China Yida Holding 10Q 2009 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________

FORM 10-Q

_____________________

	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to______.

China Yida Holding, Co.

(Exact name of registrant as specified in the Charter)

DELAWARE		000-26777		22-3662292
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employee Identification No.)

RM 1302-3 13/F, Crocodile House II

55 Connaught Road Central, Hong Kong

(Address of Principal Executive Offices)

86-591-28308388

(Issuer 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 issuer 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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

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

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer o 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 o No x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of May 14, 2009: 68,084,487 shares of common stock.

CHINA YIDA HOLDING, CO.

FORM 10-Q

March 31, 2009

TABLE OF CONTENTS

PART I— FINANCIAL INFORMATION

Item 1.	Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4T.	Controls and Procedures

PART II— OTHER INFORMATION

Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits

SIGNATURES

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

CHINA YIDA HOLDING CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

ASSETS
	March 31, 2009		December 31, 2008
Current assets
Cash and cash equivalents	$	9,967,084	$	8,715,048
Accounts receivable, net		26,015		76,569
Other current assets		705,642		76,759
Prepayments		218,283		164,169
Total current assets		10,917,024		9,032,546

Property, plant and equipment, net		33,831,232		34,173,009
Construction in progress		9,577,702		1,979,725
Intangible assets, net		8,981,183		9,358,333
Total assets	$	63,307,142	$	54,543,613

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expense	$	63,796	$	65,368
Loan payable		1,171,989		1,172,591
Other payable		836,334		456,181
Unearned revenue		29,484		6,597
Tax payables		1,963,926		726,524
Total current liabilities		4,065,530		2,427,259

Loan payable, long term		2,167,412		-

Total liabilities		6,232,942		2,427,259

Stockholders' equity
Preferred stock (10,000,000 shares authorized, 1 share issued and outstanding, par value $0.001)		-		-
Common stock (100,000,000 shares authorized and 68,084,487 and 9,999,955 issued and outstanding as of March 31 and December 31, 2008, par value $0.0001)		27,809		27,809
Additional paid in capital		21,601,288		21,601,288
Accumulated other comprehensive income		3,121,049		3,134,077
Retained earning		32,324,054		27,353,180
Total stockholders' equity		57,074,200		52,116,354

Total liabilities and stockholders' equity	$	63,307,142	$	54,543,613

The accompanying notes are an integral part of these audited consolidated financial statements.

CHINA YIDA HOLDING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008

	2009			2008
Net revenue
Advertisement	$	6,592,187		$	5,859,330
Tourism		3,230,718			992,954
Total net revenue		9,822,906			6,852,284
Cost of revenue
Advertisement		1,372,523			1,384,565
Tourism		128,226			503,035
Total cost of revenue		(1,500,750	)		(1,887,600	)
Gross profit		8,322,156			4,964,684
Operating expenses
Selling expenses		430,647			133,671
Operating and administrative expenses		1,202,198			352,316
Total operating expenses		1,632,845			485,987
Income from operations		6,689,311			4,478,698
Other (income) expense
Other expense, net		1,269			7,976
Interest expense		0			61,249
Interest income		(13,634	)		(1,545	)
Total other expense		(12,364	)		67,681
Income before income taxes		6,701,675			4,411,017
Provision for income taxes		1,730,801			99,313
Net income		4,970,874			4,311,704
Other comprehensive income
Foreign currency translation gain (loss)		(13,028	)		969,165
Comprehensive income	$	4,957,846		$	5,280,870
Basic net earnings per share	$	0.07		$	0.17
Basic weighted average shares outstanding		68,084,487			25,489,123

Diluted net earnings per share	$	0.07		$	0.15
Diluted weighted average shares outstanding		68,084,487			28,038,142

*Weighted average number of shares used to compute basic and diluted loss per share f are the same since the effect of dilutive securities is anti-dilutive.

The accompanying notes are an integral part of these audited consolidated financial statements.

CHINA YIDA HOLDING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008

	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	4,970,874		$	4,311,704
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		354,336			96,647
Amortization		372,242			963,998
(Increase) / decrease in assets:
Accounts receivables		50,501			(10,521	)
Other receivables		(629,516	)		830,029
Prepaid expense		497			(5,481	)
Advances		(54,183	)		-
Accounts payable and accrued expenses		(1,538	)		(12,548	)
Tax payable		1,236,890			(883,320	)
Unearned revenue		22,884			(90,197	)
Accrued payroll		(11,746	)		8,593
Other payable		392,545			(291,642	)
Net cash provided by operating activities		6,703,785			4,917,262

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property & equipment		(64,548	)		(613	)
Addition to construction in progress		(7,662,370	)		(7,396,037	)
Purchase of intangible assets		-			(6,271,183	)
Net cash used in investing activities		(7,726,918	)		(13,667,833	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceed from related party		-			1,383,535
Issuance of shares for cash		-			13,027,250
Borrowings		2,167,545			(836,158	)
Net cash provided by financing activities		2,167,545			13,574,627

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		107,624			(34,101	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		1,252,036			4,789,956

CASH AND CASH EQUIVALENTS, BEGINNING BALANCE		8,715,048			726,631

CASH AND CASH EQUIVALENTS, ENDING BALANCE	$	9,967,084		$	5,516,587

SUPPLEMENTAL DISCLOSURES:
Cash paid during the quarter for:
Income tax payments	$	511,212		$	-

Interest payments	$	20,243		$	61,249

The accompanying notes are an integral part of these audited consolidated financial statements.

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 tourisim and advertisement business through its subsidiaries in Peoples Republic of China.

On November 19, 2007, Chen Minhua, Fan Yanling, Extra Profit International Limited, Luck Glory International Limited, and Zhang Xinchen (collectively, the Keenway Shareholders”), Keenway Limited, Hong Kong Yi Tat and we entered into a definitive Share Exchange Agreement (“Exchange Agreement”) which resulted in Keenway becoming our wholly owned subsidiary (the “Merger”). The Merger was accomplished by means of a share exchange in which the Keenway Shareholders exchanged all of their stock in Keenway for the transfer and additional issuance of our common stock. Under the terms of the Exchange Agreement and as a result of the Merger, Keenway became our wholly owned subsidiary.

In exchange for all of their shares of Keenway common stock, the Keenway 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 certain InteliSys Shareholders; Immediately following the closing of the Merger, the Keenway Shareholders own approximately 94.5% of our issued and outstanding shares on a fully diluted basis. This transaction closed on November 19, 2007.

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.

Hongkong Yi Tat was established on July 28, 2000, under the laws of Hong Kong Special Administration Region,.

Fujian Jintai Tourism Developments Co.Ltd (“Jintai”) is incorporated on October 29, 2001 under the laws of PRC and located in Taining County, Fujian Province in China. It mainly engages in tourism developments, ethnic culture communication, timeshare resort operation, souvenirs sales, and related tourism services. It has gained 30 years of management rights (from 2001 to 2031) to manage the Big Golden Lake in Fujian province, one of the 7 best Danxia landforms in China.

The Company owns 100% shares of Jintai, and holds variable interest in Fujian Jiaoguang Media Co.Ltd and holds variable interest in Fuyu through Jintai.

Fuzhou Hongda Co. Ltd. (“Hongda”) is incorporated on July 6, 2007, under the laws of PRC and located in Fuzhou City. Hongda is a 100% owned company of Jintai.

Fuzhou Fuyu Media Co. Ltd. (“Fuyu”) is incorporated on July 31, 2007, under the laws of PRC and located in Fuzhou City. On November 5, 2007, Fuyu is acquired by Hongda which is owned by Jintai, thus becomes 100% owned by the Company through Jintai.

Fujian Jiaoguang Media Co.Ltd (“Jiaoguang”) is incorporated on October 9, 2004 under the laws of PRC and located in Fuzhou City, Fujian Province in China. It mainly engages in advertisement, publishing, exhibition, cultural communication and coordinating cultural performance as an agent. It has gained 7 years of managing rights of Fujian Education TV advertisement (from 2003 to 2010), and has option to another 5 years’ management.

On December 30, 2004, Jiaoguang and its shareholders entered into a set of Contractual Arrangements with the Company. The relationships with the Company and its shareholders are governed by the Contractual Arrangements.

The Contractual Arrangements are comprised of a series of agreements, including a Consulting Agreement and an Operating Agreement, through which the Company has the right to advise, consult, manage and operate Jiaoguang, and collect and own all of Jiaoguang’s respective net profits. Additionally, under a Proxy and Voting Agreement and a Voting Trust and Escrow Agreement, the shareholders of Jiaoguang have vested their voting control over Jiaoguang to the Company. In order to further reinforce the Company’s rights to control and operate Jiaoguang, Jiaoguang and its shareholders have granted the Company, under an Option Agreement, the exclusive right and option to acquire all of their equity interests in the Jiaoguang or, alternatively, all of the assets of the Jiaoguang. Further, the shareholders of Jiaoguang have pledged all of their rights, titles and interests in the Jiaoguang to the Company under an Equity Pledge Agreement.

The Company has adopted FASB Interpretation No. 46R "Consolidation of Variable Interest Entities" ("FIN 46R"), an Interpretation of Accounting Research Bulletin No. 51. FIN 46R 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.

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, the Company consolidated Jiaoguang’s financial statements as VIE. As of December 31, 2006, the Company has consolidated Jiaoguang’s financial statements for the two years ended December 31, 2006 and 2005 in the accompanying financial statements.

FUJIAN YUNDING TOURISM INDUSTRIAL CO. LTD (“Yunding”) is incorporated on January 21, 2009 under the laws of PRC and located in Fujian Province in China. It mainly engages in tourism developments, ethnic culture communication, timeshare resort operation, souvenirs sales, and related tourism services. It has gained 40 years of management right (from 2009 to 2049) to manage the Yunding resort in Fujian province.

2. BASIS OF PRESETATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Principle of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Hongkong Yida, Jintai, Yintai, Yunding, Fuyu, Hongda, and the accounts of the variable interest entity, Jiaoguang, collectively “the Company”. All significant inter-company accounts and transactions have been eliminated in consolidation.

b.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.

c.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.

d.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 March 31, 2009 and December 31, 2008, the Company had accounts receivable of $26,015 and $76,569, respectively.

e.Prepayments

The Company advances to certain vendors for purchase of its material and necessary service. As of March 31, 2009 and December 31, 2008, the prepayments amounted to $218,283 and $164,169, respectively.

f.Property, plant and equipment

Property, plant 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 plant, 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 20years for house&building; 5 to 8 years for electronic equipment, 8years for transportation equipment, 5 to 8years for office furniture, 26 years for lease improvements.

g.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"), issued by the Financial Accounting Standards Board ("FASB"). FAS No. 144 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 three months ended March 31, 2009.

h.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 collectibility 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 $29,484 and $6,597 as of March 31, 2009 and December 31, 2008, respectively.

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 tourist revenue is recognized when a ticket is purchased.

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.

i.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 three months ended March 31, 2009 and 2008 were $56,892 and $42,086, 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 RMB5,000,000. 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.

j.Income taxes

The Company accounts for income taxes using tax payable approach which did not need the recognition and measurement of deferred tax assets.

k.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 ‘subsidiraies in China is the Chinese Renminbi and the functional currency of the US parent is the US dollar.

l.Fair values of financial instruments

Statement of Financial Accounting Standard No. 107, "Disclosures about Fair Value of Financial Instruments", 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, advances to suppliers, accounts payable, other payable, tax payable, and related party advances and borrowings.

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.

m.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 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. 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.

Weighted average number of shares used to compute basic and diluted earnings per share for the three months ended March 31, 2009 & 2008 are the same since the effect of dilutive securities is anti-dilutive.

n.Segment reporting

Statement of Financial Accounting Standards No. 131 ("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 three months ended March 31, 2009 and 2008, the Company is organized into two main business segments: tourism and advertisement. The following table presents a summary of operating information and certain balance sheet information for the three months ended March 31, 2009 and 2008:

	Three months ended March 31,
	2009			2008
Revenues from unaffiliated customers:
Advertisement	$	6,592,187		$	5,859,330
Tourism		3,230,718			992,954
Consolidated	$	9,822,906		$	6,852,285

Operating income :
Advertisement	$	5,000,517		$	4,291,565
Tourism		1,690,238			187,845
Others		(1,444	)		(712	)
Consolidated	$	6,689,311		$	4,478,698

Advertisement	$	21,321,818		$	18,154,427
Tourism		41,942,378			17,086,237
Others		42,946			6,138,620
Consolidated	$	63,307,142		$	41,379,284


Advertisement	$	3,733,254		$	4,261,766
Tourism		1,239,247			50,699
Others		(1,627	)		(762	)
Consolidated	$	4,970,874		$	4,311,704


Interest expense:
Advertisement	$	-		$	25,262
Tourism		-			35,987
Consolidated	$	-		$	61,249

Others include reconciling amounts including certain assets which are excluded from segments and adjustments to eliminate inter company transactions.

o.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.

p.Recent accounting pronouncements

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations”. The objective of this statement will significantly change the accounting for business combinations. Under Statement 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition –date fair value will limited exceptions. Statement 141 applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect the adoption of SFAS No. 141R to have a material impact on the consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements-An Amendment of ARB No. 51". The objective of this statement is to establish new accounting and reporting standards for the Noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Statement 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company does not expect the adoption of SFAS No. 160 to have a material impact on the consolidated financial statements.

On March 19, 2008, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. "Use and complexity of derivative instruments and hedging activities have increased significantly over the past several years. This has led to concerns among investors that the existing disclosure requirements in FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, do not provide enough information about how these instruments and activities affect the entity’s financial position and performance," explained Kevin Stoklosa, project manager. "By requiring additional information about how and why derivative instruments are being used, the new standard gives investors better information upon which to base their decisions." The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under Statement 133; and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows. FASB Statement No. 161 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk–related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. Management is currently evaluating the effect of this pronouncement on financial statements.

In May 2008, FASB issued SFASB No.162, “The Hierarchy of Generally Accepted Accounting Principles”. The pronouncement mandates the GAAP hierarchy reside in the accounting literature as opposed to the audit literature. This has the practical impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP hierarchy. This pronouncement will become effective 60 days following SEC approval. The Company does not believe this pronouncement will impact its financial statements. In May 2008, FASB issued SFASB No. 163, “Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60”. The scope of the statement is limited to financial guarantee insurance (and reinsurance) contracts. The pronouncement is effective for fiscal years beginning after December 31, 2008. The Company does not believe this pronouncement will impact its financial statements.

In June 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) Emerging Issues Task Force (EITF) No. 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.” Under the FSP, unvested share-based payment awards that contain rights to receive nonforfeitable dividends (whether paid or unpaid) are participating securities, and should be included in the two-class method of computing EPS. This FSP is effective for us beginning July 1, 2009 and the Company does not expect that FSP EITF No. 03-6-1 would have a material impact on the financial statements.

q. Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

3. OTHER ASSETS

Other assets amounted to $705,642 and $76,759 as of March 31, 2009 and December 31, 2008, respectively. Other assets is mainly comprised of advances to employees and other unrelated parties, interest free, and due on demand.

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following as of March 31, 2009 and December 31:

	March 31, 2009			December 31, 2008
Building	$	34,855,605		$	34,872,855
Electronic Equipments		197,353			193,494
Transportation Equipments		74,986			63,442
Office Furniture		22,511			8,946
Subtotal		35,150,455			35,103,887

Less: Accumulated Depreciation		(1,319,223	)		(965,278	)

Total	$	33,831,232		$	34,173,009

Depreciation expenses for the three months ended March 31, 2009 and 2008 were $354,336 and, $96,647, respectively.

5. CONSTRUCTION IN PROGRESS

Construction in progress amounted to $9,577,702 and $1,979,725 of March 31, 2009 and December 31, 2008. It is mainly constructions for the new tourist resort which the Company has acquired management right from January 2009. The amount of capitalized interest included in construction in progress amounted $20,243 and $0 for the three months ended March 31, 2009 and 2008. The Company will begin depreciating these assets when they are placed in service.

6. INTANGIBLE ASSETS

Intangible assets were as of March 31, 2009 and December 31 as follows:

		March 31, 2009		December 31, 2008
Intangible asset
Management right of tourist resort	$	5,127,454	$	5,130,084
Advertising board		6,592,441		6,595,823
Accumulated amortization		(2,738,711)		(2,367,574)
Total	$	8,981,183	$	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 $6,592,441 (RMB45,000,000).The term of the contact is in excess of twelve months and inures exclusive operation rights for the registrant in the future 5 years. The registrant expects the future economic benefits from the advertising revenue through the 30 outside boards.

In accordance with 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 March 31, 2009 the Company expects these assets to be fully recoverable.

Total amortization expenses for the three months ended ended March 31, 2009 and 2008 amounted to $372,242 and $145,166 respectively. Amortization expenses for next five years after March 31, 2009 are as follows:

1 year	$	1,097,486
2 year		1,463,314
3 year		1,463,314
4 year		1,463,314
5 year		383,820
Thereafter	$	3,130,333

7. OTHER PAYABLE

Other payables are payables due to unrelated parties other than supplier vendors. The amount were $836,334 and $456,181, due on demand and interest free as of March 31, 2009 and December 31, 2008, respectively.

8. TAX PAYABLES

Tax payables consist of the following as of:

	March 31, 2009	December 31, 2008
City planning tax	$ 5,181	$ 6,729
Business tax payable	160,975	139,616
Individual income tax payable	1,153	1,136
Income tax payable	1,731,308	511,624
Education fee	4,719	5,434
Cultural construction fee	60,590	61,985
Total	$ 1,963,926	$ 726,524

9. LOAN PAYABLE

As of March 31, 2009 and December 31, 2008, the short term loan payables were as follows:

	March 31, 2009		December 31, 2008

Merchant bank of Fuzhou	$	1,171,989	$	1,172,591

As of March 31, 2009 and December 31, 2008, the long term loan payables were as follows:

	March 31, 2009		December 31, 2008

Taining Credit Union	$	2,167,412	$	-

As of March 31, 2009, the Company had a loan payable of $1,171,989 to Merchant bank of Fuzhou in China, with an annual interest rate of 8.66% from November 14, 2008 to November 13, 2009. The loan is guaranteed by a related party 80% owned by the same shareholder of the Company.

As of March 31, 2009, the Company had a loan payable of $2,167,412 to Taining Credit Union in China, with an annual interest rate of 0.585%% from March 30, 2009 to March 20, 2012. The loan is guaranteed by the management right of Yunding.

There are no interest expenses for the three months ended March 31, 2009 as compared to $25,262 in the previous year 2008. The Company has paid interest $131,662 and $61,249 for the three months ended March 31, 2009 and 2008.

The entire long term loan is due on March 20, 2012.

10. OTHER (INCOME) EXPENSES

Other (income) expenses consists of the following for the three months ended March 31, 2009 and 2008:

Other (income) expense	2009			2008
Other expense, net	$	1,269		$	7,976
Interest expense		-			61,249
Interest income		(13,634	)		(1,545	)

Total other expense	$	(12,364	)	$	67,681

11. 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 March 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 three months ended March 31, 2009 and 2008:

	2009		2008
HK Current Income Tax Expense (Benefit)	$	-	$	-

PRC Current Income Expense (Benefit)	$	1,730,801	$	99,313

Total Provision for Income Tax	$	1,730,801	$	99,313

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:

	March 31, 2009	March 31, 2008
Tax 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	(21%)	(23%)
Tax expense at actual rate	4%	2%

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 2008 except Fuyu. Fuyu is completely exempt of income tax for the first 2 years up to September 2009. There were no significant book and tax basis difference.

12. SHAREHOLDERS’ EQUITY

1) SHARE EXCHANGE AGREEMENT

As a result of the exchange agreement, the reorganization was treated as an acquisition by the accounting acquiree that is being accounted for as a recapitalization and as a reverse merger by the legal acquirer for accounting purposes. Pursuant to the recapitalization, all capital stock shares and amounts and per share data have been retroactively restated. Accordingly, the financial statements include the following:

	Common	Common Stock		Additional Paid-in Capital			Total
	Shares	Common Stock		Additional Paid-in Capital			Total
Balance, January 1, 2007 (1)	94,015,167	$	94,016	$	8,507,831		$	8,601,847
Recapitalization (2)	5,983,580		5,984		(5,984	)		-

Balance, December 31, 2007	99,999,547	$	100,000	$	8,501,847		$	8,601,847

(1)	The amount shown for paid in capital would be valued in terms of the issued capital of the nominal acquiree (the new subsidiary). The above amount of $8,601,847 represents the capital amount of Keenway Limited.

(2)

This amount represents the value of shares issued by the shell company prior to reverse acquisition recorded as a difference between the opening balance of equity of Keenway Limited as of January 1, 2007 and December 31, 2007. Any transaction after the reverse acquisition is not part of this amount.

2) SECURITY ISSUANCE AGREEMENT

On November 19, 2007, the Company entered into a Stock Purchase Agreement and Share Exchange with Keenway Limited and its certain shareholders (the “Stock Purchase Agreement”). At the time of the Stock Purchase Agreement, it was the intent of all the parties involved to deliver to the shareholders of Keenway 99% of the outstanding shares of the Company common stock. However, the Company had 100,000,000 shares authorized and could only issue 94,524,442 shares to the persons receiving shares in the Stock Purchase Agreement which resulted in an issuance of 94.5% of the shares to the shareholders listed in the Stock Purchase Agreement. Accordingly, following the Closing of the Stock Purchase Agreement, the Company conducted two 10-for-1 reverse stock splits in order to reduce the number of shares outstanding to be able to issue shares to the persons receiving shares under the Stock Purchase Agreement. On February 28, 2009, the Company authorized the issuance of 44,751,046 shares (in the same proportion) to the shareholders of the Stock Purchase Agreement. This was defined as a Corrective Issuance in Section 5.12 of the Securities Purchase Agreement that closed on March 7, 2009.

The Company entered into a Financing transaction with Pope Investments II LLC, an accredited investor, and certain other accredited investors. Pursuant to the Financing Documents, we sold units of securities that consisted of an aggregate of 13,333,334 shares of common stock and warrants exercisable into 6,666,667 shares of common stock for a total purchase price of $14,000,000. The purchase price of one unit was $1.05. The company paid $972,750 to the various parties as fund raising cost directly from the fund raised amounting of $14,000,000 which was closed on March 7, 2008.

Pursuant to terms, the warrants can be converted into 6,666,667 shares of common stock at an exercise price of $1.25 per share and can be exercised beginning on September 6, 2008 and will expire on September 6, 2011. Cashless exercise available with payment in common shares of the company if shares underlying the warrant are not registered. And Call provision (at the option of the grantor) in the warrants is available if the company attains certain EPS at December 31, 2008. The warrants are permanent in nature with no requirement on the part of the Company to redeem for cash.

Additionally, majority shareholders of the Company and the Company entered into a Lock-Up Agreement whereby both parties agreed not to sell any securities for a period of 12 months after the initial registration statement associated with this financing is declared effective. Lastly, our Chairman and the Company entered into a Make Good Agreement whereby he has pledged 13,333,334 shares of his common stock of the Company as security for the Company reaching certain earnings thresholds for the fiscal years ended 2007 and 2008. If the Company meets these thresholds, the Make Good Shares will be released from escrow and returned to the Chairman. Alternatively, if the Company fails to meet the earnings requirements, the Make Good Shares will be released to the Investors as additional compensation.

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 year
Expected volatility		514.17	%
Expected dividend yield		0	%

Warrants outstanding at March 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

$	1.05		6,666,667		2.00	$	1.05		6,666,667	$	1.05	$	-

13. MAJOR CUSTOMERS AND VENDORS

There were no major customers which accounting over 10% of the total net revenue for the three months ended March 31, 2009. There are no major vendors which accounting over 10% of the total purchase for the year ended March 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.

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. COMMITMENTS AND LEASES

The Company incurred rent expenses $15,723 and $4,752 for the years ended March 31, 2009 and 2008.

The Company and its subsidiaries made no commitments of leases for future. So there is no lease commitment in the future.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-Q. 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.

Overview

We were originally incorporated on June 4, 1999 as Apta Holdings, Inc. (“Apta”) in the State of Delaware. Apta was a wholly owned subsidiary of ARCA Corp. and Apta subsequently acquired all of ARCA’s assets and liabilities as part of ARCA’s merger with another company.

·	Keenway became our wholly owned subsidiary;
·	In exchange for all of their shares of Keenway common stock, the Keenway 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 certain InteliSys Shareholders;
·	Immediately following the closing of the Merger, the Keenway Shareholders own approximately 94.5% of our issued and outstanding shares on a fully diluted basis.

This transaction closed on November 19, 2007.

Our Business

Through Keenway’s subsidiaries in China, we operate as a major diversified entertainment company in China, currently covering China’s tourism, media and other entertainment-related industries. Our business is to identify, manage, operate and promote tourist attractions, TV channels and stations, and other profitable entertainment-related operations. Since 2004, our company has operated tourist sites and worked with tourist attractions to provide advertising through television ads and other marketing campaigns.

Principal Factors Affecting our Financial Performance

We believe that the following factors affect our financial performance:

o	Growth of Tourism and Mass Media in China

China’s tourism market is growing at a record breaking pace with no signs of a slowdown. According to predictions made by the World Trade Organization, China will become the second largest tourist destination by 2010, and will become the most popular tourist destination by 2020. According to these predictions and the Company’s own estimates, the Company expects to see unprecedented growth over the next 12 months. In addition, we expect to see similar growth in the mass media market. Over the past few years, the Chinese mass media industry has sustained a growth rate of 25%. The Company views the Chinese mass media industry as still in its infancy and will continue to grow due to Chinese emerging status as a global leader.

o	PRC Regulations Promoting Tourism

The tourism industry in China is highly regulated by the PRC government. However, after China granted the WTO access, China has been relaxing its regulations and the tourism industry in China is expanding rapidly and consists of almost 34% of the total tourism in the Asia-Pacific region. In addition, with the Olympics being held in Beijing in 2008, China is expected to relax its regulations even more. The Olympics will also promote tourism in China and encourage foreigners to visit which in turn will allow the Company to grow.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2009 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2008

The following tables set forth key components of our results of operations for the periods indicated, in dollars, and key components of our revenue for the period indicated, in dollars.

Three months ended March 31, 2009 compared to three months ended March 31, 2008

	March 31
	2009			2008
Net revenue
Advertisement	$	6,592,187		$	5,859,330
Tourism		3,230,718			992,954
Total net revenue		9,822,906			6,852,284
Cost of revenue
Advertisement		1,372,523			1,384,565
Tourism		128,226			503,035
Total cost of revenue		(1,500,750	)		(1,887,600	)
Gross profit		8,322,156			4,964,684
Operating expenses
Selling expenses		430,647			133,671
Operating and administrative expenses		1,202,198			352,316
Total operating expenses		1,632,845			485,987
Income from operations		6,689,311			4,478,698
Other (income) expense
Other expense, net		1,269			7,976
Interest expense		0			61,249
Interest income		(13,634	)		(1,545	)
Total other expense		(12,364	)		67,681
Income before income taxes		6,701,675			4,411,017
Provision for income taxes		1,730,801			99,313
Net income		4,970,874			4,311,704
Other comprehensive income
Foreign currency translation gain		(13,028	)		969,165
Other comprehensive income	$	4,957,846		$	5,280,870

In accordance with Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows," cash flows from our 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 $2,970,622 or approximately 43.35%, from $6,852,284 for the three months ended March 31, 2008 to US$9,822,906 for the three months ended March 31, 2009. Our overall net revenue increased because we are continuing to grow, specifically, our revenue increased due to the increased revenue in our tourism business of Great Golden Lake through increased number of visitors after the completion of additional scenic site constructions. We have been able to capitalize on the growing Chinese economy.

Our revenue from advertisement for the three months ended March 31, 2009 was $6,592,187 and for the three months ended March 31, 2008, it was $5,859,330. This increase was the result of organic growth of advertising sales due to FETV’s steady growth of audience rating, which led to the dramatic increase from our advertising revenue.

Our revenue for our tourism increased by $2,237,764 or approximately 225.36%, from $992,954 for the three months in 2008 to $3,230,718 for the three months in 2009 because we finished most of the infrastructure constructions on the Great Golden Lake, and Great Golden Lake’s capacity can afford more volume of visitors. From October 2007 until February 2008 we were constructing a dam to control the water level at the tourist destination. This construction of the dam is completed and the water level is now constant. Our revenue from the advertising business increased from the three months ended 2008 to the three months ended 2009 and we expect it to continue to increase due to the growing Chinese economy.

Cost of revenue:

Cost of revenue decreased by $386,850, or approximately 20.49%, from $1,887,600 for the three months ended March 31, 2008 to $1,500,750 for the three months ended March 31, 2009. The cost of revenue decreased because no marketing campaign was planned and ran in the first quarter of 2009 as compared to the same period in 2008 when we had marketing campaign to promote our scenic sites.

Our cost of revenue from media for the three months ended March 31, 2008 was $1,384,565 and for the three months ended March 31, 2009 it was $1,372,523. This was a slight decrease of $12,042 or 0.87% arising from the operations of our ordinary business.

Our cost of revenue from tourism for the three months ended March 31, 2009 was $128,226 and for the three months ended March 31, 2008 it was $503,035. This was a decrease of $374,809 or 74.51%. The decrease was because no marketing campaign was planned and ran in the first quarter of 2009 as compared to the same period in 2008 when we had marketing campaign to promote our scenic sites.

Gross profit:

Gross profit increased by $3,357,472, or 67.63%, from $4,964,684 for the three months ended March 31, 2008 to $8,322,156 for the three months ended March 31, 2009. Our gross profit increased mainly due to the increase in the number of visitors to our Great Golden Lake tourist destination after the completion of additional scenic site constructions in 2008 and cost savings from discontinued marketing campaign on our tourism destinations in 2008.

Operating Expenses:

Operating expenses were $485,987 for the three months ended March 31, 2008, compared to $1,632,845 for the three months ended March 31, 2009. This represents an increase of $1,146,858, or 235.99%, primarily due to a large increase in operations and significant business growth. The operating expenses increased due to the increase in revenues. The increase in revenues causes the company to increase its expenses in order to keep up with the increasing revenues. This is a variable expense and should fluctuate according to our revenues.

Income from Operations:

Operating profit was $4,478,698 for the three months ended March 31, 2008 and $6,689,311 for the three months ended March 31, 2009. The increase of $2,210,613, or 49.36%, was primarily the result of increased gross profit. Our income from operations increased because we increased our revenue at a greater rate than our expenses from operations increased.

Net Income:

Net income was $4,311,704 for the three months ended March 31, 2008, compared to $4,970,874 for the three months ended March 31, 2009, an increase of $659,170 or 15.29%. Our net income increased because our revenues increased.

Critical Accounting Policies

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

While all these significant accounting policies impact its financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.

Recent Accounting Pronouncements

LIQUIDITY AND CAPITAL RESOURCES

We currently generate our cash flow through operations which we believes will be sufficient to sustain current level operations for at least the next twelve months. In addition, in February 2008, we completed a $14 million financing and we intend to use the proceeds to expand our operations and improve the “Great Golden Lake” and increase the number of visitors we can attract to the destination. In 2009, we intend to continue to work to expand our tourism services and mass media outlets, including the acquisition of a provincial-level education TV station.

To the extent we are successful in rolling out our advertising campaign programs, identifying potential acquisition targets and negotiating the terms of such acquisition, and the purchase price includes a cash component, we plan to use our working capital and the proceeds of any financing to finance such acquisition costs. Our opinion concerning our liquidity is based on current information. If this information proves to be inaccurate, or if circumstances change, we may not be able to meet our liquidity needs.

2009 – 2010 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 the Company’s stock or other securities.

With respect to the mass media, we expect to grow by acquiring another operating television network.

PLAN OF OPERATIONS

Quantitative and Qualitative Disclosures about Market Risk

Interest Rates. Our exposure to market risk for changes in interest rates relates primarily to our short-term investments and short-term obligations; thus, fluctuations in interest rates would not have a material impact on the fair value of these securities. At March 31, 2009, we had approximately $ 9,967,084 in cash and cash equivalents. A hypothetical 10% increase or decrease in interest rates would not have a material impact on our earnings or loss, or the fair market value or cash flows of these instruments.

Foreign Exchange Rates. The majority of our revenues derived and expenses and liabilities incurred are in Renminbi (the currency of the PRC). Thus, our revenues and operating results may be impacted by exchange rate fluctuations in the currency of Renminbi. We have not tried to reduce our exposure to exchange rate fluctuations by using hedging transactions. However, we may choose to do so in the future. We may not be able to do this successfully. Accordingly, we may experience economic losses and negative impacts on earnings and equity as a result of foreign exchange rate fluctuations. The effect of foreign exchange rate fluctuation during the three months ended December 31, 2006 was not material to us.

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 3. Quantitative and Qualitative Disclosures about Market Risks

Not applicable because we are a smaller reporting company.

Item 4T. Controls and Procedures

Management's report on internal control over financial reporting

Our Management is responsible for establishing and maintaining adequate internal control over financial reporting under the supervision of the President and Chief Executive Officer and the Chief Financial Officer. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Management evaluated the design and operation of our internal control over financial reporting as of March 31, 2009, based on the framework and criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and has concluded that such internal control over financial reporting is effective. There are no material weaknesses that have been identified by management.

An evaluation was performed, under the supervision of, and with the participation of, our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-(e) to the Securities and Exchange Act of 1934). Based on that evaluation, the Company’s management, including our Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were adequate and effective, as of March 31, 2009, to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We do not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the system are met and cannot detect all deviations. Because of the inherent limitations in all control systems, no evaluation of control can provide absolute assurance that all control issues and instances of fraud or deviations, if any, within the Company have been detected.

This 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 the company's 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 report.

Changes in internal control over financial reporting

There were no significant changes in our internal controls over financial reporting that occurred subsequent to our evaluation of our internal control over financial reporting for the three months ended March 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Currently we are not aware of any litigation pending or threatened by or against us.

Item 1A. Risk Factors

Not applicable because we are a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities.

None.

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

On April 23, 2009, pursuant to the written consent of our majority shareholders in lieu of a special meeting, we implemented a 4 for 1 for 4 reverse stock split (the “Reverse Split”) on our issued and outstanding common stock as of April 23, 2009. Pursuant to Section 14C of the Securities Exchange Act of 1934, as amended, we filed a preliminary statement and a definitive statement to notify our shareholders on April 27 and May 7, 2009, respectively. The Reverse Split will become effective on May 17, 2009 pursuant to Rule 14c-2 under the Exchange Act. As a result, on the effective date of the Reverse Split, our issued and outstanding common stock will be reduced fourfold.

Item 5. Other Information.

On April 8, 2009, pursuant to section 2(g) of the Make Good Agreement by and among Pope Investments II, LLC (the “Investor Agent”), Minhua Chen and us, we and the investment jointly authorized our escrow agent to release from the escrow account 13,333,334 shares of our common shares that previously issued to Minhua Chen and held in the escrow account.

On April, 14, 2009, because we attained adjusted earning per share of $0.32 for the fiscal year of 2008, pursuant to Section 18(a) of the Warrant, we issued call notices to six (6) of our investors to call the callable warrants, equal to 50% of the warrants, that were originally issued to the investors redeemable at a price of $0.0001 per warrant. Upon the effectiveness of the call option, we redeemed a total number of 3,333,331 warrants. As of the date hereof, we have 3,333,336 outstanding warrants that can be converted into 3,333,336 shares of our common stock at an exercise price of $1.25 per share on and before September 6, 2011.

Item 6. Exhibits.

31.1	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 George Wung 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 George Wung pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	China Yida Holding, Co.

Date: May 14, 2009	By:	/s/ Chen Minhua
		Chen, Minhua Chief Executive Officer
		/s/ George Wung
		George Wung Principal Accounting Officer

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China Yida Holding (CNYD) Inactive 10-Q2009 Q1 Quarterly report

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