U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549~~ Form 10-Q

Mark One

~~[ X]~~x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the six month period ended ~~March~~September 3130, 2010

~~[ ]~~o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission file number: 000-33195

XINHUA CHINA LTD. (Name of small business issuer in its charter)
Nevada (State or other jurisdiction of incorporation or organization)	88-0437644 (I.R.S. Employer Identification No.)
B-26F, Oriental Kenzo Dongcheng District Beijing 100027 People’s Republic of China (Address of principal executive offices)
86-10-64168816 or 86-10-64168916 (Issuer’s telephone number)
N/A (Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:	Name of each exchange on which registered:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.00001 par value
(Title of Class)

Xinhua China Ltd.

(Name of small business issuer in its charter)

Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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[ ]

Nevada		88-0437644
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

B-26F, Oriental Kenzo Dongcheng District

Beijing 100027

People’s Republic of China

(Address of principal executive offices)

86-10-64168816 or 86-10-64168916

(Issuer’s telephone number)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:	Name of each exchange on which registered:
None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.00001 par value

(Title of Class)

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer ~~[ ]~~ o Accelerated filer ~~[ ]~~ o Non-accelerated ~~filer~~ ~~[X]~~filer x

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ~~[ ]~~ o Yes ~~[X]~~ x No

Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years.

N/A

Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes~~[ ]~~ o No~~[ ]~~ o

Applicable Only to Corporate Registrants

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date: Class	Outstanding as of ~~May~~November 1722, 2010
Common Stock $0.00001 par value	499,911,400

XINHUA CHINA LTD.

FORM 10-Q

	~~PART I – FINANCIAL INFORMATION~~	PART I – FINANCIAL INFORMATION
Item 1.	~~Financial Statements~~	Financial Statements	4
Item 2	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	~~Quantitative and Qualitative Discloses About Market Risk~~	Quantitative and Qualitative Discloses About Market Risk	28
Item 4.	~~Controls and Procedures~~	Controls and Procedures	29
Item 4T.	~~Controls and Procedures~~	Controls and Procedures	31
.	PART II – OTHER INFORMATION
		PART II – OTHER INFORMATION
Item 1.	~~Legal Proceedings~~	Legal Proceedings	31
Item 1A.	~~Risk Factors~~	Risk Factors	31
Item 2.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	~~Defaults Upon Senior Securities~~	Defaults Upon Senior Securities	31
Item 4.	~~Removed and Reserved~~	Removed and Reserved	31
Item 5.	~~Other Information~~	Other Information	32
Item 6.	~~Exhibits~~	Exhibits	32

FORWARD LOOKING STATEMENTS

Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

Available Information

Xinhua China Ltd. files annual, quarterly, current reports, proxy statements, and other information with the Securities and Exchange Commission (the “Commission”). You may read and copy documents referred to in this Quarterly Report on Form 10-Q that have been filed with the Commission at the Commission’s Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. You can also obtain copies of our Commission filings by going to the Commission’s website at http://www.sec.gov.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

XINHUA CHINA LTD.

UNAUDITED ~~CONSOLIDATED~~ FINANCIAL STATEMENTS

~~MARCH 31~~SEPTEMBER 30, 2010 AND JUNE 30, ~~2009~~2010

(Stated in US Dollars)

~~XINHUA~~Xinhua ~~CHINA LTD~~China Ltd.

Contents	Pages
Report of Registered Independent Public Accounting Firm	6
Unaudited Consolidated Balance Sheet	7 - 8
Unaudited Balance Sheet	7 - 8
Unaudited Consolidated Statement of Income	9
Unaudited Statement of Income	9
Unaudited Consolidated Statement of Stockholders’ Equity	10
Unaudited Statement of Stockholders’ Equity	10
Unaudited Consolidated Statement of Cash Flows	11
Unaudited Statement of Cash Flows	11
Notes to the Unaudited Consolidated Financial Statements	12 - 25
Notes to the Unaudited Financial Statements	12 - 21

Board of Directors and Stockholders

Xinhua China Ltd.

Report of Registered Independent Public Accounting Firm

We have reviewed the accompanying interim ~~consolidated~~balance ~~Balance~~sheets ~~Sheets~~ of Xinhua China Ltd. (“the Company”) as of ~~March~~September 3130, 2010 and June 30, ~~2009~~2010, and the related statements of income, stockholders’ equity, and cash flows for the three-months ~~and~~ ~~nine-months~~ ended ~~March~~September 3130, 2010 and 2009. These interim ~~consolidated~~ financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim consolidated financial statements for them to be in conformity with U.S. generally accepted accounting principles.

South San Francisco, California Samuel H. Wong & Co., LLP

San Mateo, California	Samuel H. Wong & Co., LLP
October 23, 2010	Certified Public Accountants

April 23, 2010 Certified Public Accountants

Xinhua China Ltd.

Unaudited ~~Consolidated~~ Balance Sheets

As of ~~March~~September 3130, 2010 and June 30, ~~2009~~2010

(Stated in US Dollars)

							(Audited)		~~(Audited)~~
		Notes		September 30, 2010	~~Notes~~		~~March~~June 3130, ~~2009~~2010		~~June 30, 2009~~
ASSETS
Current Assets	~~Current Assets~~
Cash and Cash Equivalents		~~Cash and Cash Equivalents~~3D		$	3D-		$ ~~473,218~~	255,810	~~$ 45,769~~
Accounts Receivable, net		~~Accounts Receivable, net~~3E			3E-		~~73,880~~	75,125	~~74,228~~
Other Receivables and Prepayments		~~Other Receivables and Prepayments~~4			423,000		~~227,795~~	241,353	~~224,535~~
Total Current Assets			~~Total Current Assets~~		23,000		~~774,893~~	572,288	~~344,532~~
Long-term Assets	~~Long-term Assets~~
Property, Plant & Equipment, net		~~Property~~3F, ~~Plant & Equipment, net~~5			~~3F,5~~-		~~141,011~~	204,062	~~55,156~~
Intangible Assets, net		~~Intangible Assets, net~~5			5-		~~39,260~~	78,242	-
Total Long-term Assets			~~Total Long-term Assets~~		-		~~180,271~~	282,304	~~55,156~~
Total Assets			~~Total Assets~~	$	23,000		$ ~~955,164~~	854,592	~~$ 399,688~~
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities	~~Liabilities~~
Current Liabilities	~~Current Liabilities~~
Accounts Payable and Accrued Liabilities		~~Accounts Payable and Accrued Liabilities~~6		$	141,503	6	$ ~~497,484~~	570,834	~~$ 754,025~~
Current portion of Loans Payable		~~Current portion of Loans Payable~~7			1,498,075	7	~~1,479,475~~	1,472,311	~~1,490,911~~
Total Current Liabilities			~~Total Current Liabilities~~		1,639,578		~~1,976,959~~	2,043,145	~~2,244,936~~
Long-term Liabilities	~~Long-term Liabilities~~
Loans Payable		~~Loans Payable~~7			1,058,261	7	~~1,058,261~~	1,058,261	~~1,058,261~~
Loans from Shareholders		~~Loans from Shareholders~~8			10,401,280	8	~~7,273,608~~	10,176,526	~~5,945,061~~
Total Long-term Liabilities			~~Total Long-term Liabilities~~		11,459,541		~~8,331,869~~	11,234,787	~~7,003,322~~
Total Liabilities			~~Total Liabilities~~	$	13,099,119		$ ~~10,308,828~~	13,277,932	~~$ 9,248,258~~

See Accompanying Notes to the Financial Statements and Accountant’s Report

Xinhua China Ltd.

Unaudited ~~Consolidated~~ Balance Sheets

As of ~~March~~September 3130, 2010 and June 30, ~~2009~~2010

(Stated in US Dollars)

							(Audited)
		Note		~~Note~~September 30, 2010		~~March 31, 2009~~	June 30, ~~2009~~2010
Stockholders' Equity	~~Stockholders' Equity~~
		Common Stock $0.00001 Par Value 500,000,000 Shares Authorized; 499,911,400 and 490,311,400 shares issued and outstanding at March 31, 2010 and June 30, 2009, accordingly.		9		4,999	4,903
Common Stock $0.00001 Par Value 500,000,000 Shares Authorized; 499,911,400 and 499,911,400 shares issued and outstanding at September 30, 2010 and June 30, 2010, accordingly.		9		$	4,999		$	4,999
Additional Paid-In Capital		~~Additional Paid-In Capital~~			11,940,301	~~11,721,535~~	~~11,399,960~~	11,831,075
Accumulated Other Comprehensive Income		~~Accumulated Other Comprehensive Income~~			(30,390	~~38,589~~)	~~38,756~~	40,149
Accumulated Deficit		~~Accumulated Deficit~~			(24,991,028	~~(21,118,787~~)	~~(20,292,189)~~	(24,299,563	)
Total Stockholders' (Deficit)/Equity			~~Total Stockholders' (Deficit)/Equity~~		(13,076,119	~~(9,353,664~~)	~~(8,848,570)~~	(12,423,340	)
Total Liabilities & Stockholders' Equity		~~Total Liabilities & Stockholders' Equity~~		$	23,000	~~$ 955,164~~	$ ~~399,688~~	854,592

See Accompanying Notes to the Financial Statements and Accountant’s Report

Xinhua China Ltd.

Unaudited ~~Consolidated~~ Statement of Income

For the three ~~and nine~~ months ended ~~March~~September 3130, 2010 and 2009

(Stated in US Dollars)

			Note		Three months ended				Nine months ended
				Three months ended
					March 31,				March 31,
		Note		September 30,
Revenue				2010	~~2010~~		~~2009~~	2009	~~2010~~		~~2009~~
Revenue, net	~~Revenue, net~~	3H	3H	$	-	$	-	$	-	$	-
Cost of Sales, net	~~Cost of Sales, net~~	3I	3I		-		-		-		-
Gross Profit		~~Gross Profit~~			-		-		-		-
Operating Expenses
Selling, General, and Administrative Expenses	~~Selling, General, and Administrative Expenses~~				~~181~~30,~~241~~000		~~145,682~~		~~477~~129,~~634~~019		~~483,491~~
Total Operating Expense		~~Total Operating Expense~~			~~181~~30,~~241~~000		~~145,682~~		~~477~~129,~~634~~019		~~483,491~~
Operating Income/(Loss)	~~Operating Income/(Loss)~~				(~~181~~30,~~241)~~000	)	~~(145,682)~~		(~~477~~129,~~634)~~019	)	~~(483,491)~~
Other Income (Expenses)
Other Income	~~Other Income~~				-		-		-		-
Interest Income	~~Interest Income~~				~~402~~-		7		~~442~~8		50
	Gain on debt restructuring				-		-		-		73,427
Interest Expense					122,414				104,913
	Gain from writing off accounts payable				-		-		-		179,621
Loss on disposal of subsidiaries		12			4,118,173				-
	Interest Expense				(120,156)		(98,971)		(349,406)		(349,380)
(Loss) before minority interest and income tax					(4,270,587	)			(233,924	)
	Impairment Loss on Boheng investment				-		-		-		(1,625,000)
Loss before Income Tax					(4,270,587	)			(233,924	)
		Loss before minority interest and income tax			(300,995)		(244,646)		(826,598)		(2,204,872)
Income Tax		3M			-				-
Loss before Income Tax					(300,995)		(244,646)		(826,598)		(2,204,872)
Discontinued Operations, net of tax		14			(71,086	)			-
Income Tax			3M		-		-		-		-
Net Loss				$	(4,341,673	)		$	(233,924	)
Net Loss				$	(300,995)	$	(244,646)	$	(826,598)	$	(2,204,872)
Basic & Diluted Earnings Per Share		3N,17			(0.0087	)			(0.0004	)
Basic & Diluted Earnings Per Share			3N,17		(0.0006)		(0.0012)		(0.0017)		(0.0110)
Weighted Average Shares Outstanding					499,911,400				496,259,226
Weighted Average Shares Outstanding					499,911,400		199,873,539		499,911,400		199,873,539

See Accompanying Notes to the Financial Statements and Accountant’s Report

Xinhua China Ltd.

Unaudited ~~Consolidated~~ Statements of Stockholders’ Equity

For the ~~nine~~three months ended ~~March~~September 3130, 2010 and year ended June 30, 2010

(Stated in US Dollars)

			~~Additional~~			~~Other~~			Additional					Other
	Number of	~~Common~~	~~Paid in~~		~~Comprehensive~~Common	~~Comprehensive~~	~~Accumulated~~		Paid in		Comprehensive			Comprehensive			Accumulated
	Shares	~~Stock~~	~~Capital~~		~~Income(Loss)~~Stock	~~Income(Loss)~~	~~Deficit~~	~~Total~~	Capital		Income(Loss)			Income(Loss)			Deficit			Total
Balance, July 1, 2008	98,655,733	987		10,903,997	(17,750,304)	38,149	(17,788,454)	(6,845,321)
Balance, July 1, 2009		490,311,400				4,903				11,399,960		(20,253,432	)		38,756			(20,292,189	)		(8,848,570	)
Additional Paid-in Capital	-	-		~~109,444~~	-	-	-	~~109,444~~		419,775		-			-			-			419,775
Imputed interest on interest free advances from related party	-	-		~~386,519~~	-	-	-	~~386,519~~		11,340		-			-			-			11,340
Issuance of shares to Highgate	~~266,655,667~~	29,~~666~~600,000		-	-	-96	-	~~2,666~~		-		-			-			-			96
Issuance of shares to Xianping Wang	~~125,000,000~~	~~1,250~~-		-	-	-	-	~~1,250~~		-		-			-			-			-
Foreign Currency translation	-	-		-	~~607~~	~~607~~-	-	~~607~~		-		1,393			1,393			-			1,393
Net Loss for year	-	-		-	~~(2,503,735)~~	-	~~(2,503,735)~~	~~(2,503,735)~~		-		(4,007,374	)		-			(4,007,374	)		(4,007,374	)
Balance, June 30, 2009	490,311,400	4,903		11,399,960	(20,253,432)	38,756	(20,292,189)	(8,848,570)
Balance, June 30, 2010		499,911,400				4,999				11,831,075		(24,259,413	)		40,149			(24,299,563	)		(12,423,340	)
Balance, July 1, 2009	490,311,400	4,903	11,399,960		(20,253,432)	38,756	(20,292,189)	(8,848,570)
Balance, July 1, 2010		499,911,400				4,999				11,831,075		(24,259,413	)		40,149			(24,299,563	)		(12,423,340	)
Additional Paid-in Capital on conversion	-	-	~~11,339~~		-	-	-	~~11,339~~		-		-			-			-			-
Imputed interest on interest free advances from related party	-	-	~~310,236~~		-	-	-	~~310,236~~		109,226		-			-			-			109,226
Issuance of shares to Highgate	~~9,600,000~~	96-	-		-	-	-	96		-		-			-			-			-
Foreign Currency translation	-	-	-		~~(167)~~	~~(167)~~-	-	~~(167)~~		-		(70,539	)		(70,539	)		-			(70,539	)
Net Loss for period	-	-	-		(826,598)	-	(826,598)	(826,598)
Deconsolidation of disposed subsidiaries												3,650,208			-			3,650,208			3,650,208
Balance, March 31, 2010	499,911,400	4,999	11,721,535		(21,080,197)	38,589	(21,118,787)	(9,353,664)
Net Loss for period		-				-				-		(4,341,673	)		-			(4,341,673	)		(4,341,673	)
Balance, September 30, 2010		499,911,400				4,999				11,940,301		(25,021,417	)		(30,390	)		(24,991,028	)		(13,076,119	)

	March 31, 2010		June 30, 2009
	September 30, 2010			June 30, 2010			Total
Comprehensive Income(Loss)
Net Loss	$ ~~(826,598)~~	(4,341,673	~~$ (2,503,735~~)	$	(4,007,374	)	$	(8,349,047	)
Other Comprehensive Income
Foreign Currency Translation Adjustment	~~(167)~~	(70,539	~~607~~)		1,393			(69,146	)
Total Comprehensive Income	$ ~~(826,765)~~	(4,412,212	~~$ (2,503,128~~)	$	(4,005,981	)	$	(8,418,193	)

See Accompanying Notes to the Financial Statements and Accountant’s Report

Xinhua China Ltd.

	Three months ended
	September 30,
	2010			2009
Cash Flow from Operating Activities:
Net (Loss)	$	(4,341,673	)	$	(233,924	)
Adjustments to reconcile net earnings(loss) to net cash used in operating activities:
Depreciation		-			3,856
Imputed interest expense		-			104,708

Changes in assets and liabilities:
Decrease/(Increase) Accounts receivable		7,000			-
Decrease/(Increase) Accounts Payable and accrued liabilities		(452,079	)		(41,523	)
Cash Sourced/(Used) in Operating Activities		(4,786,751	)		(166,883	)

Cash Flows from Investing Activities:
Disposal of subsidiaries		1,998,464			-
Cash Used/(Sourced) in Investing Activities		1,998,464			-

Cash Flows from Financing Activities:
Stock Issue to Highgate on debt conversion		-			96
Adjustment/(Repayment) of Loan to Highgate		18,600			(11,436	)
Loans from shareholders		2,660,462			133,236
Additional Paid-in Capital		109,226			11,340
Cash Sourced/(Used) in Financing Activities		2,788,288			133,236

Net Increase/(Decrease) in Cash & Cash Equivalents for the Period		(255,810	)		(33,647	)

Effect of Currency Translation		-			(36	)

Cash & Cash Equivalents at Beginning of Period		255,810			45,769

Cash & Cash Equivalents at End of Period	$	-		$	12,086

Cash paid for interest expenses	$	-		$	-

Unaudited Consolidated Statements of Cash Flows

For the three and nine months ended March 31, 2010 and 2009

(Stated in US Dollars)

			Three months ended				Nine months ended
			March 31,				March 31,
			2010		2009		2010			2009
Cash Flow from Operating Activities:
	Net (Loss)	$	(300,995)	$	(244,646)	$	(826,598)		$	(2,204,873)
	Adjustments to reconcile net earnings(loss) to net cash used in operating activities:
	Depreciation		8,410		5,527		17,872			16,156
	Imputed interest expense		120,076		98,971		348,404			310833
	Amortization of deferred imputed interest from note receivable		-		-		-			-
	Changes in assets and liabilities:
	Decrease/(Increase) Accounts receivable		12,245		(4,351)		348			337,765
	Decrease/(Increase) Other receivables and prepayments		(3,139)		-		(3,139)			(812)
	Decrease/(Increase) Accounts Payable and accrued liabilities		(2,348)		26,041		(294,709)			(463,812)
	Decrease/(Increase) in Deferred Revenue		-		-		-			(18,355)
	Cash Sourced/(Used) in Operating Activities		(165,751)		(118,456) 123984		(757,821)			(2,009,328)
Cash Flows from Investing Activities:
	Loss on impairment of asset		-		-					1,625,000
	Purchase of leasehold improvements		-		-		(21,235)			-
	Purchase of plant and equipment		(82,429)		-		(82,429)			-
	Purchase of intangible assets		(39,260)		-		(39,260)			-
	Cash Used/(Sourced) in Investing Activities		(121,689)		-		(142,924)			1,625,000
Cash Flows from Financing Activities:
	Stock Issue to Highgate on debt conversion		-		1,337		96			1,839
	Repayment of Loan to Highgate		-		(43,100)		(11,436)			(87,274)
	Loans from shareholders		30,000		142,068		1,328,186			414,472
	Additional Paid-in Capital		-		41,763		11,340			41,763
	Cash Sourced/(Used) in Financing Activities		30,000		142,068		1,328,186			370,800
	Net Increase/(Decrease) in Cash & Cash Equivalents for the Period		(257,440)		23,652		427,449			(13,266)
Effect of Currency Translation			313		41			8		252
Cash & Cash Equivalents at Beginning of Period			730,345		1,814			45,769		38,733
Cash & Cash Equivalents at End of Period		$	473,218	$	25,466	$		473,218	$	25,466
Cash paid for interest expenses		$	-	$	-	$		-	$	-

See Accompanying Notes to the Financial Statements and Accountant’s Report

Xinhua China Ltd.

Notes to Unaudited ~~Consolidated~~ Financial Statements

For the three ~~and nine~~ months ended ~~March~~September 3130, 2010

(Stated in US Dollars)

1.	ORGANIZATION AND BUSINESS BACKGROUND

Xinhua China Ltd. (the “Company”, formerly Camden Mines Limited) was incorporated in the State of Nevada, United States of America, on September 14, 1999. Until September 2004, the Company was a non-operating shell company and considered as a development stage enterprise since its inception. Effective from October 12, 2004, the Company changed to its current name. The Company established an office in Vancouver, Canada; however, this office was closed down in December 2006. The Company established its principal executive office at B26-F, Oriental Kenzo, No. 48 Dongzhimenwai Street, Dongcheng District, Beijing 100027 People’s Republic of China.

As of May 31, 2006, the Company reduced its equity interest in Xinhua C&D from 56.14% to 7.98%. Subsequent to the deconsolidation of Xinhua C&D, the Company commenced the internet book distribution business through Beijing Joannes Information Technology Co., Ltd. (“Joannes”).

~~Details~~ As of September 30, 2010, the Company’s disposed both subsidiaries asat ofa ~~March~~loss. See ~~31,~~note ~~2010~~12 ~~are~~– ~~described below:~~Loss on Disposal of Subsidiaries.

Name	Place of incorporation and kind of legal entity	Principal activities and place of operation	Particulars of issued/registered share capital	Effective interest held
Beijing Joannes Information Technology Co., Ltd.	PRC, a company with limited liability	Sales and distribution of books, PRC	Registered capital US$1,250,000	100%
Pac-Poly Investment Ltd.	British Virgin Islands, a company with limited liability	Investment holding, PRC	10,000,000 ordinary shares of US$1 par value	100%

2.	GOING CONCERN UNCERTAINTIES

These consolidated financial statements have been prepared assuming that Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

As of ~~March~~ 31September 30, 2010, the Company had no working capital but current liabilities exceeding current assets by $1,~~202~~616,~~066~~578 and an accumulated deficit of $2124,~~118~~991,~~786~~ 028 because the Company continued to incur losses over the past several years. Management has taken certain action and continues to implement changes designed to improve the Company’s financial results and operating cash flows. The actions involve certain cost-saving initiatives and growing strategies, including (a) reductions in headcount and corporate overhead expenses; and (b) development of e-commerce business. Management believes that these actions will enable the Company to improve future profitability and cash flow in its continuing operations through ~~March~~September 3130, 2010. As a result, the financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of the Company’s ability to continue as a going concern.

Xinhua China Ltd.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

3.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A.) Basis of Presentation These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

~~These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).~~12

(B.)	Use of Estimates

In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the year reported. Actual results may differ from these Estimates.

(C.)	Basis of Consolidation

~~The interest~~After disposal of the ~~Company~~two ~~in the~~ subsidiaries ~~was acquired by means of exchange of shares in the Company pursuant to a share exchange agreement~~ on September 1416, ~~2004. The~~ ~~transaction is considered a transfer between entities under common control~~2010, ~~within~~ the ~~meaning~~Company ofhas USno ~~GAAP. Accordingly~~subsidiaries; therefore, ~~the~~no ~~assets~~consolidation ~~and liabilities~~is transferred have been accounted for at historical cost or at their “fair value” at the date of their original acquisition and have been included in the foregoing financial statements as of the beginning of the periods presentednecessary.

The consolidated financial statements include the financial statements of the Company and its subsidiaries. Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to govern the financial and operating policies; to appoint or remove the majority of the members of the board of directors; or to cast majority of votes at the meeting of directors. All significant inter-company balances and transactions within the Company have been eliminated on consolidation.

(D.)	Cash and Cash Equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

(E.)	Accounts Receivable, Net

Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company extends unsecured credit to its customers in the ordinary course of business, but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and determined based on managements’ assessment of known requirements, aging of receivables, payment history, the customer’s current credit worthiness, and the economic environment.

Xinhua China Ltd.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

(F.)	Property, Plant, and Equipment, Net

Property, plant, and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational.

Asset Classification		Depreciable Life
Land Use right		50 years
Buildings		50 years
Motor Vehicles		8 – 10 years
Equipment and Machinery		5 – 8 years
Intangible Assets		3 years
Leasehold Improvement		2 years

Expenditure for maintenance and repairs is expensed as incurred. The gain or loss on the disposal of property, plant, and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the consolidated statement of income.

(G.)	Impairment of Long-life Assets

In accordance with SFAS No. 121, “Accounting for the impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of’, a long-lived assets and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets. The Company reviews long-lived assets, if any, to determine whether the carrying values are not impaired.

(H.)	Revenue Recognition

Sales revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed and final, delivery has occurred and there is reasonable assurance of collection of the sales proceeds. The Company generally obtains purchase authorizations from its customers for a specified amount of products at a specified price and considers delivery to have occurred when the customer takes possession of the products. Net sales incorporate offsets for discounts and sales returns. Revenue is recognized upon delivery, risk and ownership of the title is transferred and a reserve for sales returns is recorded even though invoicing may not be completed. The Company has demonstrated the ability to make reasonable and reliable estimates of products returns in accordance with SFAS No. 48, “Revenue Recognition When Right of Return Exists”.

14Shipping and handling fees billed to customers are included in sales. Costs related to shipping and handling are part of selling, general, and administrative expenses in the consolidated statements of operations. EITF No. 00-10, “Accounting for Shipping and Handling Fees and Costs” allows for the presentation of shipping and handling expenses in line items other than cost of sales. For the period ended September 30, 2010, there were no shipping and handling costs included in selling, general and administrative expenses in the accompanying consolidated statements of income.

Xinhua China Ltd.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

Shipping and handling fees billed to customers are included in sales. Costs related to shipping and handling are part of selling, general, and administrative expenses in the consolidated statements of operations. EITF No. 00-10, “Accounting for Shipping and Handling Fees and Costs” allows for the presentation of shipping and handling expenses in line items other than cost of sales. For the period ended March 31, 2010, there were no shipping and handling costs included in selling, general and administrative expenses in the accompanying consolidated statements of income.

(I.)	Cost of Sales

Cost of sales includes depreciation of property, plant, and equipment and purchase costs to publishers.

(J.)	Value-Added Tax

The Company is subject to value added tax (“VAT”) imposed by the PRC on sales. The output VAT is charged to customers who purchase books from the Company and the input VAT is paid when the Company purchases books from publishers. The VAT rate is 13%. The input VAT can be offset against the output VAT.

(K.)	Advertising Expenses

The Company expenses advertising costs as incurred in accordance with the American Institute of Certified Public Accountants (“AICPA”) Statement of Position 93-7, “Reporting for Advertising Costs”. For the period ended ~~March~~September 3130, ~~2009~~2010, advertising expenses amount to zero.

(L.)	Comprehensive Income

SFAS No. 130, “Reporting Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components, and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated comprehensive income, as presented in the accompanying statement of changes in owners’ equity consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

(M.)	Income Taxes

The Company uses the accrual method of accounting to determine and report its taxable reduction of income taxes for the year in which they are available. The Company has implemented Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Income tax liabilities computed according to the United States and People’s Republic of China (PRC) tax laws are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and intangible assets for financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes. A valuation allowance is created to evaluate deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain.

The Company is subject to United States Tax according to Internal Revenue Code Sections 951 and 957. Corporate income tax is imposed on progressive rates in the range of: -

Taxable Income
Rate			Over		But Not Over		Of Amount Over
	15	%		0		50,000		0
	25	%		50,000		75,000		50,000
	34	%		75,000		100,000		75,000
	39	%		100,000		335,000		100,000
	34	%		335,000		10,000,000		335,000
	35	%		10,000,000		15,000,000		10,000,000
	38	%		15,000,000		18,333,333		15,000,000
	35	%		18,333,333		-		-

Based on the consolidated net income/(loss) for the period ended September 30, 2010, the Company shall not be subject to income tax.

Xinhua China Ltd.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

In respect of the Company’s subsidiaries domiciled and operated in China:

· Beijing Joannes Information Technology Co., Ltd. is located in the PRC and Pac-Poly Investment Ltd. is located in the British Virgin Islands; all of these entities are subject to the relevant tax laws and regulations of the PRC and British Virgin Islands in which the related entity domiciled. The maximum tax rates of the subsidiaries pursuant to the countries in which they domicile are: -

Subsidiary	Country of Domicile	Income Tax Rate
Beijing Joannes Information Technology Co., Ltd.	PRC	25.00%
Pac-Poly Investment Ltd.	British Virgin Islands	0.00%

· Effective January 1, 2008, PRC government implemented a new 25% tax rate across the board for all enterprises regardless of whether domestic or foreign enterprise without any tax holiday which is defined as "two-year exemption followed by three-year half exemption" hitherto enjoyed by tax payers. As a result of the new tax law of a standard 25% tax rate, tax holidays terminated as of December 31, 2007. However, PRC government has established a set of transition rules to allow enterprises already started tax holidays before January 1, 2008, to continue enjoying the tax holidays until being fully utilized.

· The Company is subject to United States Tax according to Internal Revenue Code Sections 951 and 957. Corporate income tax is imposed on progressive rates in the range of: -

Taxable Income
Rate	Over	But Not Over	Of Amount Over
15%	0	50,000	0
25%	50,000	75,000	50,000
34%	75,000	100,000	75,000
39%	100,000	335,000	100,000
34%	335,000	10,000,000	335,000
35%	10,000,000	15,000,000	10,000,000
38%	15,000,000	18,333,333	15,000,000
35%	18,333,333	-	-

Based on the consolidated net income/(loss) for the period ended March 31, 2010, the Company shall not be subject to income tax.

Xinhua China Ltd.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

(N.)	Loss Per Share

The Company calculates loss per share in accordance with SFAS No. 128, “Earnings per Share”. Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive. The effect of outstanding stock options, stock purchase warrants and convertible debenture, which could result in the issuance of 499,911,400 and ~~490~~499,~~311~~911,400 of common stock at ~~March~~September 3130, ~~2009~~2010 and June 30, ~~2009~~ 2010, respectively, are anti-dilutive. As a result, diluted loss per share data does not include the assumed exercise of outstanding stock options, stock purchase warrants, or conversion of convertible debenture and has been presented jointly with basic loss per share.

(O.)	Foreign Currencies Translation

The functional and reporting currency of the Company is the United States dollars (“U.S. dollars”). The accompanying consolidated financial statements have been expressed in U.S. dollars.

The functional currency of the Company’s foreign subsidiaries is the Renminbi Yuan (“RMB”). The balance sheet is translated into United States dollars based on the rates of exchange ruling at the balance sheet date. The statement of operations is translated using a weighted average rate for the year. Translation adjustments are reflected as cumulative translation adjustments in stockholders’ equity.

Exchange Rates

~~March 31, 2010~~

September 30, 2010

~~June 30, 2009~~

~~March 31, 2009~~

June 30, 2010

September 30, 2009

Period/year end RMB : US$ exchange rate

~~6.8263~~

6.~~8319~~7011

~~6.8359~~

6.8086

6.8376

Average period/year RMB : US$ exchange rate

~~6.8285~~

6.~~8355~~7726

~~6.8373~~

6.8347

6.8425

1716

Xinhua China Ltd.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

(P.)	Fair Value of Financial Instruments

The carrying value of the Company’s financial instruments, which include cash and cash equivalents, accounts receivables, other payable and accrued liabilities, approximate their fair values due to the short-term maturity of these instruments.

(Q.)	Related Parties

For the purposes of these financial statements, parties are considered to be related if one party has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

(R.)	Convertible Debenture Issued with Stock Purchase Warrants

The Company accounts for the issuance of and modifications to the convertible debt issued with stock purchase warrants in accordance with APB No. 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants , EITF No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, and EITF No. 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments and SFAS No. 15, Accounting by Debtors and Creditors for Troubled Debt Restructurings.

Due to the indeterminate number of shares, which might be issued under the embedded convertible host debt conversion feature of these debentures, the Company is required to record a liability relating to both the detachable warrants and embedded convertible feature of the notes payable (included in the liabilities as a "derivative liability").

The accompanying consolidated financial statements comply with current requirements relating to warrants and embedded derivatives as described in SFAS 133 as follows:

The Company treats the full fair market value of the derivative and warrant liability on the convertible secured debentures as a discount on the debentures (limited to their face value). The excess, if any, is recorded as an increase in the derivative liability and warrant liability with a corresponding increase in loss on adjustment of the derivative and warrant liability to fair value.

Subsequent to the initial recording, the change in the fair value of the detachable warrants, determined under the Black-Scholes option pricing formula and the change in the fair value of the embedded derivative (utilizing the Black-Scholes option pricing formula) in the conversion feature of the convertible debentures are recorded as adjustments to the liabilities as of September 30, 2006.

§	The expense relating to the change in the fair value of the Company's stock reflected in the change in the fair value of the warrants and derivatives is included in interest expense in the accompanying consolidated statements of income.

1817

Xinhua China Ltd.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

(S.)	Recently Issued Accounting Standard

In June 2009, FASB issued FASB Statement No. 166, Accounting for Transfers for Financial Assets and FASB Statement No. 167, a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities. Statement 166 is a revision to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures.

Statement 166 is a revision to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures.

Statement 167 is a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities, and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance.

On July 1, 2009, FASB issued FASB Statement No. 168, The “FASB Accounting Standards Codification” and the Hierarchy of Generally Accepted Accounting Principles. The ASC has become the source of authoritative US GAAP recognized by the FASB to be applied by nongovernmental entities and provides that all such guidance carries an equal level of authority. The ASC is not intended to change or alter existing GAAP. The ASC is effective for interim and annual periods ending after September 15, 2009.

The Company ishas ~~currently~~adopted ~~evaluating~~ the ~~potential impact, if any, of the adoption of the~~ above recent accounting pronouncements onwithout ~~its~~any ~~consolidated~~material ~~results~~impact ~~of operations~~on ~~and~~the financial ~~condition~~statements presented herein.

4.	OTHER RECEIVABLES AND PREPAYMENT

		March 31, 2010		June 30, 2009
		September 30, 2010			June 30, 2010
Prepayments	$	~~227,795~~$	$23,000	~~224,535~~	$	241,353

The carrying amounts of prepayments approximate their fair value.

1918

Xinhua China Ltd.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

5.	PROPERTY, PLANT, AND EQUIPMENT, NET

Property, plant, and equipment consist of the following:

		March 31, 2010		June 30, 2009
		September 30, 2010			June 30, 2010
Equipment and machinery	$	~~101,364~~$	$-	~~53,418~~	$	174,428
Motor vehicles		~~81,534~~	-	~~47,007~~		81,959
Leasehold Improvement		~~37,561~~	-	~~16,306~~		37,756
		220,459		116,731
			-			294,143
Less: Accumulated Depreciation		~~(79,448)~~	-	~~(61,576)~~		(90,081	)
	$	~~141,011~~$	$-	~~55,156~~	$	204,062

Depreciation expense for ~~March~~September 3130, 2010 and June 30, ~~2009~~2010 were $~~17,872~~0 and $2628,~~585,~~ 000 respectively.

During the period ended ~~March~~September 3130, 2010, the Company ~~purchased~~disposed ~~new~~all ~~intangible~~fixed assets, which ~~will~~includes beproperty, ~~placed~~plant, inand ~~service~~equipment ~~starting~~due ~~May~~to ~~2010~~the ~~for~~disposal of their ~~new~~investment ~~line~~in ~~of business~~subsidiaries as noted in Note 12 – Discontinued Operations.

6.	ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities as of ~~March~~September 3130, 2010 and June 30, ~~2009~~2010 consists of the following:

		March 31, 2010		June 30, 2009
		September 30, 2010			June 30, 2010
Accounts Payable	$	~~497,484~~$	$141,503	~~754,025~~	$	570,834

7.	LOANS PAYABLE/CONVERTIBLE DEBENTURE

On November 23, 2005, the Company entered into a debt financing agreement (the “Agreement”) with an institutional investor, and on March 23, 2006, the Agreement was modified to include an additional institutional investor, who is an affiliate of the original institutional investor (both institutional investors collectively referred to as “the Investors”). The Investors committed to purchase up to $4,000,000 of a secured convertible debenture (“the debenture”) that shall be convertible into shares of the Company’s common stock.

After two closings on December 13, 2005 and March 23, 2006, the Company received gross proceeds of $3,250,000 (net proceeds $2,989,460) for the secured convertible debenture. The Company and debenture-holders entered into a Forbearance and Settlement Agreement on December 29, 2006 because of default in debt service, whereby the Company agreed to make cash payment and to grant rights to the creditors to cashless purchase the Company’s common stock by exercising the warrant at 200,000 shares in every three month period beginning on December 29, 2006 according to the following payment plan:

Xinhua China Ltd.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

Payment Date	Cash Payment		Conversion of Debenture
March 10, 2007	$	250,000		250,000
September 30, 2007		375,000		375,000
October 31, 2007		375,000		375,000
January 31, 2008		250,000		250,000
July 31, 2008		625,000		625,000
	$	1,875,000		1,875,000

The Company paid $250,000 for the payment due March 10, 2007 and the debenture holders exercised 100,000 shares and 125,000 shares on March 1, 2007 and April 18, 2007, respectively. During the period ended March 31, 2010 and year ended June 30, 2009; the debenture holders converted 9,600,000 and 266,655,667 shares against outstanding loan at a total conversion price of $11,436 and $144,532, respectively.

~~Loans Payable outstanding as of March 31, 2010 amount to $2,537,736 of which $1,479,475 and $1,058,261 were attributed to current portion and long-term, respectively.~~19

Loans Payable outstanding as of ~~June~~September 30, ~~2009~~2010 amount to $2,~~549~~556,~~172~~336 of which $1,~~490~~498,~~911~~ 075 and $1,058,261 were attributed to current portion and long-term, respectively.

Loans Payable outstanding as of June 30, 2010 amount to $2,530,573 of which $1,472,311 and $1,058,261 were attributed to current portion and long-term, respectively.

8.	LOANS FROM SHAREHOLDERS

The total outstanding amount of $710,~~273~~401,~~608~~280 represents cash advanced from shareholders of the Company.

These shareholders’ loans are unsecured and not repayable within the next twelve months. For the period ended ~~March~~September 3130, 2010, there was $~~310~~109,~~236~~ 226 imputed interest, at 6.00% annum, recorded. For the year ended June 30, ~~2009~~2010, there was $~~342~~419,~~847~~775 imputed interest, at 6.00% per annum, recorded.

9.	COMMON STOCK AND WARRANTS

A.	Common Stock

During 2005, the authorized capital stock of the Company increased from $1,000 consisting of 100,000,000 shares of common stock of par value $0.00001 each to $5,000 consisting of 500,000,000 shares of common stock of par value $0.00001 each.

Xinhua China Ltd.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

Warrants

(1)

The Company completed a private placement in 2005 with certain individuals for 622,690 units at $3.25 per unit for total cash proceeds of $2,023,800. Each unit consists of one share of common stock and one-half of one non-transferable share purchase warrant. The warrant will expire on the earlier of:

(i) two years from the date of issuance; and (ii) fifteen business days from date that the Company provides notice in writing to the subscriber that the Company’s common shares have been trading or traded at a price of $7 or more for a period of ten days.

(i)	two years from the date of issuance; and
(ii)	fifteen business days from date that the Company provides notice in writing to the subscriber that the Company’s common shares have been trading or traded at a price of $7 or more for a period of ten days.

The warrant shares shall have an exercise price of $4.50 per warrant share for the first twelve months, and if still available after twelve months, the warrant shares shall have an exercise price of $4.60 per warrant share starting on the first day of the second twelve month period and increasing by $0.10 on the first day of each subsequent month thereafter until expiration of the warrants.

(2) Share purchase warrant issued from convertible debenture On December 13, 2005, the Company issued to the holder of the convertible debenture 1,035,000 warrants. One share purchase warrant is exercisable for one common share at $0.00001 per share, until expiration on November 22, 2010. As of September 30, 2010, zero shares of common stock were converted by the convertible debenture holders.

~~On December~~(3) ~~13,~~Share ~~2005,~~warrant ~~the~~issued ~~Company~~for ~~issued~~service toOn ~~the~~May ~~holder~~1, of2006, the ~~convertible~~Company ~~debenture 1~~issued 100,~~035,~~000 warrants at $1. ~~One~~47 per share ~~purchase~~to ~~warrant~~Mr. isPeter ~~exercisable~~Shandro, ~~for~~the ~~one common~~VP ~~share~~Business atStrategy ~~$0.00001~~of ~~per~~the ~~share~~Company, ~~until~~in ~~expiration~~association onwith ~~November~~the ~~22, 2010. As~~planning ofand ~~March~~execution ~~31,~~of ~~2010,~~the ~~374,911,400~~on-line ~~shares~~ecommerce initiative of ~~common~~the ~~stock~~Company. ~~have been~~Compensation ~~converted~~expense byof ~~the~~$94,775 ~~convertible~~was ~~debenture~~recorded ~~holders~~with atthe anissuance ~~aggregate~~of ~~amount~~these ~~of $533,168~~warrants.

~~(3)~~10. ~~Share~~STATUTORY ~~warrant issued for service~~RESERVES

On May 1, 2006, the Company issued 100,000 warrants at $1.47 per share to Mr. Peter Shandro, the VP Business Strategy of the Company, in association with the planning and execution of the on-line ecommerce initiative of the Company. Compensation expense of $94,775 was recorded with the issuance of these warrants.

10. CHINA CONTRIBUTION PLAN

Full-time employees of the Company are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a China government-mandated multi-employer defined contribution plan. The Company is required to accrue for these benefits based on certain percentages of the employees’ salaries. The total contributions made for such employee benefits were $65,457 and $53,457, for the period ended March 31, 2010 and the year ended June 30, 2009, respectively.

11. STATUTORY RESERVES

The Company is required to make appropriations to reserves funds, comprising the statutory surplus reserve, statutory public welfare fund and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the People’s Republic of China (the “PRC GAAP”). Appropriation to the statutory surplus reserve should be at least 10% of the after-tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the Company’s registered capital. Appropriation to the statutory public welfare fund is 10% of the after-tax net income determined in accordance with the PRC GAAP. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The statutory public welfare fund is established for providing employee facilities and other collective benefits to the employees and is non-distributable other than in liquidation. The Company made no appropriations to the statutory reserve, as it did not have a pre-tax profit.

2220

~~Xinhua China Ltd~~11. CONCENTRATION OF RISK

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

12. GAIN ON DEBT RESTRUCTURING

On December 29, 2006, the Company completed a debt restructuring with its Investors, namely Cornell Capital Partners, L.P. (“Cornell”) and Highgate House Funds, Ltd. (“Highgate”) under the Forbearance and Settlement Agreement (the “Forbearance and Settlement Agreement”). Pursuant to the Forbearance and Settlement Agreement, the Company agreed to make certain payments to the Investors, with respect to the Securities Purchase Agreement (the “Securities Purchase Agreement”) entered into between the Company and the Investors on November 23, 2005, as amended on March 23, 2006, on the convertible debentures in the amounts of $1,250,000 (to Highgate on November 23, 2005) and $2,000,000 (to Cornell on March 23, 2006) (the “Convertible Debentures”) in accordance with the terms and conditions set forth in the Forbearance and Settlement Agreement.

In accordance with the Forbearance and Settlement Agreement, the Company agrees to use the proceeds from the disposal of Boheng to repay the principal and interest due to the Investors under the Convertible Debentures in exchange for the Investors agreeing to:

(i) Waive on a one-time basis only any accrued liquidated damages owing to the Investors;

(ii) Not apply the redemption premium on the scheduled repayments;

(iii) Converting the Convertible Debentures in an amount equal to at least the amount of a scheduled repayment subject to certain conditions;

(iv) No additional liquidated damages accruing during the term of the Forbearance and Settlement Agreement;

(v) Permitting the Company to withdraw the Registration Statement filed on March 28, 2006 with the SEC in connection with the Convertible Debentures;

(vi) During the term of the Forbearance and Settlement Agreement, waiving the requirement for the Company to receive written consent of each Buyer for any organizational change (as defined in the Securities Purchase Agreement) to be directly or indirectly consummated by the Company, and that the company will not effectuate any stock splits for at least nine months without the consent of the Investors; and

(vii) Terminate the provisions for security shares as set forth in Section 9 of the Securities Purchase Agreement and in Section 2 of the Transfer Agent Instructions upon receipt by the Investors of the first scheduled repayment amount.

Xinhua China Ltd.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

As a result of the debt restructuring arrangement, the Company’s liabilities on warrants, conversions, discounts were discharged resulting to a net gain of $1,500,132 attributable as follows:

·	Liabilities on Conversion discharged	$ 2,334,198
·	Liabilities on Warrants discharged	891,537
·	Loans discharged	225,000
·	Unamortized discounts	(1,950,603)
		$ 1,500,132

13. CONCENTRATION OF RISK

(A). Major Customers and Vendors

100% of the Company’s revenues were derived from customers located in the PRC, and there are no customers and vendors who account for 10% or more of revenues and purchases. The Company’s assets are all located in the PRC.

(B). Credit Risk

There are no concentrations of credit risk because the Company, while in operation, entered into large number of cash sale transactions without deploying financial instruments, which may potentially drive to significant concentrations.

1412. ~~COMMITMENT~~LOSS ~~AND~~ON ~~CONTINGENCIES~~DISPOSAL OF SUBSIDIARIES

The Company ~~currently~~disposed ~~occupies~~its ~~two~~subsidiaries; ~~office~~namely, ~~premises~~Beijing ~~under~~Joannes ~~two~~Information ~~lease~~Technology ~~agreements indicated~~Co., asLtd. ~~Lease A~~ and ~~Lease B. Lease A leases an office premise located at Dongcheng District under a non~~Pac-~~cancelable~~Poly ~~operating~~Investment ~~lease for a term of three years from January 1, 2009 to December 31, 2011~~Ltd. ~~Lease~~ ~~B leases~~during anthe ~~office~~quarter ~~premise~~and ~~located~~resulted atin ~~Xuanwu District under~~ a ~~non-cancelable operating~~loss ~~lease for a term~~ of ~~two years from November 18, 2009 to November 17, 2011. The cost incurred under these operating leases are recorded as rental expense and totaled~~ $ 684,~~005 and $65~~118,~~944 for the period ended March 31~~173, ~~2010~~ ~~and~~which ~~year~~is ~~ended~~reflected ~~June~~in ~~30, 2009, respectively. Future minimum rental payments due according to~~ the ~~operating~~Income ~~leases until date of termination are as followed:~~Statement.

	Lease A	Lease B
Within one year	$ 17,579	$ 9,229
Within year two until termination	105,474	52,298
	$ 123,053	$ 61,527

13.	NET LOSS PER SHARE

Xinhua China Ltd.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended March 31, 2010

(Stated in US Dollars)

15. NET LOSS PER SHARE

Basic net loss per share is computed using the weighted average number of the ordinary shares outstanding during the year. Diluted net loss per share is computed using the weighted average number of ordinary shares and ordinary share equivalents outstanding during the year.

The following table sets forth the computation of basic and diluted net loss per share for the period indicated:

	For the three months ended		~~For the nine months ended~~
Basic and diluted net loss per share calculation:	~~March~~September 3130, 2010	~~March 31, 2009~~	~~March 31, 2010~~	~~March~~September 3130, 2009
(a). Numerator:
Net loss used in computing basic net loss per share	~~(300,995)~~	~~(244~~4,~~646)~~341,673	~~(826,598)~~	~~(2,204,872)~~	233,924
(b). Denominator:
Weighted-average ordinary shares outstanding	~~499,911,399~~	~~199~~499,~~873~~911,~~539~~400	~~498,689,581~~	~~199,873,539~~	496,259,226
Basic and diluted net loss per share	~~(.0006)~~$	(0.~~0012)~~0087	~~(.0017)~~	~~(.0110)~~$	0.0004

For the period ended ~~March~~September 3130, 2010 and 2009 in which the Company had a net loss, inclusion of warrants outstanding would have been anti-dilutive and therefore not included in the computation of diluted losses per share.

2514. DISCONTINUED OPERATION

During the quarter ended September 30, 2010, the Company ceased operation of its subsidiaries; namely, Beijing Joannes Information Technology Co., Ltd. and Pac-Poly Investment Ltd, which were eventually disposed of before the quarter ended. Their operation results, net of tax effect are reported in detail as follow:

Results of Operations
for the three months ended
September 30, 2010
	Beijing Joannes		Pac Poly Investment Ltd.		Total
Revenue		-		-		-
Cost of revenue		-		-		-
Gross profit		-		-		-

Selling expenses		-		-		-
General and administrative expenses		64,086		7,000		71,086
Total operating expenses		64,086		7,000		71,086

Other income		-		-		-
Interest income		-		-		-
Other expense		-		-		-
Interest expense		-		-		-

Earnings/(Losses) before tax		64,086		7,000		71,086
Income tax		-		-		-
Minority interest income		-		-		-
		64,086		7,000		71,086

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BUSINESS DEVELOPMENT

Xinhua China Ltd. was incorporated September 14, 1999 under the laws of the State of Nevada as Camden Mines Limited (“Camden”). On October 12, 2004, Camden changed its name from “Camden Mines Limited” to its current corporate name “Xinhua China Ltd.” We have certain digital media distribution and related rights in "China" where we mostly operate and seek to pursue our business. We are in the development stage seeking to grow our company.

~~Current~~ Disposal of Subsidiaries

Pac-Poly Investments Limited

On September 14, 2004, we signed two separate share purchase agreements (collectively, the “Share Purchase Agreements”), whereby we issued 35,000,000 shares of our restricted common stock in exchange for a 100% interest in Pac-Poly Investments Limited, a company incorporated under the laws of the International Companies Business Act Cap 291 of British Virgin Islands (“Pac-Poly”), and a 95% interest in Beijing ~~Boheng~~Joannes ~~Investments~~Information ~~Limited,~~Technology ~~a company incorporated under the laws of China (“Beijing Boheng”), respectively~~Co. ~~The~~ ~~shareholders of Pac-Poly and Beijing Boheng received 16,387,000 and 18,613,000 shares of our restricted common stock, respectively~~Ltd. In accordance with the terms and provisions of the Share Purchase Agreement, one of our shareholders returned to us 35,000,000 shares of common stock held of record by such shareholder and the shares were cancelled and returned to treasury. Immediately prior to consummation of the respective Share Purchase Agreements, Pac-Poly and Beijing Boheng were under common control. Subsequently, Beijing Boheng spun off all of its business and net assets to its president and became a non-operating shell company. Pac-Poly had no significant operations since its inception.

AsDuring of the ~~date~~ ofthree ~~this~~month ~~Quarterly~~period ~~Report,~~ended weSeptember ~~hold~~30, ~~of record 10~~2010,~~000,000~~ ~~shares~~we disposed of ~~common stock~~our ~~at $1.00 par value~~subsidiaries, ~~which~~Pac-Poly ~~constitutes~~Investments ~~100%~~Limited ofand ~~the~~Beijing ~~total~~Joannes ~~issued~~Information ~~and outstanding~~Technology ~~shares of Pac-Poly~~Co. ~~Therefore~~Ltd., ~~Pac-Poly~~which isresulted ~~our~~in ~~wholly-owned subsidiary.~~a ~~Pac-Poly~~loss isof ~~an investment holding company~~$4,118,173.

Beijing Joannes Information Technology Co. Lt.

On May 9, 2006, we formed Beijing Joannes Information Technology Co. Lt. (“Beijing Joannes”), as our Chinese wholly owned subsidiary, to launch a digital media content initiative. We hold of record 100% of the total issued and outstanding shares of Beijing Joannes. Beijing Joannes was formed for the purpose of launching a digital media content initiative with the web site branded www.geepip.com. The business focus is building online communities with connectivity to an ecommerce engine, which allows for the online purchase of e-books, e-audio, and computer games. Hard copies of books can also be purchase through the portal. A unique customer loyalty program and digital redemption or trade-in strategy will be a market differentiator.

As of the date of this Quarterly Report, we hold of record 1,250,000 shares of common stock at $1.00 par value, which constitutes 100% of the total issued and outstanding shares of Beijing Joannes. Therefore, Beijing Joannes is our wholly-owned subsidiary.

RECENT BUSINESS OPERATIONS

We are a company establishing ourselves as a leader in the digital media industry. We have refocused our strategic business operation plans to maximize our strategic position in the publishing industry. We believe that we will be able to establish ourselves as a leader in the digital media industry. In accordance with our refocused strategic plan, we intend to enter into certain contractual relationships.

We are subject to many risks and there is no assurance of success in our plans.

RESULTS OF OPERATION

The summarized consolidated financial data set forth in the tables below and discussed in this section should be read in conjunction with our consolidated financial statements and related notes for the six month period ended December 31, 2009 and 2008, which financial statements are included elsewhere in this Quarterly Report.

	For Nine Month Period Ended March 31, 2010 (unaudited)	For Nine Month Period Ended March 31, 2009 (unaudited)
Revenue
Net revenue	-0-	-0-
Cost of Sales	-0-	-0-
Gross Profit	-0-	-0-
Operating Expenses
Selling, general and administrative expenses	$477,634	$483.491
Operating Income (loss)	(477,634)	(483,491)
Other Income (Expenses)
Other income	-0-	-0-
Interest income	442	50
Gain on debt restructuring	-0-	73,427
Interest expense	(349,406)	(349,380)
Impairment loss on Boheng	-0-	(1,625,000)
Net Loss	(826,598)	(2,204,872)

	For Three Month Period Ended September 30, 2010 (unaudited)	For Three Month Period Ended September 30, 2009 (unaudited)
Revenue
Net revenue	-0-	-0-
Cost of Sales	-0-	-0-
Gross Profit	-0-	-0-

Operating Expenses
Selling, general and administrative expenses	$30,000	$129,019
Operating Income (loss)	(30,000)	(129,019)

Other Income (Expenses)
Other income	-0-	-0-
Interest income	-0-	8
Interest expense	122,414	104,913
Loss on disposal of subsidiaries	4,118,173	-0-
Loss Before Income Tax	(4,270,587)	(233,924)
Discontinued Operations net of tax	(71,086)	-0-
Net Loss	(4,341,673)	(233,924)

RESULTS OF OPERATION

For ~~Nine~~ Three Month Period Ended ~~March~~September 3130, 2010 Compared to ~~Nine~~Three Month Period Ended ~~March 31~~September 30, 2009.

Revenues and Gross Margin and Cost of Sales

We had net sales of $-0- for both ~~nine~~three month periods ended ~~March~~September 3130, 2010 and ~~March~~September 3130, 2009.

Operating Expenses

Our total operating expenses were $~~477~~30,~~634~~000 for the ~~nine~~three month period ended ~~March~~September 3130, 2010 as compared to total operating expenses of $~~483~~129,~~491~~019 for the ~~nine~~three month period ended ~~March~~September 3130, 2009. The decrease in operating expenses during the ~~nine~~three month period ended ~~March~~September 3130, 2010 as compared to the ~~nine~~three month period ended ~~March~~September 3130, 2009 was due to a decrease in a variety of expenditures relating to our ongoing restructuring efforts. During the ~~nine~~three month period ended ~~March~~September 3130, 2010, our selling, general and administrative expenses consisted of: (i) legal and professional fees of $~~30,322~~ -0-(2009: $3716,~~426~~783); (ii) office expenses of $~~12,061~~ -0-(2009: $21,~~652~~664); (iii) salaries and benefits of $~~171,020~~ -0-(2009: $~~113~~51,~~641~~900); (iv) management fees of $9030,000 (2009: $~~150~~30,000); (v) vehicle expense of $~~22,300~~ -0-(2009: $~~2,797~~187); and (vii) other expenses of $~~15,863~~ -0-(2009: $8828,485).

Selling, general and administrative expenses primarily increased based on a reorganization of our subsidiaries and personnel following the move to relocate our office.

Interest Expense

We incurred $~~349~~122,~~406~~414 in interest expense during the ~~nine~~three month period ended ~~March 31~~September 30, 2010 as compared to $~~349~~104,~~380~~913 incurred as interest expense during the ~~nine~~ three month period ended ~~March~~September 3130, 2009. Interest expense of $~~349~~122,~~406~~414 incurred during the ~~nine~~three month period ended ~~March~~September 3130, 2010 consisted of: ~~(i)~~ $~~-0-~~122,414 (2009: $~~-0-) in interest expense from the amortization of note receivable; and (ii) $310~~104,~~236 (2009: $253,923~~913) imputed interest charged on loans from related parties.

Interest Income

During the ~~nine~~three month period ended ~~March~~September 3130, 2010, we also recorded $~~442~~-0- (2009: $508) in interest income.

Gain on Debt Restructuring and Writing Off Accounts Payable

During the nine month period ended March 31, 2010, we did not record any gain on debt restructuring as compared to $73,427 recorded during the nine month period ended March 31, 2009. During the nine month period ended March 31, 2010, we did not record any gain from writing off accounts payable as compared to $179,621 recorded during the nine month period ended March 31, 2009.

28Loss on Disposal of Subsidiaries

~~Impairment~~During ~~Loss~~the onthree ~~Boheng~~ month period ended September 30, 2010, we disposed of our subsidiaries, Beijing Joannes Information Technology Co., Ltd. and Pac-Poly Investment~~/Other~~ ~~Income~~Ltd., which resulted in a loss of $4,118,173.

~~During~~ Therefore, our net loss during the ~~nine~~three month period ended ~~March~~September 3130, 2010, wewas ~~did~~($4,341,673) ~~not~~or ~~record~~($0.0087) anper ~~impairment~~share ~~loss on as~~ compared to ana ~~impairment~~net loss of ~~Boheng~~($233,924) ~~investment~~or of ($~~1,625,000~~0.0004) ~~recorded~~ per share incurred during the ~~nine~~three month period ended ~~March~~September 3130, 2009. AsThe asubstantial ~~result~~increase ofin ~~the termination~~net byloss ~~the~~during ~~purchaser of~~ the ~~acquisition~~three ofmonth ~~Beijing~~period ~~Boheng~~ended ~~Investments and~~September ~~Management Co.~~30, ~~Ltd.,~~2010 ~~we repossessed Boheng as our 95% interest subsidiary on August 25, 2008 at a value of $1,625,000, which~~ was ~~equal~~due primarily to the ~~unpaid purchase~~loss ~~price~~on ~~due by~~ the ~~purchaser.~~disposal ~~After the repossession~~ of ~~Boheng, we conducted an evaluation of~~ our ~~carrying~~subsidiaries ~~value and determined that an impairment loss in the amount~~ of $14,~~625~~118,~~000~~173 ~~was~~recorded ~~incurred~~during ~~although Boheng still owns a 7.98% equity interest in Xinhua C&D. This impairment loss was accordingly reflected in~~ the ~~income~~three ~~statement~~month ~~for~~period ~~fiscal year~~ ended ~~December~~September 3130, ~~2008~~ 2009.

Therefore, our net loss during the nine month period ended March 31, 2010 was ($826,598) or ($0.0017) per share compared to a net loss of ($2,204,872) or ($0.0110) per share incurred during the nine month period ended March 31, 2009. The decrease in net loss during the nine month period ended March 31, 2010 was due primarily to the impairment loss on Boheng investment recorded during the nine month period ended March 31, 2009.

For Three Month Period Ended March 31, 2010 Compared to Three Month Period Ended March 31, 2009.

Revenues and Gross Margin and Cost of Sales

We had net sales of $-0- for both three month periods ended March 31, 2010 and March 31, 2009.

Operating Expenses

Our total operating expenses were $181,241 for the three month period ended March 31, 2010 as compared to total operating expenses of $145,682 for the three month period ended March 31, 2009. The increase in operating expenses during the three month period ended March 31, 2010 as compared to the three month period ended March 31, 2009 was due to an increase in a variety of expenditures relating to our restructuring efforts. During the three month period ended March 31, 2010, our selling, general and administrative expenses consisted of: (i) legal and professional fees of $9,170 (2009: $16,143); (ii) office expenses of $6,502 (2009: $825); (iii) salaries and benefits of $66,443 (2009: $66,473); (iv) management fees of $30,000 (2009: $30,000); (v) vehicle expense of $9,391 (2009: $2,546); and (vii) other expenses of $6,304 (2009: $88).

Interest Expense

We incurred $120,156 in interest expense during the three month period ended March 31, 2010 as compared to $98,971 incurred as interest expense during the three month period ended March 31, 2009. Interest expense of $120,156 incurred during the three month period ended March 31, 2010 consisted of $120,156 (2009: $98,971) imputed interest charged on loans from related parties.

Therefore, our net loss during the three month period ended March 31, 2010 was ($300,995) compared to a net loss of ($244,646) incurred during the three month period ended March 31, 2009. The increase in net loss during the three month period ended March 31, 2010 was due primarily to the increase in costs associated with our ongoing restructuring efforts.

LIQUIDITY AND CAPITAL RESOURCES

~~Nine~~ Three Month Period Ended ~~March~~September 3130, 2010

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

As at the ~~nine~~ three month period ended ~~March~~September 3130, 2010, our current assets were $~~774~~23,~~893~~000 and our current liabilities were $1,~~976~~639,~~959~~578, resulting in a working capital deficit of $1,~~202~~616,~~066~~578. As at the ~~nine~~three month period ended ~~March~~September 3130, 2010, current assets were comprised of: ~~(i)~~ $~~473~~30,~~218~~000 in ~~cash and cash equivalents; (ii) $73,880 in net accounts receivable; and (iii) $227,795 in~~ other receivables and prepayments. As at the ~~nine~~three month period ended ~~March~~September 3130, 2010, our current liabilities were comprised of: (i) $~~497~~141,~~484~~503 in accounts payable and accrued liabilities; and (ii) $1,~~479~~498,~~475~~075 in current portion of loans payable. See “ – Material Commitments.”

As at the nine month period ended March 31, 2010, our total assets were $955,164 comprised of: (i) $774,893 in current assets; (ii) $141,011 in net property, plant and equipment; and (iii) $39,260 in net intangible assets. The increase in total assets during the nine month period ended March 31, 2010 from fiscal year ended September 30, 2009 was primarily due to an increase in cash and an increase in the valuation of our net property, plant and equipment and intangible assets.24

As at the ~~nine~~ three month period ended ~~March~~September 3130, 2010, our total ~~liabilities~~assets were $1023,~~308,828~~ 000 comprised entirely of: ~~(i) $1,976,959 in~~ current ~~liabilities; (ii) $1,058,261 in loans payable; and (iii) $7,273,608 in loans from shareholders~~assets. The ~~increase~~decrease in total ~~liabilities~~ assets during the ~~nine~~three month period ended ~~March~~September 3130, 2010 from fiscal year ended June 30, ~~2009~~2010 was primarily due to the ~~increase~~decrease in ~~loans~~valuation ~~from shareholders~~of long term assets, including property, plant and equipment and a decrease in current assets, including cash and cash equivalents and other receivables and prepayments.

~~Stockholders’ deficit~~As ~~increased~~at ~~from~~the (three month period ended September 30, 2010, our total liabilities were $813,~~848~~099,~~570)~~119 ~~for~~comprised ~~June~~of: 30(i) $1,539,378 ~~2009~~in tocurrent liabilities; (ii) $91,~~353~~058,~~664~~261 in loans payable; and (iii) ~~for~~$10,401,280 ~~March 31~~in loans from shareholders. The slight decrease in total liabilities during the three month period ended September 30, 2010 from fiscal year ended June 30, 2010 was primarily due to the decrease in current liabilities, primarily including accounts payable and accrued liabilities.

Stockholders’ deficit increased from ($12,423,340) for June 30, 2010 to ($13,076,119) for September 30, 2010.

Operating Activities

We have not generated positive cash flows from operating activities. For the ~~nine~~three month period ended ~~March~~September 3130, 2010, net cash flow used in operating activities was ($~~757~~4,~~821~~786,751) compared to net cash used operating activities of ($2166,~~009,328~~883) during the ~~nine~~three month period ended ~~March~~September 3130, 2009. Net cash flow from operating activities during the ~~nine~~three month period ended ~~March~~September 3130, 2010 consisted primarily of a net loss of ($~~826~~4,~~598~~341,673) ~~adjusted~~changed by ~~$17,872 in depreciation and $348,404 in imputed interest expense. Further changes in assets and liabilities consisted of~~ a decrease of $~~348~~7,000 in accounts receivable and an increase of $3452,~~139~~079 in ~~other receivables and prepayments and $294,709 in~~ accounts payable and accrued liabilities.

Net cash flow from operating activities during the ~~nine~~three month period ended ~~March~~September 3130, 2009 consisted primarily of a net loss of ($2233,~~204,873~~924) adjusted by $163,~~156~~856 in depreciation and $~~310~~104,~~833~~708 in imputed interest expense. Further changes in assets and liabilities consisted of ~~a decrease of $337,765 in accounts receivable and~~ an increase of $~~812 in other receivables and prepayments~~41,523 ~~$463,812~~ in accounts payable and accrued liabilities ~~and $18,355 in deferred revenue~~.

Investing Activities

During the ~~nine~~three month period ended ~~March~~September 3130, 2010, net cash flow used in investing activities was ($~~142~~1,~~924)~~998,464 compared to net cash flow ~~sourced~~used ~~from~~in investing activities of $~~1,625,000~~-0- ~~in loss on impairment of asset~~ for the ~~nine~~three month period ended ~~March~~September 3130, 2009. The net cash flow used in investing activities of ( $~~142~~1,~~924)~~998,464 during the ~~nine~~three month period ended ~~March~~September 3130, 2010 consisted of: ~~(i)~~ $211,~~235 in purchase of leasehold improvements~~998,464 ~~(ii) $82,429~~ in ~~purchase~~disposal of ~~plant and equipment; and (iii) $39,260 in purchase of intangible assets relating to our ongoing restructuring efforts~~subsidiaries.

Financing Activities

During the ~~nine~~three month period ended ~~March~~September 3130, 2010, net cash flow provided by financing activities was $12,~~328~~788,~~186~~288 compared to net cash flow provided by financing activities of $~~370~~133,~~800~~236 for the ~~nine~~three month period ended ~~March~~September 3130, 2009. Net cash flow provided from financing activities during the ~~nine~~three month period ended ~~March 31~~September 30, 2010 pertained primarily to $12,~~328~~660,~~186~~462 received as loan from shareholders compared to $~~414~~133,~~472~~236 received as loan from shareholders during the ~~nine~~three month period ended ~~March~~September 3130, 2009.

PLAN OF OPERATION

The local and regional distribution business for books is competitive and fragmented in the People’s Republic of China. Estimates range up to 500 as to the number of entrants in this field. It is our plan that economy of scale, relationships with Chinese publishers and also with sub-distributors and retailers and our nationwide scope which allows us the flexibility to distribute books in any region will assist us in maintaining and enhancing our competitive position.

Our goal is to expand our business to include electronic sales, delivery and distribution of media contents. We also plan to partner with foreign publishers to provide foreign media contents in China. We seek to achieve our goal on a national scale to maximize opportunities in one of the largest and fastest growing economies in the world.

To execute on our strategy to become a digital media company we formed our new subsidiary, Beijing Joannes. Beijing Joannes is intended to be our digital media company and it is expected to distribute all digital content ~~for Xinhua C&D and others~~. Beijing Joannes has anticipated in operating its business to consumer (B2C) e-commerce portal as www.geezip.com, and expects to allow customers to purchase electronic and hard copies of books on-line.

We expect to also establish a co-publishing company which anticipates on co-publishing agreements with both domestic and foreign publishers, publishing both hard copy and digital works.

Existing working capital, further advances and possible debt instruments, warrant exercises, further private placements, monetization of existing assets, and anticipated cash flow are expected to be adequate to fund our operations over the next two months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt securities and loans from our shareholders. In connection with our business plan, management will delay additional increases in operating expenses and capital expenditures. We intend to utilize our best efforts to settle current finance accounts payables and liabilities with further issuances of securities, debt and or advances, monetization of existing assets, and revenues from operations. We will need to raise additional capital and increase revenues to meet both short term and long-term operating requirements.

We have undertaken certain actions and continue to implement changes designed to improve our financial results and operating cash flows. The actions involve certain cost-saving initiatives and growing strategies, including: (i) reductions in headcounts and corporate overhead expenses; and (ii) continue to develop e-commerce business through Beijing Joannes. We believe that these actions will enable us to improve future profitability and cash flow in our continuing operations through June 30, ~~2010~~2009. Furthermore, the restructure of debt pertaining to Cornell and Highgate has been advantageous to our over financial outlook. Ultimately, we have released the burden on cash flow for further contribution and intend to put our resources in co-publishing and e-commerce business opportunities.

The report of the independent registered public accounting firm that accompanies our June 30, 2009 and June 30, 2008 consolidated financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The consolidated financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.26

The report of the independent registered public accounting firm that accompanies our June 30, 2010 and June 30, 2009 consolidated financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The consolidated financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.

MATERIAL COMMITMENTS

Loans Payable/Convertible Debenture

During ~~2009~~ 2010/1011, a material commitment for us relates to the Forbearance and Settlement Agreement with Cornell and Highgate. On December 29, 2006, we completed the debt restructuring with Cornell and Highgate under the Forbearance and Settlement Agreement. Pursuant to the Forbearance and Settlement Agreement, we agreed to make certain payments to Cornell and Highgate with respect to the Securities Purchase Agreement previously entered into by us with Cornell and Highgate dated November 23, 2005 and amended on March 23, 2006, and the two convertible debentures in the amounts of $1,250,000 to Highgate dated November 23, 2005 and $2,000,000 to Cornell dated March 23, 2006 (collectively, the “Convertible Debentures”) in accordance with the terms and conditions set forth in the Forbearance and Settlement Agreement.

In further accordance with the Forbearance and Settlement Agreement, we agreed to use the proceeds from the disposal of Beijing Boheng to repay the principal and interest due to Cornell and Highgate under the Convertible Debentures in exchange for the agreement of Cornell and Highgate to: (i) waive on a one-time basis only any accrued liquidated damages owing to Cornell and Highgate; (ii) no application of the redemption premium on the scheduled repayments; (iii) conversion of the Convertible Debentures in an amount equal to at least the amount of a scheduled repayment subject to certain conditions; (iv) no additional liquidated damages accruing during the term of the Forbearance and Settlement Agreement; (v) permitting us to withdraw the registration statement filed on March 28, 2006 with the Securities and Exchange Commission in connection with the Convertible Debentures; (vi) during the term of the Forbearance and Settlement Agreement, waiving the requirement for us to receive written consent of Cornell and Highgate for any organizational change (as defined in the Securities Purchase Agreement) to be directly or indirectly consummated by us, and that we will not effectuate any stock splits for at least nine months without the consent of Cornell and Highgate; and (vii) terminating the provisions for security shares as set forth in Section 9 of the Securities Purchase Agreement and in Section 2 of the transfer agent instructions upon receipt by Cornell and Highgate of the first scheduled repayment amount.

The payment plan under the Forbearance and Settlement Agreement is as follows:

Payment Date	Cash Payment		Conversion of Debenture
March 10, 2007	$	250,000		250,000
June 30, 2007		375,000		375,000
October 31, 2007		375,000		375,000
January 31, 2008		250,000		250,000
July 31, 2008		625,000		625,000
	$	1,875,000		1,875,000

As of June 30, 2007, we paid $250,000 for the payment due March 10, 2007 and issued 100,000 shares and 125,000 shares of our common stock on March 1, 2007 and April 18, 2007, respectively, pursuant to exercise rights. During fiscal year ended June 30, 2009 and the six month period ended December 31, 2009, Cornell and Highgate converted an aggregate of 9,600,000 and 266,655,667 shares, respectively, against the outstanding amount at a total conversion price of $11,436 and $144,532, respectively. Loan payable outstanding as of March 31, 2010 aggregated $2,537,736 of which $1,479,475 and $1,058,261 were attributed to current portion and long-term portion, respectively.27

As of June 30, 2007, we paid $250,000 for the payment due March 10, 2007 and issued 100,000 shares and 125,000 shares of our common stock on March 1, 2007 and April 18, 2007, respectively, pursuant to exercise rights. During fiscal years ended June 30, 2009 and June 30, 2008, Cornell and Highgate converted an aggregate of 266,655,668 and 44,016,843 shares, respectively, against the outstanding amount at a total conversion price of $144,532 and $152,200, respectively. During fiscal year ended June 30, 2010, Cornell and Highgate converted an aggregate of 9,600,000 shares against the outstanding amount at a total conversion price of $11,436. As at September 30, 2010, loans payable outstanding was $2,556,336 of which $1,498,075 and $1,058,261 were attributed to current portion and long-term portion, respectively.

LOANS FROM SHAREHOLDERS

During fiscal year ~~2009~~2010/1011, a material commitment for us relates to the loans from shareholders. The outstanding amount of $710,~~273~~176,~~608~~526 represents cash advanced to us from our shareholders. These shareholder loans are unsecured, interest-free and not repayable within the next twelve months. For fiscal ~~year~~years ended June 30, 2010 and June 30, 2009, we calculated imputed interest expense of $~~342~~419,~~847~~775 ~~in relation to interest-free shareholders loans at its effective interest rate~~ and ~~accounted for it in the consolidated financial statements. For the nine month period ended March 31~~$342, ~~2010~~847, ~~we calculated imputed interest expense of $310~~respectively,~~236~~ in relation to interest-free shareholders loans at its effective interest rate and accounted for it in the consolidated financial statements. During fiscal year ended June 30, 2009, the shareholders converted an aggregate of 125,000,000 shares against the shareholders’ loan at a total conversion price of $12,500. As at September 30, 2010, there was $109,226 imputed interest at 6.00% per annum recorded.

33PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any significant equipment during the next twelve months.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse change in foreign currency and interest rates.

Exchange Rate

Our reporting currency is United States Dollars (“USD”). The Chinese Renminbi (“RMB”) has been informally pegged to the USD. However, China is under international pressure to adopt a more flexible exchange rate system. If the RMB were no longer pegged to the USD, rate fluctuations may have a material impact on the Company’s consolidated financial reporting and make realistic revenue projections difficult. Recently (July 2005) the Renminbi was allowed to rise 2%. This has not had an appreciable effect on our operations and seems unlikely to do so.

As Renminbi is the functional currency of Joannes and Boheng, the fluctuation of exchange rates of Renminbi may have positive or negative impacts on the results of operations of the Company. However, since all sales revenue and expenses of these two subsidiary companies are denominated in Renminbi, the net income effect of appreciation and devaluation of the currency against the US Dollar will be limited to the net operating results of the subsidiary companies attributable to us.

Interest Rate

Interest rates in China are low and stable and inflation is well controlled, due to the habit of the population to deposit and save money in the banks (among with other reasons, such as the People’s Republic of China’s perennial balance of trade surplus). Our loans relate mainly to trade payables and are mainly short-term. However our debt is likely to rise with physical plant in connection with expansion and, were interest rates to rise at the same time, this could become a significant impact on our operating and financing activities.

We have not entered into derivative contracts either to hedge existing risks or for speculative purposes.

ITEM 4. CONTROLS AND PROCEDURES

FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES

~~We maintain~~An ~~disclosure~~evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer/Chief Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2010. Based on that evaluation, our ~~are~~Chief ~~designed~~Executive Officer/Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in ~~our~~the reports that ~~filed~~we file or submit under the ~~Securities~~ Exchange Act ~~of 1934~~, ~~as amended,~~ is recorded, processed, summarized and reported within the time periods specified in ~~the~~SEC ~~Securities~~rules and ~~Exchange~~forms. ~~Commission's~~Such ~~rules~~officers ~~and forms,~~also ~~and~~confirmed that ~~such~~there ~~information~~was isno ~~accumulated~~change ~~and~~in ~~communicated to~~ our ~~management,~~ ~~including~~internal control ~~our~~over financial reporting during ~~president~~the ~~(also~~year ~~our~~ended ~~principal~~September ~~executive officer) and our secretary~~30, ~~treasurer~~2010 ~~and~~that ~~chief~~has ~~financial~~materially ~~officer~~affected, ~~(also~~or ~~our~~is ~~principal financial~~reasonably ~~and~~likely ~~accounting~~to ~~officer)~~materially toaffect, ~~allow~~our ~~for~~internal ~~timely~~control ~~decisions~~over ~~regarding required~~financial ~~disclosure~~reporting.

34We maintain "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated toour management, including our Chief Executive Officer/Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the "Evaluation"), under the supervision and with the participation of our Chief Executive Officer / Chief Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures ("Disclosure Controls") as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. The evaluation of our disclosure controls and procedures included a review of the disclosure controls' and procedures' objectives, design, implementation and the effect of the controls and procedures on the information generated for use in this report. In the course of our evaluation, we sought to identify data errors, control problems or acts of fraud and to confirm the appropriate corrective actions, if any, including process improvements, were being undertaken. Our Chief Executive Officer/Chief Financial Officer concludedth at,as of the end of the period covered by this report, our disclosure controls and procedures were effective and were operating at the reasonable assurance level.

As of March 31, 2010, the end of our second quarter covered by this Quarterly Report, we carried out an evaluation, under the supervision and with the participation of our president (also our principal executive officer and our principal financial and accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (also our principal executive officer and chief financial officer also our principal financial and accounting officer) concluded that our disclosure controls and procedures were effective in providing reasonable assurance in the reliability of our financial reports as of the end of the period covered by this Quarterly Report.29

~~Inherent limitations~~Our onmanagement ~~effectiveness~~is responsible for establishing and maintaining adequate control over financial reporting (as defined in Rules 13a-15(f) promulgated under the Exchange Act. The term internal control over financial reporting is defined as a process designed by, or under the supervision of, ~~controls~~the issuer's principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

~~Internal control~~1. ~~over~~Pertain ~~financial reporting has inherent limitations which include but is not limited~~ to the ~~use~~maintenance of ~~independent~~records ~~professionals~~that for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in ~~judgment~~reasonable ~~and~~detail ~~breakdowns~~accurately resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and itfairly isreflect ~~possible to design into~~ the ~~process~~transactions ~~safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation~~ and ~~presentation.~~ ~~Projections~~dispositions of ~~any evaluation of effectiveness to future periods are subject to~~ the ~~risk~~assets ~~that controls may become inadequate because~~ of ~~changes in conditions, or that~~ the ~~degree of compliance with the policies or procedures may deteriorate.~~issuer;

~~Changes~~ 2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in ~~Internal~~accordance ~~Control~~with ~~over~~generally ~~Financial~~accepted ~~Reporting~~accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and

~~There have~~3. ~~been~~Provide noreasonable ~~significant~~assurance ~~changes~~regarding inprevention ~~our~~or ~~internal~~timely ~~controls~~detection ~~over~~of ~~financial reporting~~unauthorized ~~that~~acquisition, ~~occurred~~use ~~during~~or ~~the~~disposition ~~quarter~~of ~~ended~~the ~~March~~issuer's ~~31,~~assets ~~2010~~ that could have ~~materially~~ ora ~~are~~material ~~reasonably~~effect ~~likely~~on tothe ~~materially affect, our internal controls over~~ financial ~~reporting~~statements.

Our management, including our chief executive officer and chief financial officer, does expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Our management, with the participation of the chief executive officer and chief financial officer, assessed the effectiveness of our internal control over financial reporting as of September 30, 2010. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in INTERNAL CONTROL-INTEGRATED FRAMEWORK. Our management has concluded that, as of September 30, 2010, our internal control over financial reporting is effective.

This Quarterly Rport does not include an attestation report of our 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 Annual Report.

Audit Committee

Our Board of Directors has not established an audit committee. The respective role of an audit committee has been conducted by our Board of Directors. We are contemplating establishment of an audit committee during fiscal year 2010. When established, the audit committee's primary function will be to provide advice with respect our financial matters and to assist our Board of Directors in fulfilling its oversight responsibilities regarding finance, accounting, and legal compliance. The audit committee's primary duties and responsibilities will be to: (i) serve as an independent and objective party to monitor our financial reporting process and internal control system; (ii) review and appraise the audit efforts of our independent accountants; (iii) evaluate our quarterly financial performance as well as its compliance with laws and regulations; (iv) oversee management's establishment and enforcement of financial policies and business practices; and (v) provide an open avenue of communication among the independent accountants, management and our Board of Directors.

ITEM 4T. CONTROLS AND PROCEDURES

Not applicable.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDING

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. None of our directors, officers or affiliates are (i) a party adverse to us in any legal proceedings, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

ITEM 1A. RISK FACTORS

Not applicable.

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

~~CORNELL CAPITAL~~No ~~PARTNERS~~report ~~LP/HIGHGATE HOUSE FUNDS LTD~~necessary.

We previously entered into a forbearance and settlement agreement (the “Forbearance and Settlement Agreement”) with Cornell Capital Partners LP (“Cornell”) and Highgate House Funds, Ltd. (“Highgate”). On December 29, 2006, we completed a debt restructuring with Cornell and Highgate under the Forbearance and Settlement Agreement. Pursuant to the Forbearance and Settlement Agreement, we agreed to make certain payments to Cornell and Highgate with respect to the Securities Purchase Agreement previously entered into by us with Cornell and Highgate dated November 23, 2005 and amended on March 23, 2006, and the two convertible debentures in the amounts of $1,250,000 to Highgate dated November 23, 2005 and $2,000,000 to Cornell dated March 23, 2006 (collectively, the “Convertible Debentures”) in accordance with the terms and conditions set forth in the Forbearance and Settlement Agreement.

The payment plan under the Forbearance and Settlement Agreement is as follows:

Payment Date		Cash Payment	Conversion of Debenture
March 10, 2007	$	250,000	250,000
June 30, 2007		375,000	375,000
October 31, 2007		375,000	375,000
January 31, 2008		250,000	250,000
July 31, 2008		625,000	625,000
	$	1,875,000	1,875,000

As of March 31, 2008, we paid $250,000 for the payment due March 10, 2007 and issued 100,000 shares of our common stock on March 1, 2007 and 125,000 shares on April 18, 2007, respectively, pursuant to exercise rights. The scheduled payments of $375,000 due on September 30, 2007 and October 31, 2007, respectively, were not paid as of March 31, 2008.

During the nine month period ended March 31, 2010 and fiscal year ended June 30, 2009, an aggregate of 9,600,000 and 266,655,667 shares, respectively, of our common stock were issued pursuant to conversion of the debt at a total conversion price of $11,436 and $144,532.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. REMOVED AND RESERVED

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this Quarterly Report:

Exhibit

31.1		Certification under Rule 13a-14(a).
31.2		Certification under Rule 13a-14(a).
32.1		Certification under Section 1350.
32.2		Certification under Section 1350.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly

authorized.

	XINHUA CHINA LTD.
Dated: May 17, 2010	By: /s/ XIANPING WANG
Dated: November 22, 2010	By:	/s/XIANPING WANG
	Xianping Wang
		Xianping Wang, President/Chief
	President/Chief Executive Officer
		Executive Officer
Dated: May 17, 2010	By: /s/ XIANPING WANG
Dated: November 22, 2010	By:	/s/ XIANPING WANG
	Xianping Wang
		Xianping Wang, Acting as Interim Chief
	Acting as Interim Chief Financial Officer
		Financial Officer

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