- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2011

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______________ to _____________

Commission file number: 001-34284

UNIVERSAL TRAVEL GROUP

(Exact name of registrant as specified in its charter)

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

9F, Building A, Rongchao Marina Bay Center
NO. 2021 Haixiu Road, Bao’an District, Shenzhen
People’s Republic of China		518133
(Address of principal executive offices)		(Zip Code)

86 755 836 68489

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed 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. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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	¨	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

APPLICABLE ONLY TO ISSUERS 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 Sections 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. Yes ¨ No ¨

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

As of November 14, 2011, there were 19,898,235 shares of $0.001 par value common stock issued and outstanding.

FORM 10-Q

UNIVERSAL TRAVEL GROUP

INDEX

		Page

PART I.	Financial Information	1

	Item 1. Financial Statements (Unaudited).	1

	Report of Independent Registered Public Accounting Firm	2

	Condensed Consolidated Balance Sheets as of September 30, 2011 (Unaudited) and December 31, 2010	4

	Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2011 and 2010	5

	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010	6

	Notes to Unaudited Condensed Consolidated Financial Statements as of September 30, 2011	7

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	22

	Item 3. Quantitative and Qualitative Disclosures About Market Risk.	36

	Item 4. Controls and Procedures.	36

PART II.	Other Information	36

	Item 1. Legal Proceedings.	36

	Item 1A. Risk Factors.	37

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	37

	Item 3. Defaults Upon Senior Securities.	37

	Item 4. (Removed and Reserved).	37

	Item 5. Other Information.	37

	Item 6. Exhibits.	37

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

UNIVERSAL TRAVEL GROUP

CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Universal Travel Group

We have reviewed the accompanying consolidated balance sheet of Universal Travel Group as of September 30, 2011, and the related consolidated statements of income and comprehensive income and cash flows for the three-month and nine-month periods ended September 30, 2011 and 2010. These consolidated financial statements are the responsibility of the company’s management.

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

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

We have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Universal Travel Group as of December 31, 2010, and the related consolidated statements of income and comprehensive income, changes in stockholders' equity and cash flows for the year then ended (not presented herein); and in our report dated June 06, 2011, we expressed an unqualified opinion on those consolidated financial statements.

/s/ EFP Rotenberg, LLP

EFP Rotenberg, LLP

Rochester, New York

November 11, 2011

TABLE OF CONTENTS

Condensed Consolidated Balance Sheets		4

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income		5

Unaudited Condensed Consolidated Statements of Cash Flows		6

Notes to the Unaudited Condensed Consolidated Financial Statements		7-21

UNIVERSAL TRAVEL GROUP

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,		December 31,
	2011		2010
	Unaudited
ASSETS
Cash and cash equivalents	$	53,007,049	$	39,618,988
Restricted Cash		1,186,507		307,027
Short term investments		31,306,253		19,681,308
Accounts receivable, net		36,052,088		38,658,011
Other receivables and deposits, net		957,639		780,400
Trade deposit		8,513,958		8,173,426
Prepayments		1,924,736		1,216,857
Note receivable		-		2,314,259
Total Current Assets		132,948,230		110,750,276

Property & equipment, net		1,551,522		1,692,595
Intangible assets, net		2,582,847		3,110,882
Goodwill		24,508,909		24,508,909
Total Noncurrent Assets		28,643,278		29,312,386
Total Assets	$	161,591,508	$	140,062,662

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	6,590,661	$	5,045,674
Customer deposits		2,654,645		2,203,487
Income tax payable		2,413,347		3,189,965
Total Current Liabilities		11,658,653		10,439,126

Warrants - derivative liability		318,011		810,929
Deferred tax liability		477,397		477,397
Long-term income tax payable		30,804		30,804
Total Liabilities		12,484,865		11,758,256

Stockholders' Equity
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively.		-		-
Common stock, $.001 par value, 70,000,000 shares authorized, 19,898,235 issued and outstanding at September 30, 2011 and December 31, 2010, respectively		19,898		19,898
Additional paid in capital		66,553,890		64,171,555
Statutory reserve		1,062,741		1,062,741
Retained earnings		74,422,024		59,624,186
Accumulated other comprehensive income		7,048,090		3,426,026
Total Stockholders' Equity		149,106,643		128,304,406
Total Liabilities and Stockholders' Equity	$	161,591,508	$	140,062,662

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

UNIVERSAL TRAVEL GROUP

UNAUDITED CONDENSED CONSOLIDATED

STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,

	For the nine months ended						For the three months ended
	September 30,						September 30,
	2011			2010			2011			2010
				Restated						Restated
Revenues
Air ticketing, net	$	15,759,318		$	14,439,187		$	5,478,545		$	5,736,699
Hotel reservation, net		9,330,719			10,862,393			2,940,988			4,400,270
Packaged tours, gross		83,374,997			72,507,188			33,388,230			35,379,897
		108,465,034			97,808,768			41,807,763			45,516,866
Cost of services
Air ticketing, net		5,973,132			4,913,895			2,139,745			2,080,605
Hotel reservation, net		1,714,886			3,533,764			177,190			1,554,191
Packaged tours, gross		73,115,397			62,902,349			29,394,177			30,410,425
		80,744,015			71,350,008			31,711,112			34,045,221

Gross Profit		27,721,019			26,458,760			10,096,651			11,471,645

Selling, general and administrative expenses		(7,881,889	)		(5,681,325	)		(2,310,377	)		(2,038,141	)
Gain on disposal of fixed assets		66,511			65,853			66,511			65,853
Income from operations		19,905,641			20,843,288			7,852,785			9,499,357

Other income (expense)
Other income (expense)		(18,040	)		6,900			(538	)		(17	)
Gain on change of fair value of derivative liabilities		492,918			1,253,181			47,702			304,177
Interest income		537,192			56,434			302,371			17,723
Total other income		1,012,070			1,316,515			349,535			321,883

Income before income taxes		20,917,711			22,159,803			8,202,320			9,821,240

Provision for income taxes		6,119,873			5,608,744			2,301,785			2,547,194
Net Income	$	14,797,838		$	16,551,059		$	5,900,535		$	7,274,046

Comprehensive Income
Net income	$	14,797,838		$	16,551,059		$	5,900,535		$	7,274,046
Foreign currency translation adjustments		3,622,064			442,984			1,283,504			897,063
Total Comprehensive income	$	18,419,902		$	16,994,043		$	7,184,039		$	8,171,109

Net income per common share
Basic	$	0.74		$	0.92		$	0.30		$	0.37
Diluted	$	0.73		$	0.88		$	0.30		$	0.36

Weighted average common shares outstanding
Basic		19,898,235			18,020,554			19,898,235			19,898,235
Diluted		20,214,140			18,792,520			19,981,063			20,373,536

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

UNIVERSAL TRAVEL GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	14,797,838		$	16,551,059
Add:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		925,383			1,254,187
Provision for doubtful accounts		-			59,578
Stock based compensation		2,382,335			990,846
(Gain)/Loss on change in fair value of derivative liabilities		(492,918	)		(1,253,181	)
(Gain)/Loss on sales of fixed assets		(66,511	)		(65,853	)
(Increase) / decrease in assets:
Restricted cash		(855,372	)		(73,488	)
Accounts receivable		3,896,226			(7,730,724	)
Other receivable		(147,652	)		924,561
Due from related parties		-			(995,798	)
Advances		-			440,115
Prepayments		(655,102	)		(792,128	)
Trade deposits		(53,998	)		2,118,139
Increase / (decrease) in current liabilities:
Accounts payable and accrued expenses		1,347,551			3,605,152
Customer deposits		368,378			308,915
Income tax payable		(874,444	)		658,821
Net cash provided by operating activities		20,571,714			16,000,201

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property & equipment		(208,273	)		(2,779,988	)
Purchase of intangibles		-			(51,359	)
Proceeds from sale of fixed assets		171,108			5,599,590
(Increase)/Decrease in short term investments		(10,768,621	)		-
(Increase)/Decrease in notes receivable		2,358,273			(3,028,571	)
Acquisition deposits		-			497,330
Cash paid for acquisition – net of cash acquired		-			(15,782,799	)
Net cash (used in) investing activities		(8,447,513	)		(15,545,797	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of equity financing		-			18,768,054
Net cash provided by financing activities		-			18,768,054

Effect of exchange rate changes on cash and cash equivalents		1,263,860			690,945

Net change in cash and cash equivalents		13,388,061			19,913,403
Cash and cash equivalents, beginning balance		39,618,988			36,574,741
Cash and cash equivalents, ending balance	$	53,007,049		$	56,488,144

SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest payments	$	-		$	-
Income taxes	$	6,896,491		$	4,271,081

Purchased goodwill	$	-		$	(14,612,639	)
Purchased intangible assets		-			(3,236,376	)
Fair value of assets purchased less cash acquired		-			(767,602	)
Acquisition financed with stock issuance		-			2,833,818
Acquisition paid for with cash - net of acquired	$	-		$	(15,782,799	)

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

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 1 - ORGANIZATION

Universal Travel Group was incorporated on January 28, 2004 under the laws of the State of Nevada. Full Power Enterprise Global Limited was incorporated under the laws of the British Virginia Islands. Shenzhen Yuzhilu Aviation Service Co., Ltd. was incorporated on March 9, 1998 under the laws of the People’s Republic of China (PRC)., Xi’an Golden Net Travel Serve Services Co., Ltd. was incorporated on July 25, 2001 under the laws of PRC, Shanghai Lanbao Travel Service Co., Ltd. was established in 2002 under the laws of PRC. Foshan Overseas International Travel Service Co., Ltd. was incorporated in 1990 under the laws of PRC. Chongqing Universal Travel E-Commerce Co., Ltd. and Universal Travel International Travel Agency Co., Ltd. (formerly named Shenzhen Universal Travel Agency Co., Ltd.) were both incorporated in 2009 under the laws of PRC. Hebei Tianyuan Travel Agency Co., Ltd. was incorporated in April 1999 under the laws of PRC. Huangshan Holiday Travel Service Co., Ltd. was incorporated in April 1999 under the laws of PRC. Zhengzhou Yulongkang Travel Agency Co., Ltd. was incorporated in 2000 under the laws of PRC. Kunming Business Travel Service Co., Ltd. was incorporated in 1993 under the laws of PRC. Shanxi Jinyang Travel Agency Co., Ltd. was incorporated in 1988 under the laws of PRC. Collectively these corporations are referred to herein as the Company.

Universal Travel Group owns 100% of the equity interest in Full Power Enterprise Global Limited, which in turn owns 100% of the equity interest in Shenzhen Yuzhilu Aviation Service Co., Ltd., a wholly foreign owned entity in the PRC. Universal Travel Group and Full Power Enterprise Global Limited do not conduct any substantive operations of their own. Instead, all operations of the consolidated company are conducted through its subsidiary, Shenzhen Yuzhilu Aviation Service Co., Ltd. (“YZL”). YZL and its subsidiaries, and various variable interest entities, collectively, are herein referred to as subsidiaries.

In 2007 and 2009, YZL entered into certain shareholding agreements with various related PRC residents and Shenzhen Yuzhixing Aviation Service, Co. Limited (“Party B”) to hold YZL shares of ownership of Xi’an Golden Net Travel Serve Services Co., Ltd. (“XGN”) and Universal Travel International Travel Agency Co., Ltd., formerly known as Shenzhen Universal Travel Agency Co., Ltd. (“STA”).The significant details of the agreements and other important information, among others, are outlined below:

Universal Travel Group funded the start up activities and incorporation of XGN and STA and related subsidiaries, through cash or common stock issuance;

YZL entrusted Party B as the name holder only of YZL equity interest in XGN and STA;

Party B shall neither participate in the management of operation nor shareholder meeting decisions of YZL, XGN or STA;

YZL, as the actual fund provider of XGN and STA, will enjoy all shareholder rights and profit sharing;

YZL, is entitled to all profits and is required to absorb all losses of XGN and STA and its subsidiaries;

Party B is not responsible for losses nor to benefit from any income of XGN and/or STA;

YZL will cover any capital infusion requirements of XGN and STA and related subsidiaries; and

If XGN and/or STA were to dissolve, YZL will enjoy the right to allocate and divide assets.

Based on these contractual arrangements, management believes that XGN and STA and related subsidiaries should be considered “Variable Interest Entity” (“VIE”) under ASC 810 “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51”, because the equity holders in XGN and STA no longer have the characteristics of a controlling financial interest, and the Company, through YZL, is the primary beneficiary of XGN and STA and its operations.

On March 17, 2011, the shareholders of XGN transferred 100% of the equity interests in XGN to STA and completed the registration of change in ownership with the PRC authorities on April 2, 2011. As a result, XGN is no longer subject to the aforementioned VIE arrangements and is no longer considered our VIE under ASC 810.

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 1 - ORGANIZATION (CONTINUED)

Universal Travel Group and YZL are responsible to fund any capital share shortfalls for STA and its subsidiaries. In addition, Universal Travel Group funded through cash and common stock the acquisitions as discussed in Note 2.

The Company, through its subsidiaries and VIE, engaged in the travel business, including airline ticketing, hotel reservation services and domestic and international packaged tour services in the PRC.

The following diagram illustrates our corporate structure.

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These accompanying condensed financial statements present the Company's results of operations, financial position and cash flows on a consolidated basis. The condensed consolidated financial statements include Universal Travel Group and its wholly-owned subsidiaries and its subsidiaries owned through shareholding agreements with Chinese residents, significant intercompany transactions and accounts have been eliminated in consolidation. Our policy is to consolidate all subsidiaries in which we hold a greater than 50% voting interest or otherwise control its operating activities and financial interest. It is management's opinion that all adjustments necessary for a fair statement of the results for the interim periods have been made, and all adjustments are of a normal recurring nature. The results of operations for the nine-month period ended September 30, 2011, are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2010, previously filed with the Securities and Exchange Commission (“SEC”).

The Company operates in three segments in accordance with accounting guidance FASB ASC Topic 280, “Segment Reporting.” Our Chief Executive Officer has been identified as the chief operating decision maker as defined by FASB ASC Topic 280.

Reclassification

Certain prior-year amounts have been reclassified to conform to the current-year presentation. These reclassifications had no effect on reported income or losses.

Acquisitions

In March and June of 2010, the Company had five acquisitions to fit its geographic expansion strategy, and in all and every acquisition, the Company negotiated in arm's length with acquisition target and got the approval from our board of directors before closing.

On June 28, 2010, the Company through its VIE structure and strategy consummated the acquisition of a 100% interest in Kunming Business Travel Agency Co., Ltd. (“KBT”) through a cash and stock transaction valued at approximately US$5.7 million in the aggregate.

The stock consideration consisted of 79,487 newly issued shares of the company's common stock, which were given to KBT’s shareholder immediately before the completion of the share exchange transaction. The cash consideration consisted of $5,163,625. The shares were valued at $572,243, which was the average fair value of the shares 15 days prior to the date of the exchange agreement. This amount is included in the cost of net assets, identified intangible assets, and goodwill purchased.

KBT is engaged in the business of Chinese domestic tourism. The purchase price was determined based on arms' length negotiations between Universal Travel Group and the shareholder of KBT, and approved by our board of directors.

The acquisition had been accounted for as a purchase business combination and the results of operations from the acquisition date have been included in the Company's consolidated financial statements in accordance with ASC810. The allocation of the purchase price is as follows:

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Acquisitions (Continued)

Cash acquired	$	814,097
Other assets		441,494
Property Plant & Equipment		80,121
Identifiable Intangibles		892,898
Goodwill		3,977,608
Total assets acquired		6,206,218
Liabilities assumed
Accounts & Income Taxes payable		174,732
Deferred Tax Liability		223,224
Other payable		72,394
Total	$	5,735,868

The fair value of identifiable intangible assets was measured by the independent professional appraiser, primarily including reputation of company's name and customer list. The amortization period of 5 years was based on the estimated useful life of reputation of company's name and its customer list.

The excess of purchase price over tangible assets acquired and liabilities assumed was $4,870,506 of which $3,977,608 was recorded as goodwill. At the time of the acquisition $892,898 of identifiable intangible assets and related deferred tax liability of $223,224 existed under the contractual legal or the reparability criterion as required under ASC 805 and ASC 740, respectively.

Prior to the acquisition, KBT prepared its financial statements under accounting principles generally accepted in the United States of America.

On June 28, 2010, the Company through its VIE structure and strategy consummated the acquisition of a 100% interest in Shanxi Jinyang Travel Agency Co., Ltd. (“SJT”) through a cash and stock transaction valued at approximately US$2.3 million in the aggregate.

The stock consideration consisted of 31,387 newly issued shares of the company's common stock, which were given to SJT’s shareholder immediately before the completion of the share exchange transaction. The cash consideration consisted of $2,038,946. The shares were valued at $225,986, which was the average fair value of the shares 15 days prior to the date of the exchange agreement. This amount is included in the cost of net assets, identified intangible assets, and goodwill purchased.

SJT is engaged in the business of Chinese domestic tourism. The purchase price was determined based on arms' length negotiations between Universal Travel Group and the shareholder of SJT, and approved by our board of directors.

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Acquisitions (Continued)

Cash acquired	$	7,258
Other assets		534,373
Property Plant & Equipment		20,339
Identifiable Intangibles		361,124
Goodwill		1,609,816
Total assets acquired		2,532,910
Liabilities assumed
Accounts & Income Taxes payable		78,574
Deferred Tax Liability		90,281
Other payable		99,123
Total	$	2,264,932

The excess of purchase price over tangible assets acquired and liabilities assumed was $1,970,940 of which $1,609,816 was recorded as goodwill. At the time of the acquisition $361,124 of identifiable intangible assets and related deferred tax liability of $90,281 existed under the contractual legal or the reparability criterion as required under ASC 805 and ASC 740, respectively.

Prior to the acquisition, SJT prepared its financial statements under accounting principles generally accepted in the United States of America.

On March 29, 2010 the Company through its VIE structure and strategy consummated the acquisition of a 100% interest in Zhengzhou Yulongkang Travel agency Co. Ltd (“ZYT”) through a cash and stock transaction valued at approximately US$5.7 million in the aggregate.

The stock consideration consisted of 60,633 newly issued shares of the Company’s common stock, which were given to ZYT’s shareholder immediately before the completion of the share exchange transaction. The cash consideration consisted of $5,141,764. The shares were valued at $571,172, which was the average fair value of the shares 15 days prior to the date of the exchange agreement. This amount is included in the cost of net assets, identified intangible assets, and goodwill purchased.

ZYT is engaged in the business of Chinese domestic tourism. The purchase price was determined based on arms' length negotiations between Universal Travel Group and the shareholder of ZYT and was approved by our board of directors.

The acquisition had been accounted for as a purchase business combination and the results of operations from the acquisition date have been included in the Company's consolidated financial statements in accordance with ASC 810. The allocation of the purchase price is as follows:

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Acquisitions (Continued)

Cash acquired	$	1,513,636
Accounts receivable		29,154
Other assets		11,779
Property Plant & Equipment		29,019
Identifiable Intangibles		805,626
Goodwill		3,812,004
Total assets acquired		6,201,218
Liabilities assumed
Accounts & Income Taxes payable		230,107
Deferred Tax Liability		201,406
Other payable		56,769
Total	$	5,712,936

The excess of purchase price over tangible assets acquired and liabilities assumed was $4,617,630 of which $3,812,004 was recorded as goodwill. At the time of the acquisition $805,626 of identifiable intangible assets and related deferred tax liability of $201,406 existed under the contractual legal or the reparability criterion as required under ASC 805 and ASC 740, respectively.

Prior to the acquisition, ZYT prepared its financial statements under accounting principles generally accepted in the United States of America.

On March 26, 2010 the Company through its VIE structure and strategy consummated the acquisition of a 100% interest in Huangshan Holiday Travel Service Co., Ltd. (“HHT”) through a cash and stock transaction valued at approximately US$2.9 million in the aggregate.

The stock consideration consisted of 61,846 newly issued shares of the company’s common stock, which were given to HHT’s shareholder immediately before the completion of the share exchange transaction. The cash consideration consisted of $2,343,824. The shares were valued at $585,691, which was the average fair value of the shares 15 days prior to the date of the exchange agreement. This amount is included in the cost of net assets, identified intangible assets, and goodwill purchased.

HHT is engaged in the business of Chinese domestic tourism. The purchase price was determined based on arms' length negotiations between Universal Travel Group and the shareholder of HHT, and approved by our board of directors.

The acquisition had been accounted for as a purchase business combination and the results of operations from the acquisition date have been included in the Company's consolidated financial statements in accordance with ASC 810. The allocation of the purchase price is as follows:

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Acquisitions (Continued)

Cash acquired	$	340,174
Accounts receivable		21,450
Other assets		452,193
Property Plant & Equipment		69,682
Identifiable Intangibles		479,870
Goodwill		1,892,511
Total assets acquired		3,255,880
Liabilities assumed
Accounts & Income Taxes payable		176,863
Deferred Tax Liability		119,968
Other payable		29,534
Total	$	2,929,515

The excess of purchase price over tangible assets acquired and liabilities assumed was $2,372,381 of which $1,892,511 was recorded as goodwill. At the time of the acquisition $479,870 of identifiable intangible assets and related deferred tax liability of $119,968 existed under the contractual legal or the reparability criterion as required under ASC 805 and ASC 740, respectively.

Prior to the acquisition, HHT prepared its financial statements under accounting principles generally accepted in the United States of America.

On March 29, 2010 the Company through its VIE structure and strategy consummated the acquisition of a 100% interest in Hebei Tianyuan Travel Agency Co., Ltd (“HTT”) through a cash and stock transaction valued at approximately US$4.4 million in the aggregate.

The stock consideration consisted of 93,282 newly issued shares of the company’s common stock, which were given to HTT’s shareholder immediately before the completion of the share exchange transaction. The cash consideration consisted of $3,519,736. The shares were valued at $878,726, which was the average fair value of the shares prior to the date of the exchange agreement. This amount is included in the cost of net assets, identified intangible assets, and goodwill purchased.

HTT is engaged in the business of Chinese domestic tourism. The purchase price was determined based on arms' length negotiations between Universal Travel Group and the shareholder of HTT, and approved by our board of directors.

The acquisition had been accounted for as a purchase business combination and the results of operations from the acquisition date have been included in the Company's consolidated financial statements in accordance with ASC 810. The allocation of the purchase price is as follows:

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Acquisitions (Continued)

Cash acquired	$	532,349
Accounts receivable		120,152
Other assets		208,771
Property Plant & Equipment		49,637
Identifiable Intangibles		696,858
Goodwill		3,320,700
Total assets acquired		4,928,467
Liabilities assumed
Accounts & Income Taxes payable		232,188
Deferred Tax Liability		174,215
Other payable		123,602
Total	$	4,398,462

The excess of purchase price over tangible assets acquired and liabilities assumed was $4,017,558 of which $3,320,700 was recorded as goodwill. At the time of the acquisition $696,858 of identifiable intangible assets and related deferred tax liability of $174,215 existed under the contractual legal or the reparability criterion as required under ASC 805 and ASC 740, respectively.

Prior to the acquisition, HTT prepared its financial statements under accounting principles generally accepted in the United States of America.

On March 17, 2011, the shareholders of XGN transferred 100% of the equity interests in XGN to STA and completed the registration of change in ownership with the PRC authorities on April 2, 2011. As a result, XGN became a wholly owned subsidiary of STA. The Company, though its VIE, STA, acquired a 100% interest in XGN.

Translation Adjustment

As of September 30, 2011 and December 31, 2010, the accounts of Universal Travel Group were maintained, and its condensed financial statements were expressed, in Chinese Yuan Renminbi (CNY). Such financial statements were translated into U.S. Dollars (USD) in accordance with the Foreign Currency Matters Topic of the FASB Accounting Standards Codification (“ASC 830”) with the CNY as the functional currency. According to the Statement, all assets and liabilities were translated at the current exchange rate, stockholders equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with the Comprehensive Income Topic of the FASB Accounting Standard Codification (“ASC 830”). Transaction gains and losses are reflected in the income statement and such differences may be material to the financial statements.

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

The preparation of condensed financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and such differences maybe material to the financial statements. The more significant estimates and assumptions made by management include among others, consolidation of VIE's, allowance for doubtful accounts, long-lived asset impairment, useful lives and residual values of fixed assets, stock based compensation, valuation of warrant derivative liability, purchase price allocation of fair market value of assets and liabilities acquired and deferred income taxes. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Universal Travel Group and its wholly owned subsidiaries and Variable Interest Entities, including Shenzhen Yuzhilu Aviation Service Co., Ltd., Shanghai Lanbao Travel Service Co., Ltd., Xi’an Golden Net Travel Serve Services Co., Ltd., Foshan Overseas International Travel Service Co. Ltd., Chongqing Universal Travel E-Commerce Co., Ltd., Universal Travel International Travel Agency Co., Ltd., Hebei Tianyuan Travel Agency Co., Ltd., Huangshan Holiday Travel Service Co., Ltd., Zhengzhou Yulongkang Travel Agency Co., Ltd., Kunming Business Travel Service Co., Ltd., Shanxi Jinyang Travel Agency Co., Ltd., and Full Power Enterprise Global Limited, collectively referred to herein as the Company. All material inter-company accounts, transactions and profits have been eliminated in consolidation.

Risks and Uncertainties

The Company's operation is located in the PRC. There can be no assurance that the Company will be able to successfully continue the operation and failure to do so would have a material adverse effect on the Company's financial position, results of operations and cash flows. Also, the success of the Company's operations is subject to numerous contingencies, some of which are beyond management's control. These contingencies include general economic conditions, competition, governmental and political conditions, and changes in regulations. Among other risks, the Company's operations will be subject to risk of restrictions on transfer of funds, domestic and international customs, changing taxation policies, foreign exchange restrictions, and political and governmental regulations.

Contingencies

Certain conditions may exist as of the date the condensed financial statements are issued. These conditions may result in a future loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

If the assessment of a contingency indicates that it is probable given the current economic environment that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Contingencies (Continued)

On April 15, 2011, the plaintiff Albert Snellink commenced putative class action in the United States District Court, District of New Jersey against Universal Travel Group, and Jiangping Jiang, Yizhao Zhang and Jing Xie, officers of the Company. In the complaint, plaintiff alleges a claim for violations of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), against all defendants, and a claim for a violation of Section 20(a) of the Exchange Act against the individual defendants in connection with purported misrepresentations contained in the Company’s public filings and press releases. The complaint seeks unspecified compensatory damages, and his costs incurred in the action. The Company’s time to answer or move with respect to the complaint has not yet expired. The Company believes that the allegations of complaint are without merit, and intends to vigorously defend the lawsuit.

On May 20, 2011, the plaintiff Alex Loeb commenced a derivative action in the First Judicial District Court of the State of Nevada in and for Carson City against Universal travel Group, and Jiangping Jiang, Jing Xie, Huijie Gao, Jiduan Yuan, Lizong Wang, Wenbin An, Lawrence Lee, Yizhao Zhang and Liquan Wang, officers and directors of the Company. In the complaint, plaintiff purports to assert derivative claims against the individual defendants for alleged breaches of fiduciary duties, waste of corporate assets and unjust enrichment based upon alleged conduct of the individual defendants which damaged the Company’s reputation, goodwill and standing in the business community. The complaint also alleges that such conduct may result in liability for violations of federal law. The complaint seeks, among other relief, the amount of damages sustained by the Company as a result of the Defendants’ breach of fiduciary duties, waste of corporate assets and unjust enrichment and plaintiff’s counsel’s, accountant’s and experts’ fees. On June 17, 2011, the Company filed an answer to the compliant in which the Company denied the material allegations of the complaint. The Company intends to vigorously defend the lawsuit.

As of September 30, 2011, the Company is not involved in any another material legal dispute, other than those disclosed above.

Net Income (Loss) Per Share

The Company accounts for net income (loss) per share EPS in accordance with FASB Accounting Standards Codification Topic on Earning Per Share (“ASC 260”), which requires presentation of basic and diluted EPS on the face of the statement of income for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period. It excludes the dilutive effects of potentially issuable common shares such as those related to the Company’s warrants and stock options (calculated using the treasury stock method) because they are antidilutive. Diluted net income (loss) per share is calculated by including potentially dilutive share issuances in the denominator.

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net Income (Loss) Per Share (Continued)

The following table sets forth the computation of basic and diluted earnings per share of common stock:

	Nine months ended				Three months ended
	September 30,				September 30,
	2011		2010		2011		2010
Basic earnings per share:
Numerator:
Net income used in computing basic earnings per share	$	14,797,838	$	16,551,059	$	5,900,535	$	7,274,046
Net income applicable to common shareholders	$	14,797,838	$	16,551,059	$	5,900,535	$	7,274,046

Denominator:
Weighted average common shares outstanding		19,898,235		18,020,554		19,898,235		19,898,235
Basic earnings per share	$	0.74	$	0.92	$	0.30	$	0.37

Diluted earnings per share:
Numerator:
Net income used in computing basic earnings per share	$	14,797,838	$	16,551,059	$	5,900,535	$	7,274,046
Net income applicable to common shareholders	$	14,797,838	$	16,551,059	$	5,900,535	$	7,274,046

Denominator:
Weighted average common shares outstanding		19,898,235		18,020,554		19,898,235		19,898,235
Weighted average effect of dilutive securities:
Stock options and warrants		315,905		771,966		82,828		475,301

Shares used in computing diluted net income per share		20,214,140		18,792,520		19,981,063		20,373,536
Diluted earnings per share from continuing operations	$	0.73	$	0.88	$	0.30	$	0.36

Total net income per common share
Basic	$	0.74	$	0.92	$	0.30	$	0.37
Diluted	$	0.73	$	0.88	$	0.30	$	0.36

Recent Accounting Pronouncements

In June 2011, the FASB issued guidance related to the presentation of comprehensive income in the financial statements. The new accounting guidance eliminates the option to present the components of other comprehensive income as part of the statement of shareholders' equity. Under the new guidance, the Company must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. This guidance will be effective during the interim and annual periods beginning after December 15, 2011 with early adoption permitted. The adoption of this standard will not have an impact on the Company's consolidated financial position results of operations or cash flows as it only requires a change in the format of the current presentation.

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)

In May 2011, the FASB issued guidance related to fair value measurement and disclosures in the financial statements. This guidance conforms the wording to describe many of the requirements in U.S. GAAP to International Financial Reporting Standards to ensure the related standards are consistently applied. The guidance also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This new guidance is effective during interim and annual periods beginning after December 15, 2011 and is to be applied prospectively. The adoption of this standard will not materially expand the Company's consolidated financial statement footnote disclosures.

Note 3 – SHORT-TERM INVESTMENT

As of September 30, 2011, the Company has invested $31,306,253 into Happyfund of Shanghai Pudong Development Bank with an interest rate of 6%. The investment consists of CD account with one year maturity. Accordingly it is classified as a short term investment in the accompanying financial statements.

Note 4 - INCOME TAXES

The Company is subject to U.S. federal income tax, and the Company’s subsidiaries incorporated in the PRC are subject to enterprise income taxes in the PRC.

During the three months ended September 30, 2011 and 2010, the Company recorded an income tax expense of approximately $2.3 million and $2.5 million, respectively. The decrease in the Company’s income tax expense for the three months was primarily due to the decrease of profits of its PRC subsidiaries and VIE. During the nine months ended September 30, 2011 and 2010, the Company recorded an income tax expense of approximately $6.1 million and $5.6 million, respectively. The increase in the Company’s income tax expense for the nine months was primarily due to the actual effective tax rate for the nine months..

The effective tax rate increased by 2% from a 26% effective rate for the three months ended September 30, 2010 to a 28% effective rate for the three months ended September 30, 2011. The effective tax rate increased by 4% from 25% for the nine months ended September 30, 2010 to 29% for the nine months ended September 30, 2011.

As of September 30, 2011, unrecognized tax benefits were $30,804. The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate was $30,804 at September 30, 2011. As of September 30, 2010, unrecognized tax benefits were $0. The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate was $0 at September 30, 2010.

For the three months ended September 30, 2011 and 2010, the Company recorded uncertain tax benefits of approximately $0 and $0, respectively. For the nine months ended September 30, 2011 and 2010, the Company recorded uncertain tax benefits of approximately $0 and $0, respectively.

Aggregate undistributed earnings of approximately $106 million as of September 30, 2011 of the Company's PRC subsidiaries that are available for distribution to the Company are considered to be indefinitely reinvested, and, accordingly, no provision has been made for the PRC dividend withholding taxes that would be payable upon distribution to the Company. Additionally, the PRC tax authorities have clarified that distributions made out of pre-January 1, 2008 retained earnings would not be subject to the withholding tax.

The Company's tax years from 2006 to 2010 remain open in various jurisdictions.

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 5 - SEGMENT INFORMATION

Pursuant to ASC 280 the Company operates and discloses three reportable segments: air ticketing, hotel reservation and packaged tours. Substantially all of the Company’s revenues and long-lived assets are in the PRC. The Company currently operates and prepares accounting and other financial reports separately to management for eleven major business organizations (Shenzhen Yuzhilu Aviation Service Co., Ltd., Shanghai Lanbao Travel Service Co., Ltd., Foshan International Travel Service Co., Ltd., Xi’an Golden Net Travel Serve Services Co., Ltd., Chongqing Universal Travel E-Commerce Co., Ltd., Universal Travel International Travel Agency Co., Ltd., Hebei Tianyuan Travel Agency Co., Ltd., Zhengzhou Yulongkang Travel Agency Co., Ltd., Huangshan Holiday Travel Service Co., Ltd., Kunming Business Travel Service Co., Ltd., and Shanxi Jinyang Travel Agency Co., Ltd.).

Our air-ticketing segment relates to the segment reporting of Shenzhen Yuzhilu Aviation Service Co., Ltd. and Chongqing Universal Travel E-Commerce Co., Ltd.; Hotel reservation segment relates to Shenzhen Yuzhilu Aviation Service Co., Ltd., Shanghai Lanbao Travel Service Co., Ltd. and Huangshan Holiday Travel Service Co., Ltd.; Packaged tours segment relates to Chongqing Universal Travel E-Commerce Co., Ltd., Foshan International Travel Service Co., Ltd., Xi’an Golden Net Travel Serve Service Company Ltd., Universal Travel International Travel Agency Co., Ltd., Hebei Tianyuan Travel Agency Co., Ltd., Zhengzhou Yulongkang Travel Agency Co., Ltd., Huangshan Holiday Travel Service Co., Ltd., Kunming Business Travel Service Co., Ltd., and Shanxi Jinyang Travel Agency Co., Ltd. Management monitors these segments regularly to make decisions about resources to be allocated to the segment and assess its performance.

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 5 - SEGMENT INFORMATION (CONTINUED)

The following tables present summarized information by segment:

		Air		Hotel		Packaged
		Ticketing		Reservation		Tours		Other			Total
	Nine Months Ended September 30, 2011
Revenue, net		$	15,759,318	$	9,330,719	$	83,374,997	$	-		$	108,465,034
Cost of services		$	5,913,732	$	1,714,886	$	73,115,397	$	-		$	80,744,015
Gross profit		$	9,845,586	$	7,615,833	$	10,259,600	$	-		$	27,721,019
Income from operations		$	13,251,541	$	2,004,081	$	8,661,144	$	(4,011,125	)	$	19,905,641
Income tax expenses		$	3,260,321	$	518,193	$	2,281,316	$	60,043		$	6,119,873
Depreciation & Amortization		$	824,815	$	6,540	$	94,028	$	-		$	925,383
Asset expenditures		$	68,766	$	-	$	139,507	$	-		$	208,273
Goodwill		$	-	$	3,081,799	$	21,427,110	$	-		$	24,508,909
Total assets		$	82,339,522	$	248,423	$	78,943,065	$	60,498		$	161,591,508
	Nine Months Ended September 30, 2010
Revenue, net		$	14,439,187	$	10,862,393	$	72,507,188	$	-		$	97,808,768
Cost of services		$	4,913,895	$	3,533,764	$	62,902,349	$	-		$	71,350,008
Gross profit		$	9,525,292	$	7,328,629	$	9,604,839	$	-		$	26,458,760
Income from operations		$	6,714,151	$	7,189,368	$	8,831,760	$	(1,891,991	)	$	20,843,288
Income tax expenses		$	1,727,546	$	1,587,627	$	2,293,571	$	-		$	5,608,744
Depreciation & Amortization		$	1,201,092	$	1,459	$	51,636	$	-		$	1,254,187
Asset expenditures		$	2,740,871	$	38,105	$	1,012	$	-		$	2,779,988
Goodwill		$		$	3,081,799	$	21,427,110	$	-		$	24,508,909
Total assets		$	62,052,012	$	9,642,792	$	37,798,215	$	21,406,100		$	130,899,119
	Three Months Ended September 30, 2011
Revenue, net		$	5,478,545	$	2,940,988	$	33,388,230	$	-		$	41,807,763
Cost of services		$	2,139,745	$	177,190	$	29,394,177	$	-		$	31,711,112
Gross profit		$	3,338,800	$	2,763,798	$	3,994,053	$	-		$	10,096,651
Income from operations		$	6,061,703	$	-45,191	$	3,188,565	$	(1,352,292	)	$	7,852,785
Income tax expenses		$	1,434,673	$	3,427	$	890,679	$	(26,994	)	$	2,301,785
Depreciation & Amortization		$	278,001	$	2,209	$	28,582	$	-		$	308,792
Asset expenditures		$	6,104	$	-	$	139,507	$	-		$	145,611
	Three Months Ended September 30, 2010
Revenue, net		$	5,736,699	$	4,400,270	$	35,379,897	$	-		$	45,516,866
Cost of services		$	2,080,605	$	1,554,191	$	30,410,425	$	-		$	34,045,221
Gross profit		$	3,656,094	$	2,846,079	$	4,969,472	$	-		$	11,471,645
Income from operations		$	2,549,069	$	2,799,878	$	4,701,748	$	(551,338	)	$	9,499,357
Income tax expenses		$	677,763	$	604,828	$	1,264,603	$	-		$	2,547,194
Depreciation & Amortization		$	460,857	$	580	$	29,043	$	-		$	490,480
Asset expenditures		$	1,744,295	$	4,638	$	-	$	-		$	1,748,933

UNIVERSAL TRAVEL GROUP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

Note 6 - PRO FORMA FINANCIAL STATEMENTS

Pro Forma financial statements present revenue and related data of five subsidiaries acquired in 2010 as if the acquisitions were made at the earliest date presented of January 1, 2010.

For the nine months ended September 30, 2010, the revenue, income from operations, net income, and net income per common share in Pro Forma financial statements are as follow:

	For the nine months ended
	September 30, 2010
Revenues	$	111,312,695
Income from operations	$	22,426,069
Net Income	$	17,705,677
Net income per common share
Basic	$	0.98
Dilute	$	0.94

Note 7 - SUBSEQUENT EVENTS

On April 12, 2011, the Company’s stock was suspended from trading when it was unable to file its Annual Report on Form 10-K by April 15, 2011 as a result of Windes & McClaughry Accountancy Corporation resignation on April 9, 2011. On June 8, 2011, the Company filed its Annual Report on Form 10-K. The Company filed its quarterly reports on Form 10-Q for the quarter ended March 31, 2011and June 30, 2011 on July 22, 2011 and August 15, 2011, respectively. As of November 11, 2011, the Company's stock is still suspended from trading.

As of September 30, 2011, the Company has evaluated subsequent events for potential recognition and disclosure through the date of the financial statement issuance.

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

Forward-Looking Statements: No Assurances Intended

In addition to historical information, this quarterly 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 (“PRC”) engaged in providing air ticketing and hotel booking services as well as domestic and international packaged tourism services throughout the PRC via the internet, the customer representatives and the kiosks.

Name of Entities	Place of Incorporation	Expiration date	Ownership Percentage
Universal Travel Group	Nevada, USA	-		100	%
Full Power Enterprise Global Limited	British Virginia Islands	-		100	%
Shenzhen Yuzhilu Aviation Service Co., Ltd.	China	1998.3.9-2018.3.9		100	%
Xi’an Golden Net Travel Serve Services Co., Ltd.	China	2001.8.1-2016.9.4		100	%
Shanghai Lanbao Travel Service Co., Ltd.	China	2002.5.29-2015.4.28		100	%
Foshan Overseas International Travel Service Co., Ltd.	China	Infinite Term		100	%
Chongqing Universal Travel E-Commerce Co., Ltd.	China	Infinite Term		100	%
Universal Travel International Travel Agency Co., Ltd. (formerly named: Shenzhen Universal Travel Agency Co., Ltd.)	China	Infinite Term	100		%VIE
Hebei Tianyuan International Travel Agency Co., Ltd.	China	1999.10.8-2019.10.7		100	%
Huangshan Holiday Travel Service Co., Ltd.	China	Infinite Term		100	%
Zhengzhou Yulongkang Travel Agency Co., Ltd.	China	2000.11.1-2020.11.1		100	%
Kunming Business Travel Service Co., Ltd.	China	Infinite Term		100	%
Shanxi Jinyang Travel Agency Co., Ltd.	China	2005.5.19-2015.5.18		100	%