underwriting discount & commission                                               |   | $      | 300,000     |   |

----

**China        Discovery Acquisition Corp.**

**(a        corporation in the development stage)**

**Notes        to Unaudited Financial Statements**

| **Organization****and****Business****Operations**  | China                    Discovery                    Acquisition Corp. (the “Company”) was incorporated in the Cayman Islands                    on January 8, 2007 as a blank check company whose objective is                    to acquire,                    through a stock exchange, asset acquisition or other similar                    business                    combination, an operating business, or control of such operating                    business                    through contractual arrangements, that has its principal operations                    located in the People’s Republic of China. The                    financial statements at June 30, 2007 and for the periods ended                    June 30,                    2007 are unaudited. In the opinion of management, all adjustments                    (consisting of normal adjustments) have been made that are necessary                    to                    present fairly the financial position of the Company as of June                    30, 2007,                    the results of its operations for the three month period ended                    June 30,                    2007 and for the period from January 8, 2007 (inception) through                    June 30,                    2007, and its cash flows for the period from January 8, 2007                    (inception)                    through June 30, 2007. Operating results for the interim period                    presented                    are not necessarily indicative of the results to be expected                    for a full                    year.The                    statements and related notes have been prepared pursuant to the                    rules and                    regulations of the U.S. Securities and Exchange Commission. Accordingly,                    certain information and footnote disclosures normally included                    in                    financial statements prepared in accordance with generally accepted                    accounting principles have been omitted pursuant to such rules                    and                    regulations.The                    preparation of financial statements in conformity with generally                    accepted                    accounting principles requires management to make estimates and                    assumptions that affect the reported amounts of assets and liabilities                    and                    any disclosure of contingent assets and liabilities at the date                    of the                    financial statements, and the reported amounts of revenues and                    expenses                    during the reported period. Actual results could differ from                    those                    estimates. The interim condensed financial statements should                    be read in                    conjunction with the financial statements and notes thereto included                    in                    the Company’s final prospectus, dated June 18, 2007, which was filed with                    the Securities and Exchange Commission on June 21, 2007.All                    activity from January 8, 2007 (inception) through June 30, 2007                    relates to                    the Company’s formation and initial public offering described below. The                    Company has selected December 31 as its fiscal year-end.The                    registration statement for the Company’s initial public offering                    (“Offering”) was declared effective June 18, 2007. The Company consummated                    the offering on June 26, 2007 (Note 2). The Company’s management has broad                    discretion with respect to the specific application of the net                    proceeds of                    this Offering, although substantially all of the net proceeds                    of this                    Offering are intended to be generally applied toward consummating                    the                    acquisition, through a stock exchange, asset acquisition or other                    similar                    business combination, of an operating business, or the acquisition                    of                    control of such operating business through contractual arrangements,                    that                    has its principal operations located in the People’s Republic of China                    (“Business Combination”). However, there is no assurance that the Company                    will be able to successfully effect a Business Combination. Upon                    the                    closing of the Offering, including the over-allotment option,                    an amount of                    $29,075,000 of the net proceeds was deposited in an interest-bearing                    trust                    account (“Trust Account”) until the earlier of (i) the consummation of a                    Business Combination or (ii) liquidation of the Company. There                    can be                    released to the Company, from time to time, interest earned on                    the funds                    held in trust up to an aggregate of $1,050,000. Under the agreement                    governing the Trust Account, funds will only be invested in United                    States                    “government securities” within the meaning of Section 2(a)(16) of the                    Investment Company Act of 1940 with a maturity of 180 days or                    less or in                    money market funds meeting certain conditions under Rule 2a-7                    promulgated                    under the Investment Company Act of 1940. The remaining net proceeds                    (not                    held in the Trust Account) may be used to pay for business, legal                    and                    accounting due diligence on prospective acquisitions and continuing                    general and administrative expenses. |
|---------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**China        Discovery Acquisition Corp.**

**(a            corporation in the development stage)**

**Notes            to Unaudited Financial Statements**

|   | The                  Company, after signing a definitive agreement for the acquisition                  of a                  target business, will submit such transaction for stockholder approval.                  In                  the event that stockholders owning 30% or more of the shares sold                  in the                  Offering vote against the Business Combination and exercise their                  conversion rights described below, the Business Combination will                  not be                  consummated. All                  of the Company’s stockholders prior to the Offering, including all of the                  officers and directors of the Company (“Initial Stockholders”), have                  agreed to vote their 1,250,000 founding shares of common stock                  in                  accordance with the vote of the majority in interest of all other                  stockholders of the Company (“Public Stockholders”) with respect to any                  Business Combination. After consummation of a Business Combination,                  these                  voting safeguards will no longer be applicable.  With                  respect to a Business Combination which is approved and consummated,                  any                  Public Stockholder who voted against the Business Combination may                  demand                  that the Company convert his shares. The per share conversion price                  will                  equal the amount in the Trust Account, calculated as of two business                  days                  prior to the consummation of the proposed Business Combination,                  divided by                  the number of shares of common stock held by Public Stockholders                  at the                  consummation of the Offering. Accordingly, Public Stockholders                  holding                  29.99% of the aggregate number of shares owned by all Public Stockholders                  may seek conversion of their shares in the event of a Business                  Combination. Such Public Stockholders are entitled to receive their                  per                  share interest in the Trust Account computed without regard to                  the shares                  held by Initial Stockholders. Accordingly, a portion of the net                  proceeds                  from the offering (29.99% of the amount held in the Trust Account)                  has                  been classified as common stock subject to possible conversion                  in the                  accompanying June 30, 2007 balance                  sheet.  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**China        Discovery Acquisition Corp.**

**(a            corporation in the development stage)**

**Notes            to Unaudited Financial Statements**

|   | The                Company’s Memorandum and Articles of Association provides that the Company                will continue in existence only until June 18, 2009. If the Company                has                not completed a Business Combination by such date, its corporate                existence                will cease and it will dissolve and liquidate for the purposes of                winding                up its affairs. In the event of liquidation, it is likely that the                per                share value of the residual assets remaining available for distribution                (including Trust Fund assets) will be less than the initial public                offering price per share in the Offering (assuming no value is attributed                to the Warrants contained in the Units to be offered in the Offering                discussed in Note 2). ***Concentration                of Credit Risk*** The                Company maintains cash in bank deposit accounts which, at times,                exceed                federally insured limits. The company has not experienced any losses                on                these accounts. ***Investment                Held in Trust*** The                Company’s restricted investment held in the Trust Fund at June 30, 2007 is                comprised one treasury bill with a short term maturity. Such security                generates current income which is exempt from federal income                tax. ***Loss                Per Share*** Basic                and diluted net loss per share is computed by dividing net loss by                the                weighted-average number of shares of common stock outstanding during                the                period. The                effect of the 11,500,000 warrants issued in connection with the public                offering, 1,033,334 warrants and 105,000 units issued in connection                with                the private placement and the 500,000 units included in the underwriter’s                purchase options has not been considered in diluted loss per share                calculations since the effect of such warrants would be                antidilutive. ***Use                of Estimates*** The                preparation of financial statements in conformity with accounting                principles generally accepted in the United States of America requires                management to make estimates and assumptions that affect the reported                amounts of assets and liabilities at the date of the financial statements                and the reported amounts of expenses during the reporting period.                Actual                results could differ from those                estimates. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**China        Discovery Acquisition Corp.**

**(a            corporation in the development stage)**

**Notes            to Unaudited Financial Statements**

|                                       | ***Effect                of Recent Accounting Pronouncements*** Management                does not believe that any recently issued, but not yet effective,                accounting standards if currently adopted would have a material effect                on                the accompanying financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------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|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Initial                Public Offering** | On                June                26, 2007, the Company sold 5,000,000 units (“Units”) in the Offering. On                July 2, 2007, the Company consummated the closing of an additional                750,000                Units which were subject to the over-allotment option.** **Each                Unit consists of one ordinary share, $.0001 par value, and two warrants                (“Warrants”). Each Warrant entitles the holder to purchase from the                Company one ordinary share at an exercise price of $5.00 commencing                the                later of the completion of a Business Combination or June 18, 2008                and                expiring June 17, 2011. The Warrants will be redeemable, at the Company’s                option, with the prior consent of EarlyBirdCapital, Inc., the                representative of the underwriters in the Offering (“Representative”), at                a price of $.01 per Warrant upon 30 days’ notice after the Warrants become                exercisable, only in the event that the last sale price of the common                stock is at least $8.50 per share for any 20 trading days within                a 30                trading day period ending on the third day prior to the date on which                notice of redemption is given. If the Company redeems the Warrants                as                described above, management will have the option to require any holder                that wishes to exercise his Warrant to do so on a “cashless basis.” In                such event, the holder would pay the exercise price by surrendering                his                Warrants for that number of ordinary shares equal to the quotient                obtained                by dividing (x) the product of the number of ordinary shares underlying                the Warrants, multiplied by the difference between the exercise price                of                the Warrants and the “fair market value” (defined below) by (y) the fair                market value. The “fair market value” shall mean the average reported last                sale price of the ordinary shares for the 10 trading days ending                on the                third trading day prior to the date on which the notice of redemption                is                sent to holders of Warrants. In accordance with the warrant agreement                relating to the Warrants to be sold and issued in the Offering, the                Company is only required to use its best efforts to maintain the                effectiveness of the registration statement covering the Warrants.                The                Company will not be obligated to deliver securities, and there are                no                contractual penalties for failure to deliver securities, if a registration                statement is not effective at the time of exercise. Additionally,                in the                event that a registration is not effective at the time of exercise,                the                holder of such Warrant shall not be entitled to exercise such Warrant                and                in no event (whether in the case of a registration statement not                being                effective or otherwise) will the Company be required to net cash                settle                the warrant exercise. Consequently, the Warrants may expire unexercised                and unredeemed. The                Company paid the underwriters in the Offering an underwriting discount                of                5.5% of the gross proceeds of the Offering and a non-accountable                expense                allowance of 0.5% of the gross proceeds of the Offering. However,                the                underwriters agreed that 1% of the underwriting discount would be                deferred                and would not be paid unless and until the Company consummated a                Business                Combination. In connection with this Offering, the Company also issued                an                option (“Option”), for $100, to the Representative to purchase 500,000                Units at an exercise price of $6.60 per Unit. The Company accounted                for                the fair value of the Option, inclusive of the receipt of the $100                cash                payment, as an expense of the Offering resulting in a charge directly                to                stockholders’ equity. The Company estimated that the fair value of the                Option was approximately $1,054,114 ($2.11 per Unit) using a Black-Scholes                option-pricing model. The fair value of the Option granted to the                Representative was estimated as of the date of grant using the following                assumptions: (1) expected volatility of 35.03%, (2) risk-free interest                rate of 4.54% and (3) expected life of 5 years. The Option may be                exercised for cash or on a “cashless” basis, at the holder’s option                (except in the case of a forced cashless exercise upon the Company’s                redemption of the Warrants, as described above), such that the holder                may                use the appreciated value of the Option (the difference between the                exercise prices of the Option and the underlying Warrants and the                market                price of the Units and underlying securities) to exercise the option                without the payment of any cash. The Company will have no obligation                to                net cash settle the exercise of the unit purchase option or the Warrants                underlying the unit purchase option. The holder of the unit purchase                option will not be entitled to exercise the unit purchase option                or the                Warrants underlying the unit purchase option unless a registration                statement covering the securities underlying the unit purchase option                is                effective or an exemption from registration is available. If the                holder is                unable to exercise the unit purchase option or underlying Warrants,                the                unit purchase option or Warrants, as applicable, will expire                worthless. |

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**China      Discovery Acquisition Corp.**

**(a            corporation in the development stage)**

**Notes            to Unaudited Financial Statements**

| **Note                Payable, Stockholder** | The                Company issued unsecured promissory notes in aggregate amount of                $100,000                to certain officers. The notes were non interest bearing and were                repaid                from the net proceeds of the Offering.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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| **Commitments**                              | The                Company occupies office space provided by an affiliate of the Company’s                chief operating officer. Such affiliate has agreed that, until the                Company                consummates a Business Combination, it will make such office space,                as                well as certain office and secretarial services, available to the                Company,                as may be required by the Company from time to time. The Company                has                agreed to pay such affiliate $7,500 per month for such services commencing                on the effective date of the Offering. Pursuant                to letter agreements dated as of October 12, 2006 with the Company                and the                underwriter, the Initial Stockholders have waived their right to                receive                distributions with respect to their founding shares upon the Company’s                liquidation. The                Company’s directors and certain special advisors and their members                purchased 105,000 Units (“Insider Units”) at $6.00 per Unit and 1,033,334                Warrants (“Insider Warrants”) at $0.60 per Unit (for an aggregate purchase                price of $1,250,000) privately from the Company. These purchases                took                place simultaneously with the consummation of the Offering. All of                the                proceeds received from these purchases were placed in the Trust Account.                The Insider Units and Insider Warrants are identical to the Units                being                offered by in the Offering (and the Warrants underlying such Units)                except                that if the Company calls the Warrants for redemption, the Insider                Warrants may be exercisable on a “cashless basis,” at the holder’s option                (except in the case of a forced cashless exercise upon the Company’s                redemption of the Warrants, as described above), so long as such                securities are held by such purchasers or their affiliates. Furthermore,                the purchasers have agreed that the Insider Warrants will not be                sold or                transferred by them until after the Company has completed a Business                Combination. The                Initial Stockholders and the holders of the Insider Units and Insider                Warrants (or underlying securities) will be entitled to registration                rights with respect to their founding shares, Insider Units or Insider                Warrants (or underlying securities) pursuant to an agreement to be                signed                prior the Offering. The holders of the majority of the founding shares                are                entitled to demand that the Company register these shares at any                time                commencing three months prior to the first anniversary of the consummation                of a Business Combination. The holders of the Insider Units and Insider                Warrants (or underlying securities) are entitled to demand that the                Company register these securities at any time after the Company                consummates a Business Combination. In addition, the Initial Stockholders                and holders of the Insider Units and Insider Warrants (or underlying                securities) have certain “piggy-back” registration rights on registration                statements filed after the Company’s consummation of a Business                Combination. |

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**China        Discovery Acquisition Corp.**

**(a              corporation in the development stage)**

**Notes              to Unaudited Financial Statements**

|                               | The                Representative                will be engaged by the Company to act as the Company’s non-exclusive                investment banker in connection with a proposed Business Combination.                For                assisting the Company in structuring and negotiating the terms of                a                Business Combination, the Company will pay the Representative a cash                transaction fee equal to 1% of the total consideration paid in connection                with the Business Combination, with a maximum fee to be paid of $300,000.                Additionally, the Company has agreed to pay the fees and issue the                securities to the underwriters in the Offering as described in Note                2                above.  |
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| **Preferred                Stock** | The                Company is authorized to issue 1,000,000 shares of preferred stock                with                such designations, voting and other rights and preferences as may                be                determined from time to time by the Board of Directors. The                agreement with the underwriters prohibits the Company, prior to a                Business                Combination, from issuing preferred stock which participates in the                proceeds of the Trust Account or which votes as a class with the                Common                Stock on a Business Combination.                                                                                                                                                                                |

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**ITEM      2.**
**MANAGEMENT’S      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**

**Forward      Looking Statements**

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**ITEM        3.**
**CONTROLS        AND PROCEDURES.**

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**PART      II. **

**OTHER      INFORMATION**

**ITEM      2.**
**UNREGISTERED      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

* *

**ITEM      6.**
**EXHIBITS**

|  | 31.1 | Section                302 Certification by CEO |
|--|------|-------------------------------------------------|

|  | 31.2 | Section                302 Certification by CFO |
|--|------|-------------------------------------------------|

|  | 32.1 | Section                906 Certification by CEO |
|--|------|-------------------------------------------------|

|  | 32.2 | Section                906 Certification by CFO |
|--|------|-------------------------------------------------|

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**SIGNATURES**

|                                |                                               |                         |
|-------------------------------------|----------------------------------------------------|------------------------------|
|                                | **CHINA              DISCOVERY ACQUISITION CORP.** |
|                           |                                          |                    |
| Dated:              August 12, 2007 |                                          | /s/              Michael Hsu |
|                                | Michael              HsuChief Executive Officer    |
|                                |                                               |
|                                |                                                    |

|         |                                                                                     |                          |
|--------------|------------------------------------------------------------------------------------------|-------------------------------|
|    |                                                                                |                     |
|              |                                                                                | /s/              Beatrice Hom |
|         | Beatrice              HomChief Operating Officer and Chief Financial              Office |
|         |                                                                                          |

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