UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





(Mark
One)





x
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the fiscal year ended December 31, 2009





o
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from ___________ to ___________





Commission File No.
000-26777





China
Yida Holding, Co.


(Name
of small business issuer in its charter)





DELAWARE
            
            50-0027826(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (IRS
      Employer Identification No.)28/F
      Yifa Building
              No.
      111 Wusi Road
              Fuzhou,
      Fujian, P. R. China,
            
            350003(Address
      of principal executive offices)
            
            (Zip
      Code)





86-591-28308388


(Registrant’s
telephone number, including area code)





Securities
      registered under Section 12(b) of the Exchange Act:Title
      of each class registered:
            
            Name
      of each exchange on which registered:Common
      Stock, $0.001 Par Value per Share
            
            NASDAQ
      Capital MarketSecurities
      registered under Section 12(g) of the Exchange Act:   None





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.       
Yes o    No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.    Yes o     No x





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





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.   x





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer
            o
            
            Accelerated
      filer
            oNon-accelerated
      filer
              (Do
      not check if a smaller reporting company)
            o
            
            Smaller
      reporting company
            x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o   No
x





Revenues
for year ended December 31, 2009: $51,228,951
 
 State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and ask price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter:  $52,174,152.
 
 As of
March 19, 2010, the registrant had 19,551,785 shares of its common stock
outstanding.
 
 Documents Incorporated by
Reference: Portions of the registrant’s definitive Proxy Statement for
the 2009 Annual Meeting of Stockholders, which the registrant plans to file with
the Securities and Exchange Commission within 120 days after December 31, 2009
are incorporated by reference in Part III of this Form 10-K to the extent
described herein.
 
   
 TABLE
OF CONTENTS





PAGEPART
      I
            
            1ITEM
      1.
            
            Business
            
            1ITEM
      1A.
            
            Risk Factors
            
            7ITEM
      2.
            
            Properties
            
            16ITEM
      3.
            
            Legal Proceedings
            
            16ITEM
      4.
            
            Submission of Matters to a Vote of Security
      Holders
            
            16PART
      II
            
            17ITEM
      5.
            
            Market for Registrant’s Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities
            
            18ITEM
      6.
            
            Selected Financial Data
            
            18ITEM
      7.
            
            Management’s Discussion and Analysis of Financial Condition and
      Results of Operation
            
            18ITEM
      7A.
            
            Quantitative and Qualitative Disclosures About Market
      Risk
            
            26ITEM
      8.
            
            Financial Statements and Supplementary Data
            
            26ITEM
      9.
            
            Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure
            
            45ITEM
      9A(T).
            
            Controls and Procedures
            
            45ITEM
      9B.
            
            Other
      Information
            
            --PART
      III
            
            46ITEM
      10.
            
            Directors, Executive Officers and Corporate
      Governance
            
            46ITEM
      11.
            
            Executive Compensation
            
            46ITEM
      12.
            
            Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters
            
            46ITEM
      13.
            
            Certain Relationships and Related Transactions, and Director
      Independence
            
            46ITEM
      14.
            
            Principal Accounting Fees and Services
            
            46PART
      IVITEM
      15.
            
            Exhibits, Financial Statement Schedules
            
            47SIGNATURES
            
            48












PART
I




ITEM
1.   BUSINESS





Corporate
Overview





We are a
diversified entertainment enterprise focused on China's media and tourism
industries headquartered in Fuzhou City, Fujian province, China. Our core
business strategy is centered around the combination of tourism and media. Our
tourism management business specializes in the development and management of
natural, cultural and historic scenic sites. We currently operate the Great
Golden Lake tourist destination (Global Geo-park), Hua’An Tulou cluster (or the
“Earth Buildings”) tourist destination (World Culture Heritage), and Yunding
tourist destination (Large-scale National Recreational Park), covering over 300
square kilometers in total. Our media business provides operating management
service, including channel and advertisement management for the Fujian Education
Television Channel (“FETV”) and the “Journey through China on the Train”
on-board railway program.


Our
Corporate History and Structure





Keenway
Limited was incorporated under the laws of the Cayman Islands on May 9, 2007 for
the purpose of functioning as an off-shore holding company to obtain ownership
interests in Hong Kong Yi Tat International Investment Co., Ltd (“Hong Kong Yi
Tat”), a company incorporated under the laws of Hong Kong. Immediately
prior to the Merger (defined below), Mr. Chen Minhua and his wife, Ms. Fan
Yanling, were the majority shareholders of Keenway Limited.





On
November 19, 2007, we entered into a share exchange and stock purchase agreement
with Keenway Limited, Hong Kong Yi Tat, and the then shareholders of Keenway
Limited, including Chen Minhua, Fan Yanling, Zhang Xinchen, Extra Profit
International Limited, and Lucky Glory International Limited (collectively, the
“Keenway Limited Shareholders”), pursuant to which in exchange for all of their
shares of Keenway Limited common stock, the Keenway Limited Shareholders
received 90,903,246 newly issued shares of our common stock and 3,641,796 shares
of our common stock which were transferred from some of our then existing
shareholders (the “Merger”). As a result of the closing of the Merger,
the Keenway Limited Shareholders owned approximately 94.5% of our then
issued and outstanding shares on a fully diluted basis and Keenway Limited
became our wholly owned subsidiary.





The
following chart depicts our current corporate structure:




1










●
            Hong
      Kong Yi Tat is an entity that was created solely as the holding company
      for the operating entities, Fujian Jintai Tourism Industrial Development,
      Co, Ltd., and Fujian Jiaoguang Media, Co., Ltd., and Fujian Yunding
      Tourism Industrial Co., Ltd., and Fujian Yida Tulou Tourism Development
      Cp. Ltd.  Hong Kong Yi Tat does not have any
      operations.





●
            Fujian
      Jintai Tourism Developments Co., Ltd. (“Fujian Jintai”) operates the
      tourism segment of our business. Its primary business relates to the
      operation of our tourism destinations, specifically, the Great Golden
      Lake.
              
              Fujian
      Jintai owns 100% of the ownership interest in Fuzhou Hongda Commercial
      Services Co., Ltd. (“Hongda”).  Hongda’s wholly owned subsidiary
      is Fuzhou Fuyu Advertising Co., Ltd. which is an operating entity that
      engages in the media operation.
              
              Fujian
      Jintai also owns 100% of the ownership interest in Fujian Yintai Tourism
      Co., Ltd. (“Yintai”).





●
            Fujian
      Yunding Tourism Industrial Co., Ltd’s  (“Yunding Company”)
      primary business relates to the operation of our tourism destinations,
      specifically, the Yunding tourist
destination.





●
            Fujian
      Yida Tulou Tourism Development Cp. Ltd’s primary business relates to the
      operation of our tourism destinations, specifically, Hua’An Tulou cluster
      tourist destination.





●
            Fujian
      Jiaoguang Media Co., Ltd. (“Fujian Jiaoguang”) concentrates on the mass
      media segment of our business.  Its primary business is focused
      on advertisements, including media publishing, television, cultural and
      artistic communication activities, and performance operation and
      management activities.





2





We do not
have a direct ownership interest in Fujian Jiaoguan. On December 30, 2004,
Jiaoguang and its shareholders entered into a set of contractual arrangements
with us which governs the relationships between Fijian Jiaoguan and the Company.
 The Contractual Arrangements are comprised of a series of agreements,
including a Consulting Agreement and an Operating Agreement, through which we
have the right to advise, consult, manage and operate Fujian Jiaoguang, and
collect and own all of Fujian Jiaoguang’s respective net profits. Additionally,
under a Proxy and Voting Agreement and a Voting Trust and Escrow Agreement, the
shareholders of Fujian Jiaoguang have vested their voting control over Fujian
Jiaoguang to the Company. In order to further reinforce the Company’s rights to
control and operate Fujian Jiaoguang, Fujian Jiaoguang and its shareholders have
granted us, under an Option Agreement, the exclusive right and option to acquire
all of their equity interests in the Fujian Jiaoguang or, alternatively, all of
the assets of Fujian Jiaoguang.  Further, the shareholders of Fujian
Jiaoguang have pledged all of their rights, titles and interests in Fujian
Jiaoguang to us under an Equity Pledge Agreement. We effectuated this
organizational structure due to China’s limitations on foreign investments and
ownership in Chinese domestic businesses.  Generally, the Chinese law
prohibits foreign entities from directly owning certain types of businesses,
such as the media industry.  We have obtained an opinion from
Allbright Law Office, our Chinese legal counsel, that this structure is legal
and valid and that the U.S. holding corporation can obtain the same
benefits and risks with this contractual structure as it would with a direct
equity ownership.





Our Business





We are a
diversified entertainment enterprise focused on China's media and tourism
industries headquartered in Fuzhou City, Fujian province, China. Our core
business strategy is centered around the combination of tourism and media. Our
tourism management business specializes in the development and management of
natural, cultural and historic scenic sites. We currently operate the Great
Golden Lake tourist destination (Global Geo-park), Hua’An Tulou cluster (or the
“Earth Buildings”) tourist destination (World Culture Heritage), and Yunding
tourist destination (Large-scale national recreational park), covering over 300
square kilometers in total for all of our currently managed destinations. Our
media business provides operating management services; including channel, and
advertisement management for the FETV and the “Journey through China on the
Train” railway on-board program.
 
 The Great Golden
Lake
 
 TheGreat Golden Lake was
recognized as theGlobal Geopark by the
United Nations Educational, Scientific, and Cultural Organization (“UNESCO”) in
February 2005. It is located in Taining, surrounding Sanming, Nanping of Fujian
Province and Nanchang of Jiangxi Province. This world-class tourist attraction
covers more than 230 square kilometers, including five (5) main scenic areas:
(1) Golden Lake; (2) Shangqing River; (3) Zhuangyuan Rock; (4) Luohan Mountain;
and (5) Taining Old Town.
 
 In 2001,
we entered into a tourism management revenue sharing agreement with Taining
government, to operate and to manage the Great Golden Lake destination from 2001
through 2032. We initially invested $30 million to improve the infrastructure,
and through a well-designed marketing campaign, we have succeeded in increasing
the number of the visitors from approximately 30,000 in 2001 to approximately
637,000 in 2009. Currently most visitors to the Great Golden Lake are from
Fujian, Shanghai, Guangdong and Jiangxi. With easier transportation and
increased marketing, we expect that the Great Golden Lake should be able to
attract more visitors from other provinces of China and even foreign countries.
Our revenue from the operations of the Great Golden Lake is generated from
entrance ticket fees and parking fees.
 
 Hua’an Tulou Cluster (or the
“Earth Buildings”)
 
 The Tulou
Cluster, composed of large multilayer earth buildings built by ancient wealthy
families as their residence, is knownfor their unique round
shape, ingenious structure and oriental mystery. The Tulou Cluster was
recognized as a World Cultural Heritage in 2008 by UNESCO. The Tulou Cluster is
a 1.5 hour drive away from Xiamen City, one of China’s most famous tourist
coastal cities.


3





In
December 2008, we entered into a Tourist Resources Development Agreement with
Hua’an County Government effective until 2048. Pursuant to this agreement, we
began to develop the Hua’an Tulou tourist destinations with a right of priority
to develop other scenic areas in Hua’an County. Hua’an Tulou cluster requires a
total capital input of approximately $7.5 million to put it into infrastructure
and facility constructions. The Hua’an Tulou Cluster was closed during the
construction and re-opened to the public before the fourth quarter of 2009.
Currently, around half of its visitors are from overseas, including Taiwan. We
expect our revenue to be generated from the sale of entrance ticket fees, fees
from rides on tour cars, and food at our restaurants.
 
 Yunding Recreational
Park
 
 In
November 2008, we entered into the Tourist Destination Cooperative Development
Agreement with Yongtai County Government effective until 2048. Pursuant to the
agreement, we obtained the exclusive right to develop the Yunding scenic areas,
which is approximately 50 kilometer from Fuzhou. We plan to invest approximately
$40 million to build the tourism, transportation and entertainment facilities.
By the end of 2009, we have already invested approximately $30
million.  And we expect to generate revenue from entrance fees, cable
cars and other entertainment activities. We expect that the Yunding Recreational
Park will be open to the public on the second half of 2010.
 
 FETV
 
 Covering
92% of the population of Fujian province located in southeastern China with a
population of over 35 million, Fujian Education Television (“FETV”), owned by
the Fujian Education TV Station, is a provincial comprehensive entertainment
television channel ranked #4 in ratings in Fujian province (Source: ACNielsen
2008 Survey).
 
 Pursuant
to a management agreement (the “Management Agreement”) between Fujian Education
TV Station and Fujian Jiaoguang, our subsidiary, we gained 7 years management
rights from the Fujian Education TV Station,  from August 1, 2003 to
July 31, 2010 (the “Initial Management Term”), to operate FETV at a fixed annual
payment of RMB 10,000,000. Pursuant to the Management Agreement, Fujian
Jiaoguang has an option to extend the Initial Management Term for an
additional 5 years term commencing on July 31, 2010 (the “Extended Management
Term”), provided, that we agree to a 20% increased annual payment for the
management rights during the Extended Management Term, and accept other
amendments to provisions in the Management Agreement.
 Under the
management contract, we obtained the full rights to provide programming and
content and content management services and to re-sell all advertising airtime
of FETV.  We have leveraged the FETV assets to produce high quality TV
programming focused on tourism, successfully promoting our own tourist
attractions branding the FETV station around the tourism theme and creating a
network of potential partners for our tourism business, including hotels, travel
agents, and entertainment resorts.
 
 “Journey through China on
the Train”
 
 In
February 2009, we entered into a six-year exclusive agreement with China’s
Railway Media Center to create “Journey through China on the Train” infomercial
programs, pursuant to which we will produce 20 minute monthly episodes focused
on natural resources, culture and the history of tourism destinations, tourism
advertisement and travel tips. The infomercial programs will be broadcast on7
railway lines into Tibet, all high speed motor trains in China with TV panels
and cable TV channels covering 18 railway bureaus. We will pay an annual fee of
approximately $46,154 or RMB 300,000 to Railway Media Center for the first three
years and approximately $53,846 or RMB 350,000 for the second three years. We
will generate revenue from selling embedded advertisements. At the end of 2009,
“Journey through China on the Train” was shown on 31 railroad lines with 440
trains.


MARKETING
AND DISTRIBUTION METHODS OF PRODUCTS AND SERVICES





Tourist and related
Operations





4





The
current marketing strategy of our tourist and related operations has two major
promotional elements. The first is promoting the unique brand and scenic
location through traditional advertisement mediums.  These traditional
channels include television, radio and print media.  To cut costs, the
Company has implemented a cost minimization plan whereby the majority of the
media advertisement and promotion of the tourist destination is done through the
media platforms available to the Company, including Fujian Education Television
and transportation on-board programming. This cost minimization plan allows our
tourist and related operations to reduce its cost of advertising while
maintaining a relatively high degree of exposure through our provincial TV
channel province-wide and through our transportation on-board programming
nation-wide.





The
second element of the Company's marketing effort of tourist and related
operations is promotion of the scenic destinations through the attainment of
nationally and internationally recognized merits of scenic
achievement.  To this end, the Great Golden Lake has received the
designation of the Global Geo-park title from the UN and ranked in China’s Top
10 Most Appealing Destinations and Top 50 Places for Foreigners to
Visit.  During the second half of 2008, Dadi Tulou was included on the
World Heritage List as part of the Hua’an Tulou Group.  By achieving
this high degree of recognition, the destination becomes visible on a massive
scale increasing the draw of tourists from a provincial to an international
level.  The goal is to significantly increase the daily visitation
rate through attainment of significant merit.





Each
element of the marketing strategy has been developed in order to increase the
international consumer awareness of the Company's tourist destinations, to
reduce the associated costs of such awareness and to ultimately increase the
usage rate and revenues of the park.





Because
the tourist destination is a static product/service, its distribution mainly
consists of the promotional strategies described in the paragraphs above. The
services are promoted and distributed through traditional forms of advertising
media.  Information and marketing materials regarding the park
services are distributed on site.





Media and Related
Operations





The
marketing efforts of our media and related operations can also be split into two
elements.  The first is promoting advertising revenue through program
contents with high viewing rates.  The second is promoting advertising
revenue through larger media coverage.





Promotion
through viewing rate: Through our tourist destinations, network of partners and
content exchange programs, we create and promote our own educational and
entertainment contents which can increase consumer awareness of its
contents. The goal of promoting its programming is to increase its daily viewing
rates and in turn increase the fees it can charge to third party
advertisers. By achieving high rankings in China's television statistics,
the Company becomes better known by potential advertising
clients.  With a high degree of coverage, advertisers are willing to
pay more for the Company’s services.  The Company also engages in
strategic partnerships with other content providers by which they share and
promote each other’s advertising client base to one
another.  Oftentimes, the referring content provider will receive a
finder's fee for introducing the Company to qualified advertising
clients.





Promotion
through media coverage: we attract a lot of our advertising clients through our
media coverage.  For TV channels, we hope to increase our coverage to
reach a national level.  Our FETV channels reach a coverage rate
of 92% in Fujian Province which covers approximately 28 million
people.  Our on-board programming on China’s railroad system currently
covers approximately 1 billion passengers a year.





STATUS
OF PUBLICLY ANNOUNCED NEW PRODUCTS/SERVICES





We expect
that our company will grow over the next few years.  Currently, we own
and operate the Great Golden Lake which is a tourist destination in Fujian
Province.





5





On
December 26, 2008, we entered into the Hua’an Tulou Cluster Tourist Resources
Development Agreement with the Hua’an County People’s Government in Zhangzhou,
China.  Pursuant to this agreement, we have begun to develop the
Hua’an Tulou Cluster Tourism Destination and its surrounding scenic areas
located in the Hua’an County. As a world cultural heritage, Hua’anTulou Cluster
is classified as a world class tourist destination. The surrounding scenic areas
include the Bamboo Plant Garden, Xianzi Lake, rivers along the Xianzi Lake,
Taikou Village, Shangping Wanli Building Three, and South Mountain Palace.
Hua’an Tulou Cluster and its surrounding scenic areas are well-developed, and
can be put into operation without extensive development. The Hua’an County
Government and we are jointly responsible for obtaining the approval and support
from the appropriate administrative agency regarding the admission ticket price
of the Hua’an Tulou Cluster, and its surrounding scenic areas. Our cooperation
and development of the scenic areas shall strictly comply with applicable world
heritage maintenance guide.
 
 On
November 27, 2008, we entered into the Tourist Destination Cooperative
Development Agreement with the Yongtai County People’s Government in Fuzhou,
China.  Pursuant to the agreement, the Yongtai government shall grant
us the exclusive right and special authorization to develop tourist destinations
in Fuzhou located at Yongtai Beixi and Jiezhukou Lake.  Accordingly,
we are obligated to construct, operate and manage the two tourist destinations,
subject to specific terms and conditions negotiated between us and the Yongtai
government.  We have the exclusive right to develop both Yongtai Beixi
and Jiezhukou Lake and the Yongtai government is prohibited from granting the
right of development, operation and management to any third party during the
existence of our agreement.
 
 Effective
February 13, 2009, we entered into a Cooperation Agreement with Railway Media
Center for the purpose of collaborating with Railway Media Center to produce
programs titled “Journey through China on the Train” (the “Journey Program”)
that will be broadcast to passengers traveling on train.  Pursuant to
this agreement, we are obligated to plan and film the Journey Program, and
Railway Media Center shall review and broadcast the Journey Program. The content
of the Journey Program will focus on introduction and preview of natural
resources, culture and history of tourism destinations, tourism
advertisement and travel tips. Railway Media Center will appoint the program
supervisor and we will appoint all the other personnel.
 
 We and
Railway Media Center agreed that the Journey Program shall be inserted into the
programs produced by Railway Media Center for train passengers and be broadcast
in accordance with the following rules:


(1)
            For
      the train line into Tibet, the Journey Program will be limited to 20’
      duration, and be inserted into the program that Railway Media Center
      produced by themselves. The Journey Program shall be broadcast daily on a
      rolling basis.





(2)
            For
      the high-speed motor train unit, the Journey Program will be limited to
      the range of 5-20 minutes, and be broadcast daily on a rolling
      basis.





(3)
            For
      the national broadcast channels covering 18 railway bureaus, we will
      produce a new 20’ episode every week with its premier broadcast on
      Saturday evening and replay on Sunday
afternoon.





(4)
            During
      the Term, if Railway Media Center increases its train TV broadcast
      channels, the Journey Program will be inserted into these added channels
      and be broadcast on a rolling
basis.





We expect
to acquire and develop additional tourist destinations during the next few
months.  In addition, we intend to acquire an educational based
television station in China.  These acquisitions will generate growth
for the Company and help the Company establish itself in these
industries.





INDUSTRY
AND COMPETITIVE FACTORS





We are
currently involved in the tourism and media industries in China.  Both
industries are experiencing significant growth in China.  New
competitors are entering these industries at a record
pace.  Competition is increasing and it is beginning to become
difficult to gain market share and grow.  There are, however, certain
factors that we believe will be critical for our growth:





1. Proven
replicable and unique business model: cross-platform marketing/promotion system
through company multi-platforms;


2.
Successful track record of operating both businesses and maintaining its leading
management position; and


3.
Experienced management team with more than 70 years of combined experience in
China media, tourism and entertainment industry.





6





OUR
INTELLECTUAL PROPERTY





We have obtained a trademark and the
exclusive use permission for the “Great Golden Lake.”  This trademark
has been filed with Taining County State-owned Assets Investment Operation Co.,
Ltd. We do not own nor do
we intend to own any patents or have any of our products or services
patented. In the future,
we intend to acquire other trademarks from companies that we acquire or file
trademarks or patents in order to protect our intellectual
property.





COMPLIANCE
WITH ENVIRONMENTAL LAW





We comply
with the Environmental Protection Law of PRC as well as applicable local
regulations. In addition to statutory and regulatory compliance, we actively
ensure the environmental sustainability of our operations. Penalties would be
levied upon us if we fail to adhere to and maintain certain standards. Such
failure has not occurred in the past, and we generally do not anticipate that it
will occur in the future, but no assurance can be given in this
regard.





EMPLOYEES





Currently,
we have a total of 385 full-time employees, including 16 executive officers and
senior management.
  ITEM 1A .  RISK FACTORS
 
 RISK
FACTORS
  The
market price of our common stock could fluctuate substantially due to a variety
of factors, including market perception of our ability to achieve our planned
growth, quarterly operating results of other companies in the same industry,
trading volume in our common stock, changes in general conditions in the economy
and the financial markets or other developments affecting our competitors or
us. In addition, the stock market is subject to extreme price and volume
fluctuations. This volatility has had a significant effect on the market
price of securities issued by many companies for reasons unrelated to their
operating performance and could have the same effect on our common
stock.
  Risks
Relating to Our Business
 
 ·
                IN
      ORDER TO INCREASE OUR REVENUES, WE BELIEVE WE MUST FURTHER EXPAND OUR
      BUSINESS OPERATIONS. WE CANNOT ASSURE YOU THAT OUR INTERNAL GROWTH
      STRATEGY WILL BE SUCCESSFUL WHICH MAY RESULT IN A NEGATIVE IMPACT ON OUR
      GROWTH, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND CASH
      FLOW.
 
 In order
to maximize the potential growth in our current and potential markets, we
believe that we must further expand the scope of our services in the tourism and
mass media industry. One of our strategies is to grow internally through
increasing the customers we target for advertising campaigns and locations where
we promote tourism by penetrating existing markets in the PRC and entering new
geographic markets in PRC as well as other parts of Asia and
globally.  However, many obstacles to this expansion exist, including,
but not limited to, increased competition from similar businesses, international
trade and tariff barriers, unexpected costs, costs associated with marketing
efforts abroad and maintaining attractive foreign exchange ratios.  We
cannot, therefore, assure you that we will be able to successfully overcome such
obstacles and establish our services in any additional markets.  Our
inability to implement this internal growth strategy successfully may have a
negative impact on our growth, future financial condition, results of operations
or cash flows.
 
 ·
                IN
      ADDITION TO OUR INTERNAL GROWTH STRATEGY, WE MAY GROW THROUGH STRATEGIC
      ACQUISITIONS. WE CANNOT ASSURE YOU THAT OUR ACQUISITION GROWTH STRATEGY
      WILL BE SUCCESSFUL RESULTING IN OUR FAILURE TO MEET GROWTH AND REVENUE
      EXPECTATIONS.
   7
  We also
intend to pursue opportunities to acquire businesses in the PRC that are
complementary or related in product lines and business structure to us. However,
we may not be able to locate suitable acquisition candidates at prices that we
consider appropriate or to finance acquisitions on terms that are satisfactory
to us.  If we do identify an appropriate acquisition candidate, we may
not be able to negotiate successfully the terms of an acquisition, or, if the
acquisition occurs, integrate the acquired business into our existing
business.  Acquisitions of businesses or other material operations may
require debt financing or additional equity financing, resulting in leverage or
dilution of ownership.  Integration of acquired business operations
could disrupt our business by diverting management away from day-to-day
operations. The difficulties of integration may be increased by the necessity of
coordinating geographically dispersed organizations, integrating personnel with
disparate business backgrounds and combining different corporate
cultures.
 
 We also
may not be able to maintain key employees or customers of an acquired business
or realize cost efficiencies or synergies or other benefits we anticipated when
selecting our acquisition candidates.  In addition, we may need to
record write-downs from future impairments of intangible assets, which could
reduce our future reported earnings.  At times, acquisition candidates
may have liabilities or adverse operating issues that we fail to discover
through due diligence prior to the acquisition.  In addition to the
above, acquisitions in PRC, including state owned businesses, will be required
to comply with laws of the PRC, to the extent applicable. There can be no
assurance that any given proposed acquisition will be able to comply with PRC
requirements, rules and/or regulations, or that we will successfully obtain
governmental approvals which are necessary to consummate such acquisitions, to
the extent required.  If our acquisition strategy is unsuccessful, we
will not grow our operations and revenues at the rate that we
anticipate.
 
 ·
                IN
      THE EVENT OF RAPID GROWTH OF OUR BUSINESS OPERATIONS, WE MAY EXPERIENCE A
      SIGNIFICANT STRAIN ON OUR MANAGEMENT AND OPERATIONAL INFRASTRUCTURE. OUR
      FAILURE TO MANAGE GROWTH WILL CAUSE A DISRUPTION OF OUR OPERATIONS
      RESULTING IN THE FAILURE TO GENERATE
REVENUE.
 
 If we
expand our business through successful implementation of our internal growth
strategy and/or acquisition strategy, our management and our operational,
accounting, and information infrastructure may experience a significant strain
caused by such expansion.  In order to deal with the strain our
anticipated business expansion could put on our resources, we will need to
continue to improve our financial controls, operating procedures, and management
information systems.  We will also need to effectively train,
motivate, and manage our employees.  Our failure to manage our growth
could disrupt our operations and ultimately prevent us from generating the
revenues we expect.
 
 ·
                IF
      WE ARE NOT ABLE TO IMPLEMENT OUR STRATEGIES OR EXPAND OUR MEDIA OPERATIONS
      AND ACQUIRE ADDITIONAL TOURIST ATTRACTIONS, OUR BUSINESS OPERATIONS AND
      FINANCIAL PERFORMANCE MAY BE ADVERSELY
AFFECTED.
 
 We
expanded our business in 2008 by acquiring the operation rights of additional
tourist attractions under various agreements, including Yongtai Beixi and
Jiezhukou Lake, Hua’an Tulou, and the Great Golden Lake, and establishing
collaboration with Railway Media Center to produce programs titled “Journey
through China on the Train.” Our continuous business development plan is based
on a further expansion of our media services and acquisition of additional
tourist attractions. There is inherent risks and uncertainties involved
throughout these stages of development.  There is no assurance that we
will be successful in continuously expanding our media operations or acquiring
additional tourist attractions, or that our strategies, even if implemented,
will lead to the successful achievement of our objectives.  If we are
not able to successfully implement these further development strategies, our
business operations and financial performance may be adversely
affected.
 
 ·
                TOURISM
      AND MEDIA ARE COMPETITVE BUSINESS ENVIRONMENTS WHICH COULD ADVERSELY
      AFFECT OUR FINANCIAL PERFORMANCE.
 
 We
operate in a competitive environment and have to compete with other tourist
destinations and media outlets in order to attract visitors and
customers.  In order to be successful in attracting visitors or
customers we may be forced to lower prices or spend more money on advertising to
continue to compete with our competitors.  These competitive measures
may result in lower net income.
 
 ·
                ECONOMIC
      CRISIS OR TURMOIL, OR SUPPRESSION ON INDIVIDUAL RIGHTS MAY CAUSE A
      DOWNTURN IN CHINA’S TOURISM
INDUSTRY.
 
 A
downturn in the world economic markets, or just the Chinese economy, may have a
negative impact on our business.  Consumers with a lack of disposable
incomes may decide not to vacation or travel to our tourism destinations, which
would negatively impact our business.  Additionally, the perceived
suppression of individual rights by the Chinese government may deter tourists
from visiting China, which may cause a decline in visitors to our
attraction.
 
 ·
                THE
      SLOW RECOVERY OF THE GLOBAL ECONOMIC CRISIS COULD AFFECT THE OVERALL
      AVAILABILITY AND COST OF EXTERNAL FINANCING FOR OUR
      OPERATIONS.
 
 The slow
recovery of the global financial markets from the global economic crisis and
turmoil may adversely impact our business, the business and financial condition
of our customers and the business of potential investors from whom we expect to
generate our potential sources of capital financing. Presently it is unclear to
what extent the economic stimulus measures and other actions taken or
contemplated by the Chinese governments and other governments throughout the
world will mitigate the effects of the negative impact caused by the economic
turmoil on our industry and other industries that affect our business. Although
these conditions have not presently impaired our ability to access credit
markets and finance our operations, the impact of the current crisis on our
ability to obtain capital financing in the future, and the cost and terms of
same, is unclear.
   8
 
 ·
                A
      FAILURE TO EXPAND OUR MEDIA OPERATIONS OR GOVERNMENT REGULATIONS
      RESTRICTING THE MEDIA INDUSTRY IN CHINA COULD HAVE A NEGATIVE IMPACT ON
      OUR OPERATIONS.
 
 If our
advertising and media operations fail to grow, this would have a negative impact
on our future operating results.  Further, government regulations, if
enacted, restricting media content would negatively affect our media
operations.  Any restriction on media content would limit the
potential amount of customers able to use our media services and negatively
impact our financial results.
 
 ·
                WE
      DEPEND ON OUR KEY MANAGEMENT PERSONNEL AND THE LOSS OF THEIR SERVICES
      COULD ADVERSELY AFFECT OUR
BUSINESS.
 
 We place
substantial reliance upon the efforts and abilities of our executive officers,
Mr. Chen Minhua, our Chairman and Chief Executive Officer and Ms. Fan Yanling,
our Vice President of Operations.  The loss of the services of any of
our executive officers could have a material adverse effect on our business,
operations, revenues or prospects.  We do not maintain key man life
insurance on the lives of these individuals. We may not be able to attract or
retain qualified management on acceptable terms in the future due to the intense
competition for qualified personnel in our industry and as a result, our
business could be adversely affected.
 
 ·
                WE
      MAY NEVER PAY ANY DIVIDENDS TO
SHAREHOLDERS.
 
 We have
never paid any dividends.  Our board of directors does not intend to
distribute dividends in the near future.  The declaration, payment and
amount of any future dividends will be made at the discretion of the board of
directors, and will depend upon, among other things, the results of our
operations, cash flows and financial condition, operating and capital
requirements, and other factors as the board of directors considers
relevant.  There is no assurance that future dividends will be paid,
and, if dividends are paid, there is no assurance with respect to the amount of
any such dividend.
 
 ·
                WE
      DO NOT CARRY ANY BUSINESS INTERRUPTION INSURANCE, PRODUCT LIABILITY OR
      RECALL INSURANCE OR THIRD-PARTY LIABILITY
  INSURANCE.
 
 Operation
of our business and facilities involves many risks, including natural disasters,
labor disturbances, business interruptions, property damage, personal injury and
death.  We do not carry any business interruption insurance or
third-party liability insurance for our business to cover claims in respect of
personal injury or property or environmental damage arising from accidents on
our property or relating to our operations. Therefore, we may not have insurance
coverage sufficient to cover all risks associated with our business. As a
result, we may be required to pay for financial and other losses, damages and
liabilities, including those caused by natural disasters and other events beyond
our control, out of our own funds, which could have a material adverse effect on
our business, financial condition and results of operations.
 
 ·
                MANAGEMENT
      EXERCISES SIGNIFICANT CONTROL OVER MATTERS REQUIRING SHAREHOLDER APPROVAL
      WHICH MAY RESULT IN THE DELAY OR PREVENTION OF A CHANGE IN OUR
      CONTROL.
 
 Mr. Chen
Minhua, our Chairman and Chief Executive Officer, through his common stock
ownership, currently has voting power equal to approximately 32.99% of our
voting securities. Ms. Fan Yanling, our Vice President of Operations and the
spouse of Mr. Chen Minhua, through her common stock ownership, currently has
voting power equal to approximately 32.99% of our voting
securities.  Mr. Chen Minhua and Ms. Fan Yanling have combined voting
power in our Company equal to approximately 65.98% of our voting
securities. As a result, management through such stock ownership exercises
significant control over all matters requiring shareholder approval, including
the election of directors and approval of significant corporate
transactions.  This concentration of ownership in management may also
have the effect of delaying or preventing a change in control of us that may be
otherwise viewed as beneficial by shareholders other than
management.
 
 ·
                WE
      MAY INCUR SIGNIFICANT COSTS TO ENSURE COMPLIANCE WITH UNITED STATES
      CORPORATE GOVERNANCE AND ACCOUNTING
  REQUIREMENTS.
 
 We may
incur significant costs associated with our public company reporting
requirements, costs associated with newly applicable corporate governance
requirements, including requirements under the Sarbanes-Oxley Act of 2002 and
other rules implemented by the Securities and Exchange Commission. We expect all
of these applicable rules and regulations to significantly increase our legal
and financial compliance costs and to make some activities more time consuming
and costly.  We also expect that these applicable rules and
regulations may make it more difficult and more expensive for us to obtain
director and officer liability insurance and we may be required to accept
reduced policy limits and coverage or incur substantially higher costs to obtain
the same or similar coverage.  As a result, it may be more difficult
for us to attract and retain qualified individuals to serve on our board of
directors or as executive officers.  We are currently evaluating and
monitoring developments with respect to these newly applicable rules, and we
cannot predict or estimate the amount of additional costs we may incur or the
timing of such costs. Even though we have been a reporting company since 1999,
this risk applies to us because we completed a share exchange with Keenway
Limited in 2007 whereby a Chinese operating company became our wholly owned
subsidiary.  This Chinese operating company is newly reporting and we
are adjusting to the increased disclosure requirements for us to comply
with corporate governance and accounting requirements.
 
 9
  ·
                IF
      WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROL OVER FINANCIAL
      REPORTING, OUR ABILITY TO ACCURATELY AND TIMELY REPORT OUR FINANCIAL
      RESULTS OR PREVENT FRAUD MAY BE ADVERSELY AFFECTED AND INVESTOR CONFIDENCE
      AND THE MARKET PRICE OF OUR ORDINARY SHARES MAY BE ADVERSELY
      IMPACTED.
 
 As
directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the
Securities and Exchange Commission adopted rules requiring public companies to
include a report of management on the company’s internal controls over financial
reporting in their annual reports, including Form 10-K.  In addition,
the independent registered public accounting firm auditing a company’s financial
statements must also attest to and report on the effectiveness of the company’s
internal controls over financial reporting.  Under current SEC rules,
we will be required to include a management report and our independent
registered public accounting firm’s attestation report beginning with our annual
report for the fiscal year ending December 31, 2009.  Our management
may conclude that our internal controls over our financial reporting are not
effective.  Even if our management concludes that our internal
controls over financial reporting are effective, our independent registered
public accounting firm may issue a report that is qualified if it is not
satisfied with our controls or the level at which our controls are documented,
designed, operated or reviewed, or if it interprets the relevant requirements
differently from us.  Any of these possible outcomes could result in
an adverse reaction in the financial marketplace due to a loss of investor
confidence in the reliability
 
 ·
                WE
      MAY HAVE DIFFICULTY RAISING NECESSARY CAPITAL TO FUND OPERATIONS AS A
      RESULT OF MARKET PRICE VOLATILITY FOR OUR SHARES OF COMMON
      STOCK.
 
 In recent
years, the securities markets in the United States have experienced a high level
of price and volume volatility, and the market price of securities of many
companies have experienced wide fluctuations that have not necessarily been
related to the operations, performances, underlying asset values or prospects of
such companies.  For these reasons, our shares of common stock can
also be expected to be subject to volatility resulting from purely market forces
over which we will have no control.  If our business development plans
are successful, we may require additional financing to continue to develop and
exploit existing and new products and services related to our industries and to
expand into new markets.  The exploitation of our services may,
therefore, be dependent upon our ability to obtain financing through debt and
equity or other means.
 
 ·
                WE
      HAVE A CONTRACTUAL RELATIONSHIP WITH FUJIAN JIAOGUANG MEDIA WHICH MAY BE
      IN NON-COMPLIANCE WITH PRC LAWS AND DOES NOT PROVIDE THE SAME OPERATIONAL
      CONTROL AS A DIRECT EQUITY
INTEREST.
 
 Our
contractual relationship with Fujian Jiaoguang Media was structured as a
contractual relationship as opposed to a direct equity interest in order to
comply with PRC law.  We have received a PRC legal counsel attesting
that this structure is in compliance with the PRC law.  However, the
PRC law may be subject to change or the government may review the structure
and determine that this contractual relationship is not in compliance with PRC
laws and force the termination of this relationship.  Additionally,
the contractual relationship between us and Fujian Jiaoguang Media does not
provide us with the same operational control as a direct equity
interest.  Therefore, we are subject to the risks associated with
contractual rights as opposed to owning the company.  Such risks could
include breach of contract or failure to honor the terms of the
contract.
 
 Risks
Relating to the People's Republic of China
 
 ·
                SUBSTANTIALLY
      ALL OF OUR OPERATING ASSETS ARE LOCATED IN CHINA AND SUBSTANTIALLY ALL OF
      OUR REVENUE WILL BE DERIVED FROM OUR OPERATIONS IN CHINA SO OUR BUSINESS,
      RESULTS OF OPERATIONS AND PROSPECTS ARE SUBJECT TO THE ECONOMIC, POLITICAL
      AND LEGAL POLICIES, DEVELOPMENTS AND CONDITIONS IN
  CHINA.
 
 The PRC’s
economic, political and social conditions, as well as government policies, could
impair our business.  The PRC economy differs from the economies of
most developed countries in many respects.  China’s GDP has grown
consistently since 1978 (National Bureau of Statistics of
China).  However, we cannot assure you that such growth will be
sustained in the future. If, in the future, China’s economy experiences a
downturn or grows at a slower rate than expected, there may be less demand for
spending in certain industries. A decrease in demand for spending in certain
industries could impair our ability to remain profitable.  The PRC’s
economic growth has been uneven, both geographically and among various sectors
of the economy. The PRC government has implemented various measures to encourage
economic growth and guide the allocation of resources. Some of these measures
benefit the overall PRC economy, but may have a negative effect on
us.  For example, our financial condition and results of operations
may be hindered by PRC government control over capital investments or changes in
tax regulations.
   10
 
 The PRC
economy has been transitioning from a planned economy to a more market-oriented
economy. Although in recent years the PRC government has implemented measures
emphasizing the use of market forces for economic reform, the reduction of state
ownership of productive assets and the establishment of sound corporate
governance in business enterprises, a substantial portion of productive assets
in China is still owned by the PRC government. In addition, the PRC government
continues to play a significant role in regulating industry development by
imposing industrial policies. It also exercises significant control over PRC
economic growth through the allocation of resources, controlling payment of
foreign currency-denominated obligations, setting monetary policy and providing
preferential treatment to particular industries or companies.
 
 ·
                IF
      THE MINISTRY OF COMMERCE, OR MOFCOM, CHINA SECURITIES REGULATORY
      COMMISSION, OR CSRC, OR ANOTHER PRC REGULATORY AGENCY, DETERMINES THAT
      MOFCOM AND CSRC APPROVAL OF OUR MERGER WAS REQUIRED OR IF OTHER REGULATORY
      OBLIGATIONS ARE IMPOSED UPON US, WE MAY INCUR SANCTIONS, PENALTIES OR
      ADDITIONAL COSTS WHICH WOULD DAMAGE OUR
  BUSINESS.
 
 On August
8, 2006, six PRC regulatory agencies, including the MOFCOM and the CSRC,
promulgated the Rules on Acquisition of Domestic Enterprises by Foreign
Investors, or the M&A Rules, a new regulation with respect to the mergers
and acquisitions of domestic enterprises by foreign investors that became
effective on September 8, 2006.  Article 11 of the M&A Rules
requires PRC companies, enterprises or natural persons to obtain MOFCOM approval
in order to effectuate mergers or acquisitions between PRC companies and foreign
companies legally established or controlled by such PRC companies, enterprises
or natural persons.  Article 40 of the M&A Rules requires that an
offshore special purpose vehicle formed for overseas listing purposes and
controlled directly or indirectly by PRC companies or individuals should obtain
the approval of the CSRC prior to the listing and trading of such offshore
special purpose vehicle’s securities on an overseas stock exchange,
especially in the event that the offshore special purpose vehicle acquires
shares of or equity interests in the PRC companies in exchange for the shares
of offshore companies.  On September 21, 2006, the CSRC published on
its official website procedures and filing requirements for offshore
special purpose vehicles seeking CSRC approval of their overseas
listings.
 
 On
November 19, 2007, we completed a merger transaction pursuant to a share
exchange and stock purchase agreement , which resulted in our current ownership
and corporate structure.  We believe, based on the opinion of our PRC legal
counsel, Allbright Law Offices, that MOFCOM and CSRC approvals were not required
for our merger transaction or for the listing and trading of our securities on a
trading market because we are not an offshore special purpose vehicle that is
directly or indirectly controlled by PRC companies or
individuals.  Although the merger and acquisition regulations provide
specific requirements and procedures, there are still many ambiguities in the
meaning of many provisions.  Further regulations are anticipated in the
future, but until there has been clarification either by pronouncements,
regulation or practice, there is some uncertainty in the scope of the
regulations and the regulators have wide latitude in the enforcement of the
regulations and approval of transactions.  If the MOFCOM, CSRC or another
PRC regulatory agency subsequently determines that the MOFCOM and CSRC approvals
were required, we may face sanctions by the MOFCOM, CSRC or another PRC
regulatory agency.  If this happens, these regulatory agencies may
impose fines and penalties on our operations in China, limit our operating
privileges in China, delay or restrict the repatriation of the proceeds from
this offering into China, restrict or prohibit payment or remittance of
dividends paid by Fujian Jintai, or take other actions that could damage our
business, financial condition, results of operations, reputation and prospects,
as well as the trading price of our securities.
 
 ·
                THE
      NEW M&A REGULATIONS ESTABLISH MORE COMPLEX PROCEDURES FOR SOME
      ACQUISITIONS OF CHINESE COMPANIES BY FOREIGN INVESTORS, WHICH COULD MAKE
      IT MORE DIFFICULT FOR US TO PURSUE GROWTH THROUGH ACQUISITION IN
      CHINA.
 
 The New
M&A Regulations establish additional procedures and requirements that could
make some acquisitions of PRC companies by foreign investors, such as ours, more
time-consuming and complex, including requirements in some instances that the
approval of the Ministry of Commerce shall be required for transactions
involving the shares of an offshore listed company being used as the acquisition
consideration by foreign investors.  In the future, we may grow our
business in part by acquiring complementary businesses.  Complying
with the requirements of the New M&A Regulations to complete such
transactions could be time-consuming, and any required approval processes,
including obtaining approval from the Ministry of Commerce, may delay or inhibit
our ability to complete such transactions, which could affect our ability to
expand our business or maintain our market share.
 
 ·
                IF
      THE PRC IMPOSES RESTRICTIONS DESIGNED TO REDUCE INFLATION, FUTURE ECONOMIC
      GROWTH IN THE PRC COULD BE SEVERELY CURTAILED WHICH COULD HURT OUR
      BUSINESS AND PROFITABILITY.
 
 While the
economy of the PRC has experienced rapid growth, this growth has been uneven
among various sectors of the economy and in different geographical areas of the
country.  Rapid economic growth often can lead to growth in the supply
of money and rising inflation.  In order to control inflation in the
past, the PRC has imposed controls on bank credits, limits on loans for fixed
assets and restrictions on state bank lending.  Imposition of similar
restrictions may lead to a slowing of economic growth, a decrease in demand for
our steel products and generally damage our business and
profitability.
 
  11
  ·
                FLUCTUATIONS
      IN EXCHANGE RATES COULD HARM OUR BUSINESS AND THE VALUE OF OUR
      SECURITIES.
 
 The value
of our ordinary shares will be indirectly affected by the foreign exchange rate
between U.S. dollars and RMB and between those currencies and other currencies
in which our sales may be denominated. Because substantially all of our earnings
and cash assets are denominated in RMB and the net proceeds from this offering
will be denominated and our financial results are reported in U.S. dollars,
fluctuations in the exchange rate between the U.S. dollar and the RMB will
affect the relative purchasing power of these proceeds, our balance sheet and
our earnings per share in U.S. dollars following this offering.  In
addition, appreciation or depreciation in the value of the RMB relative to the
U.S. dollar would affect our financial results reported in U.S. dollar terms
without giving effect to any underlying change in our business or results of
operations.  Fluctuations in the exchange rate will also affect the
relative value of any dividend we issue that will be exchanged into U.S. dollars
as well as earnings from, and the value of, any U.S. dollar-denominated
investments we make in the future.  Since July 2005, the RMB has not
been pegged to the U.S. dollar. Although the People’s Bank of China regularly
intervenes in the foreign exchange market to prevent significant short-term
fluctuations in the exchange rate, the RMB may appreciate or depreciate
significantly in value against the U.S. dollar in the medium to long term.
Moreover, it is possible that in the future PRC authorities may lift
restrictions on fluctuations in the RMB exchange rate and lessen intervention in
the foreign exchange market.
 
 Very limited hedging transactions are
available in China to reduce our exposure to exchange rate fluctuations. To
date, we have not entered into any hedging transactions. While we may enter into
hedging transactions in the future, the availability and effectiveness of these
transactions may be limited, and we may not be able to successfully hedge our
exposure at all. In addition, our foreign currency exchange losses may be
magnified by PRC exchange control regulations that restrict our ability to
convert RMB into foreign currencies.
 
 ·
                EXCHANGE
      CONTROLS THAT EXIST IN THE PRC MAY LIMIT OUR ABILITY TO UTILIZE OUR CASH
      FLOW EFFECTIVELY.
 
 We are
subject to the PRC’s rules and regulations on currency conversion.  In
the PRC, the State Administration for Foreign Exchange, or SAFE, regulates the
conversion between Renminbi and foreign currencies. Currently, foreign
investment enterprises, or FIEs, are required to apply to the SAFE for “Foreign
Exchange Registration Certificates for FIEs.” As a result of our ownership
of Fujian Jintai, Fujian Jintai is a FIE.  With such registration
certificates, which need to be renewed annually, FIEs are allowed to open
foreign currency accounts including a “current account” and “capital account.”
Currency conversion within the scope of the “current account,” such as
remittance of foreign currencies for payment of dividends, can be effected
without requiring the approval of the SAFE.  However, conversion of
currency in the “capital account,” including capital items such as direct
foreign investment, loans and securities, still require approval of the SAFE.
Further, any capital contributions to Henan Fujian Jintai by its offshore
shareholder must be approved by the Ministry of Commerce in China or its local
counterpart. We cannot assure you that the PRC regulatory authorities will
not impose further restrictions on the convertibility of the Renminbi. Any
future restrictions on currency exchanges may limit our ability to use our cash
flow for the distribution of dividends to our shareholders or to fund operations
it may have outside of the PRC.
 
 In August
2008, SAFE promulgated Circular 142, a notice regulating the conversion by FIEs
of foreign currency into Renminbi by restricting how the converted Renminbi may
be used.  Circular 142 requires that Renminbi converted from the
foreign currency-dominated capital of a FIE may only be used for purposes within
the business scope approved by the applicable government authority and may not
be used for equity investments within the PRC unless specifically provided for
otherwise.  In addition, SAFE strengthened its oversight over the flow
and use of Renminbi funds converted from the foreign currency-dominated capital
of a FIE.  The use of such Renminbi may not be changed without
approval from SAFE, and may not be used to repay Renminbi loans if the proceeds
of such loans have not yet been used.  Violations of Circular 142 may
result in severe penalties, including substantial fines as set forth in the SAFE
rules.
 
 ·
                PRC
      REGULATIONS RELATING TO THE ESTABLISHMENT OF OFFSHORE SPECIAL PURPOSE
      COMPANIES BY PRC RESIDENTS MAY SUBJECT OUR PRC RESIDENT SHAREHOLDERS TO
      PERSONAL LIABILITY AND LIMIT OUR ABILITY TO INJECT CAPITAL INTO OUR PRC
      SUBSIDIARIES, LIMIT OUR PRC SUBSIDIARIES’ ABILITY TO DISTRIBUTE PROFITS TO
      US, OR OTHERWISE ADVERSELY AFFECT
US.
 
 SAFE
issued a public notice in October 2005, or the SAFE notice, requiring PRC
residents to register with the local SAFE branch before establishing or
controlling any company outside of China for the purpose of capital financing
with assets or equities of PRC companies, referred to in the notice as an
“offshore special purpose company.” PRC residents that are shareholders of
offshore special purpose companies established before November 1, 2005 were
required to register with the local SAFE branch before March 31, 2006.The
failure of our beneficial owners to timely amend their SAFE registrations
pursuant to the SAFE notice or the failure of future beneficial owners of our
company who are PRC residents to comply with the registration procedures set
forth in the SAFE notice may subject such beneficial owners to fines and legal
sanctions and may also limit our ability to contribute additional capital into
our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute
dividends to our company or otherwise adversely affect our
business.
 
  12
  ·
                ANY
      OUTBREAK OF THE SWINE FLU (H1N1), SEVERE ACUTE RESPIRATORY SYNDROME, OR
      SARS, THE AVIAN FLU, OR ANOTHER WIDESPREAD PUBLIC HEALTH PROBLEM IN THE
      PRC COULD ADVERSELY AFFECT OUR
OPERATIONS.
 
 There
have been recent outbreaks of the highly pathogenic Swine Flu, caused by the
H1N1 virus, in certain regions of the world, including parts of China, where all
of our manufacturing facilities are located and where all of our sales
occur.  Our business is dependent upon our ability to attract a large
volume of visitors to our tourism destinations, and an outbreak of the Swine
Flu, or a renewed outbreak of SARS, the Avian Flu, or another widespread public
health problem in China, could have a negative effect on our
operations.  Any such outbreak could have an impact on our operations
as a result of:
 
 ·
                quarantines
      or closures of our tourist destinations·
                the
      sickness or death of our key officers and employees,
and·
                a
      general slowdown in the Chinese
economy.
 
 Any of
the foregoing events or other unforeseen consequences of public health problems
could adversely affect our operations.
 
 ·
                BECAUSE
      CHINESE LAW GOVERNS MANY OF OUR MATERIAL AGREEMENTS, WE MAY NOT BE ABLE TO
      ENFORCE OUR RIGHTS WITHIN THE PRC OR ELSEWHERE, WHICH COULD RESULT IN A
      SIGNIFICANT LOSS OF BUSINESS, BUSINESS OPPORTUNITIES OR
      CAPITAL.
 
 Chinese
law governs many of our material agreements, some of which may be with Chinese
governmental agencies. We cannot assure you that we will be able to enforce any
of our material agreements or that remedies will be available outside of the
PRC.  The system of laws and the enforcement of existing laws and
contracts in the PRC may not be as certain in implementation and interpretation
as in the United States. The Chinese judiciary is relatively inexperienced in
enforcing corporate and commercial law, leading to a higher than usual degree of
uncertainty as to the outcome of any litigation. The inability to enforce or
obtain a remedy under any of our future agreements could result in a significant
loss of business, business opportunities or capital.
 
 ·
                BECAUSE
      OUR FUNDS ARE HELD IN BANKS IN UNINSURED PRC BANK ACCOUNTS, THE FAILURE OF
      ANY BANK IN WHICH WE DEPOSIT OUR FUNDS COULD AFFECT OUR ABILITY TO
      CONTINUE IN BUSINESS.
 
 Funds on
deposit at banks and other financial institutions in the PRC are often
uninsured.  A significant portion of our assets are in the form of
cash deposited with banks in the PRC, and in the event of a bank failure, we may
not have access to our funds on deposit.  Depending upon the amount of
money we maintain in a bank that fails, our inability to have access to our cash
could impair our operations, and, if we are not able to access funds to pay our
suppliers, employees and other creditors, we may be unable to continue in
business.
 
 ·
                OUR
      BUSINESS COULD BE SEVERELY HARMED IF THE CHINESE GOVERNMENT CHANGES ITS
      POLICIES, LAWS, REGULATIONS, TAX STRUCTURE OR ITS CURRENT INTERPRETATIONS
      OF ITS LAWS, RULES AND REGULATIONS RELATING TO OUR OPERATIONS IN
      CHINA.
 
 Our
business is located in Fujian, China and virtually all of our assets are located
in China.  We generate our sales revenue only from customers located
in China.  Our results of operations, financial state of affairs and
future growth are, to a significant degree, subject to China’s economic,
political and legal development and related uncertainties. Our operations and
results could be materially affected by a number of factors, including, but not
limited to
 
 ·
                Changes
      in policies by the Chinese government resulting in changes in laws or
      regulations or the interpretation of laws or
  regulations,·
                changes
      in taxation,·
                changes
      in employment restrictions,
 
 ·
                import
      duties, and·
                currency
      revaluation.
 
 Over the
past several years, the Chinese government has pursued economic reform policies
including the encouragement of private economic activities and greater economic
decentralization. If the Chinese government does not continue to pursue its
present policies that encourage foreign investment and operations in China, or
if these policies are either not successful or are significantly altered, then
our business could be harmed.  Following the Chinese government’s
policy of privatizing many state-owned enterprises, the Chinese government has
attempted to augment its revenues through increased tax
collection.  It also exercises significant control over China’s
economic growth through the allocation of resources, controlling payment of
foreign currency-denominated obligations, setting monetary policy and providing
preferential treatment to particular industries or
companies.  Continued efforts to increase tax revenues could result in
increased taxation expenses being incurred by us.  Economic
development may be limited as well by the imposition of austerity measures
intended to reduce inflation, the inadequate development of infrastructure and
the potential unavailability of adequate power and water supplies,
transportation and communications.  In addition, the Chinese
government continues to play a significant role in regulating industry by
imposing industrial policies.
   13
 
 ·
                THE
      CHINESE LAWS AND REGULATIONS WHICH GOVERN OUR CURRENT BUSINESS OPERATIONS
      ARE SOMETIMES VAGUE AND UNCERTAIN AND MAY BE CHANGED IN A WAY THAT HURTS
      OUR BUSINESS.
 
 China’s
legal system is a civil law system based on written statutes, in which system
decided legal cases have little value as precedents, unlike the common law
system prevalent in the United States. There are substantial uncertainties
regarding the interpretation and application of Chinese laws and regulations,
including but not limited to the laws and regulations governing our business, or
the enforcement and performance of our arrangements with customers in the event
of the imposition of statutory liens, death, bankruptcy and criminal
proceedings.  The Chinese government has been developing a
comprehensive system of commercial laws, and considerable progress has been made
in introducing laws and regulations dealing with economic matters such as
foreign investment, corporate organization and governance, commerce, taxation
and trade.  However, because these laws and regulations are relatively
new, and because of the limited volume of published cases and judicial
interpretation and their lack of force as precedents, interpretation and
enforcement of these laws and regulations involve significant uncertainties. New
laws and regulations that affect existing and proposed future businesses may
also be applied retroactively.   We are considered an FIE under
Chinese laws, and as a result, we must comply with Chinese laws and
regulations.  We cannot predict what effect the interpretation of
existing or new Chinese laws or regulations may have on our
business.  If the relevant authorities find us to be in violation of
Chinese laws or regulations, they would have broad discretion in dealing with
such a violation, including, without limitation: levying fines; revoking our
business and other licenses; requiring that we restructure our ownership or
operations; and requiring that we discontinue any portion or all of our
business.
 
 ·
                A
      SLOWDOWN OR OTHER ADVERSE DEVELOPMENTS IN THE CHINESE ECONOMY MAY
      MATERIALLY AND ADVERSELY AFFECT OUR CUSTOMERS’ DEMAND FOR OUR SERVICES AND
      OUR BUSINESS.
 
 All of
our operations are conducted in China and all of our revenues are generated from
sales to businesses operating in China.  Although the Chinese economy
has grown significantly in recent years, such growth may not continue. We do not
know how sensitive we are to a slowdown in economic growth or other adverse
changes in Chinese economy which may affect demand for precision steel
products.  A slowdown in overall economic growth, an economic downturn
or recession or other adverse economic developments in China may materially
reduce the demand for our services and in turn reduce our results of
operations.
 
 ·
                FAILURE
      TO COMPLY WITH THE U.S. FOREIGN CORRUPT PRACTICES ACT AND CHINESE
      ANTI-CORRUPTION LAWS COULD SUBJECT US TO PENALTIES AND OTHER ADVERSE
      CONSEQUENCES.
 
 Our
executive officers, employees and other agents may violate applicable law in
connection with the marketing or sale of our products, including China’s
anti-corruption laws and the U.S. Foreign Corrupt Practices Act, or the FCPA,
which generally prohibits United States companies from engaging in bribery or
other prohibited payments to foreign officials for the purpose of obtaining or
retaining business.  In addition, we are required to maintain records
that accurately and fairly represent our transactions and have an adequate
system of internal accounting controls.  Foreign companies, including
some that may compete with us, are not subject to these prohibitions, and
therefore may have a competitive advantage over us. The PRC also strictly
prohibits bribery of government officials.  However, corruption,
extortion, bribery, pay-offs, theft and other fraudulent practices occur from
time-to-time in the PRC.
 
 While we
intend to implement measures to ensure compliance with the FCPA and Chinese
anti-corruption laws by all individuals involved with our company, our employees
or other agents may engage in such conduct for which we might be held
responsible.  If our employees or other agents are found to have
engaged in such practices, we could suffer severe penalties and other
consequences that may have a material adverse effect on our business, financial
condition and results of operations.  In addition, our brand and
reputation, our sales activities or the price of our ordinary shares could be
adversely affected if we become the target of any negative publicity as a result
of actions taken by our employees or other agents.
 
 ·
                THE
      IMPLEMENTATION OF THE NEW PRC EMPLOYMENT CONTRACT LAW AND INCREASES IN THE
      LABOR COSTS IN CHINA MAY HURT OUR BUSINESS AND
    PROFITABILITY.
 
 A new
employment contract law became effective on January 1, 2008 in China. It imposes
more stringent requirements on employers in relation to entry into fixed-term
employment contracts, recruitment of temporary employees and dismissal of
employees. In addition, under the newly promulgated Regulations on Paid
Annual Leave for Employees, which also became effective on January 1, 2008,
employees who have worked continuously for more than one year are entitled to
paid vacation ranging from 5 to 15 days, depending on the length of the
employee’s service. Employees who waive such vacation entitlements at the
request of the employer will be compensated for three times their normal daily
salaries for each vacation day so waived. As a result of the new law and
regulations, our labor costs may increase. There is no assurance that disputes,
work stoppages or strikes will not arise in the future. Increases in the labor
costs or future disputes with our employees could damage our business, financial
condition or operating results.
  14
  ·
                UNDER
      THE NEW EIT LAW, CHINA YIDA AND HONG KONG YI TAT MAY BE CLASSIFIED AS
      “RESIDENT ENTERPRISES” OF CHINA, WHICH MAY SUBJECT CHINA YIDA AND HONG
      KONG YI TAT TO PRC INCOME TAX ON THEIR TAXABLE GLOBAL
    INCOME.
 
 China
passed a new Enterprise Income Tax Law, or the New EIT Law, and its
implementation regulations, both of which became effective on January 1,
2008.  Under the New EIT Law, an enterprise established outside of
China with “de facto management bodies” within China is considered a “resident
enterprise,” meaning that it can be treated in a manner similar to a Chinese
domestic enterprise for enterprise income tax purposes. The implementing rules
of the New EIT Law define de facto management as “substantial and overall
management and control over the production and operations, personnel,
accounting, and properties” of the enterprise.  On April 22, 2009, the
State Administration of Taxation issued the Notice Concerning Relevant Issues
Regarding Cognizance of Chinese Investment Controlled Enterprises Incorporated
Offshore as Resident Enterprises pursuant to Criteria of de facto Management
Bodies, or the Notice, further interpreting the application of the New EIT Law
and its implementation with respect to non-Chinese enterprises or group
controlled offshore entities.  Pursuant to the Notice, an enterprise
incorporated in an offshore jurisdiction and controlled by a Chinese enterprise
or group will be classified as a “non-domestically incorporated resident
enterprise” if (i) its senior management in charge of daily operations reside or
perform their duties mainly in China; (ii) its financial or personnel decisions
are made or approved by bodies or persons in China; (iii) substantial assets and
properties, accounting books, corporate chops, board and shareholder minutes are
kept in China; and (iv) at least half of its directors with voting rights or
senior management often resident in China.  A resident enterprise
would be generally subject to the uniform 25% enterprise income tax rate
as to its worldwide income.  Although the Notice is directly
applicable to enterprises registered in an offshore jurisdiction and
controlled by Chinese domestic enterprises or groups, it is uncertain whether
the PRC tax authorities will make reference to the Notice when determining the
resident status of other offshore companies, such as Fujian Jin
Tai.  Since substantially all of our management is currently based in
China, it is likely we may be treated as a Chinese resident enterprise for
enterprise income tax purposes.  The tax consequences of such
treatment are currently unclear, as they will depend on how local tax
authorities apply or enforce the New EIT Law or the implementation
regulations.
 
 In
addition, under the New EIT Law and implementation regulations, PRC income tax
at the rate of 10% is applicable to dividends payable to investors that are
“non-resident enterprises” (and that do not have an establishment or place of
business in the PRC, or that have such establishment or place of business
but the relevant income is not effectively connected with the establishment
or place of business) to the extent that such dividends have their
source within the PRC unless there is an applicable tax treaty between the
PRC and the jurisdiction in which an overseas holder resides which reduces
or exempts the relevant tax.  Similarly, any gain realized on the
transfer of shares by such investors is also subject to the 10% PRC income tax
if such gain is regarded as income derived from sources within the
PRC.
 
 If we are
considered a PRC “resident enterprise”, it is unclear whether the dividends
we pay with respect to our shares, or the gain you may realize from the
transfer of our shares, would be treated as income derived from sources within
the PRC and be subject to PRC tax.  If we are required under the New
EIT Law to withhold PRC income tax on our dividends payable to our foreign
shareholders, or if you are required to pay PRC income tax on the transfer
of your shares, the value of your investment in our shares may be
materially and adversely affected.
 
 Risks
Related to Our Common Stock Generally
 
 ·
                OUR
      SHAREHOLDERS WILL EXPERIENCE DILUTION AS A RESULT OF THE CONVERSION OF OUR
      CLASS A WARRANTS.
 
 As of the
date hereof, we had warrants to purchase 773,812shares of
common stock (these warrants are convertible into common stock at a conversion
price of $5.00 per share). To the extent such warrants are exercised and
converted, there will be further dilution. In addition, in the event that any
future financing should be in the form of securities convertible into, or
exchangeable for, equity securities, investors may experience additional
dilution upon the conversion or exchange of such securities.
  ·
                IF
      OUR COMMON STOCK WERE DELISTED AND DETERMINED TO BE A “PENNY STOCK,” A
      BROKER-DEALER MAY FIND IT MORE DIFFICULT TO TRADE OUR COMMON STOCK AND AN
      INVESTOR MAY FIND IT MORE DIFFICULT TO ACQUIRE OR DISPOSE OF OUR COMMON
      STOCK IN THE SECONDARY MARKET.
 
 If our
common stock were removed from listing with the NASDAQ, it may be subject to the
so-called “penny stock” rules. The SEC has adopted regulations that define a
“penny stock” to be any equity security that has a market price per share of
less than $5.00, subject to certain exceptions, such as any securities
listed on a national securities exchange. For any transaction involving a “penny
stock,” unless exempt, the rules impose additional sales practice requirements
on broker-dealers, subject to certain exceptions. If our common stock were
delisted and determined to be a “penny stock,” a broker-dealer may find it more
difficult to trade our common stock and an investor may find it more difficult
to acquire or dispose of our common stock on the secondary market. Investors in
penny stocks should be prepared for the possibility that they may lose
their whole investment.
  15
  ·
                OUR
      FAILURE TO MEET THE LISTING REQUIREMENTS OF THE NASDAQ CAPITAL MARKET
      COULD RESULT IN A DE-LISTING OF OUR COMMON
  STOCK.
 
 If after
listing we fail to satisfy the continued listing requirements of the NASDAQ
Capital Market, such as the corporate governance requirements and the minimum
closing bid price requirement, NASDAQ may take steps to de-list our common
stock, which could impair your ability to sell or purchase our common stock when
you wish to do so. In the event of a de-listing, we would take actions to
restore our compliance with NASDAQ’s listing requirements, but we can provide no
assurance that any such action taken by us would allow our common stock to
become listed again, stabilize the market price or improve the liquidity of our
common stock, prevent our common stock from dropping below the NASDAQ minimum
bid price requirement or prevent future non-compliance with NASDAQ’s listing
requirements.
 
 ·
                OUR
      COMMON STOCK IS SUBJECT TO PRICE VOLATILITY UNRELATED TO OUR
      OPERATIONS.
 
 The
market price of our common stock could fluctuate substantially due to a variety
of factors, including market perception of our ability to achieve our planned
growth, quarterly operating results of other companies in the same industry,
trading volume in our common stock, changes in general conditions in the economy
and the financial markets or other developments affecting our competitors or
us. In addition, the stock market is subject to extreme price and volume
fluctuations. This volatility has had a significant effect on the market
price of securities issued by many companies for reasons unrelated to their
operating performance and could have the same effect on our common
stock.


ITEM 2.  PROPERTIES





Our
principal executive offices are located at 28/F, Yifa Building, No.111, Wusi
Road, Fuzhou, Fujian Province, PRC. The office space is approximately 800 square
meters in area.  The lease renews annually at an annual rate of
approximately $8,800, which is the market rate in that area.





Wee lease
approximately 200 square feet of office space located at 20955 Pathfinder Rd.,
#200-12, Diamond Bar, CA 91765 for our U.S. office from Arcacia Executive
Services for a term of 12 months from March 2009 at an annual rent of
approximately $10,200, which is the market rate in that area.




We
currently have three tourist destination, including “the Great Golden Lake,”
“Hua’an Tulou Cluster” andYunding Recreational Park.





·
            The Great Golden Lake is located
      in Taining, surrounding Sanming, Nanping of Fujian Province and Nanchang
      of Jiangxi Province.


·
            Hua’an
      Tulou is approximately1.5 hour drive away from Xiamen City, one of China’s
      most famous tourist coastal cities.


·
            Yunding Recreational
      Parkis approximately 30km from
      Fuzhou.





ITEM 3  LEGAL PROCEEDINGS





As of the
date hereof, we know of no material, active, pending or threatened proceeding
against us, or our subsidiaries, nor are we involved as a plaintiff in any
material proceeding or pending litigation.





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





There
were no matters that were submitted during the fourth quarter of 2009 to a vote
of security holders.





16





PART
II




ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.





Market
Information





We have
two classes of equity securities: (i) common stock, par value $.001 per share,
19,551,785 shares of which were outstanding as of March 19, 2010, and (ii)
preferred stock, par value $.001 per share, of which no shares were outstanding
as of March 19, 2010.





Our
common stock has been quoted on the OTC Bulletin Board under the symbol
"IYSA.OB" since 1999.  In December 2007, the symbol changed to
“IAVA.OB” pursuant to a 10 for 1 reverse split.  Since the end of the
2007 fiscal year and in February 2007, we effectuated another 10 for 1 reverse
stock split and changed our name to China Yida Holding, Co. as a result of the
reverse merger that closed on November 17, 2007.  Accordingly, our
symbol was changed to “CYID.OB.” Since December 7, 2009, our common stock
has been listed and traded on the NASDAQ Capital Market under the symbol “CNYD.”





The table
below sets forth the high and low bid prices for our common stock for the period
indicated based on reports of transactions on the Over-the-Counter Bulletin
Board and the NASDAQ Capital Market. Such prices reflect inter-dealer prices,
without retail markup, markdowns or commissions and may not necessarily
represent actual transactions.


Price InformationFinancial
      Quarter Ended
            
            High
            
            
            LowMarch
      31, 2009
            
            
            1.00
            
            
            
            0.15June
      30, 2009
            
            
            9.00
            
            
            
            1.11September
      30, 2009
            
            
            9.25
            
            
            
            2.00December
      31, 2009
            
            
            16.45
            
            
            
            8.00March
      31, 2008
            
            
            3.90
            
            
            
            0.75June
      30, 2008
            
            
            1.95
            
            
            
            1.20September
      30, 2008
            
            
            2.10
            
            
            
            0.50December
      31, 2008
            
            
            1.25
            
            
            
            0.15





Holders





As of
March 19, 2010, there were approximately 255 shareholders of record of our
common stock. This does not reflect the number of persons or entities who held
stock in nominee or "street" name through various brokerage firms.




Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the
shares of common stock voting for the election of directors can elect all of the
directors. Holders of our common stock representing a majority of the voting
power of our capital stock issued and outstanding and entitled to vote,
represented in person or by proxy, are necessary to constitute a quorum at any
meeting of our stockholders. A vote by the holders of a majority of our
outstanding shares is required to effectuate certain fundamental corporate
changes such as liquidation, merger or an amendment to our Articles of
Incorporation.




Although
there are no provisions in our charter or by-laws that may delay, defer or
prevent a change in control, we are authorized, without shareholder approval, to
issue shares of preferred stock that may contain rights or restrictions that
could have this effect.





Holders
of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In the
event of liquidation, dissolution or winding up, each outstanding share entitles
its holder to participate pro rata in all assets that remain after payment of
liabilities and after providing for each class of stock, if any, having
preference over the common stock. Holders of our common stock have no
pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to our common stock.





17





Dividends





Our board
of directors has not declared a dividend on our common stock during the last two
fiscal years or the subsequent interim period.





Securities
Authorized for Issuance Under Equity Compensation Plans





We have
adopted a formal equity incentive plan in June 2009. The following table sets
forth the details of the granted and vested stock options to purchase an
aggregate of 15,000 of shares of our common stock that were granted to the
directors and officers as of the date of this Report.


Name of Grantee
            
            Exercise Price
            
            
            Number of
              Common Stock
              Underlying the
              Options
            
            Grant Date
            
            Vest DateMichael
      Marks (1)
            
            $
            14.84
            
            
            
            15,000
            
            June
      10, 2009
            
            December
      10, 2009


(1)
            Mr.
      Marks is our director and the chairman of our audit
    committee.





Recent Sales of Unregistered
Securities





None.





ITEM 6.  SELECTED FIANANCIAL DATA





Not
applicable because we are a smaller reporting company.





ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS.





The
following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Form 10-K.
The following discussion contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 relating to future events or our future performance. Actual
results may materially differ from those projected in the forward-looking
statements as a result of certain risks and uncertainties set forth in this
prospectus. Although management believes that the assumptions made and
expectations reflected in the forward-looking statements are reasonable, there
is no assurance that the underlying assumptions will, in fact, prove to be
correct or that actual results will not be different from expectations expressed
in this report.





Our Business





We are a
diversified entertainment enterprise focused on China's media and tourism
industries headquartered in Fuzhou City, Fujian province, China. Our core
business strategy is centered around the combination of tourism and media. Our
tourism management business specializes in the development and management of
natural, cultural and historic scenic sites. We currently operate the Great
Golden Lake tourist destination (Global Geo-park), Hua’An Tulou cluster (or the
“Earth Buildings”) tourist destination (World Culture Heritage), and Yunding
tourist destination (Large-scale national recreational park), covering over 300
square kilometers in total for all of our currently managed destinations. Our
media business provides operating management services; including channel, column
and advertisement management for the FETV and the “Journey through China on the
Train” on-board railway program. The Great Golden
Lake


18




TheGreat Golden Lake was
recognized as theGlobal Geopark by the
United Nations Educational, Scientific, and Cultural Organization (“UNESCO”) in
February 2005. It is located in Taining, surrounding Sanming, Nanping of Fujian
Province and Nanchang of Jiangxi Province. This world-class tourist attraction
covers more than 230 square kilometers, including five (5) main scenic areas:
(1) Golden Lake; (2) Shangqing River; (3) Zhuangyuan Rock; (4) Luohan Mountain;
and (5) Taining Old Town.
 
 In 2001,
we entered into a tourism management revenue sharing agreement with Taining
government, to operate and to manage the Great Golden Lake destination from 2001
through 2032. We initially invested $30 million to improve the infrastructure,
and through a well-designed marketing campaign, we have succeeded in increasing
the number of the visitors from approximately 30,000 in 2001 to approximately
637,000 in 2009. Currently most visitors to the Great Golden Lake are from
Fujian, Shanghai, Guangdong and Jiangxi. With easier transportation and
increased marketing, we expect that the Great Golden Lake should be able to
attract more visitors from other provinces of China and even foreign countries.
Our revenue from the operations of the Great Golden Lake is generated from
entrance ticket fees and parking fees.
 
 Hua’an Tulou Cluster (or the
“Earth Buildings”)
 
 The Tulou
Cluster, composed of large multilayer earth buildings built by ancient wealthy
families as their residence, is knownfor their unique round
shape, ingenious structure and oriental mystery. The Tulou Cluster was
recognized as a World Cultural Heritage in 2008 by UNESCO. The Tulou Cluster is
a 1.5 hour drive away from Xiamen City, one of China’s most famous tourist
coastal cities.
 
 In
December 2008, we entered into a Tourist Resources Development Agreement with
Hua’an County Government effective until 2048. Pursuant to this agreement, we
began to develop the Hua’an Tulou tourist destinations with a right of priority
to develop other scenic areas in Hua’an County. Hua’an Tulou cluster requires a
total capital input of approximately $7.5 million to put it into infrastructure
and facility constructions. The Hua’an Tulou Cluster was closed during the
construction and re-opened to the public before the fourth quarter of 2009.
Currently, around half of its visitors are from overseas, including Taiwan. We
expect our revenue to be generated from the sale of entrance ticket fees, fees
from rides on tour cars, and food at our restaurants.
 
 Yunding Recreational
Park
 
 In
November 2008, we entered into the Tourist Destination Cooperative Development
Agreement with Yongtai County Government effective until 2048. Pursuant to the
agreement, we obtained the exclusive right to develop the Yunding scenic areas,
which is approximately 50 kilometer from Fuzhou. We plan to invest approximately
$40 million to build the tourism, transportation and entertainment facilities.
By the end of 2009, we have already invested approximately $30
million.  And we expect to generate revenue from entrance fees, cable
cars and other entertainment activities. We expect that the Yunding Recreational
Park will be open to the public on the second half of 2010.
 
 FETV
 
 Covering
92% of the population of Fujian province located in southeastern China with a
population of over 35 million, Fujian Education Television (“FETV”), owned by
the Fujian Education TV Station, is a provincial comprehensive entertainment
television channel ranked #4 in ratings in Fujian province (Source: ACNielsen
2008 Survey).
 
 Pursuant
to a management agreement (the “Management Agreement”) between Fujian Education
TV Station and Fujian Jiaoguang, our subsidiary, we gained 7 years management
rights from the Fujian Education TV Station,  from August 1, 2003 to
July 31, 2010 (the “Initial Management Term”), to operate FETV at a fixed annual
payment of RMB 10,000,000. Pursuant to the Management Agreement, Fujian
Jiaoguang has an option to extend the Initial Management Term for an
additional 5 years term commencing on July 31, 2010 (the “Extended Management
Term”), provided, that we agree to a 20% increased annual payment for the
management rights during the Extended Management Term, and accept other
amendments to provisions in the Management Agreement.
 Under the
management contract, we obtained the full rights to provide programming and
content and content management services and to re-sell all advertising airtime
of FETV.  We have leveraged the FETV assets to produce high quality TV
programming focused on tourism, successfully promoting our own tourist
attractions branding the FETV station around the tourism theme and creating a
network of potential partners for our tourism business, including hotels, travel
agents, and entertainment resorts.
 
 “Journey through China on
the Train”
 
 In
February 2009, we entered into a six-year exclusive agreement with China’s
Railway Media Center to create “Journey through China on the Train” infomercial
programs, pursuant to which we will produce 20 minute monthly episodes focused
on natural resources, culture and the history of tourism destinations, tourism
advertisement and travel tips. The infomercial programs will be broadcast on7
railway lines into Tibet, all high speed motor trains in China with TV panels
and cable TV channels covering 18 railway bureaus. We will pay an annual fee of
approximately $46,154 or RMB 300,000 to Railway Media Center for the first three
years and approximately $53,846 or RMB 350,000 for the second three years. We
will generate revenue from selling embedded advertisements. At the end of 2009,
“Journey through China on the Train” was shown on 31 railroad lines with 440
trains.




19




Results of Operations





During
the years ended December 31, 2009 and 2008, we are organized into two (2) main
business segments: tourism and advertisement. The following table presents a
summary of operating information and certain year-end balance sheet information
for the years ended December 31, 2009 and 2008:





Years
      ended December 31,2009
            
            
            2008Net
      revenueAdvertisement
            
            $
            31,519,267
            
            
            $
            23,319,235Tourism
            
            
            19,709,684
            
            
            
            7,280,258Total
      net revenue
            
            
            51,228,951
            
            
            
            30,599,493Cost
      of revenueAdvertisement
            
            
            6,541,382
            
            
            
            5,779,082Tourism
            
            
            4,038,708
            
            
            
            1,904,329Total
      cost of revenue
            
            
            10,580,090
            
            
            
            7,683,411Gross
      profit
            
            
            40,648,861
            
            
            
            22,916,082Operating
      expensesSelling
      expenses
            
            
            3,108,413
            
            
            
            1,456,229Operating
      and administrative expenses
            
            
            3,145191
            
            
            
            2,463,201Total
      operating expenses
            
            
            6,253,605
            
            
            
            3,919,430Income
      from operations
            
            
            34,395,256
            
            
            
            18,996,652Other
      (income) expenseOther
      (income) expense, net
            
            
            (115
            )
            
            
            22,869Interest
      expense
            
            
            -
            
            
            
            37,168Interest
      income
            
            
            (28,344
            )
            
            
            (24,832
            )Total
      other (income) expense, net
            
            
            (28,459
            )
            
            
            35,205Income
      before income taxes
            
            
            34,423,715
            
            
            
            18,961,447Provision
      for income taxes
            
            
            8,930,414
            
            
            
            670,347Net
      income
            
            
            25,493,301
            
            
            
            18,291,100Other
      comprehensive incomeForeign
      currency translation gain
            
            
            56,085
            
            
            
            2,129,733Other
      comprehensive income
            
            $
            25,549,386
            
            
            $
            20,420,833Basic
      net earnings per share
            
            $
            1.50
            
            
            $
            1.27Basic
      weighted average shares outstanding
            
            $
            17,023,344
            
            
            
            14,395,383Diluted
      net earnings per share
            
            
            1.47
            
            
            $
            1.27Diluted
      weighted average shares outstanding
            
            $
            17,314,084
            
            
            
            14,395,383





20





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





Net
Revenue:





Net
revenue increased by $20,629,458 or 67.4%, from $30,599,493 in the fiscal year
ended December 31, 2008 to $51,228,951 in the fiscal year ended December 31,
2009.  Our overall net revenue increased by $20,629,458.
 
 Our
revenue from advertisement for the fiscal year ended December 31, 2009 was
$31,519,267 and for the fiscal year ended December 31, 2008 it was $23,319,235,
representing an increase of $8,200,032 or 35.2%.  This increase was
primarily the result of increase in sales of airtime for FETV.
 
 Our
revenue for our tourism increased by $12,429,426 or 170.7%, from $7,280,258 in
the fiscal year 2008 to $19,709,684 in the fiscal year 2009. The increase was
primarily attributable to (i) increase in the number of visitors to the Great
Golden Lake from approximately 320,000 in 2008 to approximately 637,000 in 2009,
and (ii) Tulou Cluster’s re-open before the fourth quarter of
2009.


Cost of Revenue:





Cost of
revenue increased by $2,896,679, or 37.7%, from $7,683,411 in the fiscal year
ended December 31, 2008 to $10,580,090 in the fiscal year ended December 31,
2009. The increase in cost of revenue is primarily caused by revenue increase
from our tourism and advertising operations.  The revenue increase
from tourism operation resulted in higher business tax (5% business tax rate)
and higher profit sharing payment to local government.. The revenue increase
from advertising operation resulted in proportionately higher business tax
payment (8.5% business tax rate).





Our cost
of revenue from advertisement for the fiscal year ended December 31, 2009 was
$6,541,382 and for the fiscal year ended December 31, 2008 it was
$5,779,082.  This was an increase of $762,300 or 13.2%.  The
increased was the result of increase in business tax payments due to the revenue
growth.





Our cost
of revenue from tourism for the fiscal year ended December 31, 2009 was
$4,038,708 and for the fiscal year ended December 31, 2008 it was
$1,904,329.  This was an increase of $2,134,379 or
112.1%.  The increase was the result of increase in business tax
payment and profit sharing payment to the local government due to revenue
growth.





Gross profit:





Our gross
profit increased by $17,732,779, or 77.4%, from $22,916,082 in the fiscal year
ended December 31, 2008 to $40,648,861 in the fiscal year ended December 31,
2009. Our gross profit margin (gross profit divided by sales revenue) increased
from 74.89% in 2008 to 79.34% in 2009.  The increase in our gross
profit margin during 2009 was primarily due to a lower increasing rate of cost
of revenue compares to our revenue growth.  Our Great Golden Lake and
FETV are both more established operations with existing capacities that do not
require significant increase of additional cost of revenues.





21





Operating
Expenses:





Our
operating expenses were $3,919,430 in the fiscal year ended December 31, 2008,
compared to $6,253,605 in the fiscal year ended December 31, 2009, which
represents an increase of $2,334,175, or 59.6%. The increase in our operating
expenses in 2009 was primarily due to increasing costs of maintenance and
promotion for the Great Golden Lake destination.





Income
from Operations:





Operating
profit was $34,395,256 in the fiscal year ended December 31, 2009, representing
an increase of $15,398,604, or 81.1%, over the $18,996,652 reported in the
fiscal year ended December 31, 2008.


Income
Tax





Income
tax was $8,930,414 in the fiscal year ended December 31, 2009, representing an
increase of $8,260,067 or 1,232.2%, over the $670,347 reported in the fiscal
year ended December 31, 2008. Before fiscal year 2009, our advertising
operation, the FETV, enjoyed an income tax exemption.  Beginning in
fiscal year 2009, we have started to pay income taxes for FETV with income tax
rate of 25%.





Net
Income:





Net
income was $25,493,301 in the fiscal year ended December 31, 2009, an increase
of $7,202,201 or 39.4% compared to $18,291,100 reported in the fiscal year ended
December 31, 2008.  The increase in profits is primarily the result of
higher revenue offset in part by higher cost of revenue, higher operating costs,
and higher tax payments.





Critical Accounting
Policies





Use of
estimates




The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the amount of revenues and
expenses during the reporting periods. Management makes these estimates using
the best information available at the time the estimates are made. However,
actual results could differ materially from those results.




Accounts
receivable




The
Company's policy is to maintain reserves for potential credit losses on accounts
receivable. Management reviews the composition of accounts receivable and
analyzes historical bad debts, customer concentrations, customer credit
worthiness, current economic trends and changes in customer payment patterns to
evaluate the adequacy of these reserves. As of December 31, 2009 and 2008, the
Company had accounts receivable of $2,003 and $76,569, respectively. As of
December 31, 2009 and 2008, allowance for doubtful accounts amounted to $0 and
$0, respectively.




Advances and
Prepayments




The
Company advances to certain vendors for purchase of its construction material
and necessary service. As of December 31, 2009 and 2008, the prepayments
amounted to $1,432,138 and $164,169, respectively.  Long term
prepayments amounted to $1,012, 230 and $0, respectively.




22





Revenue
recognition




The
Company's revenue recognition policies are in compliance with Staff accounting
bulletin (SAB) 104.Sales revenue is recognized at the date of service rendered
to customers when a formal arrangement exists, the price is fixed or
determinable, the services rendered, no other significant obligations of the
Company exist and collectability is reasonably assured. Payments received before
all of the relevant criteria for revenue recognition are satisfied are recorded
as unearned revenue. Unearned revenue amounted to $0 and $6,597 as of December
31, 2009 and 2008, respectively.




Revenues
from advance resort ticket sales are recognized when the tickets are used.
Revenues from our contractors who have tourism contracts with us are generally
recognized over the period of the applicable agreements commencing with the
tourists visit the resort.




The
Company sells the television air time to third parties. The company records
advertising sales when advertisements are aired. The Company also sells
admission and activities tickets for a resort which the Company has the
management right.




The
Company has no product return or sales discount allowance because service
rendered and accepted by customers are normally not returnable and sales
discount is normally not granted after service is rendered.




As of
December 30, 2009 and 2008, the Company did not generate revenue from ethnic
culture communications, timeshare resorts operation, souvenir sales and the
related tourism service.




Advertising
costs




The
Company expenses the cost of advertising as incurred or, as appropriate, the
first time the advertising takes place. Advertising costs for the years ended
December 31, 2009 and 2008 were $493,061 and $406,899,
respectively.




There is
a contract in force for the period of August 1, 2003 to July 31, 2010 between a
related party (Xinhengji, XHJ) and a Television Station (Owned by The Chinese
Government) that provides for prepaid airtime to be purchased and utilized by
the related party in return for payment of RMB 5,000,000 and purchase of
suitable programming for the station in the amount of an additional RMB
5,000,000 (Educational Programming). XHJ is 80% owned by a shareholder of
the company and 20% owned by the shareholder’s mother.




XHJ has
signed a contract with the Company to assign the Company to manage the
commercial of the TV station. The Company is responsible for paying the air time
for RMB 5,000,000. XHJ is responsible for paying RMB 5,000,000 to purchase the
TV programs and entitled to revenue other than the commercial revenue. It also
states that if the Company helps XHJ to purchase the TV programs and if pays
equaling or more than RMB 5,000,000 then the Company does not have to pay RMB
5,000,000 for airtime anymore. The amount paid over RMB 5,000,000 by the Company
will be the Company’s expenses and will not be reimbursed by XHJ. The
advertising costs incurred are charged as cost of sales against specific airtime
segments.




Foreign currency
translation




The
Company uses the United States dollar ("U.S. dollars") for financial reporting
purposes. The Company's subsidiaries maintain their books and records in their
functional currency, being the primary currency of the economic environment in
which their operations are conducted. In general, for consolidation purposes,
the Company translates the subsidiaries' assets and liabilities into U.S.
dollars using the applicable exchange rates prevailing at the balance sheet
date, and the statement of income is translated at average exchange rates during
the reporting period. Gain or loss on foreign currency transactions are
reflected on the income statement. Gain or loss on financial statement
translation from foreign currency are recorded as a separate component in the
equity section of the balance sheet, as component of comprehensive income. The
functional currency of the Company ’subsidiaries in China is the Chinese
Renminbi and the functional currency of the US parent is the US
dollar.




23





Earning per share
(EPS)




Earnings
per share is calculated in accordance with the Statement of financial accounting
standards No. 128 (SFAS No. 128), Earnings per share. SFAS No. 128 (ASC 260)
superseded Accounting Principles Board Opinion No.15 (APB 15). Earnings per
share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. (ASC 260) Basic earnings per share is based upon the weighted
average number of common shares outstanding. Diluted earnings per share is based
on the assumption that all dilutive convertible shares and stock options were
converted or exercised. Dilution is computed by applying the treasury stock
method. Under this method, options and warrants are assumed to be exercised at
the beginning of the period (or at the time of issuance, if later), and as if
funds obtained thereby were used to purchase common stock at the average market
price during the period.




Basic and
diluted earning per share was $1.50 and $1.47 for the year ended December 31,
2009, respectively. Basic and diluted earning per share was $1.27 and $1.27 for
the year ended December 31, 2008, respectively.




Recent Accounting
Pronouncements





In June
2009, the FASB issued ASC 105 (previously SFAS No. 168, The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles ("GAAP") - a replacement of FASB Statement No. 162), which will
become the source of authoritative accounting principles generally accepted in
the United States recognized by the FASB to be applied to nongovernmental
entities.




In June
2009, the FASB issued ASC 855 (previously SFAS No. 165, Subsequent Events),
which establishes general standards of accounting for and disclosures of events
that occur after the balance sheet date but before the financial statements are
issued or available to be issued. It is effective for interim and annual periods
ending after June 15, 2009. There was no material impact upon the adoption of
this standard on the Company’s consolidated financial statements.






In
June 2009, the FASB issued ASC 860 (previously SFAS No. 166,
“Accounting for Transfers of Financial Assets”) , which requires additional
information regarding transfers of financial assets, including securitization
transactions, and where companies have continuing exposure to the risks related
to transferred financial assets. SFAS 166 eliminates the concept of a
“qualifying special-purpose entity,” changes the requirements for derecognizing
financial assets, and requires additional disclosures. SFAS 166 is effective for
fiscal years beginning after November 15, 2009. The Company does not
believe this pronouncement will impact its financial statements.




In
June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for
determining whether to consolidate a variable interest entity. These amended
standards eliminate a mandatory quantitative approach to determine whether a
variable interest gives the entity a controlling financial interest in a
variable interest entity in favor of a qualitatively focused analysis, and
require an ongoing reassessment of whether an entity is the primary beneficiary.
These amended standards are effective for us beginning in the first quarter of
fiscal year 2010 and we are currently evaluating the impact that adoption will
have on our consolidated financial statements.




In August
2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends
ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional
guidance on the measurement of liabilities at fair value. These amended
standards clarify that in circumstances in which a quoted price in an active
market for the identical liability is not available, we are required to use the
quoted price of the identical liability when traded as an asset, quoted prices
for similar liabilities, or quoted prices for similar liabilities when traded as
assets. If these quoted prices are not available, we are required to use another
valuation technique, such as an income approach or a market approach. These
amended standards are effective for us beginning in the fourth quarter of fiscal
year 2009 and are not expected to have a significant impact on our consolidated
financial statements.




24





LIQUIDITY
AND CAPITAL RESOURCES





Our
principal sources of liquidity during the fiscal years of 2008 and 2009 include
cash from operations, borrowings from local commercial banks and proceeds of
offerings of our securities consummated in February 2008 (the “Private
Placement”), from which  we raised $14 million in gross proceeds. As
of December 31, 2009, we had cash and cash equivalents of approximately $5.8
million as compared to approximately $8.7 million as of December 31,
2008.





The
following table sets forth a summary of our cash flows for the periods
indicated:





For
      the Years Ended December 31,2009
            
            
            2008Net
      cash provided by operating activities
            
            
            29,985,012
            
            
            
            27,382,076Net
      cash used in investing activities
            
            
            (36,080,646
            )
            
            
            (33,493,975
            )Net
      cash provided by financing activities
            
            
            3,048,673
            
            
            
            13,635,178Effect
      of exchange rate changes on cash and cash
equivalents
            
            
            108,592
            
            
            
            465,139Net
      increase in cash and cash equivalents
            
            
            (3,046,962
            )
            
            
            7,988,417Cash
      and cash equivalents, beginning balance
            
            
            8,715,048
            
            
            
            726,631Cash
      and cash equivalents, ending balance
            
            
            5,776,678
            
            
            
            8,715,048





Net cash
provided by operating activities was approximately $30.0 million for the year
ended December 31, 2009, compared to net cash provided by operations of
approximately $27.4 million for the year ended December 31, 2008.  The
$2.6 million increase was primarily due to increases in depreciation and tax
payable.





Net cash
used in investing activities was approximately $36.1 million for the year ended
December 31, 2009, compared to net cash used in investing activities of
approximately $33.5 million for the year ended December 31, 2008.  The
increase in net cash used in investing activities was due to increases in long
term prepayment and construction in progress.




Net cash
provided by financing activities amounted to approximately $3.0 million for the
year ended December 31, 2009, compared to net cash provided by financing
activities of approximately $13.6 million for the year ended December 31,
2008.  The decrease in cash provided by financing activities was
primarily due to no equity financing in  2009.





2010-2011
Outlook





Over the
course of the next few years, we intend to grow and expand our businesses in
China’s tourism, media, entertainment and other related industry.  We
expect to acquire additional tourist areas that will enhance our reputation as a
world-class company that develops and manages tourist
attractions.  These acquisitions will be financed either through
revenues of the Company or by financings and sales of our stock or other
securities.  With respect to our media operation, we expect “Journey
Through on the Train” to start generating revenue in fiscal year 2010 and expect
FETV to grow 5-10% in revenue compares to fiscal year 2009.  With respect
to our tourism operation, we expect the Great Golden Lake will grow its number
of visitors at approximately 25% compared to the same period in 2009, and expect
Tulou Cluster to start generating revenue in fiscal year 2010, and expect Yuding
Recreational Park to start generating revenue after its grand opening in the
second half of fiscal year 2010.


25





Off-Balance Sheet
Arrangements





We do not
have any off-balance sheet arrangements, financings, or other relationships with
unconsolidated entities or other persons, also known as “special purpose
entities” (SPEs).





ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOUSURES ABOUT
MARKET RISK





Not
applicable because we are a smaller reporting company.





ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA.






CHINA
YIDA HOLDING CO. AND SUBSIDIARIES
 CONSOLIDATED
FINANCIAL STATEMENTS
 DECEMBER
31, 2009
 
 TABLE
OF CONTENTS
 
 Report of
      Independent Registered Public Accounting Firm
              
              
              18Consolidated
      Balance Sheets as at December 31, 2009 and December 31,
      2008
              
              
              19Consolidated
      Statements of Income for the years ended December 31, 2009 and
    2008
              
              
              20Consolidated
      Statements of Cash Flows for the years ended December 31, 2009 and
      2008
              
              
              21Consolidated
      Statements of Stockholders equity for the years ended December 31, 2009
      and 2008
              
              
              22Notes to
      Consolidated Financial Statements
              
              
              23-35
    26






Report of Independent
Registered Public Accounting Firm
   Board of
Directors and Stockholders of
  China
Yida Holding Co. and subsidiaries
  
  We have
audited the accompanying consolidated balance sheets of China Yida Holding Co.
and Subsidiaries as of December 31, 2009 and 2008, and the related consolidated
statements of income, stockholders' equity, and cash flows for the two years
period ended December 31, 2009. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of China Yida
Holding Co. and Subsidiaries as of December 31, 2009 and 2008, and the results
of their operations and their cash flows for the two years period ended December
31, 2009, in conformity with U.S. generally accepted accounting
principles.
   /s/
Kabani & Company, Inc.
  Certified
Public Accountants
  Los
Angeles, California
  March 22,
2010




27




CHINA
      YIDA HOLDING CO. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETSAS
      ON DECEMBER 31, 2009 AND 2008ASSETSDECEMBER 31,2009
              
              
              2008Current
      assetsCash
      and cash equivalents
              
              $
              5,776,678
              
              
              $
              8,715,048Accounts
      receivable
              
              
              2,003
              
              
              
              76,569Other
      receivable, net
              
              
              190,424
              
              
              
              76,759Advances
      and prepayments
              
              
              1,432,138
              
              
              
              164,169Total
      current assets
              
              
              7,401,242
              
              
              
              9,032,546Property,
      and equipment, net
              
              
              32,995,885
              
              
              
              34,173,009Construction
      in progress
              
              
              36,730,184
              
              
              
              1,979,725Intangible
      assets, net
              
              
              7,874,938
              
              
              
              9,358,333Long
      term prepayments
              
              
              1,012,230
              
              
              
              -Total
      assets
              
              $
              86,014,478
              
              
              $
              54,543,613LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      liabilitiesAccounts
      payable
              
              $
              57,277
              
              
              $
              65,367Short
      term loans
              
              
              1,731,060
              
              
              
              1,172,591Other
      payable and accrued expenses
              
              
              1,145,564
              
              
              
              462,778Tax
      payables
              
              
              2,835,655
              
              
              
              726,524Total
      current liabilities
              
              
              5,769,555
              
              
              
              2,427,259Long
      term debts
              
              
              2,495,190
              
              
              
              -Total
      liabilities
              
              
              8,264,745
              
              
              
              2,427,259Commitments
      and contingenciesStockholders'
      equityPreferred
      stock ($0.001 par value, 10,000,000 shares authorized, 1 share issued
      and outstanding)
              
              
              -
              
              
              
              -Common
      stock ($0.0001 par value, 100,000,000 shares authorized and 17,062,064 and
      17,021,447  issued and outstanding as of December 31, 2009 and
      December 31, 2008, respectively)
              
              
              1,706
              
              
              
              1,702Additional
      paid in capital
              
              
              21,711,384
              
              
              
              21,627,394Accumulated
      other comprehensive income
              
              
              3,190,162
              
              
              
              3,134,077Retained
      earning
              
              
              50,297,151
              
              
              
              27,353,181Statutory
      reserve
              
              
              2,549,330
              
              
              
              -Total
      stockholders' equity
              
              
              77,749,733
              
              
              
              52,116,354Total
      liabilities and stockholders' equity
              
              $
              86,014,478
              
              
              $
              54,543,613The
      accompanying notes are an integral part of these unaudited consolidated
      financial statements.
 
  28
  CHINA
      YIDA HOLDING CO. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOMEFOR
      THE YEARS ENDED DECEMBER 31, 2009 AND 20082009
              
              
              2008Net
      revenueAdvertisement
              
              $
              31,519,267
              
              
              $
              23,319,235Tourism
              
              
              19,709,684
              
              
              
              7,280,258Total
      net revenue
              
              
              51,228,951
              
              
              
              30,599,493Cost
      of revenueAdvertisement
              
              
              6,541,382
              
              
              
              5,779,082Tourism
              
              
              4,038,708
              
              
              
              1,904,329Total
      cost of revenue
              
              
              10,580,090
              
              
              
              7,683,411Gross
      profit
              
              
              40,648,861
              
              
              
              22,916,082Operating
      expensesSelling
      expenses
              
              
              3,108,413
              
              
              
              1,456,229Operating
      and administrative expenses
              
              
              3,145,191
              
              
              
              2,463,201Total
      operating expenses
              
              
              6,253,605
              
              
              
              3,919,430Income
      from operations
              
              
              34,395,256
              
              
              
              18,996,652Other
      (income) expenseOther
      (income) expense, net
              
              
              (115
              )
              
              
              22,869Interest
      expense
              
              
              -
              
              
              
              37,168Interest
      income
              
              
              (28,344
              )
              
              
              (24,832
              )Total
      other (income) expense, net
              
              
              (28,459
              )
              
              
              35,205Income
      before income taxes
              
              
              34,423,715
              
              
              
              18,961,447Provision
      for income taxes
              
              
              8,930,414
              
              
              
              670,347Net
      income
              
              
              25,493,301
              
              
              
              18,291,100Other
      comprehensive incomeForeign
      currency translation gain
              
              
              56,085
              
              
              
              2,129,733Other
      comprehensive income
              
              $
              25,549,386
              
              
              $
              20,420,833Basic
      net earnings per share
              
              $
              1.50
              
              
              $
              1.27Basic
      weighted average shares outstanding
              
              
              17,023,344
              
              
              
              14,395,383Diluted
      net earnings per share
              
              $
              1.47
              
              
              $
              1.27Diluted
      weighted average shares outstanding
              
              
              17,314,084
              
              
              
              14,395,383The
      accompanying notes are an integral part of these unaudited consolidated
      financial statements.
 29
  CHINA
      YIDA HOLDING CO. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE TWELVE MONTHS ENDED DECEMBER 31, 2009 AND 20082009
                
                
                2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income
                
                
                $
                25,493,301
                
                
                $
                18,291,101Adjustments
      to reconcile net income to net cashCash
      provided by (used in) operating activities:Depreciation
                
                
                
                1,447,319
                
                
                
                399,884Amortization
                
                
                
                1,490,535
                
                
                
                4,264,777Bad
      debt expense
                
                
                
                (4,398
                )
                
                
                -Stock
      based compenstation
                
                
                
                83,994
                
                
                
                -Changes
      in operating assets and liabilities:Accounts
      receivables
                
                
                
                74,587
                
                
                
                (52,128
                )Other
      receivables
                
                
                
                (143,514
                )
                
                
                (1,061,873
                )Advances
      and prepayments
                
                
                
                (1,238,668
                )
                
                
                6,932,829Accounts
      payable and accrued expenses
                
                
                
                (7,325
                )
                
                
                (114,535
                )Tax
      payable
                
                
                
                2,107,263
                
                
                
                (993,859
                )Customer
      deposit
                
                
                
                (10,797
                )
                
                
                (136,255
                )Accrued
      payroll
                
                
                
                1,080
                
                
                
                55,392Other
      payable
                
                
                
                691,636
                
                
                
                (203,257
                )Net
      cash provided by operating activities
                
                
                
                29,985,012
                
                
                
                27,382,076CASH
      FLOWS FROM INVESTING ACTIVITIESAdditions
      to property & equipment
                
                
                
                (275,929
                )
                
                
                (25,364,501
                )Addition
      to construction in progress
                
                
                
                (34,793,109
                )
                
                
                (1,652,510
                )Purchase
      of intangible assets
                
                
                
                -
                
                
                
                (6,476,964
                )Increase
      in long term prepayment
                
                
                
                (1,011,609
                )
                
                
                -Net
      cash used in investing activities
                
                
                
                (36,080,646
                )
                
                
                (33,493,975
                )CASH
      FLOWS FROM FINANCING ACTIVITIESIssuance
      of shares for cash
                
                
                
                -
                
                
                
                13,027,250Borrowings
      under loan renewal
                
                
                
                3,048,673
                
                
                
                607,928Net
      cash provided by financing activities
                
                
                
                3,048,673
                
                
                
                13,635,178EFFECT
      OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
                
                
                
                108,592
                
                
                
                465,139NET
      CHANGE IN CASH AND CASH EQUIVALENTS
                
                
                
                (3,046,962
                )
                
                
                7,988,417CASH
      AND CASH EQUIVALENTS, BEGINNING BALANCE
                
                
                
                8,715,048
                
                
                
                726,631CASH
      AND CASH EQUIVALENTS, ENDING BALANCE
                
                
                $
                5,776,678
                
                
                $
                8,715,048SUPPLEMENTAL
      DISCLOSURES:
                
                
                
                5,776,678Non-cash
      transaction:Transferred
      to fixed asset from construction in progress
                
                
                $
                -
                
                
                $
                25,320,569Cash
      paid during the quarter for:Income
      tax payments
                
                
                $
                6,910,558
                
                
                $
                317,668Interest
      payments
                
                
                $
                210,319
                
                
                $
                109,499The
      accompanying notes are an integral part of these unaudited consolidated
      financial statements.
 30


CHINA
      YIDA HOLDING CO. AND SUBSIDIARIESCONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITYFOR
      THE YEARS ENDED DECEMBER 31, 2009, 2008 and 2007Common
      Stock
              
              
              Additional
      paid in capital
              
              
              Other
      comprehensive income
              
              
              Retained
      earning
              
              
              TotalNumber
      of shares
              
              
              Par
      Value
              
              
              
              
              
              
              Unrestricted
              
              
              Statutory
      ReserveBalance
      at December 31, 2007
              
              
              2,499,989
              
              
              $
              250
              
              
              $
              8,601,597
              
              
              $
              1,004,344
              
              
              $
              9,062,079
              
              
              
              
              
              $
              18,668,270Recapitalization
              
              
              11,187,762
              
              
              
              1,119
              
              
              
              (1,119
              )
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -Shares
      issued for cash
              
              
              3,333,372
              
              
              
              334
              
              
              
              13,026,916
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              13,027,250Reverse
      split rounding
              
              
              325
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              -
              
              
              
              -Foreign
      currency translation
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,129,733
              
              
              
              
              
              
              
              -
              
              
              
              2,129,733Net
      income from the year ended December 31, 2008
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              18,291,101
              
              
              
              -
              
              
              
              18,291,101Balance
      at December 31, 2008
              
              
              17,021,447
              
              
              
              1,702
              
              
              
              21,627,394
              
              
              
              3,134,077
              
              
              
              27,353,180
              
              
              
              -
              
              
              
              52,116,354Stock
      based compensation
              
              
              
              
              
              
              
              
              
              
              83,994
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              83,994Cashless
      exercised warrants
              
              
              40,617
              
              
              
              4
              
              
              
              (4
              )
              
              
              -
              
              
              
              
              
              
              
              
              
              
              
              -Foreign
      currency translation
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              56,085
              
              
              
              -
              
              
              
              
              
              
              
              56,085Net
      income from year ended December 31, 2009
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              25,493,301
              
              
              
              
              
              
              
              25,493,301Adjustment
      to statutory reserve
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (2,549,330
              )
              
              
              2,549,330
              
              
              
              -Balance
      at December 31, 2009
              
              
              17,062,064
              
              
              $
              1,706
              
              
              $
              21,711,384
              
              
              $
              3,190,162
              
              
              $
              50,297,151
              
              
              
              2,549,330
              
              
              $
              77,749,732The
      accompanying notes are an integral part of these consolidated financial
      statements
 
 31
 CHINA
YIDA HOLDING CO. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
 1.ORGANIZATION AND DESCRIPTION OF
BUSINESS
 
 China
Yida Holding Co. (“the Company”, “we”, “us”, “our”) engages in tourism and
advertisement business through its subsidiaries in Peoples Republic of
China.
 
 Keenway
Limited was incorporated under the laws of the Cayman Islands on May 9, 2007 for
the purpose of functioning as an off-shore holding company to obtain ownership
interests in Hong Kong Yi Tat International Investment Co., Ltd (“Hong Kong Yi
Tat”), a company incorporated under the laws of Hong Kong. Immediately
prior to the Merger (defined below), Mr. Chen Minhua and his wife, Ms. Fan
Yanling, were the majority shareholders of Keenway Limited.
 
 On
November 19, 2007, we entered into a share exchange and stock purchase agreement
with Keenway Limited, Hong Kong Yi Tai, and the then shareholders of Keenway
Limited, including Chen Minhua, Fan Yanling, Zhang Xinchen, Extra Profit
International Limited, and Lucky Glory International Limited (collectively, the
“Keenway Limited Shareholders”), pursuant to which in exchange for all of their
shares of Keenway Limited common stock, the Keenway Limited Shareholders
received 90,903,246 newly issued shares of our common stock and 3,641,796 shares
of our common stock which was transferred from some of our then existing
shareholders (the “Merger”). As a result of the closing of the Merger,
the Keenway Limited Shareholders owned approximately 94.5% of our then
issued and outstanding shares on a fully diluted basis and Keenway Limited
became our wholly owned subsidiary.
 
 Hong Kong
Yi Tat is an entity that was created solely as the holding company for the
operating entities, Fujian Jintai Tourism Industrial Development, Co, Ltd., and
Fujian Jiaoguang Media, Co., Ltd., and Fujian Yunding Tourism Industrial Co.,
Ltd., and Fujian Yida Tulou Tourism Development Cp. Ltd.  Hong Kong Yi
Tat does not have any operations.
  Fujian
Jintai Tourism Developments Co., Ltd. (“Fujian Jintai”) operates the tourism
segment of our business. Its primary business relates to the operation of our
tourism destinations, specifically, the Great Golden Lake.
 
 Fujian
Jintai owns 100% of the ownership interest in Fuzhou Hongda Commercial Services
Co., Ltd. (“Hongda”).  Hongda’s wholly owned subsidiary is Fuzhou Fuyu
Advertising Co., Ltd. which is an operating entity that engages in the media
operation.
 
 Fujian
Jintai also owns 100% of the ownership interest in Fujian Yintai Tourism Co.,
Ltd. (“Yintai”).
 
 Fujian
Yunding Tourism Industrial Co., Ltd’s  (“Yunding Company”) primary
business relates to the operation of our tourism destinations, specifically, the
Yunding tourist destination.
 
 Fujian
Yida Tulou Tourism Development Cp. Ltd’s primary business relates to the
operation of our tourism destinations, specifically, Hua’An Tulou cluster
tourist destination.
 
 Fujian
Jiaoguang Media Co., Ltd. (“Fujian Jiaoguang”) concentrates on the mass media
segment of our business.  Its primary business is focused on
advertisements, including media publishing, television, cultural and artistic
communication activities, and performance operation and management
activities.
 
 The
Company has adopted FASB Interpretation No. 46R "Consolidation of Variable
Interest Entities" ("FIN 46R") (ASC 810), an Interpretation of Accounting
Research Bulletin No. 51. FIN 46R (ASC 810) requires a Variable Interest Entity
(VIE) to be consolidated by a company if that company is subject to a majority
of the risk of loss for the VIE or is entitled to receive a majority of the
VIE's residual returns. VIEs are those entities in which the Company, through
contractual arrangements, bears the risks of, and enjoys the rewards normally
associated with ownership of the entities, and therefore the company is the
primary beneficiary of these entities. The results of subsidiaries or variable
interest entities acquired during the year are included in the consolidated
income statements from the effective date of acquisition.
 
 32
 
 ACCOUNTING
AFTER INITIAL MEASUREMENT OF VIE - Subsequent accounting for the assets,
liabilities, and non-controlling interest of a consolidated variable interest
entity are accounted for as if the entity were consolidated based on voting
interests and the usual accounting rules for which the VIE operates are applied
as they would to a consolidated subsidiary as follows:
 
 carrying
amounts of the VIE are consolidated into the financial statements of the Company
as the primary beneficiary (referred as "Primary Beneficiary" or
"PB");
 
 inter-company
transactions and balances, such as revenues and costs, receivables and payables
between or among the Primary Beneficiary and the VIE(s) are eliminated in their
entirety; and
 
 INITIAL
MEASUREMENT OF VIE- The Company initially measures the assets, liabilities, and
non-controlling interests of the VIEs at their fair values at the date of the
acquisitions.
 
 Because
Jiaoguang and the Company’s contractual relationship comply with FIN 46R (ASC
810), the Company consolidated Jiaoguang’s financial statements as
VIE.
 
 2. 
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
 
 a. Basis of
presentation
 
 The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America. The
functional currency of our operating , Changchun Yongxin Dirui Medical Co., Ltd
is Chinese Renminbi; however the accompanying financial statements have been
translated and presented in United States Dollars ($).
 b. Principle of
consolidation
 
 The
accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries Jintai, Fuyu, Hongda, Yunding, Tulou,
Yintai, Hong Kong Yi Tat and the accounts of the variable interest entities,
Jiaoguang, collectively “the Company”. All significant inter-company accounts
and transactions have been eliminated in consolidation.
 
 c. Use of
estimates
 
 The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the amount of revenues and
expenses during the reporting periods. Management makes these estimates using
the best information available at the time the estimates are made. However,
actual results could differ materially from those results.
 
 d. Cash and cash
equivalents
 
 For
Statement of Cash Flows purposes, the Company considers all cash on hand and in
banks, including accounts in book overdraft positions, certificates of deposit
and other highly-liquid investments with maturities of three months or less,
when purchased, to be cash and cash equivalents.
 
 e. Accounts
receivable
 
 The
Company's policy is to maintain reserves for potential credit losses on accounts
receivable. Management reviews the composition of accounts receivable and
analyzes historical bad debts, customer concentrations, customer credit
worthiness, current economic trends and changes in customer payment patterns to
evaluate the adequacy of these reserves. As of December 31, 2009 and 2008, the
Company had accounts receivable of $2,003 and $76,569, respectively. As of
December 31, 2009 and 2008, allowance for doubtful accounts amounted to $0 and
$0, respectively.
 
 33
 
 f. Advances and
Prepayments
 
 The
Company advances to certain vendors for purchase of its construction material
and necessary service. As of December 31, 2009 and 2008, the prepayments
amounted to $1,432,138 and $164,169, respectively.  Long term
prepayments amounted to $1,012, 230 and $0, respectively.
 
 g. Property and
equipment
 
 Property
and equipment are recorded at cost. Gains or losses on disposals are reflected
as gain or loss in the year of disposal. The cost of improvements that extend
the life of property, and equipment are capitalized. These capitalized costs may
include structural improvements, equipment, and fixtures. All ordinary repair
and maintenance costs are expensed as incurred.
 
 Depreciation
for financial reporting purposes is provided using the straight-line method over
the estimated useful lives of the assets: 5 to 20 years for house &
building; 5 to 8 years for electronic equipment; 8years for transportation
equipment; 5 to 8 years for office furniture; 26 years for lease
improvements.
  h. Impairment
 
 The
Company applies the provisions of Statement of Financial Accounting Standard No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS No.
144"), (ASC 360) issued by the Financial Accounting Standards Board ("FASB").
FAS No. 144 (ASC 360) requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable through the estimated undiscounted cash flows
expected to result from the use and eventual disposition of the assets. Whenever
any such impairment exists, an impairment loss will be recognized for the amount
by which the carrying value exceeds the fair value.
 
 The
Company tests long-lived assets, including property, plant and equipment,
intangible assets and construction in progress, for recoverability at least
annually or more frequently upon the occurrence of an event or when
circumstances indicate that the net carrying amount is greater than its fair
value. Assets are grouped and evaluated at the lowest level for their
identifiable cash flows that are largely independent of the cash flows of other
groups of assets. The Company considers historical performance and future
estimated results in its evaluation of potential impairment and then compares
the carrying amount of the asset to the future estimated cash flows expected to
result from the use of the asset. If the carrying amount of the asset exceeds
estimated expected undiscounted future cash flows, the Company measures the
amount of impairment by comparing the carrying amount of the asset to its fair
value. The estimation of fair value is generally measured by discounting
expected future cash flows as the rate the Company utilizes to evaluate
potential investments. The Company estimates fair value based on the information
available, judgments and projections are considered necessary. There was no
impairment of long-lived assets for the year ended December 31, 2009 and
2008.
 
 i. Revenue
recognition
 
 The
Company's revenue recognition policies are in compliance with Staff Accounting
Bulletin (SAB) 104. Sales revenue is recognized at the date of service rendered
to customers when a formal arrangement exists, the price is fixed or
determinable, the services rendered, no other significant obligations of the
Company exist and collectability is reasonably assured. Payments received before
all of the relevant criteria for revenue recognition are satisfied are recorded
as unearned revenue. Unearned revenue amounted to $0 and $6,597 as of December
31, 2009 and 2008, respectively.
 
 Revenues
from advance resort ticket sales are recognized when the tickets are used.
Revenues from our contractors who have tourism contracts with us are generally
recognized over the period of the applicable agreements commencing with the
tourists visit the resort.
 
 The
Company sells the television air time to third parties. The company records
advertising sales when advertisements are aired. The Company also sells
admission and activities tickets for a resort which the Company has the
management right.
 
 34
 
 The
Company has no product return or sales discount allowance because service
rendered and accepted by customers are normally not returnable and sales
discount is normally not granted after service is rendered.
 
 As of
December 30, 2009 and 2008, the Company did not generate revenue from ethnic
culture communications, timeshare resorts operation, souvenir sales and the
related tourism service.
 
 j. Advertising
costs
 
 The
Company expenses the cost of advertising as incurred or, as appropriate, the
first time the advertising takes place. Advertising costs for the years ended
December 31, 2009 and 2008 were $493,061 and $406,899,
respectively.
 
 There is
a contract in force for the period of August 1, 2003 to July 31, 2010 between a
related party (Xinhengji, XHJ) and a Television Station (Owned by The Chinese
Government) that provides for prepaid airtime to be purchased and utilized by
the related party in return for payment of RMB 5,000,000 and purchase of
suitable programming for the station in the amount of an additional RMB
5,000,000 (Educational Programming). XHJ is 80% owned by a shareholder of
the company and 20% owned by the shareholder’s mother.
 
 XHJ has
signed a contract with the Company to assign the Company to manage the
commercial of the TV station. The Company is responsible for paying the air time
for RMB 5,000,000. XHJ is responsible for paying RMB 5,000,000 to purchase the
TV programs and entitled to revenue other than the commercial revenue. It also
states that if the Company helps XHJ to purchase the TV programs and if pays
equaling or more than RMB 5,000,000 then the Company does not have to pay RMB
5,000,000 for airtime anymore. The amount paid over RMB 5,000,000 by the Company
will be the Company’s expenses and will not be reimbursed by XHJ. The
advertising costs incurred are charged as cost of sales against specific airtime
segments.
 
 k. Income
taxes
 
 Income
taxes are accounted for under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.
 
 l. Foreign currency
translation
 
 The
Company uses the United States dollar ("U.S. dollars") for financial reporting
purposes. The Company's subsidiaries maintain their books and records in their
functional currency, being the primary currency of the economic environment in
which their operations are conducted. In general, for consolidation purposes,
the Company translates the subsidiaries' assets and liabilities into U.S.
dollars using the applicable exchange rates prevailing at the balance sheet
date, and the statement of income is translated at average exchange rates during
the reporting period. Gain or loss on foreign currency transactions are
reflected on the income statement. Gain or loss on financial statement
translation from foreign currency are recorded as a separate component in the
equity section of the balance sheet, as component of comprehensive income. The
functional currency of the Company ’subsidiaries in China is the Chinese
Renminbi and the functional currency of the US parent is the US
dollar.
 
 m. Fair values of financial
instruments
 
 Statement
of Financial Accounting Standard No. 107, "Disclosures about Fair Value of
Financial Instruments", (ASC 825) requires that the Company disclose estimated
fair values of financial instruments.
 
 The
Company's financial instruments primarily consist of cash and cash equivalents,
accounts receivable, other receivables, prepaid expenses, fixed, accounts
payable, other payable, tax payable, and short and long term loans.
 
 35
 
 As of the
balance sheet dates, the estimated fair values of the financial instruments were
not materially different from their carrying values as presented on the balance
sheet. This is attributed to the short maturities of the instruments and that
interest rates on the borrowings approximate those that would have been
available for loans of similar remaining maturity and risk profile at respective
balance sheet dates.
 
 n. Stock-based
compensation
 
 The
Company records stock-based compensation expense pursuant to SFAS 123R (ASC
718), "Share Based
Payment.”  SFAS 123R (ASC 718) requires companies to measure
compensation cost for stock-based employee compensation plans at fair value at
the grant date and recognize the expense over the employee's requisite service
period. Under SFAS 123R (ASC 718), the Company’s expected volatility assumption
is based on the historical volatility of Company’s stock or the expected
volatility of similar entities. The expected life assumption is primarily based
on historical exercise patterns and employee post-vesting termination behavior.
The risk-free interest rate for the expected term of the option is based on the
U.S. Treasury yield curve in effect at the time of grant.
 
 Stock-based
compensation expense is recognized based on awards expected to vest, and there
were no estimated forfeitures as the Company has a short history of issuing
options. SFAS 123R (ASC 718) requires forfeitures to be estimated at the time of
grant and revised in subsequent periods, if necessary, if actual forfeitures
differ from those estimates.
 
 o. Earning per share
(EPS)
 
 Earnings
per share is calculated in accordance with the Statement of financial accounting
standards No. 128 (SFAS No. 128), Earnings per share. SFAS No. 128 (ASC 260)
superseded Accounting Principles Board Opinion No.15 (APB 15). Earnings per
share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. (ASC 260) Basic earnings per share is based upon the weighted
average number of common shares outstanding. Diluted earnings per share is based
on the assumption that all dilutive convertible shares and stock options were
converted or exercised. Dilution is computed by applying the treasury stock
method. Under this method, options and warrants are assumed to be exercised at
the beginning of the period (or at the time of issuance, if later), and as if
funds obtained thereby were used to purchase common stock at the average market
price during the period.
 
 Basic and
diluted earning per share was $1.50 and $1.47 for the year ended December 31,
2009, respectively. Basic and diluted earning per share was $1.27 and $1.27 for
the year ended December 31, 2008, respectively.
  p. Segment
reporting
  ASC 250
(SFAS 131), "Disclosure About Segments of an Enterprise and Related Information"
requires use of the "management approach" model for segment reporting. The
management approach model is based on the way a company's management organizes
segments within the company for making operating decisions and assessing
performance. Reportable segments are based on products and services, geography,
legal structure, management structure, or any other manner in which management
disaggregates a company.
 
 During
the years ended December 31, 2009 and 2008, the Company is organized into two
main business segments: tourism and advertisement. The primary business relates
to tourism and, specifically, tourism at the Great Golden Lake and
Tulou. The company offers bamboo rafting, parking lot service, photography
services and ethnic cultural communications. The primary business related to
advertisement is focused on advertisements, including media publishing,
television, cultural and artistic communication activities, and performance
operation and management activities.
 
 The
following table presents a summary of operating information and certain year-end
balance sheet information for the years ended December 31, 2009 and
2008:
 
 36
  Years
      ended December 31,2009
                  
                  
                  2008Revenues
      from unaffiliated customers:Advertisement
                  
                  $
                  31,519,267
                  
                  
                  $
                  23,319,235Tourism
                  
                  
                  19,709,684
                  
                  
                  
                  7,280,258Consolidated
                  
                  $
                  51,228,951
                  
                  
                  $
                  30,599,493Operating
      income :Advertisement
                  
                  $
                  23,714,997
                  
                  
                  $
                  16,564,398Tourism
                  
                  
                  11,034,036
                  
                  
                  
                  2,705,267Others
                  
                  
                  (353,777
                  )
                  
                  
                  (273,012
                  )Consolidated
                  
                  $
                  34,395,256
                  
                  
                  $
                  18,996,653Identifiable
      assets:Advertisement
                  
                  $
                  20,979,003
                  
                  
                  $
                  22,327,272Tourism
                  
                  
                  64,563,402
                  
                  
                  
                  31,050,807Others
                  
                  
                  472,073
                  
                  
                  
                  1,165,534Consolidated
                  
                  $
                  86,014,478
                  
                  
                  $
                  54,543,613Net
      incomeAdvertisement
                  
                  $
                  17,698,552
                  
                  
                  $
                  16,461,954Tourism
                  
                  
                  8,153,611
                  
                  
                  
                  2,084,320Others
                  
                  
                  (358,862
                  )
                  
                  
                  (255,173
                  )Consolidated
                  
                  $
                  25,493,301
                  
                  
                  $
                  18,291,101Interest
      expense:Advertisement
                  
                  $
                  -
                  
                  
                  
                  -Tourism
                  
                  
                  -
                  
                  
                  $
                  37,168Consolidated
                  
                  $
                  -
                  
                  
                  $
                  37,168
 
 Others
include reconciling amounts including certain assets which are excluded from
segments and adjustments to eliminate inter company transactions.
 
 q. Statement of cash
flows
 
 In
accordance with Statement of Financial Accounting Standards No. 95, "Statement
of Cash Flows," cash flows from the Company's operations is calculated based
upon the local currencies. As a result, amounts related to assets and
liabilities reported on the statement of cash flows may not necessarily agree
with changes in the corresponding balances on the balance sheet.
 
 r. Recent accounting
pronouncements
 
 In June
2009, the FASB issued ASC 105 (previously SFAS No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles
("GAAP") - a replacement of FASB Statement No. 162), which will become
the source of authoritative accounting principles generally accepted in the
United States recognized by the FASB to be applied to nongovernmental
entities.
 
 37
 
 In June
2009, the FASB issued ASC 855 (previously SFAS No. 165, Subsequent Events), which
establishes general standards of accounting for and disclosures of events that
occur after the balance sheet date but before the financial statements are
issued or available to be issued. It is effective for interim and annual periods
ending after June 15, 2009. There was no material impact upon the adoption of
this standard on the Company’s consolidated financial statements.
  In
June 2009, the FASB issued ASC 860 (previously SFAS No. 166,
“Accounting for Transfers of Financial Assets”) , which requires additional
information regarding transfers of financial assets, including securitization
transactions, and where companies have continuing exposure to the risks related
to transferred financial assets. SFAS 166 eliminates the concept of a
“qualifying special-purpose entity,” changes the requirements for derecognizing
financial assets, and requires additional disclosures. SFAS 166 is effective for
fiscal years beginning after November 15, 2009. The Company does not
believe this pronouncement will impact its financial statements.
  In
June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for
determining whether to consolidate a variable interest entity. These amended
standards eliminate a mandatory quantitative approach to determine whether a
variable interest gives the entity a controlling financial interest in a
variable interest entity in favor of a qualitatively focused analysis, and
require an ongoing reassessment of whether an entity is the primary beneficiary.
These amended standards are effective for us beginning in the first quarter of
fiscal year 2010 and we are currently evaluating the impact that adoption will
have on our consolidated financial statements.
 
 In August
2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends
ASC Topic 820, Measuring
Liabilities at Fair Value, which provides additional guidance on the
measurement of liabilities at fair value. These amended standards clarify that
in circumstances in which a quoted price in an active market for the identical
liability is not available, we are required to use the quoted price of the
identical liability when traded as an asset, quoted prices for similar
liabilities, or quoted prices for similar liabilities when traded as assets. If
these quoted prices are not available, we are required to use another valuation
technique, such as an income approach or a market approach. These amended
standards are effective for us beginning in the fourth quarter of fiscal year
2009 and are not expected to have a significant impact on our consolidated
financial statements.
 
 s. Reclassifications
 
 Certain
prior period amounts have been reclassified to conform to the current period
presentation.
 
 3. 
OTHER ASSETS
 
 Other
assets amounted to $190,424 and $76,759 as of December 31, 2009 and 2008,
respectively. Other assets is mainly comprised of advances to and receivables
from employees and other unrelated parties, interest free, and due upon
demand.
 
 4. 
PROPERTY AND EQUIPMENT
 
 Property
and equipment consist of the following as of December 31, 2009 and
2008:
 
 2009
                  
                  
                  2008Building
                  
                  $
                  34,903,503
                  
                  
                  $
                  34,872,855Electronic
      Equipments
                  
                  
                  303,652
                  
                  
                  
                  193,494Transportation
      Equipments
                  
                  
                  74,281
                  
                  
                  
                  63,442Office
      Furniture
                  
                  
                  128,765
                  
                  
                  
                  8,946Subtotal
                  
                  
                  35,410,201
                  
                  
                  
                  35,103,887Less:
      Accumulated Depreciation
                  
                  
                  (2,414,316
                  )
                  
                  
                  (965,278
                  )Total
                  
                  $
                  32,995,885
                  
                  
                  $
                  34,173,009
 
 Depreciation
expenses for the years ended December 31, 2009 and 2008 were $1,447,319 and,
$399,884 respectively.
 
 5. 
CONSTRUCTION IN PROGRESS
 
 Construction
in progress amounted to $36,730,184 and $1,979,725 of December 31, 2009 and
2008. It is mainly related to the constructions for the new tourist resort which
the Company has acquired management right from January 2009 in Yuding; various
small ongoing projects related to the Great Golden Lake dam; and the
construction of earthen building Tulou. The amount of capitalized interest
included in construction in progress amounted $213,950 and $100,057 for the
years ended December 31, 2009 and 2008, respectively. The Company will begin
depreciating these assets when they are placed in service.  The
Company expects these projects to be completed by the third quarter 2010 and
placed in service at the end of third quarter 2010.
 
 38
 
 6. 
INTANGIBLE ASSETS
 
 As of
December 31, 2009 and 2008, intangible assets were as follows:
 
 2009
                  
                  
                  2008Intangible
      assetManagement
      right of tourist resort
                  
                  $
                  5,134,223
                  
                  
                  $
                  5,130,084Advertising
      board
                  
                  
                  6,601,500
                  
                  
                  
                  6,595,823Accumulated
      amortization
                  
                  
                  (3,860,785
                  )
                  
                  
                  (2,367,574
                  )Total
                  
                  $
                  7,874,938
                  
                  
                  $
                  9,358,555
 
 The
company acquired 30 years tourist resort management right at August, 2001 from
unrelated parties by paying cash.
 
 The
Company entered an agreement with one third party on February 29, 2008 and
obtained five-year use rights of 30 outside advertising boards in Fuzhou city
amounting to $6,601,500 (RMB45, 000,000). The term of the contact is in
excess of twelve months and inures exclusive operation rights for the Company in
the future 5 years. The Company expects the future economic benefits from the
advertising revenue through the 30 outside boards.
 
 In
accordance with ASC 350 (previously SFAS 142), the advertising board is a non
monetary asset without physical substance that provides probable future economic
benefits and has costs that can be reliably measured. An intangible asset is
identifiable if it arises from contractual or other legal rights, regardless of
whether those rights are transferable or separable from the entity or from other
rights and obligations.
 
 Intangible
assets of the Company are reviewed annually as to whether their carrying value
has become impaired. The Company considers assets to be impaired if the carrying
value exceeds the future projected cash flows from related operations. The
Company also re-evaluates the periods of amortization to determine whether
subsequent events and circumstances warrant revised estimates of useful lives.
As of December 31, 2009 the Company expects these assets to be fully
recoverable.
 
 Total
intangible assets amortization expenses for the years ended December 31, 2009
and 2008 amounted to $1,490,535 and $1,157,415 respectively. Amortization
expenses for the next five years and thereafter ended December 31 amounts to
$9,824,643 and consists of the following:
  Years ending December 31,
                  
                  Amount2010
                  
                  $
                  1,490,4952011
                  
                  
                  1,490,4952012
                  
                  
                  1,490,4952013
                  
                  
                  1,490,4952014
                  
                  
                  171,041Thereafter,
                  
                  
                  3,691,622
 
 7.  ADVANCES
AND PREPAYMENTS
 
 The
Company advances and prepays certain monies for project
deposits.  These balances are interest free and unsecured. As of
December 31, 2009 and December 31, 2008, advance and prepayments amounted to
$1,432,138 and $164,169, respectively.
 
 Long term
prepayments related to the advances of Yunding construction projects. As of
December 31, 2009 and December 31, 2008, long term prepayments amounted to
$1,012,230 and $0, respectively.
 
 During
December 2007, the company entered into several contracts with unrelated parties
for marketing and TV programming amounting to $9,459,052 (RMB 69,000,000). The
Company amortized the service expense beginning in 2008.
 
 39
 
 Fuyu and
Yintai entered two marketing promotion agreements with two tour agents
(unrelated parties) for promoting the resorts the Company owns in the next three
years in March 2008. The two tour agents promise to bring tourism revenue for
Yintai amounting to $2,926,552 (RMB 21 million) annually for the next three
years. At the same time, Fuyu had prepaid the special market promotion fee
$5,346,421 ($1,782,140 annual) to the two contractors entirely for the next
three years. Fuyu also provide 500 minutes advertisement free annually for
the two contractors. The prepaid expense for the two tour agents as of December
31, 2007 was $0 and $5,357,385 respectively.
 
 Fuyu
entered another contract with another unrelated party for purchasing TV program.
Fuyu prepaid $4,112,631 (RMB 30 million) to the unrelated party as of December
31, 2007 and the contractor promise to bring advertising revenue to
Fuyu amounting to $2,741,754 (RMB 20 million) annually for the next three
years. The prepaid balance for this contract was amounting to
$4,101,667 as of December 31, 2007.
 
 Total
amortization expenses amounted to $3,107,362 (RMB 20.8
million).
 
 During
the year ended December 31, 2008, the Company cancelled all three contracts per
above and received the rest of the prepayment amounting $
6,932,750 (RMB 48.2 million).
 
 8. 
OTHER PAYABLE
 
 Other
payables are payables due to unrelated parties other than supplier vendors. The
amount was $1,145,564 and $462,778, due on demand and interest free as of
December 31, 2009 and 2008, respectively.
 
 9. 
TAX PAYABLES
 
 Tax
payables consist of the following as of December 31, 2009 and 2008:
 
 December
      31, 2009
                  
                  
                  December
      31, 2008City
      planning tax
                  
                  $
                  7,140
                  
                  
                  $
                  6,729Business
      tax payable
                  
                  
                  201,820
                  
                  
                  
                  139,616Individual
      income tax payable
                  
                  
                  3,317
                  
                  
                  
                  1,136Income
      tax payable
                  
                  
                  2,533,023
                  
                  
                  
                  511,624Education
      fee
                  
                  
                  6,625
                  
                  
                  
                  5,434Cultural
      construction fee
                  
                  
                  83,730
                  
                  
                  
                  61,985Total
                  
                  $
                  2,835,655
                  
                  
                  $
                  726,524
 
 10. 
LOAN PAYABLE
 
 Short
term loan payables represent the loans borrowed from commercial banks that are
due within one year. As of December 31, 2009 and December 31, 2008, the
outstanding balances on these loans were $1,731,060 and $1,172,591,
respectively, and these loans consisted of the following:
  2009
                  
                  
                  2008Short
      term loan payableLoan
      from Construction Bank, interest rate at 5.81% per annum, due December 15,
      2010, guaranteed by the Tulou’s construction.
                  
                  
                  557,460
                  
                  
                  
                  -Loan
      from Merchant bank of Fuzhou, interest rate at 8.66% per annum, due
      November 6, 2010, guaranteed by the a related party which is 80% owned by
      a shareholder of the Company
                  
                  
                  1,173,600
                  
                  
                  
                  1,172,591Total
                  
                  $
                  1,731,060
                  
                  
                  $
                  1,172,591
 
 40
 
 As of
December 31, 2009 and 2008, the long term loan payables were as
follows:
  2009
                  
                  
                  2008Loan
      from Taining Credit Union, interest rate at 7.02% per annum, due March 20,
      2010, guaranteed by the management rights of the Great Golden
      Lake
                  
                  $
                  2,495,190
                  
                  
                  $
                  -
 
 The
interest expenses are $0 and $37,168 for the years ended December 31, 2009 and
2008, respectively. The Company has paid interest in the amount of $210,035 and
$109,499 for the years ended December 31, 2009 and 2008,
respectively.  The amount of capitalized interest included in
construction in progress (Note 5) amounted $213,950 and $100,057 for the years
ended December 31, 2009 and 2008, respectively
 
 11.  OTHER
(INCOME) EXPENSES
 
 Other
(income) expenses consists of the following for the years ended December 31,
2009 and 2008:
 
 Other
      (income) expense
                  
                  2009
                  
                  
                  2008Other
      expense, net
                  
                  $
                  (115)
                  
                  
                  $
                  22,869Interest
      expense
                  
                  
                  -
                  
                  
                  
                  37,168Interest
      income
                  
                  
                  (28,344
                  )
                  
                  
                  (24,832
                  )Total
      other (income) expense, net
                  
                  $
                  (28,459
                  )
                  
                  $
                  35,205
 
 12. 
INCOME TAXES
  The
Company is registered in Hong Kong, China and has operations in primarily two
tax jurisdictions - the PRC and China (HK). For certain operations in the HK and
PRC, the Company has incurred net accumulated operating losses for income tax
purposes. The Company believes that it is more likely than not that these net
accumulated operating losses will not be utilized in the future. Therefore, the
Company has provided full valuation allowance for the deferred tax assets
arising from the losses at these locations as of December 31, 2009. Accordingly,
the Company has no net deferred tax assets.
 
 The
provision for income taxes from operations income consists of the following for
the twelve month periods ended December 31, 2009 and 2008:
 
 2009
                  
                  
                  2008PRC
      Current Income Expense (Benefit)
                  
                  $
                  8,930,414
                  
                  
                  $
                  670,347Total
      Provision for Income Tax
                  
                  $
                  8,930,414
                  
                  
                  $
                  670,347
 
 The
following is a reconciliation of the provision for income taxes at the PR and HK
tax rate to the income taxes reflected in the Statement of
Operations:
 
 December
      31, 2009
                  
                  December
      31, 2008Tax
      expense (credit) at statutory rate - HK
                  
                  
                  17.5%
                  
                  
                  
                  17.5%Changes
      in valuation allowance
                  
                  
                  (17.5%)
                  
                  
                  
                  (17.5%)Foreign
      income tax rate
                  
                  
                  25%
                  
                  
                  
                  25%Foreign
      income tax benefit - PRC
                  
                  
                  (0%)
                  
                  
                  
                  (21%)Other
      (a)
                  
                  
                  1%
                  
                  
                  
                  0%Effective
      income tax rates
                  
                  
                  26%
                  
                  
                  
                  4%
  (a)
                  The
      1% represents expenses (such as certain expenses incurred in the U.S.
      entity) incurred by the Company that are not deductible for PRC income tax
      for the three months ended December 31,
2009.
 
 41
 
 People’s Republic of China
(PRC)
 
 Pursuant
to the PRC Income Tax Laws, the Company's subsidiary is generally subject to
Enterprise Income Taxes ("EIT") at a statutory rate of 33%, which comprises 30%
national income tax and 3% local income tax before 2008. Beginning January 1,
2008, the new Enterprise Income Tax ("EIT") law will replace the existing laws
for Domestic Enterprises ("DES") and Foreign Invested Enterprises ("FIEs"). The
new standard EIT rate of 25% will replace the 33% rate currently applicable to
both DES and FIEs. The Company’s applicable EIT rate under new EIT law is 25%
which was approved by local Tax department.
 
 The
applicable income tax rate for the business operation in PRC is 25% in 2009 and
2008 except Fuyu. Fuyu was completely exempt of income tax for the first 2 years
till fiscal year 2008 .There were no significant book and tax basis
difference.
 
 13.  
SHAREHOLDERS’ EQUITY
 
 1)
SECURITY ISSUANCE AGREEMENT
 
 In
connection with the closing of a financing transaction on November 19, 2007, the
Company granted Pope Investments II, LLC and certain other investors Class A
Warrants that were exercisable for a total of 6,666,667 shares of the Company’s
common stock (the “Warrant Shares”) at $1.25 per share (the “Exercise Price”),
and were exercisable as of September 6, 20009 and will expire on September 6,
2011. Subject to the provisions of the Class A Warrants, warrant holders may
elect to exercise the Class A Warrants on a cashless basis. Pursuant to Section
18 of the Class A Warrants, the Company shall have the option to call 50% of the
Class A Warrants at a redemption price of $0.001 per share of the Warrant Shares
upon the Company’s achievement of the 2008 performance threshold, and shall have
the option to call 100% of the Warrant Shares underlying the then outstanding
Class A Warrants upon the Company’s achievement of net income of $39,000,000 for
the fiscal year of 2010.
 
 The
assumptions used for warrants issued with the share purchasing in Black Scholes
calculation are as follow:
 
 Risk-free
      interest rate
                  
                  
                  2.5
                  %Expected
      life of the options
                  
                  3
      yearExpected
      volatility
                  
                  
                  514.17
                  %Expected
      dividend yield
                  
                  
                  0
                  %
 
 On April
14, 2009, in reliance upon Section 18 of the Class A Warrants, the Company
exercised its call option to redeem a total of 3,333,331 Warrant Shares at
$0.001 per share for a total of $3,336.
  In June
2009, the Company effectuated a 4:1 reverse stock split (the “Split”). As a
result, the remaining 3,333,336 Warrant Shares underlying the Class A Warrants
were reduced to 833,337 and the Exercise Price was increased to $5 per
share.
 
 Following
is a summary of the warrant activity for the year ended December 31,
2009:
  Outstanding,
      December 31, 2008
                  
                  
                  6,666,667Called
      back
                  
                  
                  (3,333,331
                  )4:1
      Reverse Split
                  
                  
                  833,337Exercised
      during the year
                  
                  
                  (59,525
                  )Outstanding,
      December 31, 2009
                  
                  
                  773,812
  Warrants
outstanding at December 31, 2009 and related weighted average price and
intrinsic value are as follows:
 
 Exercise
      Prices
                  
                  
                  Total
                    Warrants
                    Outstanding
                  
                  
                  Weighted
                    Average
                    Remaining
      Life
                    (Years)
                  
                  
                  Total
                    Weighted
                    Average
                    Exercise
      Price
                  
                  
                  Warrants
                    Exercisable
                  
                  
                  Weighted
                    Average
                    Exercise
      Price
                  
                  
                  Aggregate
                    Intrinsic
                    Value$
                  5
                  
                  
                  
                  773,812
                  
                  
                  
                  1.67
                  
                  
                  $
                  5
                  
                  
                  
                  773,812
                  
                  
                  $
                  5
                  
                  
                  $
                  -
  42
 
 2)
REVERSE SPLIT
 
 The
Company effecuated a 4:1 reverse stock split during the quarter ended
June 30, 2009. All statements are reversely stated.
 
 3)
STOCK BASED COMPENSATION
 
 On June
10, 2009 (the “Grant Date”), the Company entered into a Non-qualified Stock
Option Agreement with one of the Company’s directors, pursuant to which, the
Company agrees to issue the director non-qualified stock options (the “Stock
Options”) to purchase a total of 30,000 shares of the Company’s common stock as
compensation for his services to be rendered as the Company’s
director.  One half of the Stock Options shall vest on the sixth
monthly anniversary of the Grant Date (the “First Vesting Date”)and become
exercisable at an exercise price equal to the market price of the Company’s
common stock on the First Vesting Date and the second half of Stock Options
shall vest on the 12th monthly anniversary of the Grant Date (the “Second
Vesting Date”) and become
exercisable at an exercise price equal to the market price of the Company’s
common stock on the Second Vesting Date
 The
Company valued the stock options by the Black-Scholes model with the following
assumptions:
 
 Expected
                  
                  Expected
                  
                  Dividend
                  
                  Risk Free
                  
                  Grant DateTerm
                  
                  Volatility
                  
                  Yield
                  
                  Interest Rate
                  
                  Fair
      ValueDirector
                  
                  
                  5.25
                  
                  356
                  %
                  0
                  %
                  3.11
                  %
                  $
                  5.60
 
 The
following is a summary of the option activity:
 
 Number of optionsOutstanding
      as of December 31, 2008
                  
                  
                  -Granted
                  
                  
                  30,000Exercised
                  
                  
                  -Forfeited
                  
                  
                  -Outstanding
      as of December 31, 2009
                  
                  
                  30,000
 
 Following
is a summary of the status of options outstanding at December 31,
2009:
 
 Outstanding options
                  
                  Exercisable optionsAverage
                    Exercise price
                  
                  Number
                  
                  Average
                    remaining
                    contractual life
                    (years)
                  
                  Average
                    Exercise
                    price
                  
                  Number
                  
                  Average
                    remaining
                    contractual life
                    (years)$
                  (1)
                  
                  30,000
                  
                  9.50
                  
                  $
                  14.84
                  
                  15,000
                  
                  
                  9.50$
                  (1)
                  
                  30,000
                  
                  
                  
                  $
                  14.84
                  
                  15,000
                  
                  
                  -
    As of
December 31, 2009, there was approximately $83,994 of total unrecognized
compensation expense related to un-vested share-based compensation
arrangements.
 
 For the
years ended December 31, 2009 and 2008, the Company recognized approximately
$83,994 and $0, respectively, as compensation expenses for its stock option
plan.
 
 14.   MAJOR
CUSTOMERS AND VENDORS
 
 There
were no major customers which accounting over 10% of the total net revenue for
the year ended December 31, 2009. There are no major vendors which accounting
over 10% of the total purchase for the year ended December 31, 2009. The Company
extends credit to its customers based upon its assessment of their credit
worthiness and generally does not require collateral. Credit losses have not
been significant.
 
 15.  
CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS
 
 The
Company’s practical operations are all carried out in the PRC. Accordingly, the
Company’s business, financial condition, and results of operations may be
influenced by the political, economic and legal environments in the PRC, and by
the general state of the PRC's economy.
 
 43
 
 The
Company’s operations in the PRC are subject to specific considerations and
significant risks not typically associated with companies in the North America
and Western Europe. These include risks associated with, among others, the
political, economic and legal environments and foreign currency exchange. The
Company’s results may be adversely affected by changes in governmental policies
with respect to laws and regulations, anti-inflationary measures, currency
conversion and remittance abroad, and rates and methods of taxation, among other
things.
 
 16. 
LEASE COMMITMENTS
 
 The
Company incurred rental expenses of $55,951 and $22,066 for the years ended
December 31, 2009 and 2008.
 
 The
Company does not have any future lease commitments to pay a minimum
amount.
 
 17.
COMMITMENTSANDCONTIGENCIES
 
 Commitments
 
 The
Company entered into a construction contract with an unrelated party to develop
road project of Yunding tourist attraction in Janurary 2009. The project costs
$10,749,597 (RMB73.28 million) and has completed $10,086,548 (RMB 68.76 million)
during the year ended December 31, 2009.
 
 The
Company entered into construction contract with an unrelated party to develop a
cable car project of Yunding tourist attraction in March 2009. The project
costs $7,902,304 (RMB 53.87 million) and has completed $7,535,573 (RMB 51.37
million) during the year ended December 31, 2009.
 
 The
Company entered into a construction contract with an unrelated party to develop
Tulou cluster scenic zone in April 2009.  The total cost of the
project is $960,833 (RMB 6.55 million) and has completed $906,557 (RMB 6.18
million) during the year ended December 31, 2009.
 
 The
Company entered into a construction contract with an unrelated party to develop
project of Yunding Tianchi in July 2009. The total contract is in the amount of
$ 5,842,746 (RMB 39.83 million) and has completed $5,487,751 (RMB 37.41 million)
during the year ended December 31, 2009.
 
 The
Company entered into a construction contract with an unrelated party to develop
road project of Yunding in October 2009. The total contract costs of $12,081,561
(RMB 82.36 million) and has completed $ 9,514,449 (RMB 64.86 million) during the
year ended December 31, 2009.
 
 Litigation
 
 From time
to time, the Company is a party to various legal actions arising in the ordinary
course of business.  The Company’s management does not expect the legal
matters involving the Company would have a material impact on the Company’s
consolidated financial position or results of operations
 
 18. 
SUBSEQUENT EVENTS
 
 On
January 28, 2010, the Company issued 2,289,221 shares (the “Shares”) of its
common stock at a price of $11.50 per share.
 
 On
February 2, 2010, the Company sold an additional 200,500 shares of common stock
at a price of $11.50 per share that were originally subscribed for in its
previously announced registered direct offering.  Accordingly, the
Company issued a total of 2,489,721 shares in the registered direct offering for
aggregate gross proceeds of $28,631,791.50.
  44
 ITEM9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE





Our
accountant is Kabani & Company, Inc., independent certified public
accountants. We do not presently intend to change accountants. At no time have
there been any disagreements with such accountants regarding any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.





ITEM 9A(T).  CONTROLS AND PROCEDURES





Evaluation
of disclosure controls and procedures





Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
Exchange Act of 1934, as amended (Exchange Act), as of December 31, 2009. Based
on this evaluation, our principal executive officer and principal financial
officers have concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in the
reports we file or submit under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the Securities and
Exchange Commission’s rules.





MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





Management
of the Company is responsible for establishing and maintaining effective
internal control over financial reporting as defined in Rule
13a-15(f) under the Exchange Act over the registrant. The Company’s
internal control over financial reporting is designed to provide reasonable
assurance to the Company’s management and Board of Directors regarding the
preparation and fair presentation of published financial statements in
accordance with United State’s generally accepted accounting
principles (US GAAP), including those policies and procedures that: (i) pertain
to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the
company, (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with US
GAAP and that receipts and expenditures are being made only in accordance with
authorizations of management and directors of the company, and (iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.  Management
conducted an evaluation of the effectiveness of internal control over financial
reporting based on the framework in Internal Control— Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Management’s assessment included an evaluation of the design of our
internal control over financial reporting and testing of the operational
effectiveness of our internal control over financial reporting. Based on this
assessment, Management concluded the Company maintained effective internal
control over financial reporting as of December 31, 2009.





45





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Therefore, even those
systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and
presentation.  This annual report does not include an attestation
report of the Company’s registered public accounting firm regarding internal
control over financial reporting. Management’s report was not subject to
attestation by our registered public accounting firm pursuant to temporary rules
of the Securities and Exchange Commission that permit the Company to
provide only management’s report in this Annual Report.




PART III




ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE





The
information required by this Item is incorporated by reference to the
information contained in our Proxy Statement for our 2009 Annual Meeting of
Stockholders, which we will file with the Commission within 120 days after the
end of 2009.




ITEM 11.  EXECUTIVE COMPENSATION


The
information required by this Item is incorporated by reference to the
information contained in our Proxy Statement for our 2009 Annual Meeting of
Stockholders, which we will file with the Commission within 120 days after the
end of 2009.




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


The
information required by this Item is incorporated by reference to the
information contained in our Proxy Statement for our 2009 Annual Meeting of
Stockholders, which we will file with the Commission within 120 days after the
end of 2009.





ITEM 13.  CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


The
information required by this Item is incorporated by reference to the
information contained in our Proxy Statement for our 2009 Annual Meeting of
Stockholders, which we will file with the Commission within 120 days after the
end of 2009.





ITEM 14.  PRINCIPAL
ACCOUNTING FEES AND SERVICES


The
information required by this Item is incorporated by reference to the
information contained in our Proxy Statement for our 2009 Annual Meeting of
Stockholders, which we will file with the Commission within 120 days after the
end of 2009.





46





PART
IV





ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES.





(a)
Documents filed as part of this Annual Report





1.
Financial Statements





2.
Financial Statement Schedules





3.
Exhibits





Exhibit No.
            
            Title
      of Document31.1
            
            Certification
      of Chen Minhua pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.31.2
            
            Certification
      of Lin Yongxi pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.32.1
            
            Certification
      of Chen Minhua pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002.32.2
            
            Certification
      of Lin Yongxi pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of
2002.








47


SIGNATURES





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











CHINA
      YIDA HOLDING, CO.Date:  
      March
      23, 2010
            By:
            /s/ Chen,
      MinhuaChen,
      Minhua
              Chief
      Executive OfficerBy:
            /s/ George
      WungGeorge
      WungPrincipal
      Accounting Officer





Pursuant
to the requirements of the Securities Exchange Act of 1934, this annual report
has been signed by the following persons in the capacities and on the dates
indicated.
 Signature
              
              Capacity
              
              Date/s/
      Minhua
      Chen
              
              Chief
      Executive Officer (Principal Executive
              
              March
      23, 2010Minhua
      Chen
              
              Officer),
      President and Director/s/
      George
      Wung
              
              Chief
      Financial Officer
              
              March
      23, 2010George
      Wung
              
              (Principal
      Financial Officer; PrincipalAccounting
      Officer)/s/
      Yanling
      Fang
              
              Director
              
              March
      23, 2010Yanling
      Fang/s/
      Michael
      Marks
              
              Director
              
              March
      23, 2010Michael  Marks/s/
      Fucai
      Huang
              
              Director
              
              March
      23, 2010Fucai
      Huang/s/
      Chunyu
      Yin
              
              Director
              
              March
      23, 2010Chunyu
      Yin





48