UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

FORM 10-K

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

For the fiscal year ended December 31, 2008

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 000-51516

UNIVERSAL TRAVEL GROUP

(Exact name of registrant as specified in its charter)

Nevada	90-0296536
State or other jurisdiction of Incorporation or organization	(I.R.S. Employer Identification No.)

2008 Shennan Road, Hualian Center, Room 301-309, Shenzhen, The People’s Republic of China

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code 011-86- 755-836-68489

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

Title of each class		Name of each exchange on which registered

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

Common Stock, $0.001 par value per share

Preferred Stock, $0.001 par value per share

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes x No

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

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

o Yes x No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

Note.—If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided that the assumptions are set forth in this Form.

The aggregate market value of the voting and non-voting common stock of the issuer held by non-affiliates as of March 12, 2009 was approximately $16,538,602.94 (24,684,482 shares of common stock) based upon the closing price of the common stock as quoted by Nasdaq OTC Bulletin Board on such date.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. o Yes o No

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

As of March 12, 2009, there are presently 41,619,966 shares of common stock, par value $0.001 issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).

PART I

Item 1. Business.

History and Organization

We were incorporated on January 28, 2004, pursuant to the laws of the state of Nevada.

On March 15, 2006, we entered into an Acquisition Agreement and Plan of Merger (the "Acquisition Agreement") with TAM of Henderson, Inc. ("TAM"), whereby TAM acquired all of our outstanding shares of Common Stock from our then sole stockholder and simultaneously merged with and into the Company, with the Company as the surviving corporation.

On June 20, 2006, Mr. Xiao Jun ("Jun"), our former officer and director, acquired from the then-majority-shareholder of our Company 8,000,000 shares of our Common Stock, for an aggregate purchase price of $435,000 (the "Stock Transaction"). After giving effect to such acquisition, Jun held 8,000,000 of the 10,450,000 shares of our Common Stock then issued and outstanding, constituting, in the aggregate, 77% of the then issued and outstanding shares of Common Stock of the Company. In connection with his acquisition of shares in the Company, Jun was appointed as our Chief Executive Officer.

On July 12, 2006 , we consummated the transaction contemplated by the Agreement and Plan of Merger, dated as of June 26, 2006 (the "Merger Agreement"), by and among the Company, Merger Sub of Tam, Inc. ("Merger Subsidiary"), a wholly owned subsidiary of us, Full Power Enterprise Global Limited (“Full Power”), and the shareholders of Full Power. In accordance with the Merger Agreement, Merger Subsidiary merged with and into Full Power, Merger Subsidiary ceased to exist and Full Power was the surviving entity (the "Merger Transaction").

The Full Power Shareholders received 20,000,000 shares of Common Stock in exchange for all of the issued and outstanding shares of Full Power. As a result of the Merger Transaction, Full Power became the Company's wholly owned subsidiary. Full Power owns all of the issued and outstanding capital stock of Shenzhen Yu Zhi Lu Aviation Service Company Limited (“YZL”).

In connection with the Merger Transaction, Jiangping Jiang (who, prior to the Merger Transaction was a shareholder of Full Power), Xin Zhang and Hoi-Yui Lee were appointed to our Board of Directors and Jun resigned from all positions with us.

Business Overview

With the acquisition of Full Power and hence YZL, we shifted our business to the online travel service industry in the People’s Republic of China (“PRC”). YZL, a company organized under the laws of the PRC, is primarily engaged in the business of providing domestic and international airline ticketing services and cargo transportation agency services. Additionally, YZL provides hotel reservations, packaged tours, and air delivery services both online and through customer representative offices. YZL also owns an aviation network (www.cnutg.com) that provides a complete air ticket sales network.

During 2007, we made several acquisitions, which expanded our scope of business.

On April 10, 2007, we acquired Shenzhen Speedy Dragon Enterprise Limited ("SSD") in exchange for 714,285 shares of our shares of Common Stock and an interest-free promissory note in the principal amount of $3,000,000, payable no later than April 10, 2008. The note has been repaid in full.

SSD, located in Shenzhen City, is a cargo logistics company providing commercial, point-to-point parcel and container transportation services within the PRC. It also operates as an international and domestic freight forwarding agency for Chinese civil aviation companies and provides railway and express delivery services. SSD relies upon independent delivery services with more than 200 vehicles and manages leased and owned warehouses totaling 40,000 square meters (approximately 430,556 square feet), which it uses to stage, transfer, and store packages in transit. During 2007, air cargo for which SSD arranged transportation accounted for approximately 30% of the total air cargo market in Shenzhen, China.

On August 6, 2007, we acquired Xi'an Golden Net Travel Serve Service Company Limited ("XGN") in exchange for 151,765 shares of our Common Stock and interest-free promissory notes in the aggregate principal amount of $1,542,000, payable no later than August 6, 2008. The note has been repaid in full.

XGN was established in 2001 and focuses on the domestic tourism market. It provides air tickets, train tickets and other travel-related services including servicing individuals and groups attending conferences and exhibitions, making travel arrangements for business studies, academic exchanges, travel adventures, cultural education, sports competition, and theatrical performances. XGN also specializes in central plains tours of Xi'an. Since 2005, XGN has formed joint ventures with other travel agencies in Tibet, Xinjiang, Shanxi and Inner Mongolia that focus on western plains routes.

In August 8, 2007, we acquired Shanghai Lanbao Travel Service Company Limited ("SLB") in exchange for 600,000 shares of our Common Stock and interest-free promissory notes in the aggregate principal amount of $2,828,000, payable no later than August 8, 2008. The note has been repaid in full.

SLB was established in 2002 and its core business focus is a centralized real-time booking system providing consumers and travel related businesses with hotel bookings, air ticket and tourism information via the internet and mobile phone text-messaging technology. It owns and manages the award winning China Booking Association website, http://www.cba-hotel.com/, which receives approximately 200,000 visitors daily.

In October 29, 2007, we acquired Foshan Overseas International Travel Service Co., Ltd. ("FOI") in exchange for 1,122,986 shares of our Common Stock and interest-free promissory notes in the aggregate principal amount of $3,153,500, payable no later than October 29, 2008. This note has been repaid in full.

FOI was established in 1990. Its core business focuses on both domestic and international tourism, as well as packaged airfare, hotel and conference reservations with ground transportation within the PRC. For three consecutive years, FOI has been recognized as one of the 100 outstanding enterprises by the China Tourism Bureau and in 2004 was voted one of the most credible enterprises in the country. Last year it served more than 120,000 people with packaged tours and conferences.

Sources of Revenue

We have four lines of business, namely (i) air-ticketing, (ii) hotel reservations, (iii) packaged tours and (iv) air cargo agency services.

Air-ticketing

We earn a commission for each air ticket sold. Our commission varies depending on the season but it averages approximately 6% of each ticket sold.

Our subsidiary, YZL (Shenzhen Yu Zhi Lu Aviation Service Company Limited) has contracted with Chinese domestic airlines such as Air China, China Southern Airlines and China Eastern Airlines and 34 international airlines such as United Airlines, Cathay Pacific and Virgin Airlines to sell Chinese domestic and international air tickets. YZL holds the “First Class Air-Ticketing Agency” license from the General Administration of Civil Aviation of China (“CAAC”). YZL has been in operation for more than ten years.

Our customers can make air-tickets enquiries via our web-sites - www.cnutg.com, and www.cnutg.com.cn. Further, we are also able to attend to our customers through our customer representatives, our company offices and our franchises.

We maintain an 800 square meters call center in Shenzhen and our call center has 100 seats to handle customer enquiries. We share commission with our franchises. The share varies according to business seasonality and varies from 1% in our favor to 3%.

Hotel Reservations

We generate revenue from paid hotel bookings in the form of commissions.

Our subsidiaries, YZL and SLB (Shanghai Lanbao Travel Service Company Limited) have contracted with 2,000 hotels and 7,000 hotels, respectively. SLB has established a China Booking Association comprising more than 1,000 travel agencies who share more than 200,000 hotel resources internationally.

Our customers are able to enquire via SLB's website (www.cba-hotel.com). Additionally, SLB maintains a 100 square meters call center in Shanghai and the call center has 20 seats to handle hotel reservation enquiries.

Package Tours

Our subsidiaries, XGN (Xi'an Golden Net Travel Serve Service Company Limited) and FOI (Foshan Overseas International Travel Service Co., Ltd.) are involved in the packaged tour business. We contract with traffic service providers, accommodation provides and leisure service providers to purchase air tickets, train and coach tickets, accommodation and leisure or entertainment packages in bulk and then resell them to our customers with a mark-up. FOI maintains 9 company offices around the Guangzhou area, and XGN maintains 3 company offices in Xi'an.

Air Cargo Business

We are through our subsidiary, SSD (Shenzhen Speedy Dragon Enterprise Limited) involved in the air cargo business. We basically broker air cargo spaces and resell them to local logistic companies to generate revenue. We have contracts with Chinese domestic airlines like China Southern Airlines, Air China, and Shenzhen Airlines and offer cargo spaces to over 52 major domestic cities in the PRC. Our customers are charged based on the class and weight of goods shipped.

Insurance

We presently have Directors and Officers insurance with AIG. The policy is for a term of one year commencing June 23, 2008 to June 23, 2009 for an aggregate liability of $5,000,000. We have paid a premium of $42,436 for the policy. We do not have any other insurance.

Intellectual Property

We have applied to register the following trademarks with the Trademark Bureau of the State Administration for Industry & Commerce:

Trademark	Class	Registrant
UTG	16, 39, 43	Shenzhen Yu Zhi Lu Aviation Service Company Limited
TRIPEASY	39, 42	Shenzhen Yu Zhi Lu Aviation Service Company Limited

We, through our subsidiary, XGN, have the “古都之旅” trademark registered under Class 39 with the Trademark Burean of the State Administration for Industry & Commerce. The term of the registration is valid from January 7, 2005 through to January 6, 2015.

Class 16 (Paper goods and printed matter) covers paper, cardboard and goods made from these materials, not included in other classes; printed matter; bookbinding material; photographs; stationery; adhesives for stationery or household purposes; artists' materials; paint brushes; typewriters and office requisites (except furniture); instructional and teaching material (except apparatus); plastic materials for packaging (not included in other classes); playing cards; printers' type; printing blocks.

Class 39 covers transport, packaging and storage of goods and travel arrangements.

Class 42 (Computer, scientific & legal) covers scientific and technological services and research and design relating thereto: industrial analysis and research services; design and development of computer hardware and software; legal services.

Class 43 (Hotels and Restaurants) covers services for providing food and drink; temporary accommodations.

We have also registered the following domain names:

Domain Name	Owner	Registration Date	Expiration Date
www.cnutg.com	Shenzhen Yuzhilu Aviation Service Company Ltd	2006-05-05	2011-05-05
www.cnutg.com.cn	Shenzhen Yuzhilu Aviation Service Company Ltd	2006-07-27	2013-07-27
www.cnutg.cn	Shenzhen Yuzhilu Aviation Service Company Ltd	2006-07-27	2012-07-27
www.cnutg.net	Shenzhen Yuzhilu Aviation Service Company Ltd	2006-07-27	2012-07-27
www.cnutg.net.cn	Shenzhen Yuzhilu Aviation Service Company Ltd	2006-07-27	2012-07-27

Customers

Our customer base is very diversified and numerous. Almost all our customers are individuals and none of our customers comprise more than 1% of our revenue. The loss of any one of our customer will not have a material adverse effect on any segment of our business or our business, as a whole.

Revenue Breakdown

Packaged Tours

Below is a breakdown the number of sales of our packaged tours for the past three years:

Year	Visitors		Number of visitors multiplied by the number of days comprising the tour


2006		65,981		238,924
2007		93,984		364,676
2008		139,242		521,270

Air-ticketing

Below is a breakdown of the number of air tickets sold for the past three years:

Year	Number of Tickets
2006		601, 000
2007		1,084,000
2008		1,720,000

Hotel Reservations

Below is a breakdown of the number of hotel room nights booked through us for the past three years:

Year	Number of Room Nights
2006		352,000
2007		680,000
2008		1,466,000

Cargo

Below is a breakdown of the volume of cargo shipped through us for the past three years.

Year	Tons
2006		869
2007		3,612
2008		2,089

Suppliers

Our major suppliers for our air-ticketing and air cargo business are mainly the PRC domestic airlines. We contract directly and individually with each hotel and supplier of the various components of our packaged tours.

We do not have long term contracts with any one of our suppliers. We typically sign one year contracts, which renew for successive one-year terms unless earlier terminated by either party. The main terms of such contracts would typically comprise terms pertaining to authorizations, trade deposits and payment method.

We are not dependent on any one supplier and most of our suppliers are competitors against each other within their own industry. Accordingly, we are able to choose the supplier with the most favorable terms to contract with and because such terms vary from time to time, our list of suppliers constantly changes too.

Our online reservation database is managed in-house and we are not dependent on a third party service provider to maintain our database and ensure that it is stable and secure.

Sales and Marketing

We advertise our services for the general public through roadside billboards, brochures, internet ads, cell phone message ads, newspapers and magazines ads.

Sales and marketing for the past three years account for very small percentage of our revenue, and as our TRIPEASY Travel Service Kiosks will be serving as an effective media platform in the coming years and a marketing tool for us, we believe our sales and marketing expenses will not increase materially.

Below is the breakdown of sales and marketing expenses for our various subsidiaries for the past year:

Subsidiary		Amount (RMB)/ (US$)
Foshan Overseas International Travel Service Co., Ltd.		119,669 / $17,496
Shenzhen Speedy Dragon Enterprise Limited		11,000 / $1,608
Shenzhen Yu Zhi Lu Aviation Service Company Limited		870,000 / $127,193 (Media Advertisement expenses)862,000 / $126,024 (Airport Marketing expenses)
Shanghai Lanbao Travel Service Company Limited		15,000 / $2,192 (Advertisements) 25,000 / $3,655 (Website) 17,000 / $2,486 (Promotions)

We anticipate that our sales and marketing expenses for fiscal year 2009 would remain roughly the same.

Competition

Our main competitors in China in the online booking industry for air-tickets and hotel reservations include Ctrip.com International, Ltd. and eLong, Inc.

It is very difficult to assess our competitors in the packaged tour business as there are numerous packaged tour providers in the PRC that operate different routes every year.

Our main competitors for the cargo agency business stem from the direct sales departments operated by the various airlines companies themselves.

Many of our competitors, particularly those engaged in the online booking industry, are better established than us, are more widely known to consumers, and have larger infrastructures and greater capital resources.

Our Competitive Advantage

We believe that we have the following advantages over our competitors:

our business model and sources of revenue are diversified in that we are involved in the air ticketing, hotel reservations, packaged tours, and air cargo agency businesses and any negative impact on one line of business may buffered by our other lines of businesses;

our businesses and presence are spread out throughout the PRC, which makes us less susceptible to a total loss or interruption to our business in the event of a natural calamity; and

we plan to roll out more of the TRIPEASY Travel Service Kiosks (“Kiosks”) in 2009 in certain selected cities in the PRC. The Kiosks would enable our customer to make travel related inquiries and book their travel without a computer or an internet connection. They should appeal to computer users who do not make travel related transactions over the internet from their computers and non-computer owners.

Our Future Goals and Expansion Plans

We are planning a nationwide rollout of the TRIPEASY Travel Service Kiosks within the next two years. The Kiosks will be located everywhere including hotels, office buildings, banks, shopping malls and MTR stations. The Company will promote the Kiosks via local media such as newspapers, billboards and internet ads, including its own award-winning website, www.cnutg.com, as well as other related websites, which will in turn further the Company’s brand recognition. The Kiosks themselves will provide a strong media platform to strengthen Universal Travel Group’s franchise. Additionally, the Kiosks’ interface will feature the same look, feel and functionality as Universal Travel Group’s new website, www.cnutg.com.cn, which integrates the Company’s diversified services into a new platform with selected value- added features and functionality.

The Kiosks are interactive terminals placed in strategically targeted public areas. They will enable convenient, fast and easy to use, real-time air ticketing inquiries, reservations and purchases, as well as hotel and tour reservations. The Kiosks will provide full 360° views of hotels and travel destinations and accept payment via bank cards, debit cards and VISA. According to Credit Suisse Research, the number of domestic travelers in the PRC that use online travel services continues to rise, accounting for 16% of users in 2007, up from 12% in 2005. The Company initially plans to introduce the Kiosks in selected major cities in the PRC, with approximately 600 Kiosks to be rolled out in 2009. Major cities such as Shanghai and Shenzhen have a higher proportion of people using online travel services as compared to the rest of the PRC, representing 23% and 20% of the users in 2007, respectively. According to the China Internet Network Information Center, the PRC is the world’s largest market for internet users. Despite this, 95% of internet users still do not make purchases over the internet. The TRIPEASY Kiosks will eliminate the need for a personal computer or online access in order to make travel arrangements and are specifically targeted at this demographic of users.

Our beta testing of the Kiosks has shown promising results. The TRIPEASY Kiosks will serve, together with our website and call center, to integrate our air ticket sales, hotel room sales, and packaged tours businesses. We are working on a cost-effective way for a potential rollout by bundling it with Byte Power (CQ) Info Tech Limited's (a subsidiary of Byte Power Group Limited - ASE: BPG.AX) E-Kiosks. This will allow us to enter a new market in Chongqing quickly and efficiently.

Employees

At the current time, in addition to our officers, we have approximately 200 full-time employees. None of our employees is a member of a union and our relationships with our employees are generally satisfactory. In accordance with Chinese Labor Law, we provide social security and medical insurance to all our employees.

Government Regulations

General Regulation of Businesses

Air-ticketing. The air-ticketing business is subject to the supervision of China National Aviation Transportation Association, or CNATA, and its regional branches. Prior to March 31, 2006, the principal regulation governing air-ticketing in China is the Administration on Civil Aviation Transporting Marketing Agency Business Regulations (1993). The said regulation was abolished by PRC government on January 24, 2008. Currently the principal regulation governing air-ticketing in the PRC is the Rules on Cognizance of Qualification for Civil Aviation Transporting Marketing Agencies (2006) which became effective on March 31, 2006.

Under these regulations, prior to May 19, 2005, an air-ticketing agency was required to obtain a permit from CAAC or its regional branch in every city in which the agency propose to conduct its air-ticketing business. On and after May 19, 2005, any entity that wishes to conduct the air-ticketing business in the PRC must apply for an air-ticketing permit from CNATA. The regulations provide for a transitional grace period for air-ticketing agencies that have obtained a valid license from CAAC or its regional branch prior to the promulgation of the new rules. These agencies are permitted to use their original licenses until such licenses expire.

Travel Agency. The travel industry is subject to the supervision of the China National Tourism Administration and local tourism administrations. The principal regulations governing travel agencies in the PRC include:

Administration of Travel Agencies Regulations (1996), as amended in December 2001; and

Administration of Travel Agencies Regulations Implementing Rules (2001).

Under these regulations, a travel agency must obtain a license from the China National Tourism Administration to conduct cross-border travel business, and a license from the provincial-level tourism administration to conduct domestic travel agency business.

Advertising. The State General Administration of Industry and Commerce is responsible for regulating advertising activities in the PRC. The principal regulations governing advertising (including online advertising) in China include:

Advertising Law (1994);

Administration of Advertising Regulations (1987); and

Implementing rules of the Administration of Advertising Regulations (2004).

Under these regulations, any entity conducting advertising activities must obtain an advertising permit from the local Administration of Industry and Commerce.

Value-added Telecommunications Business and Online Commerce. Our provision of travel-related content on our websites is subject to PRC laws and regulations relating to the telecommunications industry and Internet, and regulated by various government authorities, including the Ministry of Information Industry and the State General Administration of Industry and Commerce. The principal regulations governing the telecommunications industry and Internet include:

Telecommunications Regulations (2000);

The Administrative Measures for Telecommunications Business Operating Licenses (2001); and

The Internet Information Services Administrative Measures (2000).

Under these regulations, Internet content provision services are classified as value-added telecommunications businesses, and a commercial operator of such services must obtain a value-added telecommunications business license from the appropriate telecommunications authorities to conduct any commercial value-added telecommunications operations in the PRC.

With respect to online commerce, there are no specific PRC laws at the national level governing online commerce or defining online commerce activities, and no government authority has been designated to regulate online commerce. There are existing regulations governing retail business that require companies to obtain licenses to engage in the business. However, it is unclear whether these existing regulations will be applied to online commerce.

Regulation of Foreign Currency Exchange and Dividend Distribution

Foreign Currency Exchange. The principal regulation governing foreign currency exchange in the PRC is the Foreign Currency Administration Rules (1996), as amended. Under these Rules, RMB is freely convertible for trade and service-related foreign exchange transactions, but not for direct investment, loan or investment in securities outside China unless the prior approval of the State Administration for Foreign Exchange of the People’s Republic of China is obtained.

Pursuant to the Foreign Currency Administration Rules, foreign investment enterprises in the PRC may purchase foreign currency without the approval of the State Administration for Foreign Exchange of the PRC for trade and service-related foreign exchange transactions by providing commercial documents evidencing these transactions. They may also retain foreign exchange (subject to a cap approved by the State Administration for Foreign Exchange of the PRC) to satisfy foreign exchange liabilities or to pay dividends. In addition, if a foreign company acquires a company in the PRC, the acquired company will also become a foreign investment enterprise. However, the relevant PRC government authorities may limit or eliminate the ability of foreign investment enterprises to purchase and retain foreign currencies in the future. In addition, foreign exchange transactions for direct investment, loan and investment in securities outside the PRC are still subject to limitations and require approvals from the State Administration for Foreign Exchange of the PRC.

Dividend Distribution. The principal regulations governing distribution of dividends of wholly foreign-owned companies include:

The Foreign Investment Enterprise Law (1986), as amended in October 2000;

Administrative Rules under the Foreign Investment Enterprise Law (2001);

Company Law of the PRC (2005); and

Enterprise Income Tax Law and its Implementation Rules (2007).

Under these regulations, foreign investment enterprises in the PRC may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, wholly foreign-owned enterprises in the PRC are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds, unless such reserve funds have reached 50% of their respective registered capital. These reserves are not distributable as cash dividends.

Under the new EIT Law, dividends, interests, rent, royalties and gains on transfers of property payable by a foreign-invested enterprise in the PRC to its foreign investor who is a non-resident enterprise will be subject to a 10% withholding tax, unless such non-resident enterprise’s jurisdiction of incorporation has a tax treaty with the PRC that provides for a reduced rate of withholding tax.

Under the new EIT Law, an enterprise established outside the PRC with its “de facto management body” within the PRC is considered a resident enterprise and will be subject to the enterprise income tax at the rate of 25% on its worldwide income. The “de facto management body” is defined as the organizational body that effectively exercises overall management and control over production and business operations, personnel, finance and accounting, and properties of the enterprise. It remains unclear how the PRC tax authorities will interpret such a board definition.

According to the new EIT law, enterprises that currently enjoy a preferential tax rate will transition to the statutory enterprise income tax rate of 25% over five years. The applicable tax rate will increase to 18% for 2008, 20% in 2009, 22% in 2010, 24% in 2011 and 25% in 2012. Enterprises who are currently subject to an enterprise income tax rate of 24% will have their rates increased to 25% in 2008.

The current tax rates of our various subsidiaries are: for YZL (Shenzhen Yu Zhi Lu Aviation Service Company Limited ), 15%; for SSD (,Shenzhen Speedy Dragon Enterprise Limited) 15%, for SLB (Shanghai Lanbao Travel Service Company Limited, 33%, for XGN (Xi'an Golden Net Travel Serve Service Company Limited), 33% and for FOI (Foshan Overseas International Travel Service Co., Ltd.), 33%. For 2008, these rates will be adjusted to 18%, 18%, 25%, 25% and 25% respectively.

Notwithstanding the foregoing provision, the new EIT Law also provides that, if a resident enterprise directly invests in another resident enterprise, the dividends received by the investing resident enterprise from the invested enterprise are exempted from income tax, subject to certain conditions.

Moreover, under the new EIT Law, foreign ADS holders may be subject to a 10% withholding tax upon dividends payable by a Chinese entity and gains realized on the sale or other disposition of ADSs or ordinary shares, if such income is sourced from within the PRC and we are classified as a PRC resident enterprise.

Approvals, licenses and certificates

We have received the following licenses and approvals:

“First Class Air-Ticketing Agency” awarded by the CAAC and IATA to YZL;

“Second Class Air Cargo Agency” awarded by the CAAC and IATA to SSD;

“International Travel Agency” awarded by the China Travel Bureau to FOI; and

“Domestic Travel Agency” awarded by the China Travel Bureau to XGN.

Item 1A. Risk Factors.

The reader should carefully consider each of the risks described below. If any of the following risks described below should occur, our business, financial condition or results of operations could be materially adversely affected and the trading price of our Common Stock could decline significantly.

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information contained in this prospectus before deciding to invest in our Common Stock.

Risks Related to the Company

Risks associated with business declines or disruptions in the travel industry generally could reduce our revenue.

A large part of our revenue is driven by the trends that occur in the travel industry in the PRC, including the hotel, airline and packaged-tour industries. As the travel industry is highly sensitive to business and personal discretionary spending levels, it tends to decline during general economic downturns. Other adverse trends or events that tend to reduce travel and are likely to reduce our revenue include the following:

an outbreak of political or economic unrest in China;

a recurrence of SARS or any other serious contagious diseases;

increased prices in the hotel, airline, or other travel-related industries;

increased occurrence of travel-related accidents;

outbreak of war or conflict in the Asia-Pacific region;

increases in terrorism or the occurrence of a terrorist attack in the Asia-Pacific region;

poor weather conditions; and

natural disasters.

We could be severely affected by changes in the travel industry and will, in many cases, have little or no control over those changes. As a result of any of these events, our operating results and financial conditions could be materially and adversely affected.

Loss of key personnel could affect our ability to successfully grow our business.

We are highly dependent upon the services of our senior management team. The permanent loss for any of the key executives could have a material adverse effect upon our operating results.

Our management is comprised almost entirely of individuals residing in the PRC with very limited English skills

Our management is comprised almost entirely of individuals born and raised in the PRC. As a result of differences in culture, educational background and business experiences, our management may analyze, evaluate and present business opportunities and results of operations differently from the way they are analyzed, evaluated and presented by management teams of public companies in Europe and the United States. In addition, our management has very limited skills in English. Consequently, it is possible that our management team will emphasize or fail to emphasize aspects of our business that might customarily be emphasized in a different manner by comparable public companies from different geographical and political areas.

Our management is not familiar with the United States securities laws.

Our management and the former owners of the businesses we acquire are generally unfamiliar with the requirements of the United States securities laws and may not appreciate the need to devote the resources necessary to comply with such laws. A failure to adequately respond to applicable securities laws could lead to investigations by the Securities and Exchange Commission and other regulatory authorities that could be costly, divert management's attention and disrupt our business.

Our operating history is not an adequate basis to judge our future prospects.

We have encountered and will continue to encounter risks and difficulties frequently experienced by companies in evolving industries such as the travel service industry in the PRC. Some of the risks relate to our ability to:

attract and retain customers and encourage our customers to engage in repeat transactions;

retain our existing agreements with travel suppliers such as hotels and airlines and to expand our service offerings on satisfactory terms with our travel suppliers;

operate, support, expand and develop our operations, our call center, our website, and our communications and other systems;

diversify our sources of revenue;

maintain effective control of our expenses; and

respond to changes in our regulatory environment.

If we are not successful in addressing any or all of these risks, our business may be materially affected in an adverse manner.

The travel industry in China is seasonal.

Our business travel operations experience seasonal fluctuations, reflecting seasonal variations in demand for travel services. During the first quarter, demand for travel services generally declines in the PRC and the number of bookings flattens or decreases, in part due to a slowdown in business activity during the Chinese New Year holiday. Demand for travel services generally peaks during the second half of the year and there may be seasonal luctuations in allocations of travel services made available to us by travel suppliers. Consequently, our revenue may fluctuate from quarter to quarter.

Our business depends on the technology infrastructure of third parties.

We rely on third-party computer systems and other service providers, including the computerized reservation systems of airlines and hotels to make reservations and confirmations. Other third parties provide, for instance, our back-up data center, telecommunications access lines, significant computer systems and software licensing, support and maintenance service and air-ticket delivery. Any interruption in these or other third-party services or deterioration in their performance could impair the quality of our service.

Risks Related to our Common Stock

There is a limited public market for our Common Stock.

There is currently a limited public market for our Common Stock. Holders of our Common Stock may, therefore, have difficulty selling their Common Stock, should they decide to do so. In addition, there can be no assurances that such markets will continue or that any shares of Common Stock, which may be purchased, may be sold without incurring a loss. Any such market price of the Common Stock may not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value, and may not be indicative of the market price for the Common Stock in the future. Further, the market price for the Common Stock may be volatile depending on a number of factors, including business performance, industry dynamics, and news announcements or changes in general economic conditions.

Ownership of our Common Stock is concentrated.

Our Common Stock is owned by a relatively small number of holders, some of whom have business relationships in the PRC. A determination by any of such holders to sell all or a substantial portion of its holdings could depress the trading price of our Common Stock.

We have not and do not anticipate paying any dividends on our Common Stock.

We have paid no dividends on our Common Stock to date and it is not anticipated that any dividends will be paid to holders of our Common Stock in the foreseeable future. While our future dividend policy will be based on the operating results and capital needs of the business, it is currently anticipated that any earnings will be retained to finance our future expansion and for the implementation of our business plan. As an investor, you should take note of the fact that a lack of a dividend can further affect the market value of our stock, and could significantly affect the value of any investment in our Company.

We will incur significant costs as a result of operating as a public company and our management will be required to devote substantial time to compliance requirements.

As a public company we incur significant legal, accounting and other expenses under the Sarbanes-Oxley Act of 2002, together with rules implemented by the Securities and Exchange Commission and applicable market regulators. These rules impose various requirements on public companies, including requiring certain corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance requirements.

In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, commencing in 2007, we must perform system and process evaluations and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our testing may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Compliance with Section 404 may require that we incur substantial accounting expenses and expend significant management efforts. If we are not able to comply with the requirements of Section 404 in a timely manner, or if our accountants later identify deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other applicable regulatory authorities.

Our Board of Directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stock holders.

Our Amended and Restated Articles of incorporation authorizes the issuance of preferred shares which may be issued with dividend, liquidation, voting and redemption rights senior to our Common Stock without prior approval by the stockholders. The Preferred Stock may be issued for such consideration as may be fixed from time to time by the Board of Directors. The Board of Directors may issue such shares of Preferred Stock in one or more series, with such designations, preferences and rights or qualifications, limitations or restrictions thereof as shall be stated in the resolution of resolutions.

The issuance of preferred stock could adversely affect the voting power and other rights of the holders of common stock. Preferred stock may be issued quickly with terms calculated to discourage, make more difficult, delay or prevent a change in control of our Company or make removal of management more difficult. As a result, the Board of Directors' ability to issue preferred stock may discourage the potential hostile acquirer, possibly resulting in beneficial negotiations. Negotiating with an unfriendly acquirer may result in, among other things, terms more favorable to us and our stockholders. Conversely, the issuance of preferred stock may adversely affect any market price of, and the voting and other rights of the holders of the Common Stock. We presently have no

plans to issue any preferred stock.

Our Common Stock is subject to the Penny Stock Regulations

Our Common Stock and will likely be subject to the SEC's “penny stock” rules to the extent that the price remains less than $5.00. Those rules, which require delivery of a schedule explaining the penny stock market and the associated risks before any sale, may further limit your ability to sell your shares.

The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share. Our Common Stock, when and if a trading market develops, may fall within the definition of penny stock and subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 or $300,000, together with their spouse).

For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the `penny stock` rules may restrict the ability of broker-dealers to sell our Common Stock and may affect the ability of investors to sell their Common Stock in the secondary market.

As an issuer of “penny stock” the protection provided by the federal securities laws relating to forward-looking statements does not apply to us and as a result we could be subject to legal action.

Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, if we are a penny stock, we will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. Such an action could hurt our financial condition.

For more information about penny stocks, contact the Office of Filings, Information and Consumer Services of the U.S. Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549, or by telephone at 1-800-732-0330.

The issuance of shares through our stock compensation plans may dilute the value of existing stockholders and may affect the market price of our stock.

Although we do not have an option or other equity-based incentive plan at present, in the future we may use stock options, stock grants and other equity-based incentives, to provide motivation and compensation to our officers, employees and key independent consultants. The award of any such incentives will result in an immediate and potentially substantial dilution to our existing stockholders and could result in a decline in the value of our stock price. The exercise of these options and the sale of the underlying shares of common stock and the sale of stock issued pursuant to stock grants may have an adverse effect upon the price of our stock.

Risks Related to Doing Business in The People’s Republic of China

It may be difficult for our stockholders to enforce their rights against the Company or its officers or directors.

Because our principal assets are located outside of the United States and some of our directors and all of our executive officers reside outside of the United States, it may be difficult for you to enforce your rights based on the United States Federal securities laws against us and our officers and directors in the United States or to enforce judgments of United States courts against us or them in the People's Republic of China.

In addition, our operating subsidiaries and substantially all of our assets are located outside of the United States. You will find it difficult to enforce your legal rights based on the civil liability provisions of the United States Federal securities laws against us in the courts of either the United States or the People's Republic of China and, even if civil judgments are obtained in courts of the United States, to enforce such judgments in the courts of the People's Republic of China. In addition, it is unclear if extradition treaties in effect between the United States and the People's Republic of China would permit effective enforcement against us or our officers and directors of criminal penalties, under the United States Federal securities laws or otherwise.

Our business operations take place primarily in the PRC. Because Chinese laws, regulations and policies are continually changing, our operations will face numerous risks.

Because our operations primarily take place outside of the United States and are subject to Chinese laws, regulations and policies affecting any change of Chinese laws may adversely affect our business, such as exchange controls and currency restrictions, currency fluctuations and devaluations, changes in local economic conditions, changes in Chinese laws and regulations, exposure to possible expropriation or other Chinese government actions, and unsettled political conditions. These factors may have a material adverse effect on our operations or on our business, results of operations and financial condition.

China's economy differs from the economies of most developed countries in many respects, including substantial governmental regulation, development, growth rate, control of foreign exchange, significant restrictions on property rights, taxation levels, and permitted allocation of resources. While the People's Republic of China economy has experienced significant growth in the past 20 years, growth has been uneven across different regions and among various economic sectors of China. The government of the People's Republic of China has implemented various measures to encourage economic development and guide the allocation of resources, which may or may not achieve the desired results or stated goals. Some of these measures may benefit the overall economy of People's Republic of China, but may also have a negative effect on us or on the economy in general. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. Since early 2004, the government of the People's Republic of China has implemented certain measures to control the pace of economic growth. Such measures may cause a decrease in the level of economic activity in the People’s Republic of China, which could adversely affect our results of operations and financial condition.

Limitations on Chinese economic market reforms may discourage foreign investment in Chinese businesses.

The value of investments in Chinese businesses could be adversely affected by political, economic and social uncertainties in China. The economic reforms in China in recent years are regarded by China's central government as a way to introduce economic market forces into China. Given the overriding desire of the central government leadership to maintain stability in China amid rapid social and economic changes in the country, the economic market reforms of recent years could be slowed, or even reversed.

We face economic risks in doing business in the PRC.

As a developing nation, the PRC's economy is more volatile than that of developed Western industrial economies. It differs significantly from that of the U.S. or a Western European country in such respects as structure, level of development, capital reinvestment, resource allocation and self-sufficiency. Only in recent years has the Chinese economy moved from what had been a command economy through the 1970s to one that during the 1990s encouraged substantial private economic activity. In 1993, the Constitution of China was amended to reinforce such economic reforms. The trends of the 1990s indicate that future policies of the Chinese government will emphasize greater utilization of market forces. For example, in 1999 the Government announced plans to amend the Chinese Constitution to recognize private property, although private business will officially remain subordinated to the state-owned companies, which are the mainstay of the Chinese economy. However, there can be no assurance that, under some circumstances, the government's pursuit of economic reforms will not be restrained or curtailed. Actions by the central government of the PRC could have a significant adverse effect on economic conditions in the country as a whole and on the economic prospects for our Chinese operations.

Any slowdown of economic growth in the PRC could have a negative effect on our business. There can be no assurance that the growth of the economy in the PRC will continue or that any slowdown will not have a negative effect on our business.

Our online business relies on the existence of an adequate telecommunications infrastructure for continued growth of China's internet market.

Although private sector Internet service providers currently exist in the PRC, almost all access to the Internet is maintained through a network owned by China Netcom under the regulatory supervision of China's Ministry of Information Industry. In addition, the national networks in the PRC connect to the Internet through a government-controlled international gateway. This international gateway is the only channel through which a domestic Chinese user can connect to the international Internet network. We rely on this infrastructure and China Netcom to provide data communications capacity, primarily through local telecommunications lines. We cannot assure you that this infrastructure will be further developed. In addition, we will have no access to alternative networks and services, on a timely basis if at all, in the event of any infrastructure disruption or failure. The Internet infrastructure in the PRC may not support the demands associated with continued growth in Internet usage.

We may suffer currency exchange losses if the Renminbi depreciates relative to the U.S. Dollar.

Our reporting currency is the U.S. dollar. However, a substantial portion of our assets and revenues are denominated in the Chinese currency, Renminbi, commonly referred to as RMB. Our assets and revenues expressed in our U.S. dollar financial statements will decline in value of the Renminbi depreciates relative to the U.S. dollar. Any such depreciation could adversely affect the market price of our Common Stock. Very limited hedging transactions are available in the PRC to reduce our exposure to exchange rate fluctuations and we do not intend to engage in any such transactions. In addition, our currency exchange losses may be magnified by Chinese exchange control regulations that restrict our ability to convert Renminbi into U.S. Dollars.

We may not be able to freely convert Renminbi into foreign currency.

A portion of our revenues and operating expenses will be denominated in Renminbi while a portion of our capital expenditures are denominated in U.S. dollars.

Under current Chinese regulations, the payment of dividends, trade and service-related foreign transactions to a foreign investor of a foreign-invested enterprise is treated as a "current account" payment for which the approval of the State Administration of Foreign Exchange is not required. However, in order to distribute dividends we may be required to file documentation to a designated foreign exchange bank. The Bank must certify that all requirements have been met, such as payment of taxes, directors' approval and a capital verification report issued by an accounting firm. If a foreign-invested enterprise dissolves, a return of capital, which includes foreign direct investment, is treated as a "capital account" payment. This typically requires approval of the State Administration of Foreign Exchanges' in addition to the filing of documentation.

We may currently convert Renminbi for transactions under the "current account" without the approval of the State Administration of Foreign Exchange for settlement of "current account" transactions, including payment of dividends, by providing commercial documents evidencing these transactions. They may also retain foreign exchange in their current accounts (subject to a ceiling approved by the State Administration of Foreign Exchange) to satisfy foreign exchange liabilities or to pay dividends. However, the relevant Chinese governmental authorities may limit or eliminate the ability to purchase and retain foreign currencies in the future. Such change of policy would materially and adversely affect our business, financial condition and results of operations.

The Chinese legal and judicial system may negatively impact foreign investors.

In 1982, the National Peoples Congress amended the Constitution of China to authorize foreign investment and guarantee the "lawful rights and interests" of foreign investors in the PRC. However, the PRC's system of laws is not yet comprehensive. The legal and judicial systems in the PRC are still rudimentary, and enforcement of existing laws is inconsistent. Many judges in the PRC lack the depth of legal training and experience that would be expected of a judge in a more developed country. Because the Chinese judiciary is relatively inexperienced in enforcing the laws that do exist, anticipation of judicial decision-making is more uncertain than would be expected in a more developed country. It may be impossible to obtain swift and equitable enforcement of laws that do exist, or to obtain enforcement of the judgment of one court by a court of another jurisdiction. The PRC's legal system is based on written statutes; a decision by one judge does not set a legal precedent that is required to be followed by judges in other cases. In addition, the interpretation of Chinese laws may be varied to reflect domestic political changes.

The promulgation of new laws, changes to existing laws and the pre-emption of local regulations by national laws may adversely affect foreign investors. However, the trend of legislation over the last 20 years has significantly enhanced the protection of foreign investment and allowed for more control by foreign parties of their investments in Chinese enterprises. There can be no assurance that a change in leadership, social or political disruption, or unforeseen circumstances affecting the PRC’s political, economic or social life, will not affect the Chinese government's ability to continue to support and pursue these reforms. Such a shift could have a material adverse effect on our business and prospects.

The practical effect of the Peoples Republic of China legal system on our business operations in the PRC can be viewed from two separate but intertwined considerations. First, as a matter of substantive law, the Foreign Invested Enterprise laws provide significant protection from government interference. In addition, these laws guarantee the full enjoyment of the benefits of corporate Articles and contracts to Foreign Invested Enterprise participants. These laws, however, do impose standards concerning corporate formation and governance, which are not qualitatively different from the general corporation laws of the several states. Similarly, the Peoples Republic of China accounting laws mandate accounting practices, which are not consistent with U.S. Generally Accepted Accounting Principles. The PRC's accounting laws require that an annual "statutory audit" be performed in accordance with the PRC accounting standards and that the books of account of Foreign Invested Enterprises are maintained in accordance with Chinese accounting laws. Article 14 of the Peoples Republic of China Wholly Foreign-Owned Enterprise Law requires a Wholly Foreign-Owned Enterprise to submit certain periodic fiscal reports and statements to designate financial and tax authorities, at the risk of business license revocation. Second, while the enforcement of substantive rights may appear less clear than United States procedures, the Foreign Invested Enterprises and Wholly Foreign-Owned Enterprises are Chinese registered companies, which enjoy the same status as other Chinese registered companies in business-to-business dispute resolution. Generally, the Articles of Association provide that all business disputes pertaining to Foreign Invested Enterprises are to be resolved by the Arbitration Institute of the Stockholm Chamber of Commerce in Stockholm, Sweden, applying Chinese substantive law. Any award rendered by this arbitration tribunal is, by the express terms of the respective Articles of Association, enforceable in accordance with the "United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958)." Therefore, as a practical matter, although no assurances can be given, the Chinese legal infrastructure, while different in operation from its United States counterpart, should not present any significant impediment to the operation of Foreign Invested Enterprises.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

All land in the PRC is owned by the government and cannot be sold to any individual or entity. Instead, the government grants landholders a "land use right" after a purchase price for such "land use right" is paid to the government. The "land use right" allows the holder the right to use the land for a specified long-term period of time and enjoys all the incidents of ownership of the land. The following are the details regarding Universal travel Group’s land use rights with regard to the land that it uses in its business.

Our principal executive offices are located at Shennan Road, Hualian Center Room 301 - - 304, Shenzhen, People's Republic of China. The offices contain approximately 8,600 square feet of usable space and are subject to a lease which expires October 2010. The monthly rent payable for these offices is $5,400.

In addition to our headquarters, YZL maintains offices at the locations listed below which require aggregate monthly payments of $14,760.

Baoan Airport Branch: BT61-62, Area B, Shenzhen Baoan Airport.

Fuyong Branch: No. 129. Bai Shi Sha Blvd, Fuyong Zhen, Shenzhen City.

Longhua Zhuojing Branch: No.11 Sheng Di Long Quan, Ban Ren Min Bei Road, Longhua Blvd, Shenzhen City.

Xinzhou Branch: 1st Floor Business Center, Chu Tian Hotel, Hubei Building, Bin He Road, Shenzhen City.

No. 2008 Shennan Road, Hua Lian Building Suite 305-309, Shenzhen City.

FOI maintains 9 offices around the Guangzhou, which aggregate monthly rental amounts to $4,430;

XGN maintains 3 offices in Xi’an and the aggregate monthly rent amounts to $707;

SLB maintains its main office in Shanghai and its monthly rent is $5,630;

SSD’s headquarters are in Shenzhen Baoan Airport and its monthly rent is $4,379.

We plan to expand our operations and lease more office space in the near future. We anticipate that our monthly rental expenses will increase to about $50,000, including the rentals for our TRIPEASY Travel Service Kiosks.

Item 3. Legal Proceedings.

We know of no material, active, pending or threatened proceeding against us or our subsidiaries, nor are we, or any subsidiary, involved as a plaintiff or defendant in any material proceeding or pending litigation.

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

None.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities.

Market Information

Our common stock is traded on the OTC Bulletin Board under the symbol “UTVG.OB”. Prior to August 21, 2006, the date we changed our name from TAM of Henderson, Inc. to Universal Travel Group, our Common Stock was quoted under the symbol "TMHN.OB".

The prices set forth below reflect the quarterly high and low bid price information for shares of our Common Stock for the periods indicated. These quotations are taken from the OTC Bulletin Board. They reflect inter-dealer prices, without retail markup, markdown or commission, and may not represent actual transactions.

Calendar Quarter	Low Bid		High Bid
2007 First Quarter	$	0.40	$	1.80
2007 Second Quarter	$	1.57	$	3.60
2007 Third Quarter	$	1.85	$	4.08
2007 Fourth Quarter	$	2.75	$	5.72

2008 First Quarter	$	1.45	$	3.82
2008 Second Quarter	$	1.12	$	2.86
2008 Third Quarter	$	0.87	$	1.65
2008 Fourth Quarter	$	0.45	$	1.10

Holders of Securities

As of March 12, 2009, there were approximately 37 holders of record of our Common Stock, including shares held in street name by brokerage firms. The holders of Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the Common Stock have no preemptive rights and no right to convert their Common Stock into any other securities. There are no redemption or sinking fund provisions applicable to the Common Stock.

Our Common Stock is covered by a Commission rule that imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors, which are generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell our securities and also may affect the ability of purchasers of our Common Stock to sell their shares in the secondary market. It may also cause fewer broker-dealers to be willing to make a market in our common stock, and it may affect the level of news coverage we receive.

Dividends

We have not declared or paid any cash dividends on our Common Stock since our inception, and our board of directors currently intends to retain all earnings for use in the business for the foreseeable future. Any future payment of dividends will depend upon our results of operations, financial condition, cash requirements and other factors deemed relevant by our board of directors. There are currently no restrictions that limit our ability to declare cash dividends on our Common Stock and we do not believe that there are any that are likely to do so in the future.

Securities Authorized for Issuance Under Equity Compensation Plans

In January 2007, we adopted the Universal Travel Group 2007 Equity Incentive Plan. In the first quarter of 2007, we issued 3,770,000 shares of our Common Stock pursuant to the Plan for services rendered from October 2, 2006, through February 28, 2007. At the time of issuance the 3,770,000 shares were valued at $1,583,400, of which $950,040 was charged against earnings in 2006 and $633,360 was charged against earnings for 2007.

There are no longer any shares available for issuance pursuant to the Universal Travel Group 2007 Equity Incentive Plan.

During 2007 we issued options to purchase 100,000 shares to each of three newly appointed directors. The options are exercisable for a period of approximately 10 years from the date of issuance and are exercisable at prices of $1.95; $2.85 and $3.75, respectively. All three directors have to date ceased to be directors of the Company. Accordingly, only an aggregate of options to purchase 66,666 shares of our Common Stock has vested amongst these three ex-directors.

Additionally, on June 24, 2008, we granted an option to purchase 100,000 shares of our Common Stock to our newly appointed director, Yizhao Zhang. His option is exercisable for a period of approximately 10 years from the date of issuance and is exercisable at $1.52 per share. The option holder has no voting or dividend rights. We record the expense of the stock options over the related vesting period. The options were valued using the Black-Scholes option-pricing model at the model at the date of grant stock option pricing.

In January 2009, we adopted the Universal Travel Group 2009 Incentive Stock Plan. On January 20, 2009, we issued options to purchases 6,000,000 shares of Common Stock to our Chief Executive Officer, Ms. Jiangping Jiang at an exercise price of $1.28. The remaining options to purchase 600,000 shares of Common Stock were issued on the same date to various employees at an exercise price of $0.90. The term of each option was for 10 years. The options vest in six annual equal installments. However, in the event (i) the Company reports an after tax Net Income of $14,000,000 in its Annual Report on Form 10-K filed with the SEC for its fiscal year 2008, then options to purchase one-third of the shares granted shall vest and become immediately exercisable and each grantee of such options shall be entitled to exercise his/her options rateably, (ii) the Company reports an after tax Net Income of $18,000,000 in its Annual Report on Form 10-K filed with the SEC for its fiscal year 2009, then options to purchase another one-third of the shares granted shall vest and become immediately exercisable and each grantee of such options shall be entitled to exercise his/her options rateably and (iii) the Company reports an after tax Net Income of $22,000,000 in its Annual Report on Form 10-K filed with the SEC for its fiscal year 2010, then options to purchase another one-third of the shares granted shall vest and become immediately exercisable and each grantee of such options shall be entitled to exercise his/her options rateably. As of the date of this Annual Report, all the 6,600,000 options to purchase our Common Stock under the Universal Travel Group 2009 Incentive Stock Plan have been issued and there are no longer any shares available for issuance under the said Plan.

The following table provides information as of the date hereof our outstanding equity compensation plans and arrangements.

Equity Compensation Plan Information

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		6,600,000	$	1.24		0
Equity compensation plans not approved by security holders		166,666	$	2.232		0
Total		166,666	$	2.232		0

Warrants

On August 28, 2008, we entered into a Securities Purchase Agreement with Access America Fund, LP, Chinamerica Fund LP, Pope Investments II LLC, Heller Capital Investments, LLC, CGM as C/F Ronald I. Heller IRA, Investment Hunter, LLC, MARed Investments, High Capital Funding, LLC, and Merrill Lynch, Pierce, Fenner & Smith, FBO Beau L. Johnson (collectively, the “Buyers”) to sell to the Buyers 4,588,708 shares of Common Stock and warrants to purchase 2,294,356 shares of Common Stock for an aggregate purchase price of $7,112,500. The Financing closed on August 29, 2008.

Each warrant has an Exercise Price of $2.71 and a term of 5 years from the date of issuance. We shall have the right at any time, on written notice given not less than forty five (45) days prior to the Redemption Date (which is the date the warrants are to be redeemed), to redeem the outstanding warrants at the Redemption Price of one cent ($.01) per share of Common Stock issuable upon exercise of the warrants, provided (i) the Market Price (as defined in the warrant) of the Common Stock shall equal or exceed $8.13 for at least thirty (30) Trading Days prior to the call for redemption by the Company, (ii) the shares of Common Stock are trading on a recognized U.S. share exchange, which shall mean the New York Stock Exchange, the American Stock Exchange or the Nasdaq Stock Market (including the Global Select, Global and Capital Markets) and (iii) we are current in all our reporting obligations under the Securities Exchange Act of 1934. All warrants must be redeemed if any warrants are redeemed.

We may only exercise the right of redemption of the warrants if a registration statement covering the sale by the holder(s) of the shares of Common Stock issuable upon exercise of the warrants is current and effective on each day in the period commencing on the first day of call for redemption and ending sixty (60) days after the Redemption Date. In the event that, at any time subsequent to the date on which the warrants are called for redemption and before the Redemption Date, the shares of Common Stock issuable upon exercise or conversion of the warrants are not subject to a current and effective registration statement, our right to call the warrants for redemption shall terminate with respect to all warrants that have not then been exercised or converted. The Redemption Date shall be postponed for two (2) Trading Days for each day after the warrants are called for redemption that the Market Price of the Common Stock is less than the $8.13; provided, however, that if the Market Price shall be less than $8.13 for ten (10) consecutive Trading Days or fifteen (15) Trading Days during the period from the date the warrants are called for redemption to the Redemption Date, our right to redeem any warrants not theretofore exercised or converted shall terminate, subject to the right of the Company to call the remaining warrants for redemption.

If we were to sell or issue Common Stock at a price which is less than the Exercise Price then in effect, or warrants, options, convertible debt or equity securities with an exercise price per share or a conversion price which is less than the Exercise Price then in effect, the Exercise Price shall be adjusted immediately thereafter so that it shall equal the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares and the number of shares of Common Stock which the aggregate consideration received or receivable for the issuance of such additional shares would purchase at the Exercise Price then in effect, and the denominator of which shall be the number of shares of Common Stock outstanding immediately after the issuance of such additional shares (including a pro forma adjustment as though all such options, warrants and other convertible securities had been exercised or converted). Such adjustment shall be made successively whenever such an issuance is made. An adjustment shall not result in any change in the number of shares of Common Stock issuable upon exercise of this Warrant.

Penny Stock Regulations

Our shares of Common Stock are subject to the "penny stock" rules of the Securities Exchange Act of 1934 and various rules under this Act. In general terms, "penny stock" is defined as any equity security that has a market price less than $5.00 per share, subject to certain exceptions. The rules provide that any equity security is considered to be a penny stock unless that security is registered and traded on a national securities exchange meeting specified criteria set by the SEC, issued by a registered investment company, and excluded from the definition on the basis of price (at least $5.00 per share), or based on the issuer's net tangible assets or revenues. In the last case, the issuer's net tangible assets must exceed $3,000,000 if in continuous operation for at least three years or $5,000,000 if in operation for less than three years, or the issuer's average revenues for each of the past three years must exceed $6,000,000.

Trading in shares of penny stock is subject to additional sales practice requirements for broker-dealers who sell penny stocks to persons other than established customers and accredited investors. Accredited investors, in general, include individuals with assets in excess of $1,000,000 or annual income exceeding $200,000 (or $300,000 together with their spouse), and certain institutional investors. For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of the security and must have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security. Finally, monthly statements must be sent disclosing recent price information for the penny stocks. These rules may restrict the ability of broker-dealers to trade or maintain a market in our Common Stock, to the extent it is penny stock, and may affect the ability of shareholders to sell their shares.

Purchases of Equity Securities by the Company and Affiliated Purchasers

During the fourth quarter of our fiscal year ended December 31, 2008, neither we nor any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act) purchased any shares of our Common Stock, the only class of our outstanding equity securities registered pursuant to section 12 of the Exchange Act.

Recent Sales of Unregistered Securities

The following sets forth recent sales by the Company of unregistered securities during the fiscal year ended December 31, 2008:

On February 4, 2008, we received a commitment for $3.5 million in financing from three Chinese financial institutions, namely Total Shine Group Limited, Victory High Investments Limited and Think Big Trading Limited, in exchange for 1,301,481 shares of our Common Stock, a price of $2.70 per share. The proceeds were to be used exclusively to reduce debt from past acquisitions. The funds were to be paid in three installments: $600,000 was paid upon execution of the equity financing agreement, $1,400,000 is to be paid no later than February 28, 2008 and the balance of $1,514,000 is to be paid no later than ten days after the filing of our Annual report. The first round of financing closed on February 7, 2008. Proceeds from the first closing amounting to $599,994 were paid directly to the shareholders of Foshan Overseas International Travel Service Co., Ltd. (FOI) to satisfy an amount due to them under a note and we issued 222,222 shares of our Common Stock to Total Shine Group Limited, Victory High Investments Limited and Think Big Trading Limited. On May 7, 2008 we terminated the equity financing agreement with the financial institutions due to their failure to provide the remaining amounts according to the agreement.

On August 28, 2008, we entered into a Securities Purchase Agreement with Access America Fund, LP, Chinamerica Fund LP, Pope Investments II LLC, Heller Capital Investments, LLC, CGM as C/F Ronald I. Heller IRA, Investment Hunter, LLC, MARed Investments, High Capital Funding, LLC, and Merrill Lynch, Pierce, Fenner & Smith, FBO Beau L. Johnson (collectively, the “Buyers”) to sell to the Buyers 4,588,708 shares of common stock, of the Company and warrants to purchase 2,294,356 shares of common stock for an aggregate purchase price of $7,112,500. Each warrant has an exercise price of $2.71 and a term of 5 years from the date of issuance.

The private placements were exempt from registration under the Securities Act under Section 4(2) of the Securities Act and Rule 506 promulgated thereunder because the securities were offered only to nine purchasers, all of which were accredited investors, no general advertisement of the sale of securities was made, and all other requirements of the exemption were satisfied.

The following sets forth recent sales by the Company of unregistered securities during the fiscal year ending December 31, 2007:

On April 10, 2007, we, Full Power Enterprise Global Limited ("Full Power"), Shenzhen Yu Zhi Lu Aviation Service Company Limited (“YZL”), Shenzhen Speedy Dragon Enterprise Limited (“SSD”) and Song, entered into a share exchange agreement pursuant to which YZL acquired 100% of SSD in a stock and cash transaction valued at approximately US $4,000,000. Under the share exchange agreement, in exchange for his shares in SSD, Song received both stock consideration and cash consideration. The stock consideration consisted of

714,285 newly issued shares of our Common Stock.

On August 6, 2007, pursuant to a share exchange agreement, in exchange for the shares of Xi'an Golden Net Travel Serve Service Company Limited (“XGN”), we issued to the shareholders of XGN an aggregate of 151,765 shares of our Common Stock, which were divided proportionally among the shareholders in accordance with their respective ownership interests in XGN immediately before the closing of the share exchange agreement.

On August 8, 2007, pursuant to a share exchange agreement, in exchange for the shares of Shanghai Lanbao Travel Service Company Limited (“SLB”), we issued to the shareholders of SLB an aggregate of 600,000 shares of our Common Stock, which were divided proportionally among the shareholders in accordance with their respective ownership interests in SLB immediately before the closing of the share exchange agreement.

On October 29, 2007, pursuant to a share exchange agreement, in exchange for the shares of Foshan Overseas International Travel Service Co., Ltd. (“FOI”), we issued to the shareholders of FOI an aggregate of 1,122,986 shares of our Common Stock, which were divided proportionally among the shareholders in accordance with their respective ownership interests in FOI immediately before the closing of the share exchange agreement.

The shares of the our Common Stock were issued to Song and the shareholders without registration under Section 5 of the Securities Act in reliance on the exemption from registration contained in Section 4(2) of the Securities Act. Specifically, (1) we had determined that Song and the shareholders are knowledgeable and experienced in finance and business matters and thus they are able to evaluate the risks and merits of acquiring our securities; (2) Song and the shareholders have advised us that they are able to bear the economic risk of purchasing our common stock; (3) we have provided Song the shareholders with access to the type of information normally provided in a prospectus; and (4) we did not use any form of public solicitation or general advertising in connection with the issuance of the shares.

In addition, the shares of our Common Stock were issued to Song and the shareholders without registration under Section 5 of the Securities Act, in reliance on the exemption from registration contained in Regulation S under the Securities Act. We believe that the issuance of our Common Stock to Song and the shareholders (the "Offshore Shareholders") constituted an offshore transaction. Each of the Offshore Shareholders is a resident of China. At the time the Registrant offered to issue its shares to the Offshore Shareholders, each of the Offshore Shareholders was located in China. Furthermore, at the time we issued our Common Stock to the Offshore Shareholders, we reasonably believed that each of the Offshore Shareholders was outside the United States. As a result, we believed that these facts enable us to also rely on Regulation S for an exemption from the registration requirements of Section 5 of the Securities Act with respect to the issuances to the Offshore Shareholders.

The following sets forth recent sales by the Company of unregistered securities during the fiscal year ended December 31, 2006:

None.

No underwriter was involved in any of the above issuances of securities. All of the above securities were issued in reliance upon the exemptions set forth in Section 4(2) of the Securities Act on the basis that they were issued under circumstances not involving a public offering.

Other than the securities mentioned above, we have not issued or sold any securities without registration for the past three years from the date of this registration statement.

Item 6. Selected Financial Data.

The following selected consolidated financial data presented below are derived from our Consolidated Financial Statements and related Notes of the Company, and should be read in connection with those statements, some of which are included herein. The information set forth below is not necessarily indicative of future results and should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

UNIVERSAL TRAVEL GROUP

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE YEARS ENDED DECEMBER 31,

	2008			2007			2006

Gross revenues,	$	76,759,411		$	44,294,853		$	10,013,788
Cost of services		51,555,991			29,519,012			4,594,376
Gross Profit		25,203,420			14,775,841			5,419,412

Selling, general and administrative expenses		6,128,553			3,229,526			1,353,434

Stock based compensation		207,588			945,903			950,040

Total expenses		6,336,141			4,175,429			2,303,474

Income from operations		18,867,279			10,600,412			3,115,938

Other Income (Expense)
Loss on disposal of assets		1,105			-			-
Other income		(8,402	)		(25,105	)		(36,383	)
Interest income		(39,416	)		(3,293	)		(11,994	)
Interest expense		106,163			80,847			2,754
Total Other Income (Expense)		59,450			52,449			(45,623	)
Income before income taxes		18,807,829			10,547,963			3,161,561

Provision for income taxes		4,275,652			1,852,069			603,083
Net income	$	14,532,177		$	8,695,894		$	2,558,478

Net income per common share
Basic	$	.38		$	.26		$	.07
Diluted	$	.37		$	. .26		$	.07

Weighted average common shares outstanding
Basic		38,562,155			33.629,518			30,450,000
Diluted		38,744,392			33,779,518			30,450,000

UNIVERSAL TRAVEL GROUP

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2008 and 2007

	2008		2007
ASSETS
Current Assets
Cash and cash equivalents	$	16,204,531	$	2,671,684
Accounts receivable, net		10,715,206		5,403,820
Other receivables and deposits, net		141,413		1,297,426
Refundable acquisition deposit		-		1,453,050
Due from shareholder		-		1,444,818
Trade deposit		6,737,521		2,650,744
Advances		438,468		616,861
Escrow deposits		762,800		-
Prepaid expenses		319,257		713,668
Total Current Assets		35,319,196		16,252,071

Property & equipment, net		273,340		127,393
Intangible assets		307,335		18,626
Goodwill		13,526,809		13,526,809
		14,107,484		13,672,828

Total Assets	$	49,426,680	$	29,924,899

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Notes payable – bank	$	-	$	1,288,554
Note payable – others		-		1,576,750
Accounts payable and accrued expenses		2,219,156		3,604,666
Customer deposits		1,047,250		1,132,886
Income tax payable		1,759,402		664,995
Total Current Liabilities		5,025,808		8,267,851

Stockholders' Equity

Common stock, $.001 par value, 70,000,000 shares authorized, 41,619,966 and 36,809,036 issued and outstanding		41,621		36,810
Additional paid in capital		15,833,368		8,601,534
Other comprehensive income		1,520,166		545,164
Statutory reserve		372,144		372,144
Retained earnings		26,633,573		12,101,396
Total Stockholders' Equity		44,400,872		21,657,048
Total Liabilities and Stockholders' Equity	$	49,426,680	$	29,924,899

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements: No Assurances Intended

In addition to historical information, this Annual Report contains forward-looking statements, which are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” or similar expressions. These forward-looking statements represent Management’s belief as to the future of Universal Travel Group. Whether those beliefs become reality will depend on many factors that are not under management’s control. Many risks and uncertainties exist that could cause actual results to differ materially from those reflected in these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.

Business Overview

We are a travel services provider in the People’s Republic of China engaged in providing air ticketing and hotel booking services as well as domestic and international packaged tourism services throughout the People’s Republic of China via both the internet and customer representatives.

Under the theme "Wings towards a more colorful life", our core services revolve around travel services but we also provide air cargo agency services through our subsidiary, SSD.

In 2007, we completed the acquisitions of SSD, XGN, which specializes in domestic packaged tour services, SLB, which specializes in hotel reservations and FOI, which handles both domestic and international travel inquiries.

In 2008, we successfully integrated our packaged tours, air-ticketing and hotel reservation businesses onto our newly developed on-line platform, which provides rich and comprehensive travel information to primarily leisure travelers.

In October 2008, we successfully rolled out our TRIPEASY Kiosks. We believe that the Kiosks are innovate self-service terminals capable of handling a full range of booking services including packaged tours through a secured built-in payment function that accepts all major Chinese bank cards. As of the end of fiscal year 2008, we had 20 Kiosks manufactured and operating through a pilot program, and based on the initial interest of the concept industry-wide, we plan to roll additional TRIPEASY Kiosks at selected locations.

Major Factors Affecting the Travel Industry

A variety of factors affect the travel industry in the People’s Republic of China, and we shall be discussing these together with an analysis of our results of operations and financial condition.

Some of these factors include:

(i)	Growth in the Domestic Economy and Demand for Travel Services in the People’s Republic of China.

We expect that our financial results will continue to be affected by the overall growth of the domestic economy and demand for travel services in the People’s Republic of China and internationally.

According to the statistics from the website of the National Bureau of Statistics of China, the People’s Republic of China’s gross domestic product (or “GDP”) increased from RMB13.6 trillion (US$1.7 trillion) in 2003 to RMB24.7 trillion (US$3.4 trillion) in 2007, representing a compound annual growth rate of 16%. China's GDP increased from RMB24.7 trillion (US$3.4 trillion) in 2007 to RMB30.1 trillion (US$4.3 trillion) in 2008, representing a annual growth rate of 9%. Per capita, GDP rose from RMB10,542 (US$1,273) in 2003 to RMB18,665 (US$2,559) in 2007, representing a 15% compound annual growth rate; and from 2007 to 2008, grew from RMB18,665(US$2,559) to RMB22,609(US$3,308), representing year over year growth of 21%.

Such unprecedented growth has led to a significant increase in the demand for travel services.

According to statistics from the website of the National Tourism Administration of People's Republic of China, domestic tourism expenditure grew from RMB344.2 billion (US$41.6 billion) in 2003 to RMB777.1 billion (US$106.5 billion) in 2007, representing a compound annual growth of 23%. Expenditure increased from RMB777.1 billion (US$106.5 billion) in 2007 to RMB874.9 billion (US$120.0 billion) in fiscal 2008, representing year over year growth of 12.6%. These figures include a 1.4% year over year decline in inbound travel volume totaling $13.0 billion, which was affected by the global recession.

The number of outbound travelers (from the PRC to other countries) totaled 4.6million in 2008, an increase of 11.9% due to among other factors, the depreciation of foreign currencies versus the RMB.

According to the statistics from the website of the Civil Aviation Administration of China, domestic passenger transportation volume grew 3.3% in 2008 compared to 2007; and domestic air cargo volume grew 0.3% in 2008 versus 2007. Notably, fiscal 2008 was a period that saw several major events take hold including, but not limited to, the snow storms that battered numerous parts of the country throughout the Lunar New Year holiday period, the Tibetan political crisis, the major Sichuan earthquake and the Beijing Olympic games. Notwithstanding the unexpected events or drastic fluctuations in the social and economic environment, we believe that demand for travel services in the People’s Republic of China should continue to increase at a healthy rate over the next several years as the overall economy and per capita income continue to grow and show improvements.

(ii)	Seasonality in the Travel Service Industry.

The domestic travel services industry is characterized by seasonal fluctuations, and accordingly, our revenue patterns may vary from quarter to quarter. Since inception, revenue generated during the latter half of each calendar year has generally been higher than in the first half, due primarily to the fact that the latter half coincides with the peak domestic business and leisure travel. However, given that the central government modifies public holiday policies from time to time, and the fact that the Lunar New Year vacation period falls on varying days each year, seasonality is subject to minor inconsistencies on a comparable year over year basis. For example, the government authorized three new 3-day public holiday period during calendar 2008 to incentive domestic travel, and has further plans to further increase holiday periods in both 2009 and 2010. Such seasonality is difficult to discern throughout our operating history as our revenue stream has evolved and become more diversified as a result of our decision to gain scale through acquisitions, particularly over the last several years. Going forward, however, we anticipate that seasonality within our overall business will more closely relate to industry standards, as we focus more on organic growth, particularly with respect to the TRIPEASY Kiosk rollout, and less so on acquisitive expansion.

(iii)

Disruptions in the Travel Industry.

Because travel patterns are typically sensitive to inclement weather, one-time events and as previously mentioned, seasonality issues, travelers tend to modify their travel plans in advance or in many cases with minimal notice depending on the situation foreseen or unforeseen.

Examples of specific events that occurred during 2008 and hence altered travel patterns include:

•

snow storms which affected a large part of the country during the Lunar New Year Holiday period;

•

the summer Olympics in August, which led to an increase in both travel product offerings as well as hotel, airline and other travel-related pricing;

•

the major earthquakes in May 2008 and the aftermath which heavily affected travel in the Sichuan area;

•

the threat of terrorist attacks and increased security over international events, which affected our cargo agency business; and

•

a sharp downturn throughout the major international financial centers such as the United States and Europe.

RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 2008 AND 2007

The following table presents certain consolidated statement of operations information derived from the consolidated statements of income for the three months ended December 31, 2008 and 2007.

Revenue Segment Analysis:

	Three months ended December 31, 2008			Three months ended December 31, 2007			Increase / (Decrease)			Percentage
Revenue	$	29,434,725		$	17,495,408			11,939,317			68.2	%
Cost of services		(19,090,311	)		(12,099,577	)		(6,990,734	)		57.8	%
Gross Profit		10,344,414			5,395,831			4,948,583			91.7	%
Selling, General and Administration		(2,103,832	)		(1,007,119	)		(1,096,713	)		108.9	%
Stock based compensation		(51,786	)		(312,543	)