```
 
```

| 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)                                |

| Large accelerated filer  ̈                           |   | Accelerated filer  ̈    |
|----------------------------------------------------------|--------|-----------------------------|
|                                                     |   |                        |
| Non-accelerated filer  ̈                             |   | Smaller reporting company x |
| (Do not check if smaller reporting              company) |   |                        |

----

|                                                                                                                                      |   |   | Page   |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                                                                                 |   |   |   |   |
| Part                  I. Financial Information:                                                                                      |   |   |   |   |
|                                                                                                                                 |   |   |   |   |
| Item                  1. Financial Statements:                                                                                       |   |   | 3      |   |
|                                                                                                                                 |   |   |   |   |
| Balance                  Sheets                                                                                                      |   |   | 3      |   |
|                                                                                                                                 |   |   |   |   |
| Statements                  of Operations                                                                                            |   |   | 4      |   |
|                                                                                                                                 |   |   |   |   |
| Statement                  of Stockholders’ Equity                                                                             |   |   | 5      |   |
|                                                                                                                                 |   |   |   |   |
| Statements                  of Cash Flows                                                                                            |   |   | 6      |   |
|                                                                                                                                 |   |   |   |   |
| Notes                  to Financial Statements                                                                                       |   |   | 7      |   |
|                                                                                                                                 |   |   |   |   |
| Item                  2. Management’s Discussion and Analysis of Financial Condition and Results                  of Operation |   |   | 16     |   |
|                                                                                                                                 |   |   |   |   |
| Item                  3. Controls and Procedures                                                                                     |   |   | 18     |   |
|                                                                                                                                 |   |   |   |   |
| Part                  II. Other Information:                                                                                         |   |   |   |   |
|                                                                                                                                 |   |   |   |   |
| Item                  2. Unregistered Sales of Equity Securities and Use of                  Proceeds                                |   |   | 20     |   |
|                                                                                                                                 |   |   |   |   |
| Item                  6. Exhibits                                                                                                    |   |   | 20     |   |
|                                                                                                                                 |   |   |   |   |
| Signatures                                                                                                                           |   |   | 21     |   |

----

**Part      1.**

**Financial        Information**

**Item        1. Financial Statements**

**China        Discovery Acquisition Corp.**

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

**Balance        Sheets **

----

|                                                                             |   | September                30, 2008 |       | December                31, 2007 |   |
|----------------------------------------------------------------------------------|--------|-----------------------------------|------------|----------------------------------|--------|
|                                                                             |   | (unaudited)                       |       |                             |   |
| **ASSETS**                                                                       |   |                              |       |                             |   |
|                                                                             |   |                              |       |                             |   |
| CURRENT                ASSETS                                                    |   |                              |       |                             |   |
| Cash                                                                             |   | $                                 | 141,851    |                             | $      | 100,832 |   |
| Cash                and cash equivalents held in Trust Account                   |   |                              | 34,111,596 |                             |   | 33,876,887 |   |
| Prepaid                expense                                                   |   |                              | 35,000     |                             |   | - |   |
| Interest                receivable                                               |   |                              | 54,000     |                             |   | 107,490 |   |
| Total                Assets                                                      |   | $                                 | 34,342,447 |                             | $      | 34,085,209 |   |
|                                                                             |   |                              |       |                             |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                    |   |                              |       |                             |   |   |   |
|                                                                             |   |                              |       |                             |   |   |   |
| **CURRENT                LIABILITIES**                                           |   |                              |       |                             |   |   |   |
| Deferred                Underwriter’s fees                                 |   |                              | 345,000    |                             |   | 345,000 |   |
| Accrued                expenses                                                  |   |                              | 121,860    |                             |   | - |   |
| Total                current liabilities                                         |   |                              | 466,860    |                             |   | 345,000 |   |
|                                                                             |   |                              |       |                             |   |   |   |
| Ordinary                shares, subject to possible conversion, 1,724,999 shares |   |                              |       |                             |   |   |   |
| at                conversion value                                               |   |                              | 10,230,068 |                             |   | 10,008,413 |   |
|                                                                             |   |                              |       |                             |   |   |   |
| **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 7,105,000 shares (which includes 1,724,999 |   |                              |       |                             |   |   |   |
| subject                to possible conversion)                                   |   |                              | 711        |                             |   | 711 |   |
| Additional                paid-in capital                                        |   |                              | 22,965,365 |                             |   | 23,187,020 |   |
| Retained                earnings accumulated during the development              |   |                              |       |                             |   |   |   |
| stage                                                                            |   |                              | 679,443    |                             |   | 544,065 |   |
| Total                stockholders’ equity                                  |   |                              | 23,645,519 |                             |   | 23,731,796 |   |
|                                                                             |   |                              |       |                             |   |   |   |
| **Total                liabilities and stockholders’ equity**              |   | $                                 | 34,342,447 |                             | $      | 34,085,209 |   |

*See        accompanying notes to financial statements.*

----

**China        Discovery Acquisition Corp.**

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

**Unaudited        Statements of Operations **

----

|                                                                        |   | For                the Three Months Ended September                30, 2008 |      | For                the Nine months ended September 30, 2008 |   | Period                from January                8, 2007 (inception) to                September                30, 2007 |   | Period                fromJanuary                8, 2007 (inception) to                September                30, 2008 |      |
|-----------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|-----------|-------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------|-----------|
|                                                                        |   | (unaudited)                                                                 |      | (unaudited)                                                 |   | (unaudited)                                                                                                               |   | (unaudited)                                                                                                              |      |
|                                                                        |   |                                                                        |      |                                                        |   |                                                                                                                      |   |                                                                                                                     |      |
| Formation                costs                                              |   | $                                                                           | -         |                                                        | $      | -                                                                                                                         |   | $                                                                                                                        | 4,501     |   | $ | 4,501 |   |
| Operating                expenses                                           |   |                                                                        | 244,801   |                                                        |   | 398,331                                                                                                                   |   |                                                                                                                     | 157,586   |   |   | 664,619 |   |
| Operating                loss                                               |   |                                                                        | (244,801  | )                                                           |   | (398,331                                                                                                                  | )      |                                                                                                                     | (162,087  | ) |   | (669,120 | ) |
|                                                                        |   |                                                                        |      |                                                        |   |                                                                                                                      |   |                                                                                                                     |      |   |   |   |   |
| Other                income:                                                |   |                                                                        |      |                                                        |   |                                                                                                                      |   |                                                                                                                     |      |   |   |   |   |
| Investment                income                                            |   |                                                                        | 162,205   |                                                        |   | 533,709                                                                                                                   |   |                                                                                                                     | 385,983   |   |   | 1,348,563 |   |
| Net                income (loss) for period                                 |   |                                                                        | (82,596   | )                                                           |   | 135,378                                                                                                                   |   |                                                                                                                     | 223,896   |   |   | 679,443 |   |
|                                                                        |   |                                                                        |      |                                                        |   |                                                                                                                      |   |                                                                                                                     |      |   |   |   |   |
| Net                income (loss) attributable to ordinary shareholders |   | $                                                                           | (82,596   | )                                                           | $      | 135,378                                                                                                                   |   | $                                                                                                                        | 223,896   |   | $ | 679,443 |   |
|                                                                        |   |                                                                        |      |                                                        |   |                                                                                                                      |   |                                                                                                                     |      |   |   |   |   |
| Weighted                average shares outstanding                          |   |                                                                        | 7,105,000 |                                                        |   | 7,105,000                                                                                                                 |   |                                                                                                                     | 3,166,667 |   |   | 5,531,062 |   |
|                                                                        |   |                                                                        |      |                                                        |   |                                                                                                                      |   |                                                                                                                     |      |   |   |   |   |
| Net                income (loss) per share, basic and diluted          |   | $                                                                           | (0.01     | )                                                           | $      | 0.02                                                                                                                      |   | $                                                                                                                        | 0.07      |   | $ | 0.12 |   |

*See        accompanying notes to financial statements*

----

**China      Discovery Acquisition Corp.**

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

**Unaudited        Statement of Stockholders’ Equity**

----

|                                                                                                                                                                                                                                         |   |   | Ordinary                Shares |   |   | AdditionalPaid-In |   |   | Retained                Earnings accumulated during the                developmental |   |   |    |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------|--------|--------|-------------------|--------|--------|--------------------------------------------------------------------------------------|--------|--------|---------|--------|
|                                                                                                                                                                                                                                         |   |   | Shares                         |   |   | Amount            |   |   |  Capital                                                                        |   |   | stage   |   |   | Total |   |
| Balance,                January 8, 2007 (inception)                                                                                                                                                                                          |   | $      | —                        |   | $      | —           |   | $      | —                                                                              |   | $      | — |   | $ | — |   |
|                                                                                                                                                                                                                                         |   |   |                           |   |   |              |   |   |                                                                                 |   |   |    |   |   |   |   |
| Ordinary                shares issued January 8, 2007 at $.0200 per share                                                                                                                                                                    |   |   | 1,250,000                      |   |   | 125               |   |   | 24,875                                                                               |   |   | --      |   |   | 25,000 |   |
|                                                                                                                                                                                                                                         |   |   |                           |   |   |              |   |   |                                                                                 |   |   |    |   |   |   |   |
| Sale                of 5,750,000 units at $6.00 per unit through a public offering, net                of                underwriter’s discount and offering expenses (1,724,999 shares subject to                possible conversion) |   |   | 5,750,000                      |   |   | 575               |   |   | 31,920,469                                                                           |   |   | --      |   |   | 31,921,044 |   |
| Proceeds                from issuance of underwriter’s options                                                                                                                                                                         |   |   |                           |   |   |              |   |   | 100                                                                                  |   |   | --      |   |   | 100 |   |
| Proceeds                subject to possible conversion of 1,724,999 shares                                                                                                                                                                   |   |   | --                             |   |   | --                |   |   | (10,008,413                                                                          | )      |   | --      |   |   | (10,008,413 | ) |
| Proceeds                from private placement to insider units and warrants                                                                                                                                                                 |   |   | 105,000                        |   |   | 11                |   |   | 1,249,989                                                                            |   |   | --      |   |   | 1,250,000 |   |
| Accretion                of trust relating to ordinary shares subject to possible                redemption                                                                                                                                  |   |   |                           |   |   |              |   |   | (221,655                                                                             | )      |   | --      |   |   | (221,655 | ) |
| Net                income for the period from inception to September 30, 2008                (unaudited)                                                                                                                                     |   |   | --                             |   |   | --                |   |   | --                                                                                   |   |   | 679,443 |   |   | 679,443 |   |
| Balance,                September 30, 2008                                                                                                                                                                                                   |   |   | 7,105,000                      |   | $      | 711               |   | $      | 22,965,365                                                                           |   | $      | 679,443 |   | $ | 23,645,519 |   |

*See        accompanying notes to financial statements*

----

**China            Discovery Acquisition Corp.**

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

**Unaudited            Statements of Cash Flows **

----

|                                                                                                                           |   | For                the Nine                months ended September                30, 2008 |     | Period                from January                8, 2007 (inception) to                September                30, 2007 |   | January                8, 2007(inception)                toSeptember                30, 2008 |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------|----------|---------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|
| **CASH                FLOWS FROM OPERATING ACTIVITIES**                                                                        |   |                                                                                      |     |                                                                                                                      |   |                                                                                         |   |
| Net                income                                                                                                      |   |                                                                                      | 135,378  |                                                                                                                      |   | 302,971                                                                                      |   |   | 679,443 |   |
| Adjustments                to reconcile net income for the period to net cash provided by operating                activities: |   |                                                                                      |     |                                                                                                                      |   |                                                                                         |   |   |   |   |
| Changes                in operating assets and liabilities                                                                     |   |                                                                                      |     |                                                                                                                      |   |                                                                                         |   |   |   |   |
| Increase                in accrued expenses                                                                                    |   |                                                                                      | 121,860  |                                                                                                                      |   | -                                                                                            |   |   | 121,860 |   |
| Prepaid                expense                                                                                                 |   |                                                                                      | (35,000  | )                                                                                                                         |   | -                                                                                            |   |   | (35,000 | ) |
| Interest                receivable                                                                                             |   |                                                                                      | 53,490   |                                                                                                                      |   | -                                                                                            |   |   | (54,000 | ) |
| Net                cash provided by operating activities                                                                       |   |                                                                                      | 275,728  |                                                                                                                      |   | 302,971                                                                                      |   |   | 712,303 |   |
|                                                                                                                           |   |                                                                                      |     |                                                                                                                      |   |                                                                                         |   |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES**                                                                        |   |                                                                                      |     |                                                                                                                      |   |                                                                                         |   |   |   |   |
| Deposits                to Trust Account                                                                                       |   |                                                                                      | —  |                                                                                                                      |   | (33,372,500                                                                                  | )      |   | (33,372,500 | ) |
| Interest                earned on trust fund                                                                                   |   |                                                                                      | (584,709 | )                                                                                                                         |   | (263,782                                                                                     | )      |   | (1,289,096 | ) |
| Withdrawals                from Trust Account                                                                                  |   |                                                                                      | 350,000  |                                                                                                                      |   | -                                                                                            |   |   | 550,000 |   |
| Net                cash used in investing activities                                                                           |   |                                                                                      | (234,709 | )                                                                                                                         |   | (33,636,282                                                                                  | )      |   | (34,111,596 | ) |
|                                                                                                                           |   |                                                                                      |     |                                                                                                                      |   |                                                                                         |   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                                                                        |   |                                                                                      |     |                                                                                                                      |   |                                                                                         |   |   |   |   |
| Gross                proceeds from initial public offering                                                                     |   |                                                                                      | --       |                                                                                                                      |   | 34,297,500                                                                                   |   |   | 34,500,000 |   |
| Proceeds                from underwriters’ purchase option                                                               |   |                                                                                      | --       |                                                                                                                      |   | 100                                                                                          |   |   | 100 |   |
| Proceeds                from sale of ordinary shares to founding stockholders                                                  |   |                                                                                      | --       |                                                                                                                      |   | 25,000                                                                                       |   |   | 25,000 |   |
| Proceeds                from private placement to founding stockholders                                                        |   |                                                                                      | --       |                                                                                                                      |   | 1,250,000                                                                                    |   |   | 1,250,000 |   |
| Payment                of costs of initial public offering                                                                     |   |                                                                                      | --       |                                                                                                                      |   | (2,031,456                                                                                   | )      |   | (2,233,956 | ) |
| Proceeds                from stockholder notes payable                                                                         |   |                                                                                      | --       |                                                                                                                      |   | 100,000                                                                                      |   |   | 100,000 |   |
| Repayment                of stockholder notes payable                                                                          |   |                                                                                      | --       |                                                                                                                      |   | <100,000>                                                                              |   |   | (100,000 | ) |
| Net                cash provided by financing activities                                                                       |   |                                                                                      | -        |                                                                                                                      |   | 33,541,144                                                                                   |   |   | 33,541,144 |   |
|                                                                                                                           |   |                                                                                      |     |                                                                                                                      |   |                                                                                         |   |   |   |   |
| NET                INCREASE IN CASH                                                                                            |   |                                                                                      | 41,019   |                                                                                                                      |   | 207,833                                                                                      |   |   | 141,851 |   |
| CASH                AT BEGINNING OF PERIOD                                                                                     |   |                                                                                      | 100,832  |                                                                                                                      |   | -                                                                                            |   |   | - |   |
| CASH                AT END OF PERIOD                                                                                           |   | $                                                                                         | 141,851  |                                                                                                                      | $      | 207,833                                                                                      |   | $ | 141,851 |   |
| Cash                paid for interest                                                                                          |   |                                                                                      | --       |                                                                                                                      |   | --                                                                                           |   |   | -- |   |
| Cash                paid for income tax                                                                                        |   |                                                                                      | --       |                                                                                                                      |   | --                                                                                           |   |   | -- |   |
| SUPPLEMENTAL                SCHEDULE OF NON-CASH FINANCING ACTIVITIES                                                          |   |                                                                                      |     |                                                                                                                      |   |                                                                                         |   |   |   |   |
| Accrual                of deferred underwriting discount & commission                                                      |   | $                                                                                         | -        |                                                                                                                      | $      | 345,000                                                                                      |   | $ | 345,000 |   |
| Fair                value of underwriter purchase option included in offering                costs                             |   | $                                                                                         | -        |                                                                                                                      | $      | -                                                                                            |   | $ | 1,054,114 |   |

*See      accompanying notes to financial      statements*

----

**China      Discovery Acquisition Corp.**

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

**Notes        to Unaudited Financial Statements**

| **1.** | **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                unaudited financial statements included herein have been prepared                by the                Company, without audit. 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 September                30,                2008, the results of its operations for the three and nine month                periods                ended September 30, 2008 and for the period from January 8, 2007                (inception) through September 30, 2008, and its cash flows for the                nine                month period ended September 30, 2008 and for the periods from January                8,                2007 (inception) through September 30, 2008 and 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 Annual Report on Form 10-KSB for the year ended December 31,                2007, as filed with the Securities and Exchange Commission on April                14,                2008. All                activity from January 8, 2007 (inception) through September 30, 2008                relates to the Company’s formation, its initial public offering described                below, as well as its business acquisition activities. 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 on 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 $33,372,500 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 ordinary shares subject to possible conversion                in the                accompanying September 30, 2008 balance sheet. The                Company’s Memorandum and Articles of Association provides that the Company                will continue in existence only until June 26, 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). |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**China        Discovery Acquisition Corp.**

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

**Notes          to Unaudited Financial Statements**

|   |   | ***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 September 30,                2008 is comprised of Money Market Treasury Obligations Fund consisting                of                tax exempt securities with short term maturities. Such securities                generate                current income which is exempt from federal income tax. ***Earnings                Per Share*** Basic                earnings (loss) per share is computed by dividing net income (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 (210,000 warrants)                issued                in connection with the private placement and the 500,000 units (1,000,000                warrants) included in the underwriter’s purchase options has not been                considered in diluted income (loss) per share calculations since                such                warrants are not yet excercisable. ***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**

|   |   | ***Recent                Accounting Pronouncements***In                September 2006, the FASB issued Statement of Financial Accounting                Standards No. 157, “*Fair                Value Measurements”*,                (SFAS 157). SFAS 157 defines fair value, establishes a framework                for                measuring fair value in generally accepted accounting principles                and                expands disclosures about fair value measurements. FAS 157 is effective                for financial statements issued for fiscal years beginning after                November                15, 2007 and interim periods within those fiscal years. In February                2008,                FASB issued Staff Position 157-2, Effective Date of FASB Statement                No.                157, (FSP 157-2) which delays the effective date of SFAS 157 for                nonfinancial assets and nonfinancial liabilities, except for items                that                are recognized or disclosed at fair value in the financial statements                on a                recurring basis. The Company expects that the adoption of SFAS 157                will                not have a material impact on its financial statements. In                February 2007, the Financial Accounting Standards Board (FASB) issued                SFAS                No. 159, *"The                Fair Value Option for Financial Assets and Financial Liabilities                -                Including an Amendment of FASB Statement No. 115".*                This statement permits entities to choose to measure many financial                instruments and certain other items at fair value. Most of the provisions                of SFAS No. 159 apply only to entities that elect the fair value                option.                However, the amendment to SFAS No. 115 "Accounting for Certain Investments                in Debt and Equity Securities" applies to all entities with                available-for-sale and trading securities. SFAS No. 159 is effective                as of                the beginning of an entity's first fiscal year that begins after                November                15, 2007. The Company expects that the adoption of SFAS 159 will                not have                a material impact on its financial statements.  In                June 2007, the FASB ratified Emerging Issue Task Force (“EITF”) Issue No.                06-11 *“Accounting                for the Income Tax Benefits of Dividends on Share-Based Payment                Awards”*                (“EITF 06-11”). EITF 06-11 provides that tax benefits associated with                dividends on share-based payment awards be recorded as a component                of                additional paid-in capital. EITF 06-11 is effective, on a prospective                basis, for fiscal years beginning after December 15, 2007. The Company                expects that the adoption of EITF 06-11 will not have a material                impact on                its financial statements.  In                June 2007, the FASB issued EITF Issue No. 07-03, “*Accounting                for Non-Refundable Advance Payments for Goods or Services to Be Used                in                Future Research and Development Activities”*                (“EITF 07-03”). EITF 07-03 provides guidance on whether non-refundable                advance payments for goods that will be used or services that will                be                performed in future research and development activities should be                accounted for as research and development costs or deferred and                capitalized until the goods have been delivered or the related services                have been rendered. EITF 07-03 is effective for fiscal years beginning                after December 15, 2007. The Company expects that the adoption of                EITF                07-03 will not have a material impact on its financial                statements. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**China        Discovery Acquisition Corp.**

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

**Notes          to Unaudited Financial Statements**

|   |   | In                December 2007, the FASB issued SFAS 160, which amends Accounting                Research                Bulletin No. 51 to establish accounting and reporting standards for                the                noncontrolling interest in a subsidiary and for the deconsolidation                of a                subsidiary. SFAS 160 clarifies that a noncontrolling interest in                a                subsidiary is an ownership interest in the consolidated entity that                should                be reported as equity in the consolidated financial statements. SFAS                160                requires consolidated net income to be reported at amounts that include                the amounts attributable to both the parent and the noncontrolling                interest. The provisions of SFAS 160 are effective for the Company                as of                January 1, 2009. The Company expects that the adoption of SFAS 160                will                not have a material impact on its financial statements.  In                December 2007, the FASB issued SFAS 141(R), which replaces Statement                of                Financial Accounting Standards No. 141 (“SFAS 141”), *“Business                Combinations.”*                SFAS 141(R) establishes principles and requirements for recognizing                and                measuring identifiable assets and goodwill acquired, liabilities                assumed                and any noncontrolling interest in an acquisition, at their fair                value as                of the acquisition date. SFAS 141(R) will change the accounting treatment                of certain items, including (1) acquisition and restructuring costs                will                generally be expensed as incurred, (2) noncontrolling interests will                be                valued at fair value at the acquisition date, (3) acquired contingent                liabilities will be recorded at fair value at the acquisition date                and                subsequently measured at the higher of such amount or the amount                determined under existing guidance for non-acquired contingencies,                and (4)                changes in deferred tax asset valuation allowances and income tax                uncertainties after the acquisition date will affect the provision                for                income taxes. The Company is currently evaluating the impact of the                adoption of SFAS 141(R) on its financial statements.  In                March 2008, the FASB issued Statement of Financial Accounting Standard                No.                161 (“SFAS 161”), “Disclosures about Derivative Instruments and Hedging                Activities.” SFAS 161 enhances the disclosure requirements for derivative                instruments and hedging activities. SFAS 161 is effective for the                Company                on January 1, 2009 and early adoption is encouraged. The Company                expects                that the adoption of SFAS 161 will not have a material impact on                its                financial statements.  In                April 2008, the FASB issued FASB Staff Position No. 142-3 (“FSP 142-3”),                *“Determination                of the Useful Life of Intangible Assets.”*                FSP 142-3 amends the factors that should be considered in developing                renewal or extension assumptions used to determine the useful life                of a                recognized intangible asset. Specifically, the Company shall consider                its                own historical experience in renewing or extending similar arrangements,                even when there is likely to be substantial cost or material                modifications. Also, in the absence of its own experience, an entity                shall                consider the assumptions that market participants would use. The                provisions of FSP 142-3 are applied prospectively to intangible assets                acquired after January 1, 2009. FSP 142-3 may have a material impact                on                the determination of the useful lives of intangible assets acquired                after                January 1, 2009. This impact, if any, from the application of FSP                142-3                will depend on the facts and circumstances of the intangible assets                acquired after adoption. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**China        Discovery Acquisition Corp.**

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

**Notes          to Unaudited Financial Statements**

|   |   | In                May 2008, the FASB issued FASB Staff Position No. APB 14-1 (“APB 14-1”),                *“Accounting                for Convertible Debt Instruments That May Be Settled in Cash upon                Conversion (Including Partial Cash Settlement).”*                APB 14-1 clarifies that the liability and equity components of convertible                debt instruments that may be settled in cash upon conversion should                be                accounted for separately. The liability and equity components of                convertible debt instruments within the scope of APB 14-1 shall be                separately accounted for in a manner that will reflect the entity’s                nonconvertible debt borrowing rate when interest costs are recognized                in                subsequent periods. The provisions of APB 14-1 are applied retrospectively                and are effective for the Company as of January 1, 2009. The Company                currently expects that the adoption of APB 14-1 will not have a material                impact on its financial statements. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**China        Discovery Acquisition Corp.**

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

**Notes          to Unaudited Financial Statements**

| **2.** | **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 an over-allotment option. Exercised by                the                underwriters of our initial public offering** **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 of the warrants                underlying the Units 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. |
|--------|--------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**China      Discovery Acquisition Corp.**

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

**Notes          to Unaudited Financial Statements**

| **3.** | **Note                Payable, Stockholder** | During                2007, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **4.** | **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                agreed to                pay such affiliate $7,500 per month for such services commencing                on the                effective date of the Offering. The Company recognized $22,500 and                $67,500                of expense under this arrangement for the three and nine months ended                September 30, 2008 and ($120,000) and for the period from January                8, 2007                (inception) to September 30, 2008, respectively. 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 Insider Warrant (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                sold 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 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. |

----

**China        Discovery Acquisition Corp.**

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

**Notes            to Unaudited Financial Statements**

|   |                               | The                Representative has been 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. |
|--------|------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **5.** | **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.                                                                                                                                                                                                         |

----

**ITEM      2.**
**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATION**

**Overview**

**Results      of Operations**

----

**Financial      Condition and Liquidity**

* *

----

----

**ITEM      4.**
**CONTROLS      AND PROCEDURES.**

----

**PART      II. **

**OTHER      INFORMATION**

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

* *

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

|  | (a) | Exhibits: |
|--|-----|-----------|
|   |   |   |
|--------|--------|--------|
|   |   | 31.1               Section 302 Certification by CEO |
|--------|--------|----------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   |   | 31.2               Section 906 Certification by CFO |
|--------|--------|----------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   |   | 32.1               Section 302 Certification by CEO |
|--------|--------|----------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   |   | 32.2               Section 906 Certification by CFO |
|--------|--------|----------------------------------------------------------|

----

**SIGNATURES**

|                                          |                                                             | **CHINA                DISCOVERY ACQUISITION CORP.** |
|-----------------------------------------------|------------------------------------------------------------------|------------------------------------------------------|
|                                          |                                                                  |
|  Dated:                November 14, 2008 |                                                        |                                            |
|                                               |                                                                  | /s/              Michael Hsu                         |
|                                               | Michael                HsuChief                Executive Officer |

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

----