UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington, D.C.
20549
  FORM
10-Q
  [X]
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934:
  For
the Quarterly Period ended September 30, 2008
  [  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE
ACT
  For the
transition period from __________________ to __________________
 
 Commission
File Number: 1-10559
 China International Tourism
Holdings Ltd.
 (Exact
name of registrant as specified in its charter)
  Nevada
              65-1021346(State
      or other jurisdiction of
              (IRS
      Employer Identification No.)incorporation
      or organization)
  E Pang Gong Site, 44 Hong
Guang Road, Xi An, P.R. China 710068
 (Address
of principal executive offices)
 
 ( 8629 )
8436-8561
 (Issuer's
telephone number)
  Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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 [  ]
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
  Large
accelerated filer [
]                                                                           Accelerated
filer   [ ]
  Non-accelerated
filer  [
]                                                                           Smaller
Reporting Company [X]
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [  ] No [X]
 
 Number of
shares of common stock outstanding as of November 10, 2008: 
48,591,809
 Number of
shares of preferred stock outstanding as of November 10,
2008:   3,295,000
 
 
 CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION
  The
discussion contained in this 10-Q under the Securities Exchange Act of 1934, as
amended, contains forward-looking statements that involve risks and
uncertainties. The issuer's actual results could differ significantly from those
discussed herein. These include statements about our expectations, beliefs,
intentions or strategies for the future, which we indicate by words or phrases
such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the
Company believes," "management believes" and similar language, including those
set forth in the discussions under "Notes to Financial Statements" and
"Management's Discussion and Analysis or Plan of Operation" as well as those
discussed elsewhere in this Form 10-Q. We base our forward-looking statements on
information currently available to us, and we assume no obligation to update
them. Statements contained in this Form 10-Q that are not historical facts are
forward-looking statements that are subject to the "safe harbor" created by the
Private Securities Litigation Reform Act of 1995.
  
 
 
 TABLE OF CONTENTSPART
      I. FINANCIAL INFORMATIONITEM 1.FINANCIAL
      STATEMENTS
              3ITEM 2.MANAGEMENT'S DISCUSSION AND
      ANALYSIS OR PLAN OF OPERATION
              8ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
      ABOUT MARKET RISK
              9ITEM 4.CONTROLS AND
      PROCEDURES
              9PART
      II. OTHER INFORMATIONITEM 1.LEGAL
      PROCEEDINGS
              10ITEM
      1A.RISK FACTORS
              10ITEM 2.CHANGES IN SECURITIES AND USE OF
      PROCEEDS
              10ITEM
      3. DEFAULTS UPON SENIOR SECURITIES
              10ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              10ITEM 5.OTHER
      INFORMATION
              10ITEM 6.EXHIBITS AND REPORTS ON FORM
      8-K
              10SIGNATURES
              11INDEX TO
      EXHIBITS
              12
  2
 Table of Contents
  ITEM 1. FINANCIAL STATEMENTS
  INDEX
      TO INTERIM FINANCIAL STATEMENTSPageConsolidated
      Unaudited Condensed Balance Sheets – September 30, 2008 and December 31,
      2007
              4Consolidated
      Unaudited Condensed Consolidated Statements of Operations and
      Comprehensive Income - For the Three and Nine Months Ended September 30,
      2008 and 2007
              5Consolidated
      Unaudited Condensed Statements of Cash Flows - For the Nine Months Ended
      September 30, 2008 and 2007
              6Notes
      to Consolidated Unaudited Condensed Financial Statements
              7
  3
 Table of Contents
  CHINA
      INTERNATIONAL TOURISM HOLDINGS, LTD. AND SUBSIDIARYUnaudited
      Condensed Consolidated Balance SheetsAs
      of September 30, 2008 and December 31, 2007September
      30, 2008
                  
                  
                  December
      31, 2007ASSETSCURRENT
      ASSETSCash
      and Cash Equivalents
                  
                  $
                  12,191
                  
                  
                  $
                  7,152Accounts
      Receivable
                  
                  
                  8,858
                  
                  
                  
                  19,338Inventory
                  
                  
                  14,968
                  
                  
                  
                  14,515Prepaid
      Expenses
                  
                  
                  20,206
                  
                  
                  
                  9,523TOTAL
      CURRENT ASSETS
                  
                  
                  56,223
                  
                  
                  
                  50,528FIXED
      ASSETSProperty,
      Plant, and Equipment
                  
                  
                  720,623
                  
                  
                  
                  691,110Accumulated
      Depreciation
                  
                  
                  (338,753
                  )
                  
                  
                  (269,508
                  )TOTAL
      FIXED ASSETS
                  
                  
                  381,870
                  
                  
                  
                  421,602TOTAL
      ASSETS
                  
                  $
                  438,093
                  
                  
                  $
                  472,130LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESAccounts
      Payable and Accrued Liabilities
                  
                  $
                  371,549
                  
                  
                  $
                  360,867Due
      to Shareholder
                  
                  
                  58,120
                  
                  
                  
                  24,620TOTAL
      CURRENT LIABILITIES
                  
                  
                  429,669
                  
                  
                  
                  385,487TOTAL
      LIABILITIES
                  
                  
                  429,669
                  
                  
                  
                  385,487COMMITMENTS
      AND CONTINGENCIESRedeemable
      Preferred Stock (par value $.01,
                  
                  
                  32,950
                  
                  
                  
                  32,9505,000,000
      Shares Authorized, 3,295,000 SharesIssued
      and Outstanding)STOCKHOLDERS'
      EQUITYCommon
      Stock (par value $.0001, 250,000,000 Shares
                  
                  
                  4,860
                  
                  
                  
                  4,860Authorized,
      48,591,809 Shares Issued and OutstandingPaid
      in Capital
                  
                  
                  3,617,895
                  
                  
                  
                  3,617,895Accumulated
      Other Comprehensive Income
                  
                  
                  43,251
                  
                  
                  
                  21,063Retained
      Earnings (Deficit)
                  
                  
                  (3,690,532
                  )
                  
                  
                  (3,590,125
                  )TOTAL
      STOCKHOLDERS' EQUITY
                  
                  
                  (24,526
                  )
                  
                  
                  53,693TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                  
                  $
                  438,093
                  
                  
                  $
                  472,130-The
      accompanying notes are an integral part of these financial
      statements.
  4
 Table of Contents
  CHINA
      INTERNATIONAL TOURISM HOLDINGS, LTD. AND SUBSIDIARYUnaudited
      Condensed Consolidated Statements of OperationsFor
      the Three and Nine Months Ended September 30, 2008 and
  2007For
      The Three Months Ended
                  
                  
                  For
      The Nine Months Ended9/30/2008
                  
                  
                  9/30/2007
                  
                  
                  9/30/2008
                  
                  
                  9/30/2007REVENUESales
                  
                  $
                  70,852
                  
                  
                  $
                  126,184
                  
                  
                  $
                  188,628
                  
                  
                  $
                  423,737Cost
      of Sales
                  
                  
                  148
                  
                  
                  
                  28,217
                  
                  
                  
                  14,344
                  
                  
                  
                  91,346GROSS
      PROFIT
                  
                  
                  70,714
                  
                  
                  
                  97,967
                  
                  
                  
                  174,284
                  
                  
                  
                  332,391OPERATING
      EXPENSESSelling,
      General , and Administrative
                  
                  
                  113,322
                  
                  
                  
                  181,044
                  
                  
                  
                  409,279
                  
                  
                  
                  536,045INCOME
      (LOSS) FROM OPERATIONS
                  
                  
                  (42,608
                  )
                  
                  
                  (83,077
                  )
                  
                  
                  (234,995
                  )
                  
                  
                  (203,654
                  )OTHER
      INCOME / (EXPENSES):Finance
      Costs
                  
                  
                  (2
                  )
                  
                  
                  (4
                  )
                  
                  
                  (209
                  )
                  
                  
                  (69
                  )Non-Operating
      Income
                  
                  
                  3,673
                  
                  
                  
                  (528
                  )
                  
                  
                  (1,703
                  )
                  
                  
                  (410
                  )Other
      income
                  
                  
                  136,500
                  
                  
                  
                  -
                  
                  
                  
                  136,500
                  
                  
                  
                  -Total
      Other Income (Expense)
                  
                  
                  140,171
                  
                  
                  
                  (532
                  )
                  
                  
                  134,588
                  
                  
                  
                  (479
                  )NET
      INCOME (LOSS) BEFORE TAXES
                  
                  
                  97,563
                  
                  
                  
                  (83,609
                  )
                  
                  
                  (100,407
                  )
                  
                  
                  (204,133
                  )INCOME
      TAX EXPENSE
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -NET
      INCOME (LOSS) FROM CONTUNUED OPERATIONS
                  
                  $
                  97,563
                  
                  
                  $
                  (83,609
                  )
                  
                  $
                  (100,407
                  )
                  
                  $
                  (204,133
                  )GAIN
      ON  DISPOSAL OF SUBSIDIARY
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -NET
      INCOME (LOSS)
                  
                  
                  97,563
                  
                  
                  
                  (83,609
                  )
                  
                  
                  (100,407
                  )
                  
                  
                  (204,133
                  )OTHER
      COMPREHENSIVE INCOME (LOSS)Foreign
      Currency Translation (Loss) Gain
                  
                  
                  2,165
                  
                  
                  
                  161
                  
                  
                  
                  22,188
                  
                  
                  
                  (4,220
                  )COMPREHENSIVE
      INCOME (LOSS)
                  
                  $
                  99,728
                  
                  
                  $
                  (83,448
                  )
                  
                  $
                  (78,219
                  )
                  
                  $
                  (208,353
                  )NET
      LOSS PER COMMON SHAREBasically
      and Fully Dilluted
                  
                  $
                  **
                  
                  
                  $
                  **
                  
                  
                  $
                  **
                  
                  
                  $
                  ****Less
      the .01WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDING
                  
                  
                  48,591,809
                  
                  
                  
                  48,591,809
                  
                  
                  
                  48,591,809
                  
                  
                  
                  48,591,809The
      accompanying notes are an integral part of these financial
      statements.
  5
 Table of Contents
   CHINA
      INTERNATIONAL TOURISM HOLDINGS, LTD. AND SUBSIDIARYUnaudited
      Condensed Consolidated Statements of Cash FlowsFor
      the Nine Months Ended September 30, 2008 and 2007For
      the Nine Months Ended9/30/2008
                  
                  
                  9/30/2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income(loss) after income tax
                  
                  $
                  (100,407
                  )
                  
                  $
                  (204,133
                  )Adjustments
      to reconcile net income tonet
      cash provided by (used in) operating activities:Depreciation
                  
                  
                  69,245
                  
                  
                  
                  84,496Accounts
      Receivable and Other Receivables
                  
                  
                  10,480
                  
                  
                  
                  (4,497
                  )Prepaid
      and Other Assets
                  
                  
                  (10,683
                  )
                  
                  
                  41,679Inventory
                  
                  
                  (453
                  )
                  
                  
                  1,702Accounts
      Payable
                  
                  
                  44,182
                  
                  
                  
                  35,224Tax
      Payable
                  
                  
                  -
                  
                  
                  
                  (7,295
                  )Other
      Payable
                  
                  
                  -
                  
                  
                  
                  33,568NET
      CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
                  
                  
                  12,364
                  
                  
                  
                  (19,256
                  )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of property, plant, and equipment
                  
                  
                  (29,513
                  )
                  
                  
                  (2,030
                  )NET
      CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
                  
                  
                  (29,513
                  )
                  
                  
                  (2,030
                  )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from shareholder loan
                  
                  
                  -
                  
                  
                  
                  12,474NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                  
                  
                  -
                  
                  
                  
                  12,474FOREIGN
      CURRENCY TRANSLATION ADJUSTMENT
                  
                  
                  22,188
                  
                  
                  
                  (4,220
                  )NET
      INCREASE IN CASH AND CASH EQUIVALENTS
                  
                  
                  5,039
                  
                  
                  
                  (13,032
                  )CASH
      AND CASH EQUIVALENTS:Beginning
      of period
                  
                  
                  7,152
                  
                  
                  
                  21,333End
      of period
                  
                  
                  12,191
                  
                  
                  
                  8,301The
      accompanying notes are an integral part of these financial
      statements.
  6
 Table of Contents
  CHINA
INTERNATIONAL TOURISM HOLDINGS, LTD. AND SUBSIDIARY
 NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
 
  NOTE A - BASIS OF
PRESENTATION
 The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with both generally accepted accounting principles for
interim financial information, and the instructions to Form 10-Q and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting of normal recurring
accruals) that are, in the opinion of management, considered necessary for a
fair presentation of the results for the interim periods presented. Interim
results are not necessarily indicative of results for a full year.
 
 The
condensed consolidated financial statements and related disclosures have been
prepared with the presumption that users of the interim financial information
have read or have access to our annual audited consolidated financial statements
for the preceding fiscal year. Accordingly, these condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the related notes thereto contained in the Annual
Report on Form 10-KSB for the year ended December 31, 2007.
 
 Business
Organization
  China
International Tourism Holdings, Limited. (the “Company” or “CIHS”) was
incorporated in the State of Nevada on December 23, 1988, formerly known as Dark
Dynamite, Inc., NCI Holdings, Inc., Vector Holding, Inc., and prior to June 26,
2002, Vector Aeromotive Corporation. On September 9, 2007, the Board of
Directors of CIHS approved a name change from Dark Dynamite, Inc to China
International Tourism Holdings, Limited. This change went into legal effect in
the third quarter of 2007.
 
 Recently Issued Accounting
Pronouncements
 
 In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities"("SFAS No. 161"). SFAS No. 161
requires companies with derivative instruments to disclose information that
should enable financial-statement users to understand how and why a company uses
derivative instruments, how derivative instruments and related hedged items are
accounted for under FASB Statement No. 133 "Accounting for Derivative
Instruments and Hedging Activities" and how derivative instruments and
related hedged items affect a company's financial position, financial
performance and cash flows. SFAS No. 161 is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008.
The adoption of this statement is not expected to have a material effect on the
Company's future financial position or results of operations.
 
 In May,
2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 162,
"The Hierarchy of Generally
Accepted Accounting Principles," ("SFAS No. 162"). SFAS No. 162
identifies the sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).
SFAS No. 162 will be effective 60 days following the SEC's approval of the
Public Company Accounting Oversight Board's amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles." The FASB has
stated that it does not expect SFAS No. 162 will result in a change in current
practice. The application of SFAS No. 162 will have no effect on the Company's
financial position, results of operations or cash flows.
 
 Also in
May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee
Insurance Contracts--an interpretation of FASB Statement No. 60" ("SFAS
No. 163"). SFAS No. 163 interprets Statement 60 and amends existing accounting
pronouncements to clarify their application to the financial guarantee insurance
contracts included within the scope of that Statement. SFAS No. 163 is effective
for financial statements issued for fiscal years beginning after December 15,
2008, and all interim periods within those fiscal years. As such, the Company is
required to adopt these provisions at the beginning of the fiscal year ended
December 31, 2009. The Company is currently evaluating the impact of SFAS No.
163 on its financial statements but does not expect it to have an effect on the
Company's financial position, results of operations or cash flows.
 
 In May
2008, the FASB issued FSP APB 14-1, "Accounting for Convertible Debt
Instruments that may be Settled in Cash upon Conversion (Including Partial Cash
Settlement)" ("FSP APB 14-1"). FSP APB 14-1 applies to convertibledebt securities that, upon
conversion, may be settled by the issuer fully or partially in cash. FSP APB
14-1 specifies that issuers of such instruments should separately account for
the liability and equity components in a manner that will reflect the entity's
nonconvertible debt borrowing rate when interest cost is recognized in
subsequent periods. FSP APB 14-1 is effective for financial statements issued
for fiscal years after December 15, 2008, and must be applied on a
retrospective basis. Early adoption is not permitted. The Company is assessing
the potential impact of this FSP on theconvertibledebt issuances.
 
 In June
2008, the FASB issued FASB Staff Position ("FSP") EITF 03-6-1, "Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities"
("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting, and therefore need to be included in the earnings
allocation in computing earnings per share under the two-class method as
described in SFAS No. 128, Earnings per Share. Under the guidance of FSP EITF
03-6-1, unvested share-based payment awards that contain nonforfeitable rights
to dividends or dividend equivalents (whether paid or unpaid) are participating
securities and shall be included in the computation of earnings-per-share
pursuant to the two-class method. FSP EITF 03-6-1 is effective for financial
statements issued for fiscal years beginning after December 15, 2008 and all
prior-period earnings per share data presented shall be adjusted
retrospectively. Early application is not permitted. The Company is assessing
the potential impact of this FSP on the earnings per share
calculation.
 
 In June
2008, the FASB ratified EITF No. 07-5, "Determining Whether an Instrument
(or an Embedded Feature) is Indexed to an Entity's Own Stock" ("EITF
07-5"). EITF 07-5 provides that an entity should use a two-step approach to
evaluate whether an equity-linked financial instrument (or embedded feature) is
indexed to its own stock, including evaluating the instrument's contingent
exercise and settlement provisions. EITF 07-5 is effective for financial
statements issued for fiscal years beginning after December 15, 2008. Early
application is not permitted. The Company is assessing the potential impact of
this EITF 07-5 on the financial condition and results of
operations.
  NOTE B – PAYABLES,
COMMITMENTS AND CONTIGENCIES
 
 As of
September 30, 2008, the Company had a payable outstanding in the amount of
$371,549. The $136,500 in connection with the litigation (see Note D) was
included in other income during the third quarter of 2008 due to the final
settlement described in Note D.
 
 NOTEC–GOING
CONCERN
 
 As shown
in the accompanying unaudited financial statements, the Company has working
capital deficit of $373,446 and a deficit book value that have placed
substantial doubt as to whether the Company can continue as a going concern. The
ability of the Company to continue as a going concern is dependent on developing
operations, increasing revenues, and obtaining new capital. Management has
enacted a plan to raise capital and increase profitability.
  NOTED–LITIGATION
 
 Securities
and Exchange Commission v. David M. Wolfson, et al. On October 16, 2004 a
civil complaint was filed by the Securities and Exchange Commission in which
Dark Dynamite, Inc. was named as a respondent. The Company's former president
Gino Carlucci was also named as a respondent. The suit was filed in the United
States District Court for the District of Utah and bears the docket number
2:03CV00914DAK and the style of the case is: “Securities and Exchange Commission
v. David M. Wolfson; NuWay Holdings, Inc., a Nevada corporation; Momentous
Group, LLC, a Utah limited liability company; Leeward Consulting Group, LLC, a
Utah limited liability company; Sukumo Limited, a company incorporated in the
British Virgin Islands (a.k.a. Sukumo Group, Ltd., Fujiwara Group, First
Chartered Capital Corporation, First Colonial Trust, First China Capital and
International Investment Holding); Michael Sydney Newman (A.K.A. Marcus
Wiseman); Stem Genetics, Inc., a Utah corporation; Howard H. Robertson; Gino
Carlucci; G & G Capital, LLC an Arizona and Utah limited liability company;
F10 Oil and Gas Properties, Inc.; Jon H. Marple; Mary E. Blake; Jon R. Marple;
Grateful Internet Associates, LLC, a Colorado limited liability company;
Diversified Financial Resources Corporation, a Delaware corporation; John
Chapman; Valesc Holdings, Inc., a New Jersey corporation; Jeremy D. Kraus;
Samuel Cohen; Dark Dynamite, Inc., (The Company) a Nevada corporation. The
complaint alleges that the Company failed to accurately and fully disclose the
nature of its relationship to The Sukumo Group, Inc., including the failure of
Sukumo to complete the purchase of the shares and alleges that Sukumo acted as a
selling agent for the Company. The complaint also faults The Sukumo Group Inc.'s
actions with regard to the sale of common stock to off shore purchasers for
failing to disclose the interest that Sukumo had in each sale, reporting that it
was taking a 1-2% commission on the sale rather than keeping 70% or more of the
proceeds of each transaction. The Company filed a motion to dismiss the
complaint based upon a lack of jurisdiction and the failure of the complaint to
adequately set forth the actions of the Company which form the basis of a cause
of action against the Company that was denied by the Court. The Company filed an
answer disputing the allegations of the complaint and has participated in some
pre-trial discovery.
 
 The
Company and the Government have agreed upon the terms of a settlement, the terms
of which provide for the Company to pay the sum of $30,000 to the SEC. A final
judgment has been entered and the related payment has been made in this case
during the quarter ended September 30, 2008.
 
 7
 Table of Contents
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 
 GENERAL
DESCRIPTION OF BUSINESS
 
 As used
in this Quarterly Report, the terms "we", "us", "our," the “Registrant,” “CIHS”
and the "Company" means, China International Tourism Holdings, Ltd., a Nevada
corporation, formerly known as Dark Dynamite, Inc., NCI Holdings, Inc., Vector
Holding, Inc., and prior to June 26, 2002, Vector Aeromotive Corporation. These
terms also refer to our subsidiary corporation, Shanxi Kai Da Lv You Gu Wen You
Xian Gong Si ("Kai Da"), a corporation organized under the laws of the Peoples’
Republic of China (“Kai Da”) acquired in August 2005.
 
 After the
acquisition of Kai Da, management changed our primary business into theme park
management and travel related services. Accordingly, we changed our name to
China International Tourism Holdings Ltd. We contract and operate the Theme Park
of Qin E Pang Gong (“Theme Park”) through Shanxi Kai Da Lv You Gu Wen You
Xian Gong Si (“Kai Da”), our wholly owned subsidiary in China. The Theme Park
was built up next to the historical address of E Pang Gong, the most prestigious
and largest palace in Chinese history built for Qin Shi Huang, the first emperor
in the Qin dynasty over 2,200 years ago. E Pang Gong was burned down during the
war and became a legend as well as the subject of numerous historical books. In
1994, the historical address of E Pang Gong was appraised by United Nations
Educational, Scientific and Cultural Organization ("UNESCO") as one of the
wonders in the ancient world due to the size of the palace and the degree of
preservation. The current theme park was built imitating the original palace
based on historical records and legends, covering approximately 5.59 million
square feet consisting of several building structure, including the Front
Palace, Qihe River, Magnetic Gate, Heaven Tower, Earth Temple, Lan-Chi Palace
and the Shang-Lin Garden. Management believes it’s a significant achievement to
be able to display such a famous and grand palace to the domestic and
international communities. It is believed to be one of the more important
historical sites in China.
 
 In
addition to our Theme Park management, we also manage Six-state Hot Spring
Resort, one of the components of Theme Park business, which is located inside
the Theme Park and built in an ancient Chinese style to match the Theme
Park.
 
 More
information about our business can be found on the corporate website at http://www.qinepanggong.com.
 
 RESULTS
OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND
2007
 
 FORWARD LOOKING
STATEMENTS
  The
information herein contains certain forward looking statements within the
meaning of §27A of the Securities Act of 1933, as amended and §21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe harbors created thereby. Investors are cautioned that all forward
looking statements involve risks and uncertainty, including without limitation,
the ability of us to continue its current expansion strategy, changes in the
theme park entertainment markets, labor and employee benefits, as well as
general market conditions, competition and pricing. Although we believe that the
assumptions underlying the forward looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward looking statements included in this Form 10-Q
will prove to be accurate. In view of the significant uncertainties inherent in
the forward looking statements included herein, the inclusion of such
information should not be regarded as a representation by us or any other person
that our objectives and plans will be achieved.
 
 CRITICAL ACCOUNTING
POLICIES
 
 Revenue
recognition
 
 Our
policy is to recognize income when it is earned. Our revenue is derived
from ticket sales, and hotel and restaurant income. Revenues are booked net
of any cash discounts. If any material contingencies are present, revenue
recognition is delayed until all material contingencies are eliminated. Material
contingencies are circumstances in which there are any potential uncertainties
as to the completion of the revenue process being complete. Further, no revenue
is recognized unless collection of the applicable consideration is probable.
Probable collection is determined at the time collection occurs or is more than
reasonably possible it will be collected. Retail store sales - revenue is
recognized when sales are made. They are paid by cash or credit
card.
 
 Property,
Plant, and Equipment
 
 Property,
plant, and equipment are recorded at cost less accumulated depreciation and
impairment. Repairs and maintenance expenditures, which are not considered
improvements and do not extend the useful life of property, plant, and
equipment, are expensed as incurred. The cost and related accumulated
depreciation applicable to property, plant, and equipment sold or no longer in
service are eliminated from the accounts and any gain or loss is included in the
statement of operations.
  Depreciation
is calculated to write-off the cost or basis of the property, plant, and
equipment over their estimated useful lives for the date on which they become
fully operational and after taking into account their estimated residual values
(salvage value), using the straight-line method, at the following rates per
year:
  Equipment Straight-line
for 5 to 20 years with a 5% salvage value
  Furniture Straight-line
for 5 to 10 years with a 5% salvage value
  Autos Straight-line
for 5 to 10 years with a 5% salvage value
 
 When
assets are sold or retired, their costs and accumulated depreciation are
eliminated from the accounts and any gain or loss resulting from their disposal
is included in the Statement of Operations.
  The
Company recognizes an impairment loss on property, plant, and equipment when
evidence, such as the sum of expected future cash flows (undiscounted and
without interest charges), indicates that future operations will not produce
sufficient revenue to cover the related future costs, including depreciation,
and when the carrying amount of the asset cannot be realized through sale.
Measurement of the impairment loss is based on the fair value of the
assets.
 
 Stock-Based
Compensation
 
 We
account for stock-based compensation using the fair value method of Financial
Accounting Standard No. 123R. Common shares issued for services rendered by a
third party (both employees and non-employees) are recorded at the fair value of
the shares issued or services rendered, whichever is more readily
determinable.
  Revenues
 
 Gross
revenues for the three and nine months ended September 30, 2008 were $70,852 and
$188,628, respectively, derived from ticket sales, and hotel and restaurant
income. The decrease by $55,332 and $235,109, compared to gross revenues of
$126,184 and $423,737 for the same periods ended September 30, 2007,
respectively, were due primarily to the consummation of the contracts with some
travel agents in February 2007, pursuant to which the travel agents brought
tourists to our theme park for the discounted price. We did not have new
contracts signed with the travel agents after the first quarter of
2007.
 
 Due to
the different peak season timing for the theme park and most of our tours are a
one-day trip to the theme park, the revenue appears to be diversified. The peak
season for the theme park tickets is from March to October, compared to the peak
season for the resorts in the first quarter of each year.
 
 Income /
Loss
 
 We had
net income of $97,563 for the three months and net loss of $100,407 for the nine
months ended September 30, 2008, compared to the net loss of $83,609 and
$204,133 for the same period ended September 30, 2007, respectively. The net
income during the third quarter of 2008 was due primarily to the final
settlement for the case of Securities and Exchange Commission v. David M.
Wolfson, et al. as described in Item 1 of Part II in this report. The accrued
liabilities of $136,500 in connection with the case were included in other
income during the three months ended September 30, 2008.
 
 We expect
to incur losses in fiscal year 2008 until traffic is increased to the Theme Park
and product sales increase. There can be no assurance that we will achieve or
maintain profitability, or that any revenue growth will take place in the
future.
  8
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  Expenses
 
 Selling,
general and administrative expenses for the three and nine months ended
September 30, 2008 were $113,322 and $409,279, respectively, compared to
selling, general and administrative expense of $181,044 and $536,045 for the
same periods ended September 30, 2007, respectively, were due primarily to the
Theme Park operation.
 
 Cost of
Sales
 
 Cost of
sales included expenses directly related to delivering our product or services.
Travel agents' commissions and direct labor would be examples of cost of sales
items. During the three and nine months ended September 30, 2008, we had $148
and $14,344, respectively, in cost of sales, compared to cost of sales of
$28,217 and $91,346 for the same periods ended September 30,2007. Cost of sales
as a percentage of sales was 0.2% and 7.6% for the three and nine months ended
September 30, 2008, respectively. The decrease in cost of sales due primarily to
the restaurant has gone out of business.
 
 Impact of
Inflation
 
 We
believe that inflation has had a negligible effect on operations during this
period. We believe that we can offset inflationary increases in the cost of
sales by increasing sales and improving operating efficiencies.
 
 Liquidity and Capital
Resources
 
 Cash
flows provided by operating activities were $12,364 for the nine months ended
September 30, 2008, compared to cash flows of $19,256 used in operation for the
nine months ended September 30, 2007. Positive cash flows from operation during
the nine months of 2008 were due primarily to the net loss offset by
depreciation of $69,245, plus the decrease in accounts receivable by $10,480 and
the increase in account payable by $44,182. Negative cash flows from operation
during the nine months ended September 30, 2007 were primarily due to the net
loss of $204,133, partially offset by depreciation of $84,496, the decrease in
prepaid and other assets by $41,679 and the increase in accounts payable and
other payable, which was $35,224 and $33,568, respectively.
 
 Cash
flows used in investing activities were $29,513 and $2,030 for the nine months
ended September 30, 2008 and 2007, respectively, attributable to the purchase of
fixed assets consisting of leasehold improvements, machinery and
equipment.  Most of the disbursements refurbished the theme
park.
 
 We had no
cash flows from financing activities for the nine months ended September 30,
2008. The cash flows provided by financing activities were $12,474 during the
nine months ended September 30, 2007 due primarily to shareholder
loan.
 
 We
project that we will need additional capital to fund operations over the next 12
months. We anticipate we will need an additional $50,000 in working capital
during 2008 and $100,000 for the two years thereafter.
 
 On a
long-term basis, liquidity is dependent on continuation and expansion of
operations, receipt of revenues, additional infusions of capital and debt
financing. However, there can be no assurance that we will be able to obtain
additional equity or debt financing in the future, if at all. If we are unable
to raise additional capital, our growth potential will be adversely affected.
Additionally, we will have to significantly modify our business
plan.
  Trends, Events, and
Uncertainties
 
 The
success of our business depends in large part on our ability to identify tourist
trends as well as to react to changing customer demand in a timely manner.
Consequently, we depend in part upon the continuing favorable market response to
the creative efforts of our marketing team’s ability to anticipate products and
services that appeal to our consumer base. Failure on our part to anticipate,
identify and respond effectively to changing consumer demands and trends will
adversely affect our sales.
 
 Ability to Continue as a
Going Concern
 
 As shown
in the accompanying unaudited financial statements, the Company has working
capital deficit of $373,446 and a deficit book value that have placed
substantial doubt as to whether the Company can continue as a going concern. The
ability of the Company to continue as a going concern is dependent on developing
operations, increasing revenues, and obtaining new capital. Management has
enacted a plan to raise capital and increase profitability.
  ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 The
information to be reported under this item is not required of smaller reporting
companies.
  ITEM
4. CONTROLS AND PROCEDURES.
  We
maintain disclosure controls and procedures designed to ensure that information
required to be disclosed in reports filed under the Securities Exchange Act of
1934 (“Exchange Act”) is recorded, processed, summarized and reported within the
specified time periods. Our Chief Executive Officer and our Chief Financial
Officer (collectively, the “Certifying Officers”) are responsible for
maintaining our disclosure controls and procedures. The controls and procedures
established by us are designed to provide reasonable assurance that information
required to be disclosed by the issuer in the reports that it files or submits
under the Exchange Act are recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and forms.
  During the nine months ended September 30, 2008, our Certifying Officers
evaluated the effectiveness of our disclosure controls and procedures as of the
end of the period covered by this report. Based on the evaluation, the
Certifying Officers concluded that our disclosure controls and procedures were
effective to provide reasonable assurance that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the applicable rules and forms, and that it is accumulated and communicated
to our management, including the Certifying Officers, as appropriate to allow
timely decisions regarding required disclosure. These conclusions
notwithstanding you are advised that no system is 100%
foolproof.
 
 Changes
in Internal Control over Financial Reporting
  There
were no changes in the our internal control over financial reporting that
occurred during the period covered by this report that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.
 
 9
 Table of Contents
  PART
II. OTHER INFORMATION
 
 Item
1. Legal Proceedings
 
 Securities
and Exchange Commission v. David M. Wolfson, et al. On October 16, 2004 a
civil complaint was filed by the Securities and Exchange Commission in which
Dark Dynamite, Inc. was named as a respondent. The Company's former president
Gino Carlucci was also named as a respondent. The suit was filed in the United
States District Court for the District of Utah and bears the docket number
2:03CV00914DAK and the style of the case is: “Securities and Exchange Commission
v. David M. Wolfson; NuWay Holdings, Inc., a Nevada corporation; Momentous
Group, LLC, a Utah limited liability company; Leeward Consulting Group, LLC, a
Utah limited liability company; Sukumo Limited, a company incorporated in the
British Virgin Islands (a.k.a. Sukumo Group, Ltd., Fujiwara Group, First
Chartered Capital Corporation, First Colonial Trust, First China Capital
and International Investment Holding); Michael Sydney Newman (A.K.A. Marcus
Wiseman); Stem Genetics, Inc., a Utah corporation; Howard H. Robertson; Gino
Carlucci; G & G Capital, LLC an Arizona and Utah limited liability company;
F10 Oil and Gas Properties, Inc.; Jon H. Marple; Mary E. Blake; Jon R. Marple;
Grateful Internet Associates, LLC, a Colorado limited liability company;
Diversified Financial Resources Corporation, a Delaware corporation; John
Chapman; Valesc Holdings, Inc., a New Jersey corporation; Jeremy D. Kraus;
Samuel Cohen; Dark Dynamite, Inc., (The Company) a Nevada corporation. The
complaint alleges that the Company failed to accurately and fully disclose the
nature of its relationship to The Sukumo Group, Inc., including the failure of
Sukumo to complete the purchase of the shares and alleges that Sukumo acted as a
selling agent for the Company. The complaint also faults The Sukumo Group Inc.'s
actions with regard to the sale of common stock to off shore purchasers for
failing to disclose the interest that Sukumo had in each sale, reporting that it
was taking a 1-2% commission on the sale rather than keeping 70% or more of the
proceeds of each transaction. The Company filed a motion to dismiss the
complaint based upon a lack of jurisdiction and the failure of the complaint to
adequately set forth the actions of the Company which form the basis of a cause
of action against the Company that was denied by the Court. The Company filed an
answer disputing the allegations of the complaint and has participated in some
pre-trial discovery.
 
 The
Company and the Government have agreed upon the terms of a settlement, the terms
of which provide for the Company to pay the sum of $30,000 to the SEC. A final
judgment has been entered and the related payment has been made in this case
during the quarter ended September 30, 2008.
  Item
1A. Risk Factors
  Information
regarding risk factors appears in Part I, “Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations” under the
captions “General Description of Business” and “Cautionary Note Regarding
Forward-Looking Statements” contained in this Quarterly Report on Form 10-Q and
in “Item 1A. RISK FACTORS” of our 2007 Annual Report on Form 10-KSB. There
have been no material changes from the risk factors previously disclosed in our
2007 Annual Report on Form 10-KSB.
 
 Item
2. Changes in Securities and Use of Proceeds
  None.
  Item
3. Defaults Upon Senior Securities
  None.
  Item
4. Submission of Matters to a Vote of Security Holders.
  None.
  Item
5. Other Information
  None.
 
 Item
6. Exhibits And Reports On Form 8-K
 
 (1)
              Exhibits:
      Exhibits required to be attached by Item 601 of Regulation S-B are listed
      in the Index to Exhibits Beginning on page 8 of this Form 10-Q, which is
      incorporated herein by reference.
 
 Reports on Form 8-K filed in
the third quarter of 2008
  None.
 
 10
 Table of Contents
 
 SIGNATURES
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, there unto duly authorized.
  CHINA INTERNATIONAL TOURISM HOLDINGS
      LTD.Date:
      November 14, 2008
              By:
              /s/ Ming
      LeiMing
      Lei
                President
      and CEO
 
 Date:
      November 14, 2008
              By:
              /s/ Xiaojun
      WangXiaojun
      Wang
                Chief
      Financial Officer
  11
 Table of Contents
  INDEX
TO EXHIBITS
  Exhibit
      No.
              
              Description31.1
              
              Certification of Chief
      Executive Officer31.2
              
              Certification of Chief
      Financial Officer.32.1
              
              Statement required by 18
      U.S.C. Section 1350, as adopted pursuant to section 906 of the
      Sarbanes-Oxley Act of 2002.32.2
              
              Statement required by 18
      U.S.C. Section 1350, as adopted pursuant to section 906 of the
      Sarbanes-Oxley Act of
2002.