New Taohuayuan Cultr (GREY:NTYN)

Future Developments and Strategy

• We purchased land use rights covering approximately 848 undeveloped acres in the city of Lantian for a one-time cost (including taxes) of $16,198,000. Lantian is located approximately 23 miles from Xi'an. The land use rights, which expire in 2045, permit us to use the land to build a mixed-use development that will include condominium units, hotel rooms, single-family residences, educational facilities and commercial developments. We will supervise the design, construction and development of this project. We will operate the project once it is complete.
  
• We have also obtained land use rights covering approximately 7.5 undeveloped acres in Xi'an for a one time cost of $1,258,000. The land use rights, which expire in 2037, permit us to build a new 150 room, 270 bed, hotel and resort on the property. The new development, named the New Hainan hotel and resort, will be water oriented with the hotel surrounding a one-acre pool. Smaller pools and beaches will compliment the main pool. We will supervise the design, construction and development of this project. We will operate the project once it is complete.

 As of March 15, 2010 expenditures for the Lantian and New Hainan projects have been funded with cash from our operations and proceeds from the sale of our common stock. We expect to finance the remaining costs for the Lantian and New Hainan projects through cash from our operations and loans. Loans would be collateralized by the property and issued in conjunction with the government. As of March 25, 2009 we did not have any firm commitments from any third party with respect to financing either project. If required financing is not be available the development of the projects may take additional time or we may be unable to develop the projects.