- 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, 2012

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: 000-26777

CHINA YIDA HOLDING, CO.

(Exact name of registrant as specified in its charter)

Delaware		50-0027826
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

28/F Yifa Building, No. 111 Wusi Road Fuzhou, Fujian, P. R. China		350003
(Address of principal executive offices)		(Zip Code)

+ 86 (591) 2830 8999

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 o

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

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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		¨ (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 Exchange Act).

Yes o No x

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

Class		Shares outstanding as of November 12, 2012
Common stock, $.001 par value		19,571,785

INDEX

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited).	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	42

Item 4.	Controls and Procedures.	42

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	43

Item 1A.	Risk Factors.	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	43

Item 3.	Defaults Upon Senior Securities.	43

Item 4.	Mine Safety Disclosures.	43

Item 5.	Other Information.	43

Item 6.	Exhibits.	43

SIGNATURES		44

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements.

CHINA YIDA HOLDING CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,		December 31,
	2012		2011
	(UNAUDITED)		(AUDITED)
ASSETS
Current assets
Cash and cash equivalents	$	8,416,253	$	5,684,847
Accounts receivable		227,674		129,849
Other receivables, net		625,786		4,940,389
Advances and prepayments		1,639,287		1,881,427
Prepayment - current portion		363,307		207,117
Total current assets		11,272,307		12,843,629

Property and equipment, net		140,451,891		110,593,580
Construction in progress		3,415,337		25,964,029
Intangible assets, net		44,887,717		32,355,010
Long-term prepayments		4,819,210		12,758,763
Deferred tax assets		-		104,078
Total assets	$	204,846,462	$	194,619,089
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Short-term loans	$	4,114,575	$	943,619
Long-term debt, current portion		6,871,340		3,761,894
Accounts payable		24,827		91,385
Current obligation under airtime rights commitment		2,206,033		2,359,169
Accrued expenses and other payables		2,080,927		638,175
Taxes payable		391,767		1,223,528
Deferred tax liabilities - current		-		67,644
Total current liabilities		15,689,469		9,085,414

Long-term obligation under airtime rights commitment		-		1,548,928
Long-term debt		29,769,855		26,040,732
Total liabilities		45,459,324		36,675,074

Commitments and contingencies

Equity
Preferred stock ($0.0001 par value, 10,000,000 shares authorized, none issued and outstanding)		-		-
Common stock ($0.001 par value, 100,000,000 shares authorized, 19,571,785 and 19,551,785 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively)		19,571		19,551
Additional paid in capital		49,148,049		49,111,569
Accumulated other comprehensive income		13,426,488		12,484,116
Retained earnings		88,975,816		87,715,182
Statutory reserve		2,549,330		2,549,330
Total China Yida Holding, Co. Stockholders’ equity		154,119,254		151,879,748
Non-controlling interest		5,267,884		6,064,267
Total equity		159,387,138		157,944,015
Total liabilities and equity	$	204,846,462	$	194,619,089

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

CHINA YIDA HOLDING CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

	Nine Months Ended September 30,						Three Months Ended September 30,
	2012			2011			2012			2011
Net revenue
Advertisement	$	14,126,023		$	26,675,530		$	3,168,963		$	8,322,439
Tourism		7,340,957			7,299,124			3,152,618			2,885,042

Total net revenue		21,466,980			33,974,654			6,321,581			11,207,481

Cost of revenue
Advertisement		4,227,122			6,847,683			1,236,714			2,141,129
Tourism		4,377,807			3,681,633			1,618,473			1,389,869

Total cost of revenue		8,604,929			10,529,316			2,855,187			3,530,998

Gross profit		12,862,051			23,445,338			3,466,394			7,676,483

Operating expenses
Selling expenses		4,751,736			3,704,622			2,104,616			1,596,304
General and administrative expenses		3,443,661			3,543,764			1,019,861			1,174,569

Total operating expenses		8,195,397			7,248,386			3,124,477			2,770,873

Income from operations		4,666,654			16,196,952			341,917			4,905,610

Other income (expense)
Other expense, net		(191,870	)		(41,430	)		(77,203	)		(23,648	)
Interest income		32,218			75,358			11,645			27,942
Interest expense		(990,189	)		(228,212	)		(870,698	)		(26,454	)

Total other expenses		(1,149,841	)		(194,284	)		(936,256	)		(22,160	)

Income(Loss) before income tax and non-controlling interest		3,516,813			16,002,668			(594,339	)		4,883,450

Less: Provision for income tax		2,457,792			5,433,442			451,471			1,715,696

Net income(Loss)		1,059,021			10,569,226			(1,045,810	)		3,167,754

Net loss attributed to non-controlling interest		201,613			84,015			70,399			40,852

Net income(loss) attributable to China Yida Holding Co.	$	1,260,634		$	10,653,241		$	(975,411	)	$	3,208,606

Net income (Loss)	$	1,059,021		$	10,569,226		$	(1,045,810	)	$	3,167,754

Other comprehensive income
Foreign currency translation gain(loss)		980,614			5,005,563			(253,430	)		1,741,244

Comprehensive income(loss)		2,039,635			15,574,789			(1,299,240	)		4,908,998

Comprehensive loss attributable to non-controlling interest		163,371			84,678			79,962			41,469

Comprehensive income(loss) attributable to China Yida Holding Co.	$	2,203,006		$	15,659,467		$	(1,219,278	)	$	4,950,467

Earnings(Losses) per share
- Basic	$	0.06		$	0.54		$	(0.05	)	$	0.16
- Diluted	$	0.06		$	0.54		$	(0.05	)	$	0.16

Weighted average shares outstanding
- Basic		19,561,240			19,551,785			19,571,785			19,551,785
- Diluted		19,561,240			19,561,621			19,571,785			19,555,436

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

CHINA YIDA HOLDING CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For The Nine Months Ended September 30,
	2012			2011

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,059,021		$	10,569,226
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		3,053,498			2,599,582
Amortization		1,845,015			2,718,586
Stock based compensation		36,500			576,536
Deferred tax expense		36,434			51,914
Amortization of financing costs		180,597			-
Changes in operating assets and liabilities:
Accounts receivable		(97,174	)		(106,811	)
Other receivables, net		3,718,652			(319,681	)
Advances and prepayments		254,323			282,239
Accounts payable		(67,241	)		(1,098,386	)
Accrued expenses and other payables		1,441,158			1,539,620
Taxes payable		(840,807	)		(544,244	)
Net cash provided by operating activities		10,619,976			16,268,581

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment		(9,103,497	)		(5,823,616	)
Additions to construction in progress		(416,744	)		(2,718,003	)
Additions to intangible asset		(4,639,247	)		(11,988,896	)
Proceeds from disposal of intangible assets		-			2,080,636
Increase in long-term prepayments for acquisition of property,equipment and land use rights		(1,185,197	)		(2,778,112	)
Net cash used in investing activities		(15,344,685	)		(21,227,991	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of loan from non-controlling interest		-			2,712,533
Repayment of obligation under airtime rights commitment		(1,729,368	)		(1,400,069	)
Payment of deferred financing costs		(674,645	)		-
Proceeds from short-term loans		3,170,326			-
Proceeds from long-term loans		9,510,977			10,788,484
Repayment of long-term loans		(2,847,632	)		(246,594	)
Net cash provided by financing activities		7,429,658			11,854,354

EFFECT OF EXCHANGE RATE CHANGES ON CASH		26,457			317,307

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		2,731,406			7,212,251
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		5,684,847			7,146,684
CASH AND CASH EQUIVALENTS, ENDING OF PERIOD	$	8,416,253		$	14,358,935

SUPPLEMENTAL DISCLOSURES:
Non-cash investing activities:
Transfer from construction in progress to property and equipment	$	23,165,538		$	-
Transfer from advances and prepayments to intangible assets	$	9,556,747		$	-

Cash paid during the period for:
Income tax	$	3,199,743		$	5,830,819
Interest	$	2,303,355		$	691,035

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

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

China Yida Holding Co. (“China Yida”) and its subsidiaries (collectively the "Company”, “we”, “us”, or “our”) engage in tourism and advertisement businesses in the People’s Republic of China.

Keenway Limited was incorporated under the laws of the Cayman Islands on May 9, 2007 for the purpose of functioning as an off-shore holding company to obtain ownership interests in Hong Kong Yi Tat International Investment Co., Ltd (“Hong Kong Yi Tat”), a company incorporated under the laws of Hong Kong. Immediately prior to the Merger (defined below), Mr. Chen Minhua and his wife, Ms. Fan Yanling, were the majority shareholders of Keenway Limited.

On November 19, 2007, we entered into a share exchange and stock purchase agreement with Keenway Limited, Hong Kong Yi Tat, and with the shareholders of Keenway Limited at that time, including Chen Minhua, Fan Yanling, Zhang Xinchen, Extra Profit International Limited, and Lucky Glory International Limited (collectively, the “Keenway Limited Shareholders”), pursuant to which in exchange for all of their shares of Keenway Limited common stock, the Keenway Limited Shareholders received 90,903,246 newly issued shares of our common stock and 3,641,796 shares of our common stock which was transferred from some of our then existing shareholders (the “Merger”). As a result of the closing of the Merger, the Keenway Limited Shareholders owned approximately 94.5% of our then issued and outstanding shares on a fully diluted basis and Keenway Limited became our wholly owned subsidiary.

Hong Kong Yi Tat was incorporated as the holding company of our operating entities, Fujian Jintai Tourism Development Co., Ltd., and Fujian Jiaoguang Media Co., Ltd., Yida (Fujian) Tourism Group Limited, and Fujian Yida Tulou Tourism Development Co., Ltd. (“Tulou”). Hong Kong Yi Tat does not have any other operation.

Fujian Jintai Tourism Development Co., Ltd. (“Fujian Jintai”) has a wholly owned subsidiary, Fuzhou Hongda Commercial Services Co., Ltd., (“Hongda”). The operation of Fujian Jintai is to develop the Great Golden Lake, one of our tourism destinations.

Hongda does not have any operation except for owning 100% of the ownership interest in Fuzhou Fuyu Advertising Co., Ltd. (“Fuyu”) which is engaged in the operations of our media business. On March 15, 2010, Hongda entered into an equity transfer agreement with Fujian Yunding Tourism Industrial Co., Ltd, (currently known as Yida (Fujian) Tourism Group Limited, “Fujian Yunding”), pursuant to which Fujian Yunding acquired 100% of the issued and outstanding shares of Fuyu from Hongda at the aggregate purchase price of RMB 3,000,000. As a result, Fujian Yunding became the 100% holding company of Fuyu. Hongda ceased business and deregistered on December 2, 2011.

Fujian Jintai originally also owned 100% of the ownership interest in Fujian Yintai Tourism Co., Ltd. (“Yintai”). On March 15, 2010, Fujian Jintai entered into an equity transfer agreement with Fujian Yunding, pursuant to which Fujian Yunding acquired 100% of the issued and outstanding common stock of Yintai from Fujian Jintai at the aggregate purchase price of RMB 5,000,000. As a result, Yintai became a wholly owned subsidiary of Fujian Yunding. Yintai was deregistered on November 18, 2010.

Fujian Yida Tulou Tourism Development Co., Ltd.’s (“Tulou”) primary business relates to the operation of the Hua’An Tulou cluster, one of our tourism destinations.

On April 12, 2010, our operating subsidiary “Fujian Yunding Tourism Industrial Co., Ltd.” changed its name to “Yida (Fujian) Tourism Group Limited” for our expanding business in operations of domestic tourism destinations in China by acquiring new tourism destinations. Yida (Fujian) Tourism Group Limited’s (“Fujian Yida”) primary business relates to the operations of our Yunding tourism destination and all of our newly engaged tourism destinations, and the management of our media business.

On March 16, 2010, Fujian Yida formed a wholly owned subsidiary, Yongtai Yunding Resort Management Co., Ltd. (“Yongtai Yunding”) which currently has no material business operations. We plan to develop Yongtai Yunding into a business entity primarily focusing on the operations of our Yunding tourism destination.

Fujian Jiaoguang Media Co., Ltd. (“Fujian Jiaoguang”) and the Company’s contractual relationship comply with the requirements of the Accounting Standard Codification ("ASC") 810, to consolidate Fujian Jiaoguang’s financial statements as a Variable Interest Entity. During the current period, Fujian Jiaoguang had no material business operations.

Fuzhou Fuyu Advertising Co., Ltd. (“Fuyu”) concentrates on the mass media segment of our business. Its primary business is focused on advertisements, including media publishing, television, cultural and artistic communication activities, and performance operation and management activities.

On April 15, 2010, we entered into agreement with Anhui Xingguang Group to set up a new subsidiary – Anhui Yida Tourism Development Co., Ltd. ("Anhui Yida") by investing 60% of the equity interest, and Anhui Xingguang Group owns 40% of the equity interest of Anhui Yida. The total paid-in capital of Anhui Yida was $14,687,307 (equals RMB 100 million). Anhui Yida's primary business relates to the operation of our tourism destinations, specifically, Ming dynasty culture tourist destination.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On July 6, 2010 Fujian Yida formed a wholly owned subsidiary, Jiangxi Zhangshu (Yida) Tourism Development Co., Ltd. (“Jiangxi Zhangshu”) which currently has no material business operations. The initial paid-in capital of Jiangxi Zhangshu was $2,937,461 (RMB 20 million). On July 5, 2011, Fujian Yida and Fuyu further injected capital amounted to RMB 49 million and RMB1 million, respectively, to Jiangxi Zhangshu. On March 20, 2012, Fujian Yida and Fuyu further injected capital amounted to RMB 29.4 million and RMB 0.6 million, respectively, to Jiangxi Zhangshu, and the total paid-in capital increased to $15,842,337 (RMB100 million). We plan to develop Jiangxi Zhangshu into a business entity primarily focusing on the operations of a new tourist destination.

On July 7, 2010 Fujian Yida formed a wholly owned subsidiary, Jiangxi Fenyi (Yida) Tourism Development Co., Ltd. (“Jiangxi Fenyi”) which currently has no material business operations. The initial paid-in capital of Jiangxi Fenyi was $1,762,477 (RMB 12 million). On July 7, 2011, Fujian Yida further injected capital amounted to RMB 48 million to Jiangxi Fenyi and the total paid-in capital increased to $9,391,876 (RMB 60 million). We plan to develop Jiangxi Fenyi into a business entity primarily focusing on the operations of a new tourist destination.

On June 24, 2011, Fujian Yida formed a wholly owned subsidiary, Fujian Yida Travel Service Co., Ltd (the “Yida Travel”). The total paid-in capital of Yida Travel was $1,546,670 (RMB 10 million). Its primary business is to conduct domestic and international traveling services in China, including operating the direct sales of travel services for our current tourist destinations at the Great Golden Lake, Yunding Recreational Park, and Hua’An Tulou Cluster, and our three tourist destinations currently under construction, Ming Dynasty Entertainment World, China Yang-sheng (Nourishing Life) Paradise, and the City of Caves.

On May 11, 2012, Jiangxi Zhangshu formed a wholly owned subsidiary, Zhangshu (Yida) Real Estate Development Co.,Ltd

(the “Zhangshu Development”). The total paid-in capital of Zhangshu Development was $792,532 (RMB 5 million). Its primary business is to conduct business of real estate development and sales in China.

On May 16, 2012, Anhui Yida formed a wholly owned subsidiary, Bengbu (Yida) Real Estate Development Co.,Ltd (the “Bengbu Yida”). The total paid-in capital of Fenyi Development was $1,268,050 (RMB 8 million). Its primary business is to conduct business of real estate development in China.

On May 22, 2012, Jiangxi Zhangshu formed a wholly owned subsidiary, Zhangshu (Yida) Investment Co., Ltd (the “Zhangshu Investment”). The total paid-in capital of Zhangshu Investment was $792,532 (RMB 5 million). Its primary business is to conduct real estate investment, project management and consulting in China..

On June 6, 2012, Jiangxi Fenyi formed a wholly owned subsidiary, Fenyi (Yida) Property Development Co.,Ltd (the “Fenyi Development”). The total paid-in capital of Fenyi Development was $792,532 (RMB 5 million). Its primary business is to conduct business of real estate development and sales in China.

On July 20, 2012, Anhui Yida formed a wholly owned subsidiary, Bengbu (Yida) Investment Co., Ltd (the “Bengbu Investment”). The total paid-in capital of Fenyi Development was $792,532 (RMB 5 million). Its primary business is to conduct real estate investment, project management and consulting in China.

On July 30, 2012, Fujian Yida formed a wholly owned subsidiary, Fujian (Yida) Culture and Tourism Performing Arts Co., Ltd (the “Yida Arts”). The total paid-in capital of Fenyi Development was $792,532 (RMB 5 million). Its primary business is to operate performance and show events at Yunding Park.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited condensed consolidated financial statements of China Yida Holding, Co. and Subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the requirements for reporting on Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. However, the information included in these interim financial statements reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position and the consolidated results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full year. The consolidated balance sheet information as of December 31, 2011 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K. These interim financial statements should be read in conjunction with that report. Certain comparative amounts have been reclassified to conform to the current period's presentation.

a. Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The functional currency is the Chinese Renminbi, however the accompanying consolidated financial statements have been translated and presented in United States Dollars ($).

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

b. Principles of consolidation

The accompanying consolidated financial statements include the accounts of China Yida and its wholly-owned subsidiaries Keenway Limited, Hong Kong Yi Tat, Fujian Jintai, Fuyu, Hongda, Fujian Yida, Tulou, Anhui Yida, Yongtai Yunding, Jiangxi Zhangshu, Jiangxi Fenyi, Yida Travel, Fenyi Development, Bengbu Yida, Zhangshu Development, Zhangshu Investment, Bengbu Investment, Yida Arts and the accounts of its variable interest entity, Fujian Jiaoguang. All significant inter-company accounts and transactions have been eliminated in consolidation.

Consolidation of Variable Interest Entities

According to the requirements of ASC 810, an Interpretation of Accounting Research Bulletin No. 51 that requires a Variable Interest Entity ("VIE"), the Company has evaluated the economic relationships of Fujian Jiaoguang which signed an exclusive right agreement with the Company. Therefore, Fujian Jiaoguang is considered to be a VIE, as defined by ASC Topic 810-10, of which the Company is the primary beneficiary.

The carrying amount and classification of Fujian Jiaoguang’s assets and liabilities included in the Condensed Consolidated Balance Sheets are as follows:

	September 30, 2012		December 31, 2011
Total current assets *	$	12,260,868	$	12,091,197
Total assets	$	12,268,307	$	12,098,729
Total current liabilities #	$	10,633,430	$	10,011,732
Total liabilities	$	10,633,430	$	10,011,732

*Including intercompany receivables of $12,254,575 and $12,090,456 as at September 30, 2012 and December 31, 2011, respectively, to be eliminated in consolidation.

# Including intercompany payables of $9,639,134 and $9,009,187 as at September 30, 2012 and December 31, 2011, respectively, to be eliminated in consolidation.

Although Fujian Jiaoguang no longer had revenues, its bank account still has to be maintained active with certain cash flows to support its expenses. As such, Fujian Jiaoguang transferred funds from and to the Company’s directly-owned subsidiaries, which resulted in part of the intercompany receivables and payables. Another significant portion of the intercompany receivable recorded at Fujian Jiaoguang represented payments that Fujian Jiaoguang paid on behalf of Jintai previously, which remained due from Jintai. Nonetheless, since Fujian Jiaoguang is a variable interest entity subject to consolidation, the balances of its intercompany receivables and payables are eliminated against the corresponding account balances at the Company’s directly-owned subsidiaries at the consolidation level.

c. Use of estimates and assumptions

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results. The most significant estimates reflected in the consolidated financial statements include depreciation, useful lives of property and equipment, deferred income taxes, useful life of intangible assets and contingencies. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

d. Cash and cash equivalents

The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with original maturities of six months or less, when purchased, to be cash and cash equivalents. As of September 30, 2012 and December 31, 2011, the Company has uninsured deposits in banks of approximately $8,343,000 and $5,435,000.

e. Accounts receivable

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Based on the management’s judgment, no allowance for doubtful accounts is required at the balance sheet dates.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

f. Advances and prepayments

The Company advances funds to certain vendors for purchase of its construction materials and necessary services. Based on the management’s judgment, no allowance for advances and prepayments is required at the balance sheet dates.

g. Property and equipment

Property and equipment are recorded at cost less accumulated depreciation. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extends the life of property, and equipment are capitalized. These capitalized costs may include structural improvements, equipment, and fixtures. All ordinary repair and maintenance costs are expensed as incurred.

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets or lease term as follows:

Building	20 years
Electronic Equipment	5 to 8 years
Transportation Equipment	8 years
Office Furniture	5 to 8 years
Leasehold Improvement and Attractions	Lesser of term of the lease or the estimated useful lives of the assets

h. Intangible assets

Intangible assets consist of acquisition of management right of tourist resort, commercial airtime rights and land use rights for tourism resorts. They are amortized on the straight line basis over their respective lease periods. The lease period of management right, commercial airtime rights and land use rights is 30 years, 3 years and 40 years, respectively.

i. Impairment

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows as the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available, judgments and projections are considered necessary. There was no impairment of long-lived assets as of September 30, 2012 and December 31, 2011.

j. Revenue recognition

Revenue is recognized at the date of service rendered to customers when a formal arrangement exists, the price is fixed or determinable, the services rendered, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before satisfaction of all of the relevant criteria for revenue recognition are recorded as unearned revenue.

Revenues from advance resort ticket sales are recognized when the tickets are used. Revenues from our contractors who have tourism contracts with us are generally recognized over the period of the applicable agreements commencing with the tourists visiting the resort. The Company also sells admission and activities tickets for a resort which the Company has the management right.

The Company sells the television airtime to third parties. The Company records advertising sales when advertisements are aired.

The Company has no allowance for product returns or sales discounts because services that are rendered and accepted by the customers are normally not refundable and discounts are normally not granted after service has been rendered.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Profit sharing costs are recorded as cost of revenue. Profit sharing arrangements with the local governments for the management rights (see Note 15):

For the nine months ended September 30, 2012
	Fujian Jintai		Tulou

Gross receipts	$	3,926,123	$	1,033,337

Profit sharing costs		556,418		-
Nature resource compensation expenses		325,749		107,296
Total paid to the local governments		882,167		107,296

Net receipts	$	3,043,956	$	926,041

For the nine months ended September 30, 2011
	Fujian Jintai		Tulou

Gross receipts	$	3,887,167	$	2,498,718

Profit sharing costs		486,048		-
Nature resource compensation expenses		329,127		280,747
Total paid to the local governments		815,175		280,747

Net receipts	$	3,071,992	$	2,217,971

For the three months ended September 30, 2012
	Fujian Jintai		Tulou

Gross receipts	$	2,028,011	$	245,453

Profit sharing costs		283,430		-
Nature resource compensation expenses		169,186		22,813
Total paid to the local governments		452,616		22,813

Net receipts	$	1,575,395	$	222,640

For the three months ended September 30, 2011
	Fujian Jintai		Tulou

Gross receipts	$	1,852,473	$	678,554

Profit sharing costs		231,190		-
Nature resource compensation expenses		157,153		73,923
Total paid to the local governments		388,343		73,923

Net receipts	$	1,464,130	$	604,631

k. Advertising costs

The Company expenses the cost of advertising as incurred or, as appropriate, the first time the advertising takes place. Advertising costs for the nine months ended September 30, 2012 and 2011 were $676,920 and $400,160, respectively. Advertising costs for the three months ended September 30, 2012 and 2011 were $310,986 and $169,356, respectively.

l. Post-retirement and post-employment benefits

Full time employees of subsidiaries of the Company participate in a government mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, employee housing, and other welfare benefits are provided to employees. Chinese labor regulations require that the subsidiaries of the Company make contributions to the government for these benefits based on a certain percentages of employees’ salaries. The Company has no legal obligation for the benefits beyond the contributions made. The total amounts for such employee benefits, which were expensed as incurred, were $182,125 and $145,730 for the nine months ended September 30, 2012 and 2011, respectively, and were $57,282 and $57,162 for the three months ended September 30, 2012 and 2011 respectively. Other than the above, neither the Company nor its subsidiary provides any other post-retirement or post-employment benefits.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

m. Foreign currency translation

The Company uses the United States dollar ("U.S. dollars") for financial reporting purposes. The Company's subsidiaries maintain their books and records in their functional currency, being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, the Company translates the subsidiaries' assets and liabilities into U.S. dollars using the applicable exchange rates prevailing at the balance sheet dates, and the statements of income are translated at average exchange rates during the reporting periods. Gain or loss on foreign currency transactions are reflected on the income statement. Gain or loss on financial statement translation from foreign currency are recorded as a separate component in the equity section of the balance sheet and is included as part of accumulated other comprehensive income. The functional currency of the Company and its subsidiaries in China is the Chinese Renminbi.

n. Income taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. The deferred income tax assets were $0 and $104,078 as September 30, 2012and December 31, 2011, respectively.

The Company applied the provisions of ASC 740-10-50, “Accounting For Uncertainty In Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of September 30, 2012, management considered that the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

China Yida is subject to U.S. Federal and California state examination by tax authorities for years after 2007, and the PRC tax authority for years after 2006.

o. Fair values of financial instruments

The carrying amounts reported in the condensed consolidated financial statements for current assets and currently liabilities approximate fair value due to the short-term nature of these financial instruments. The carrying amount of long-term loans approximates fair value since the interest rate associated with the debt approximates the current market interest rate.

The Company adopted ASC 820-10, “Fair Value Measurements and Disclosures”, which establishes a single authoritative definition of fair value and a framework for measuring fair value and expands disclosure of fair value measurements for both financial and nonfinancial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flows) and the cost approach (cost to replace the service capacity of an asset or replacement cost). For purposes of ASC 820-10-15, nonfinancial assets and nonfinancial liabilities would include all assets and liabilities other than those meeting the definition of a financial asset or financial liability as defined in ASC-820-10-15-15-1A.

p. Stock-based compensation

The Company records stock-based compensation expense pursuant to ASC 718-10, " Share Based Payment Arrangement ,” which requires companies to measure compensation cost for stock-based employee compensation plans at fair value at the grant date and recognize the expense over the employee's requisite service period. The Company’s expected volatility assumption is based on the historical volatility of Company’s stock or the expected volatility of similar entities. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

Stock-based compensation expense is recognized based on awards expected to vest, and there were no estimated forfeitures as the Company has a short history of issuing options. ASC 718-10 requires forfeitures to be estimated at the time of grant and revised in subsequent periods, if necessary, if actual forfeitures differ from those estimates.

q. Earnings per share (EPS)

Earnings per share is calculated in accordance with ASC 260. Basic earnings per share is based upon the weighted average number of common shares outstanding. Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock instruments were converted or exercised. Options and warrants are assumed to be exercised at the beginning of the period if the average stock price for the period is greater than the exercise price of the warrants and options.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

r. Statutory Reserves

In accordance with the relevant laws and regulations of the PRC and the articles of association of the Company, the Company is required to allocate 10% of their net income reported in the PRC statutory accounts, after offsetting any prior years’ losses, to the statutory surplus reserve, on an annual basis. When the balance of such reserve reaches 50% of the respective registered capital of the subsidiaries, any further allocation is optional.

As of September 30, 2012, the statutory reserve of the subsidiaries already reached 50% of the registered capital of the subsidiaries and the Company did not have any further allocation on it.

The statutory surplus reserves can be used to offset prior years’ losses, if any, and may be converted into registered capital, provided that the remaining balances of the reserve after such conversion is not less than 25% of registered capital. The statutory surplus reserve is non-distributable.

s. Segment reporting

ASC 250, "Disclosure About Segments of an Enterprise and Related Information" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. The Company has two reportable segments: advertisement and tourism

t. Dividend Policy

Under the laws governing foreign invested enterprises in China, dividend distribution and liquidation are allowed but subject to special procedures under the relevant laws and rules. Any dividend payments will be subject to the decision of the Board of Directors and subject to foreign exchange rules governing such repatriation. Any liquidation is subject to both the relevant government agency’s approval and supervision as well as the foreign exchange control.

u. Reclassification

Certain reclassifications have been made to the 2011 consolidated financial statements to conform to the 2012 consolidated financial statement presentation. These reclassifications had no effect on net loss or cash flows as previously reported.

v. Recent accounting pronouncements

In December 2011, the FASB issued revised guidance on “Disclosures About Offsetting Assets and Liabilities.” The revised guidance specifies that an entity should disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The revised guidance affects all entities that have financial instruments and derivative instruments. The revised guidance is effective for interim or annual periods beginning after January 1, 2013. We do not expect the adoption of this standard will have a material impact on our consolidated financial statements.

In December 2011, FASB issued Accounting Standards Update No. 2011-12, Comprehensive Income (“ASU 2011-12”). Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. Among the new provisions in ASU 2011-05 was a requirement for entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented (for both interim and annual financial statements); however this reclassification requirement is indefinitely deferred by ASU 2011-12 and will be further deliberated by the FASB at a future date.

In September 2011, the FASB has issued Accounting Standards Update (ASU) No. 2011-08, Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU 2011-08 is intended to simplify how entities, both public and nonpublic, test goodwill and other intangible assets such as patents for impairment. ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350, Intangibles-Goodwill and Other. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The Company does not expect the adoption of ASU 2011-08 to have a material effect on the Company’s consolidated financial statements.

In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU No. 2011-05), Presentation of Comprehensive Income , an amendment to ASC Topic 220, Comprehensive Income . Under this amendment, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in stockholders’ equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. The guidance for public entities is effective for fiscal years or interim periods beginning after December 15, 2011 with early adoption permitted. The amendments in this update are to be applied retrospectively. The Company does not expect the adoption of ASU 2011-05 to have a material effect on the Company’s consolidated financial statements.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In July 2012, FASB issued an amendment (ASU No. 2012-02) to Intangibles–Goodwill and Other (ASC Topic 350). In accordance with the amendments in this Update, an entity has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Subtopic 350-30. An entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of this guidance had no impact on our consolidated financial position or results of operations.

3. OTHER RECEIVABLES, NET

Other receivables consist of the following:

	September 30, 2012			December 31, 2011

Refundable deposits - land use rights	$	-		$	4,718,094
Ticket revenue deposited in special treasury account assigned by government		395,986			50,720
Other		250,624			192,270
		646,610			4,961,084
Less: Allowance		(20,824	)		(20,695	)
	$	625,786		$	4,940,389

Anhui Yida participated in a bid for several land use rights in Anhui Province, with the intention to develop tourism destinations. Anhui Yida deposited $4,834,440 (RMB 30.5 million) with the local government of Anhui province to participate in the bid in 2011. The deposit can be applied to payment for the land use rights if the Company wins the bid or the Company may choose to receive the deposit returned by the government and make new payment for purchasing the land use rights after winning the bid. For the nine-month period ended September 30, 2012, the local government of Anhui province refunded the deposit in full amount $4,834,440 (RMB 30.5 million) to Anhui Yida for the land use rights that the Company had won the bid on.

As of September 30, 2012 and December 31, 2011, the ticket revenue collected by Fujian Jintai of $395,986 and 50,720 were deposited in the special treasury account assigned by government according to the tourism management revenue sharing agreement between Fujian Jintai and Fujian Taining Great Golden Lake Tourism Economic Development Zone Management Committee (“Taining government”) in 2001 (See Note 15) and usually they are collectible within 30 days after profit sharing process is completed by the government.

4. ADVANCES AND PREPAYMENTS

Advances and prepayments consist of the following:

	September 30, 2012			December 31, 2011

Advance payments related to land use rights	$	812,017		$	1,072,144
Advance payments related to facilities of Yunding Park		531,432			142,781
Advance payments related to construction cost of Great Golden Lake		192,836			240,969
Other		106,120			428,631
		1,642,405			1,884,525
Less: Allowance		(3,118	)		(3,098	)
	$	1,639,287		$	1,881,427

As of September 30, 2012, advance payments related to land use rights mainly represented the advance payments made by Fujian Yida and Fenyi Yida. Fujian Yida made advance payments to the local government of Yongtai County of $700,427 (RMB 4.4 million) for an acquisition of land use rights. Fenyi Yida made advance payments of $382,534 (RMB 2.4 million) on behalf of the local government to the existing user of the land to compensate for the acquisition of land for the development of the tourism destinations in Fenyi city. The local government repaid $270,944 (RMB 1.7 million) to the Company at the end of January, 2012.

As of December 31, 2011, advance payments related to land use rights mainly represented the advance payments made by Fujian Yida and Fenyi Yida. Fujian Yida made advance payments to the local government of Yongtai County of $691,987 (RMB4.4 million) for the acquisition of land use rights. Fenyi Yida made advance payment of $380,157 (RMB2.4 million) on behalf of the local government to the existing user of the land to compensate for the acquisition of land for the development of the tourism destinations in Fenyi province. The variances as compared to the amounts disclosed in the Company’s consolidated financial statements as of September 30, 2012 were mainly the effect of foreign currency translation.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

5. PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

	September 30, 2012			December 31, 2011

Buildings, Improvements and Attractions	$	148,749,137		$	116,009,545
Electronic Equipment		652,181			523,108
Transportation Equipment		2,480,388			2,399,339
Office Furniture		63,085			53,606
		151,944,791			118,985,598
Less: Accumulated Depreciation		(11,492,900	)		(8,392,018	)
Property and equipment, net	$	140,451,891		$	110,593,580

Depreciation expense for the nine months ended September 30, 2012 and 2011 were $3,053,498 and $2,599,582, respectively.

Depreciation expense for the three months ended September 30, 2012 and 2011 were $1,019,135 and $904,149, respectively.

6. CONSTRUCTION IN PROGRESS

The construction in progress consists of the projects related to the construction of the following:

	September 30, 2012		December 31, 2011

Jiangxi Zhangshu Yang-sheng Paradise	$	-	$	12,049,824
Jiangxi Fenyi City of Caves		-		10,933,552
Great Golden Lake		3,415,337		2,980,653
	$	3,415,337	$	25,964,029

The construction in progress mainly related to the construction of new tourist resorts which the Company has developed. Most construction projects in progress were completed by September 30, 2012. The amount of capitalized interest included in construction in progress for the nine months ended September 30, 2012 and 2011 amounted to $1,479,846 and $511,493, respectively, and the amount of capitalized interest included in construction in progress for the three months ended September 30, 2012 and 2011 amounted to $0 and $250,890, respectively.

Construction in progress of $32,042,326 and $14,735,861 were transferred to property and equipment during the nine months ended September 30, 2012 and the year ended December 31, 2011, respectively.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7. INTANGIBLE ASSETS, NET

Intangible assets consist of the following:

	September 30, 2012			December 31, 2011

Management right of tourist resort	$	5,538,851		$	5,504,443
Commercial airtime rights		6,839,677			6,616,013
Land use right		39,665,641			25,334,867
		52,044,169			37,455,323
Accumulated amortization		(7,156,452	)		(5,100,313	)
Intangible assets, net	$	44,887,717		$	32,355,010

Commercial airtime rights

On August 1, 2010, the Company entered into a commercial airtime rights agreement with a television station. Under the terms of the agreement, the Company can obtain commercial airtime and resell to advertisers from August 1, 2010 to July 31, 2013 for a monthly fee of $158,506 (RMB 1,000,000) for the period from August 1, 2010 to July 31, 2011. The fee is increased by 20% annually on every August 1. From August 1, 2011 to July 31, 2012, the monthly fee is $190,207 (RMB1,200,000). From August 31, 2012 to July 30, 2013, the monthly fee will be $228,249 (RMB 1,440,000) for the period. The agreement can be renewed for two additional years, with mutual agreement between the parties. Since the Company is reselling the commercial airtime to advertisers, the Company has present-valued the monthly payments, including the 20% annual increase, using the market borrowing rate of 7% for three years and recorded $6.9 million (RMB 43,680,000) of commercial airtime rights as an intangible asset, $6.9 million (RMB 43,680,000) as an obligation under airtime rights commitment, and $255,525 (RMB 1,612,083) as deferred interest at inception.

At inception, the Company had made an initial assessment that there is no assurance the Company will exercise the option for two additional years and therefore, the Company has only considered the present value of the monthly fee for the first three years under the terms of the agreement.

Land use right

On October 31, 2010, the Company entered into an agreement with the local government in the PRC to acquire the land use rights for 40 years for the development of the Yunding Park. The purchase consideration was $2,087,221 (RMB 13,189,150).

On October 31, 2011, the Company entered into land use rights agreements with the local PRC governments for the purchase of the land use rights in Anhui to develop Ming Dynasty Entertainment World. As of September 30, 2012, the Company paid approximately $10,165,442 (RMB 64.24 million) and recorded the amount under Intangible Assets.

On November 3, 2011, the Company entered into five land use rights agreements with the local PRC governments for the purchase of the land use rights in Zhangshu City for 40 years to develop China Yang-sheng Paradise. As of September 30, 2012, the Company paid approximately $27,077,481 (RMB 171.10 million) and recorded the amount under Intangible Assets.

On December 13, 2011, the Company entered into a land use rights agreements with the local PRC governments for the purchase of the land use rights in Jiangxi to develop Jiangxi Fenyi Dongdou resort. As of September 30, 2012, the Company paid approximately $335,496 (RMB 2.12 million) and recorded the amount under Intangible Assets.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7. INTANGIBLE ASSETS, NET(CONTINUED)

Amortization expense for the nine months ended September 30, 2012 and 2011 amounted to $1,845,015 and $2,718,586, respectively.

Amortization expense for the three months ended September 30, 2012 and 2011 amounted to $613,873 and $844,271, respectively.

Estimated amortization for the next five years and thereafter is as follows:

As of September 30,	Amounts
2013	$	2,086,078
2014		236,808
2015		236,808
2016		236,808
2017		236,808
Thereafter		41,854,407
	$	44,887,717

8. LONG-TERM PREPAYMENTS

Long-term prepayments consist of the following:

	September 30, 2012		December 31, 2011

Prepayments for project planning, assessments and consultation fees	$	3,374,673	$	2,136,883
Deferred financing costs		1,190,320		846,695
Prepayments for acquisition of land use right and management right of tourist resort		-		9,481,598
Others		254,217		293,587
	$	4,819,210	$	12,758,763

Prepayments for project planning, assessments and consultation fees represent advances relating to the planning, assessment and consultation for the development of other tourism destinations in Anhui province and Jiangxi province.

For the nine months ended September 30, 2012 and 2011, the Company paid approximately $674,645 (RMB 4.3 million) and approximately $374,823 (RMB 2.4 million) of fees in order to obtain additional debt used to construct various resort projects. These fees are deferred and amortized on a straight line basis over the life of the debt.

Estimated amortization of the deferred financing costs for the next five years and thereafter is as follows:

As of September 30,	Amounts
2013	$	308,366
2014		251,396
2015		251,396
2016		251,396
2017		251,396
Thereafter		184,736
Total minimum payments	$	1,498,686
Current portion recorded under prepayments - current portion		(308,366	)
Long term portion	$	1,190,320

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

9. BANK LOANS

Short-term loans

Short-term loans represent borrowings from commercial banks that are due within one year. These loans consisted of the following:

	September 30, 2012		December 31, 2011

Loan from Fujian Haixia Bank (formerly known as Merchant bank of Fuzhou), interest rate at 9.184% per annum, due November 4, 2012, guaranteed by Fujian Jintai Tourism Development Co., Ltd.	$	949,517	$	943,619
Loan from Fujian Haixia Bank (formerly known as Merchant bank of Fuzhou), interest rate at 8.4% per annum, due August 16, 2013, guaranteed by Fujian Jintai Tourism Development Co., Ltd. and Yida Travel Service Co. Ltd.	$	1,582,529	$	-
Loan from China Minsheng Banking Corp, Ltd., interest rate at 8% per annum, has been paid off in October 2012. (Note (a))		1,582,529		-

Total	$	4,114,575	$	943,619

Note:

(a) On April 30, 2012, $19,040 (RMB 120,000) of financing costs was paid in connection with this loan.

Interest expense for the nine months ended September 30, 2012 and 2011 amounted to $134,882 and $94,968, respectively. Interest expense for the three months ended September 30, 2012 and 2011 amounted to $26,036 and $32,722, respectively. The interest expense for the nine months ended September 30, 2012 and 2011 of $108,745 and $64,977, respectively was capitalized as part of construction in progress. The interest expense for the three months ended September 30, 2012 and 2011 that amounted to $0 and $32,262, was capitalized as part of construction in progress.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Long-term debt

Long term debt consists of the following:

	September 30, 2012			December 31, 2011

Loan from Industrial and Commercial Bank of China Limited, interest rate at 7.76% per annum, final installment due October 25, 2018, collateralized by the right to collect resort ticket sales at the Great Golden Lake. (Note (a))	$	12,784,573		$	13,682,472

Loan from Industrial and Commercial Bank of China Limited, interest rate at 6.40% per annum, final installment due December 15, 2017, secured by credit guarantee of Fujian Jintai and the right to collect resort ticket sales at Yunding resort as additional collateral. (Note (b))		9,890,806			10,615,711

Loan from Industrial and Commercial Bank of China Limited, interest rate at 7.76% per annum, final installment due November 22, 2018, collateralized by the right to collect resort ticket sales at the Tulou resort, secured by the fixed assets of Fujian Tulou and personal guarantees by two of the Company’s directors as additional collateral. (Note (c))		4,945,403			5,504,443

Loan from China Minsheng Banking Corp, Ltd., interest rate at 11.97% per annum, final installment due November 20, 2014, secured by credit guarantee of Fujian Jintai, collateralized by the fixed assets of Fujian Yida and personal guarantees by two of the Company’s directors as additional collateral. (Note (d))		9,020,413			-
		36,641,195			29,802,626
Less: current portion		(6,871,340	)		(3,761,894	)
Total	$	29,769,855		$	26,040,732

Note:

(a)

$1,965,501 (RMB 12,420,000) will be due in each twelve-month period as of September 30, 2013, 2014, 2015, 2016, 2017, 2018 respectively and $991,567 (RMB 6,270,000) will be due in the twelve-month period as of September 30, 2019. In November 2011 and in March 2012, $474,760 and $221,475 of financing costs were paid in connection with this loan and subject to amortization, with $344,765 and $168,875 recorded in Long-Term Prepayments as of September 30, 2012, respectively.

(b)

$1,266,023 (RMB 8,000,000), $1,740,782 (RMB 11,000,000), $2,057,288 (RMB 13,000,000), $2,215,540 (RMB 14,000,000), $1,978,161 (RMB 12,500,000), and $633,012 (RMB 4,000,000) will be due in each of the twelve-month period as of September 30, 2013, 2014, 2015, 2016, 2017 and 2018. In January 2011 and in March 2012, $384,871 and $379,800 of financing costs were paid in connection with this loan and subject to amortization, with $233,672 and $230,597 recorded in Long-Term Prepayments as of September 30, 2012, respectively.

(c)

$791,264 (RMB 5,000,000) will be due in each twelve-month period as of September 30, 2013, 2014, 2015, 2016, 2017, 2018 respectively, and $197,819 (RMB 1,250,000) will be due in the twelve-month period as of September 30, 2019. In December 2011 and in January 2012, $214,670 and $72,242 of financing costs were paid in connection with this loan and subject to amortization, with $158,447 and $53,964 recorded in Long-Term Prepayments as of September 30, 2012, respectively.

(d)	$2,848,552 (RMB 18,000,000), $5,380,598 (RMB 34,000,000), and $791,263 (RMB 5,000,000) will be due in each twelve-month period as of September 30, 2013, 2014, and 2015, respectively.

Interest expense for the nine months ended September 30, 2012 and 2011 amounted to $2,168,472 and $596,067 respectively. Interest expense for the three months ended September 30, 2012 and 2011 amounted to $797,471 and $220,919, respectively. The interest expense for the nine months ended September 30, 2012 and 2011 of $1,369,740 and $446,516, respectively was capitalized as part of construction in progress. The interest expense for the three months ended September 30, 2012 and 2011 that amounted to $0 and $218,628 was capitalized as part of construction in progress.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

10. OBGLIATION UNDER AIRTIME RIGHTS COMMITMENT

Obligation under airtime rights commitment (See note 7) consists of the following:

As of September 30,
2013	$	2,278,842
Less: Deferred interest		(72,809	)
	$	2,206,033

11. ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables consist of the following:

	September 30, 2012		December 31, 2011

Unearned revenue	$	256,906	$	30,155
Accrued payroll		387,595		298,810
Welfare payables		12,856		23,428
Construction payable-Retention		895,196		-
Other		528,374		285,782
	$	2,080,927	$	638,175

12. INCOME TAX

The Company is subject to Hong Kong (“HK”) and People’s Republic of China (“PRC”) profit tax. For certain operations in HK and PRC, the Company has incurred net accumulated operating losses for income tax purposes.

United States

The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company has no taxable income for the year. The applicable income tax rate for the Company for the nine months ended September 30, 2012 and 2011 was 35% and 35%, respectively. No tax benefit has been realized since a valuation allowance has offset the deferred tax asset resulting from the net operating losses.

Cayman Islands

Keenway Limited, a wholly owned subsidiary of the Company, is incorporated in the Cayman Islands and, under the current laws of the Cayman Islands, is not subject to income taxes.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Hong Kong

Hong Kong Yi Tat, a wholly owned subsidiary of the Company, is incorporated in Hong Kong. Hong Kong Yi Tat is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. No provisions for income taxes have been made as Hong Kong Yi Tat has no taxable income for the year. The applicable statutory tax rate for the subsidiary for the nine months ended September 30, 2012 and 2011 was 16.5% and 16.5%, respectively.

PRC

Effective on January 1, 2008, the PRC Enterprise Income Tax Law, EIT Law, and Implementing Rules impose an unified enterprise income tax rate of 25% on all domestic-invested enterprises and foreign investment enterprises in PRC, unless they qualify under certain limited exceptions. As such, starting from January 1, 2008, the Company’s subsidiaries in PRC are subject to an enterprise income tax rate of 25%.

The provision for income tax consists of the following:

	For The Nine months ended September 30,						For The Three Months Ended September 30,
	2012			2011			2012		2011

Current
USA	$	-		$	-		$	-	$	-
China		2,421,358			5,381,528			451,471		1,706,842
		2,421,358			5,381,528			451,471		1,706,842
Deferred
USA
Deferred tax asset for NOL carry forwards		150,907			878,407			22,024		85,760
Valuation allowance		(150,907	)		(878,407	)		(22,024)		(85,760	)
		-			-			-		-
China
Current portion
Temporary difference from general and administrative expenses		-			(71	)		-		(24	)
Net changes in deferred income tax under current portion		-			(71	)		-		(24	)

Non current portion
Deferred tax asset for NOL carry forwards		1,414,498			129,541			549,437		62,823
Temporary difference from airtime rights expenses		104,078			(56,068	)		-		(10,967	)
Temporary difference from capitalized interest		(67,644	)		4,225			-		2,137
Valuation allowance		(1,414,498	)		(129,541	)		(549,437)		(62,823	)
Net changes in deferred income tax under non-current portion		36,434			(51,843	)		-		(8,830	)

Net deferred income tax expenses (benefit)		36,434			(51,914	)		-		(8,854	)

Total provision for income tax	$	2,457,792		$	5,433,442		$	451,471	$	1,715,696

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating losses and temporary differences become deductible. Management considered projected future taxable income and tax planning strategies in making this assessment.

The change in total allowance for the nine months ended September 30, 2012 and 2011 was an increase of $1,565,405 and $466,373, respectively. The change in total allowance for the three months ended September 30, 2012 and 2011 was an increase of $571,461 and $148,584, respectively.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

13. EQUITY

STOCK-BASED COMPENSATION

On June 10, 2009 (the “Grant Date”), the Company entered into a Non-qualified Stock Option Agreement with one of the Company’s directors, pursuant to which, the Company issued the director non-qualified stock options (the “Stock Options”) to purchase a total of 30,000 shares of the Company’s common stock as compensation for his services to be rendered as the Company’s director. One half of the Stock Options shall vest on the sixth month anniversary of the Grant Date (the “First Vesting Date”) and become exercisable at an exercise price equal to the market price of the Company’s common stock on the First Vesting Date and the second half of Stock Options shall vest on the twelveth month anniversary of the Grant Date (the “Second Vesting Date”) and become exercisable at an exercise price equal to the market price of the Company’s common stock on the Second Vesting Date.

On January 21, 2011 (the “CFO Stock Option Grant Date”), the Company entered into a Non-qualified Stock Option Agreement with the Company’s former Chief Financial Officer, pursuant to which, the Company issued non-qualified stock options (the “CFO Stock Options”) to purchase a total of 75,000 shares of the Company’s common stock as compensation for his services to be rendered as the Company’s Chief Financial Officer. 15,000 CFO Stock Options vested on the CFO Stock Option Grant Date; 20,000 CFO Stock Options shall vest on the one-year anniversary of the CFO Grant Date; 20,000 CFO Stock Options shall vest on the second-year anniversary of the CFO Grant Date; and 20,000 CFO Stock Options shall vest on the third-year anniversary of the CFO Grant Date. The exercise price for all of the shares was determined as the fair value of our common stock using the closing price on the grant date.

On November 5, 2011, our former CFO submitted a letter of resignation resigning from his position. The resignation was effective as of December 31, 2011. Under the Non-qualified Stock Option Agreement, if CFO is removed from office for cause prior to the 21 st day of January, 2012, any outstanding stock options held by him which are not vested and exercisable by him immediately prior to resignation shall terminate as of the date of removal, and any outstanding stock options held by CFO which is vested and exercisable immediately prior to removal shall be exercisable at any time prior to the expiration date of such stock option or within one-year after the date of removal, whichever is shorter. As a result, 60,000 CFO Stock Options were forfeited as of December 31, 2011. On January 6, 2012, our former CFO transferred options to purchase 15,000 shares to Mr. Minhua Chen, our Chief Executive Officer, as a gift.

On January 21, 2011 (the “VPIR Stock Option Grant Date”), the Company entered into a Non-qualified Stock Option Agreement with the Company’s former Corporate Secretary and VP of Investor Relation (“VPIR”), pursuant to which, the Company issued non-qualified stock options (the “VPIR Stock Options”) to purchase a total of 75,000 shares of the Company’s common stock as compensation for his services to be rendered as the Company’s VP of Investor Relation. 15,000 VPIR Stock Options shall vest on the VPIR Stock Option Grant Date; 20,000 VPIR Stock Options shall vest on the one-year anniversary of the VPIR Grant Date; 20,000 VPIR Stock Options shall vest on the second-year anniversary of the VPIR Grant Date; and 20,000 VPIR Stock Options shall vest on the third-year anniversary of the VPIR Grant Date. The exercise price for all of the shares was determined as the fair value of our common stock using the closing price on the grant date.

On November 5, 2011, our former VPIR submitted a letter of resignation resigning from his position. The resignation was effective as of December 31, 2011. Under the Non-qualified Stock Option Agreement, if VPIR is removed from office for cause prior to the 21 st day of January, 2012, any outstanding stock option held by him which is not vested and exercisable by him immediately prior to resignation shall terminate as of the date of removal, and any outstanding stock options held by VPIR which is vested and exercisable immediately prior to removal shall be exercisable at any time prior to the expiration date of such stock option or within one-year after the date of removal, whichever is shorter. As a result, 60,000 VPIR Stock Options were forfeited as of December 31, 2011. On January 6, 2012, our former VPIR transferred options to purchase 15,000 shares to Mr. Minhua Chen, our Chief Executive Officer, as a gift.

On March 17, 2011 (the “ID Stock Option Grant Date”), the Company entered into a Non-qualified Stock Option Agreement with the Company’s Independent Director, pursuant to which, the Company issued non-qualified stock options (the “ID Stock Options”) to purchase a total of 30,000 shares of the Company’s common stock as compensation for his services to be rendered as the Company’s Independent Director. One half of the ID Stock Options vested on the ID Grant Date and the second half of ID Stock Options vested on June 10, 2011. The exercise price for all of the shares was determined as the fair value of our common stock using the closing price on the grant date.

On July 27, 2011, the Company entered into an agreement with the Company’s Independent Director, pursuant to which, the Company granted 20,000 restricted shares of the Company’s common stock as compensation for his services to be rendered as the Company’s Independent Director from June 10, 2011 to June 9, 2012. The estimated value of the 20,000 shares was $73,000 on June 10, 2011. The unrecognized share based compensation expense as of September 30, 2012 and December 31, 2011 was approximately $0 and $36,500, respectively. On May 24, 2012, the 20,000 restricted shares were issued.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company valued the stock options using the Black-Scholes model with the following assumptions:

Type of Stock Option	Number of Options		Expected Term		Expected Volatility			Dividend Yield			Risk Free Interest Rate
Options to Independent Director, June 10, 2009		30,000		5.25		356	%		0	%		3.11	%
Options to Chief Financial Officer, January 21, 2011		75,000		6.25		60	%		0	%		3.44	%
Options to VP of Investor Relation, January 21, 2011		75,000		6.25		60	%		0	%		3.44	%
Options to Independent Director, March 17, 2011		30,000		6.25		60	%		0	%		3.25	%

The following is a summary of the option activity:

	Number of Options

Outstanding as of December 31, 2011		90,000
Granted		-
Exercised		-
Forfeited		-
Outstanding as of September 30, 2012		90,000

For the nine months ended September 30, 2012 and 2011, the Company recognized approximately $36,500 and $576,536, respectively, as stock-based compensation expense for its stock option plan, which is included in general and administrative expenses.

For the three months ended September 30, 2012 and 2011, the Company recognized approximately $0 and $74,543, respectively, as stock-based compensation expense for its stock option plan, which is included in general and administrative expenses.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

14. NON-CONTROLLING INTEREST

On April 15, 2010, the Company established a new subsidiary, Anhui Yida. The Company has a 60% interest and Anhui Xingguang Group, an unrelated entity, holds a 40% interest. Anhui Yida has not commenced operations as of September 30, 2012. Non-controlling interest consisted of the following:

	September 30, 2012			December 31, 2011

Balance brought forward	$	6,064,267		$	94,595
Accumulated deficits		(201,613	)		(195,823	)
Accumulated other comprehensive income		38,242			236,701
		5,900,896			135,473
Add: Repayment from non-controlling interest		-			5,928,794
Less: Loan to non-controlling interest		(633,012)			-
Balance carry forward	$	5,267,884		$	6,064,267

15. COMMITMENTS AND CONTINGENCIES

(1) Operating commitments

Operating commitments consist of leases for office space under various operating lease agreements which expire in April 2021.

Operating lease agreements generally contain renewal options that may be exercised at the Company’s discretion after the completion of the terms. The Company's obligations under various operating leases are as follows:

As of September 30,
2013	$	307,392
2014		276,518
2015		267,587
2016		266,571
2017		278,101
Thereafter		12,474,112
Total minimum payments	$	13,870,281

The Company incurred rental expenses of $291,181 and $126,395 for the nine months ended September 30, 2012 and 2011, respectively and which included $7,133 and $6,935, respectively, paid to Xin Hengji Holding Company Limited, a related party.

The Company incurred rental expenses of $113,761 and $55,940 for the three months ended September 30, 2012 and 2011, respectively and which included $2,369 and $2,383, respectively, paid to Xin Hengji Holding Company Limited, a related party.

(2) Management rights commitments

In 2001, Fujian Jintai entered into a tourism management revenue sharing agreement which is related to the management rights with Fujian Taining Great Golden Lake Tourism Economic Development Zone Management Committee (“Taining government”) to operate and to manage the Great Golden Lake resort from 2001 through 2032. The Company agreed to pay (1) 8% of the revenue from 2001 to 2005; (2) 10% of the revenue from 2006 to 2010; (3)12% of the revenue from 2011 to 2015; (4) 14% of the revenue from 2016 to 2020; (5) 16% of the revenue from 2021 to 2025; 18% from 2026 to 2032 to the Taining government.

The Company paid approximately $556,418 and $486,048 to the Taining government for the nine months ended September 30, 2012 and 2011, respectively, and recorded as cost of revenue.

The Company paid approximately $283,430 and $231,190 to the Taining government for the three months ended September 30, 2012 and 2011, respectively, and recorded as cost of revenue.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

15. COMMITMENTS AND CONTINGENCIES (CONTINUED)

(3) Compensation for using nature resources commitments

In 2007, Fujiang Jintai entered into an agreement with Taining government which is related to compensation fees for using nature resources in the Great Golden Lake resort. The Company agreed to pay 10% of the revenue from sale of resort tickets after deduction of the profit sharing with Taining government (see above).

The Company paid approximately $325,749 and $329,127 to the Taining government for the nine months ended September 30, 2012 and 2011, respectively, and recorded as selling expenses.

The Company paid approximately $169,186 and $157,153 to the Taining government for the three months ended September 30, 2012 and 2011, respectively, and recorded as selling expenses.

In December 2008, Tulou entered into a Tourist Resources Development Agreement with Hua’an County Government (“Hua’an government”) which is related to pay compensation fees for using nature resources in Tulou. The Company agreed to pay (1) 16% of gross ticket sales in the first five years; (2) 20% of gross ticket sales in the second five years; (3) 23% of gross ticket sales in the third five years; (4) 25% of gross ticket sales in the fourth five years; (5) 28% of gross ticket sales in the fifth five years; (6) 30% in twenty six years and thereafter when the ticket price of the Clusters is RMB60 ($9.50 USD) or above per person.

The Company paid approximately $107,296 and $280,747 to the Hua’an government for the nine months ended September 30, 2012 and 2011, respectively, and recorded as selling expenses.

The Company paid approximately $22,813 and $73,923 to the Hua’an government for the three months ended September 30, 2012 and 2011, respectively, and recorded as selling expenses.

In 2008, Hong Kong Yi Tat entered into a Tourist Destination Cooperative Development Agreement with Yongtai County Government with respect to the development of Yunding Park pursuant to which Fujian Yida is obligated to pay 5 million RMB, or approximately $0.80 million, to the Yongtai County People’s Government over the course of the first 10 years of the Agreement. As of September 30, 2012, the Company has paid to the Yongtai County local government 3 million RMB, or $0.48 million. We plan to pay to the local government the remaining 2 million RMB, or $0.32 million, by 2018.

(4) Litigation

The Company’s management does not expect the legal matters involving the Company would have a material impact on the Company’s consolidated financial position or results of operations.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

16. EARNINGS(LOSSES) PER SHARE

Basic earnings per share is computed by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution of securities by including other potential common stock, including convertible preferred stock, stock options and warrants, in the weighted average number of common shares outstanding for the period, if dilutive. The numerators and denominators used in the computations of basic and dilutive earnings per share are presented in the following table:

	For The Nine Months Ended September 30,				For The Three Months Ended September 30,
	2012		2011		2012		2011
BASIC

Numerator for basic earnings per share attributable to the Company’s common stockholders:

Net income(loss) used in computing basic earnings per share	$	1,260,634	$	10,653,241	$	(975,411)	$	3,208,606

Basic earnings(losses) per share	$	0.06	$	0.54	$	(0.05)	$	0.16

Basic weighted average shares outstanding		19,561,240		19,551,785		19,571,785		19,551,785

	For The Nine Months Ended September 30,				For The Three Months Ended September 30,
		2012		2011		2012		2011
DILUTED

Numerator for basic earnings per share attributable to the Company’s common stockholders:

Net income(loss) used in computing diluted earnings per share	$	1,260,634	$	10,653,241	$	(975,411)	$	3,208,606

Diluted earnings(losses) per share	$	0.06	$	0.54	$	(0.05)	$	0.16

Weighted average outstanding shares of common stock		19,561,240		19,551,785		19,571,785		19,551,785
Warrants		-		-		-		-
Options		-		9,836		-		3,651
Diluted weighted average shares outstanding		19,561,240		19,561,621		19,571,785		19,555,436

Potential common shares outstanding as of September 30:
Options outstanding		90,000		90,000		90,000		110,000
Unvested restricted common shares		-		20,000		-		20,000

For the nine months and nine months ended September 30, 2012 and 2011, 90,000 and 90,000 options, respectively were not included in the diluted EPS because the average stock price was lower than the strike price of these options.

For the three months and nine months ended September 30, 2012 and 2011, 90,000 and 110,000 options, respectively were not included in the diluted EPS because the average stock price was lower than the strike price of these options.

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

17. BUSINESS SEGMENTS

During the nine months ended September 30, 2012 and September 30, 2011, the Company is organized into two main business segments: advertisement and tourism. The primary business relates to tourism at the Great Golden Lake, Yunding resort and Tulou resort. The Company offers bamboo rafting, parking lot service, photography services and ethnic cultural communications. The primary business related to advertisement is focused on advertisements, including media publishing, television, cultural and artistic communication activities, and performance operation and management activities. The following table presents a summary of operating information and certain balance sheet information for the two segments for the years ended:

	For The Nine Months Ended September 30,						For The Three Months Ended September 30,
	2012			2011			2012			2011
Revenues:
Advertisement	$	14,126,023		$	26,675,530		$	3,168,963		$	8,322,439
Tourism		7,340,957			7,299,124			3,152,618			2,885,042
Total	$	21,466,980		$	33,974,654		$	6,321,581		$	11,207,481

Operating income(loss):
Advertisement	$	9,384,135		$	19,234,964		$	1,783,656		$	6,148,461
Tourism		(4,287,401	)		(1,832,147	)		(1,379,161	)		(998,249)
Other		(430,080	)		(1,205,865	)		(62,578	)		(244,602	)
Total	$	4,666,654		$	16,196,952		$	341,917		$	4,905,610

Net income(loss):
Advertisement	$	6,777,264		$	14,185,447		$	1,270,471		$	4,576,021
Tourism		(5,287,080	)		(2,357,224	)		(2,253,357	)		(1,154,085	)
Other		(431,163	)		(1,258,997	)		(62,924	)		(254,182	)
Total	$	1,059,021		$	10,569,226		$	(1,045,810)		$	3,167,754

Capital expenditure:
Advertisement	$	-		$	2,324		$	-		$	17
Tourism		9,520,241			8,539,295			4,177,409			2,994,437
Total	$	9,520,241		$	8,541,619		$	4,087,409		$	2,994,454

	September 30, 2012		December 31, 2011
Identifiable assets:
Advertisement	$	5,623,478	$	4,134,036
Tourism		198,988,929		189,882,849
Others		234,055		602,204
Total	$	204,846,462	$	194,619,089
Intangible assets:
Advertisement	$	1,849,269	$	3,491,785
Tourism		43,038,448		28,863,225
Total	$	44,887,717	$	32,355,010

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

CHINA YIDA HOLDING, CO. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

18. SUBSEQUENT EVENTS

On August 1, 2012, by unanimous written consent of the Board of Directors of the Company, the Board of Directors adopted resolutions approving a reverse split of the Company’s Common Stock on the basis of one (1) share for every five (5) outstanding shares, so that five (5) outstanding shares of Common Stock before the reverse stock split shall represent one share of Common Stock after the reverse stock split (the “Reverse Split”) and proposing that such resolution be submitted for a vote of the stockholders of the Corporation (the “Board Consent”). The action taken by the Board of Directors with respect to the Reverse Split and amending the Company’s Amended and Restated Certificate of Incorporation to effect the Reverse Split (the “Amendment”) was subsequently adopted by the written consent of the Company’s stockholders entitled to vote a majority of the shares of Common Stock then outstanding on August 1, 2012 (the “Stockholder Consent”). The Information Statement in connection with the authorization of the above corporate action was first being mailed or furnished to the stockholders of the Company on or about September 19, 2012, and the transaction described therein shall become effective at such future date as determined by the Board of Directors, as evidenced by the filing of the Amendment with the Secretary of State of the State of Delaware, but in no event earlier than the 20th day after the Information Statement was so mailed or furnished.

On September 28, 2012, by unanimous written consent of the Board of Directors of the Company, the Board of Directors adopted resolutions approving the reincorporation of the Company in Nevada through the merger of China Yida Holding, Co., a Delaware corporation, with and into a newly created, wholly-owned Nevada subsidiary, China Yida Holding, Co. (the “Reincorporation”) and proposing that such resolution be submitted for a vote of the stockholders of the Corporation. The action taken by the Board of Directors with respect to the Reincorporation and filing of a certificate of merger with the Secretary of State of the State of Delaware to effect the Reincorporation was subsequently adopted by the written consent of the Company’s stockholders entitled to vote a majority of the shares of common stock then outstanding on September 28, 2012 (the “Stockholder Consent”). The Information Statement in connection with the authorization of the above corporate action was first being mailed or furnished to the stockholders of the Company on or about October 23, 2012, and the transaction described therein shall become effective at such future date as determined by the Board of Directors, as evidenced by the filing of the Amendment with the Secretary of State of the State of Delaware, but in no event earlier than the 20th day after the Information Statement was so mailed or furnished.

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

The following discussion of our financial condition and results of operations should also be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those financial statements appearing elsewhere in this Form 10-Q. The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

Overview

China Yida Holding, Co (“we” or the “Company”) was formed on June 4, 1999 to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with a company having its primary operations in the PRC. On November 19, 2007, we consummated the acquisition of Keenway Limited, Hong Kong Yi Tat, and the then shareholders of Keenway Limited, including Chen Minhua, Fan Yanling, Zhang Xinchen, Extra Profit International Limited, and Lucky Glory International Limited, received newly issued shares of our common stock.

We currently operate the Great Golden Lake tourist destination (Global Geo-park), Hua’An Tulou cluster (or the “Earth Buildings”) tourist destination (World Culture Heritage), and Yunding Recreational Park (Large-scale National Recreational Park), covering over 300 square kilometers in total. Our media business provides operating management service, including channeanl and advertisement management for the FETV since 2004 and the “Journey through China on the Train” on-board railway program (“Railway Media”). Through our wholly owned subsidiaries in China, we have entered into four additional cooperation agreements respectively with the local Chinese government agents, namely, (i) the Anhui Province Bengbu Municipal Government; (ii) the Jiangxi Province Zhangshu Municipal Government; (iii) the Fenyi County, Xinyu City, Jiangxi Province Government; and (iv) the Fujian Education Media Limited Company, a wholly state-owned company organized by the Fujian Education Television Station (“FETV”). Under these agreements, we have obtained the right to construction and development of the Ming Dynasty Entertainment World Project (“Ming Dynasty Entertainment World”) including the purchase of the forty (40) years land use rights for a parcel of approximately 250 Mu for commercial land use purpose and another parcel of approximately 82.37 acres for industry land use purpose, as well as the construction of the Royal Hot Spring World project; the right to invest in construction and development of China Yang-sheng (Nourishing Life) Paradise Project (“Nourishing Life”) (including the following projects: (i) Salt Water Hot Spring SPA & Health Center, (ii) Yang-sheng Holiday Resort, (iii) World Yang-sheng Cultural Museum, (iii) International Camphor Tree Garden, (iv) Chinese Medicine and Herb Museum, (v) Yang-sheng Sports Club, (vi) Old Town of Chinese Traditional Medicine, and (vii) various other Yang-sheng related projects and tourism real estate projects) with a forty (40) year exclusive right to develop, operate and manage a variety of caves, hot springs and other natural and cultural tourist resources identified in the Meng Mountain area, and various caves and tourist resources of the Dagang Mountain located in Fenyi County, Xinyu City, Jiangxi Province (“The City of Caves”); and the five years (three year agreement with two year renewal) of exclusive management rights for the operation of the FETV channel (“FETV”).

We expect that our tourism business will be the primary source of our revenue over the next few years. Advertising business has been our primary source of revenue for the last two years because the tourism business has experienced the serious flooding and weather and the ads restriction was not executed by the local government. The revenue from advertising will decrease because of the new restriction on the advertisement and we expect that the revenue from tourism will increase. However, any increase in revenue will depend on the recovery of Great Golden Lake and the progress we make in our other tourist destinations. This expectation is also based on our new projects and construction of tourism destinations. Last year we experienced a significant flood at the Great Golden Lake which resulted in a sharp decrease of revenue because we had to close the park. It has taken a considerable amount of time for the natural beauty to be restored after the flood but we believe that the Great Golden Lake has started to recover and visitors will return to the park. Flooding does not occur on a regular basis either at the Great Golden Lake or in the province and we do not expect to see additional floods or other natural disasters affect our operations in the future. In 2012, at Great Golden Lake and at Hua’an Tulou, we do not anticipate much new construction as we are maintaining our existing operations and restoring what is already built and in operation. We do not expect any construction or restoration to affect our operations. Our advertising and tourism businesses are not seasonal. We have visitors to our parks throughout the year.

We are subject to risks common to companies operating in China, including risks inherent in our distribution and commercialization efforts, uncertainty of foreign regulatory approvals and laws, the need for future capital and retention of key employees. We cannot provide assurance that we will generate revenues or achieve and sustain profitability in the future.

Recent Development

We established six new subsidiaries during the nine months ended September 30, 2012.

On May 11, 2012, Jiangxi Zhangshu formed a wholly owned subsidiary, Zhangshu (Yida) Real Estate Development Co., Ltd. (“Zhangshu Development”). The total paid-in capital of Zhangshu Development was $792,532 (RMB 5 million). Its primary business is to conduct business of real estate development and sales in China.

On May 16, 2012, Anhui Yida formed a wholly owned subsidiary, Bengbu (Yida) Real Estate Development Co., Ltd. (“Bengbu Yida”). The total paid-in capital of Fenyi Development was $1,268,050 (RMB 8 million). Its primary business is to conduct business of real estate development in China.

On May 22, 2012, Jiangxi Zhangshu formed a wholly owned subsidiary, Zhangshu (Yida) Investment Co., Ltd. (“Zhangshu Investment”). The total paid-in capital of Zhangshu Investment was $792,532 (RMB 5 million). Its primary business is to conduct real estate investment, project management and consulting in China.

On June 6, 2012, Jiangxi Fenyi formed a wholly owned subsidiary, Fenyi (Yida) Property Development Co., Ltd. (“Fenyi Development”). The total paid-in capital of Fenyi Development was $792,532 (RMB 5 million). Its primary business is to conduct business of real estate development and sales in China.

On July 20, 2012, Anhui Yida formed a wholly owned subsidiary, Bengbu (Yida) Investment Co., Ltd. (“Bengbu Investment”). The total paid-in capital of Fenyi Development was $792,532 (RMB 5 million). Its primary business is to conduct real estate investment, project management and consulting in China.

On July 30, 2012, Fujian Yida formed a wholly owned subsidiary, Fujian (Yida) Culture and Tourism Performing Arts Co., Ltd. (“Yida Arts”). The total paid-in capital of Fenyi Development was $792,532 (RMB 5 million). Its primary business is to operate Yunding performance and show events.

Upon the incorporation of these new subsidiaries, our corporate structure chart has changed to the following:

Factors Affecting Our Performance

Advertising Business

For the advertising business, our advertising revenue is driven by the popularity of our television programs and the number of viewers tuning into our television station. If more people tune into our station, we will be able to attract more advertisers and charge more for each advertising spot. This will increase our revenues. We strive to keep our audience rating high in order to be able to sell all our advertising air time.

We generate our advertising revenue by selling air time to sponsors and companies that are interested in marketing their products to our television viewers. We incur administrative fees, business traveling fees, salaries, depreciation, automobile, and interest costs in operating the advertising business.

The new PRC regulations set forth by the State Administration for Radio, Film and Television which bans certain television and radio advertisements has had a negative effect on our revenues and certain clients have not continued to advertise. Accordingly, we expect our revenues to decline.

Tourism Business

For the tourism business, our revenue is driven by the reputation of our tourist destinations. We strive to offer quality tourist attractions that offer our visitors diverse entertainment, including catering, hotel, transportation, and shopping. We generate our revenue from our visitors and tourists who are looking to enjoy our tourist location. We incur many costs associated with operating the tourist business, including, administration fees, business traveling fees, land use rights fees, and revenue sharing fees.

We entered into tourism management revenue sharing agreement with the Taining government with respect to the Great Golden Lake resort. We have contracted to share the revenue over the course of the agreement as follows: (i) from 2001 to 2006 we will receive 92% of the revenue and the Taining government will receive 8% of the revenue; (ii) from 2006 to 2012 we will receive 90% of the revenue and the Taining government will receive 10% of the revenue; (iii) from 2012 to 2016 we will receive 88% of the revenue and the Taining government will receive 12% of the revenue; (iv) from 2016 to 2022 we will receive 86% of the revenue and the Taining government will receive 14% of the revenue; (v) from 2022 to 2026 we will receive 84% of the revenue and the Taining government will receive 16% of the revenue; and (vi) from 2026 to 2032 we will receive 82% of the revenue and the Taining government will receive 18% of the revenue. Because of the decreasing revenue share that we will receive from the Great Golden Lake resort and the resort has not been fully recovered to its previous level due to the flood, we may not be able to maintain our revenues from Great Golden Lake.

However, with the recovery of Great Golden Lake and the expected grand openings of three new tourism projects in the future, we believe that we will be able to generate more revenues in order to maintain the high gross profit margins in the tourism segment.

We do expect our tourism business to be our primary source of revenue over the next few years. Although Ming Dynasty, Yang-Sheng Paradise, and City of Caves are not yet operating, we do expect them to be opened and to start generating revenue by the first half of 2013. Also, we expect Yunding to continue to grow and for the Great Golden Lake to recover from the flooding.

Results of Operations

Results of Operations for the Nine months ended September 30, 2012 as Compared to the Nine months ended September 30, 2011

The following table presents a summary of operating information for the nine months ended September 30, 2012 and 2011:

	For the nine months			For the nine months						Increase/
(All amounts, other than	ended			ended			Increase/			(Decrease)
percentage, in U.S.	September 30,			September 30,			(Decrease)			Percentage
Dollar)	2012			2011			U.S. Dollar ($)			(%)
Net revenue
Advertisement	$	14,126,023		$	26,675,530		$	(12,549,507	)		(47.05	)
Tourism		7,340,957			7,299,124			41,833			0.57
Total net revenue		21,466,980			33,974,654			(12,507,674	)		(36.81	)

Cost of revenue
Advertisement		4,227,122			6,847,683			(2,620,561	)		(38.27	)
Tourism		4,377,807			3,681,633			696,174			18.91
Total cost of revenue		8,604,929			10,529,316			(1,924,387	)		(18.28	)

Gross profit		12,862,051			23,445,338			(10,583,287	)		(45.14	)

Selling expenses		4,751,736			3,704,622			1,047,114			28.27
General and administrative expenses		3,443,661			3,543,764			(100,103	)		(2.82	)
Income from operations		4,666,654			16,196,952			(11,530,298	)		(71.19	)
Other expense, net		(191,870	)		(41,430	)		(150,440	)		363.12
Interest income		32,218			75,358			(43,140	)		(57.25	)
Interest expense		(990,189	)		(228,212	)		(761,977	)		333.89
Less: Provision for income tax		2,457,792			5,433,442			(2,975,650	)		(54.77	)
Net income		1,059,021			10,569,226			(9,510,205	)		(89.98	)
Net loss attributable to non-controlling interest		201,613			84,015			117,598			139.97
Net income attributable to China Yida Holding Co.	$	1,260,634		$	10,653,241		$	(9,392,607	)		(88.17	)

Net Revenue

Net revenue decreased by approximately $12.51 million or approximately 36.81%, from approximately $33.97 million for the nine months ended September 30, 2011 to approximately $21.47 million for the nine months ended September 30, 2012. The decrease in net revenue was primarily due to a decrease in advertisement revenue which was partially offset by an increase in tourism.

Advertisement revenue decreased by approximately $12.55 million or approximately 47.05%, from approximately $26.68 million for the nine months ended September 30, 2011 to approximately $14.13 million for the nine months ended September 30, 2012.

This decrease was primarily due to the instability of the railway media broadcast revenue. Instability means that the program is broadcasting manually by the train attendant, we cannot monitor how he/she broadcasts the tape, or whether he/she has inserted the program tape or not. Railway program is a 20 minute infomercial program, the content of the programs are tourism news and information. Advertising clients choose the length of the advertisement during the program, and the period of time they want the advertisement to be broadcasted. Recently some clients decide to purchase less advertisement from the company, and they may consider give up the railway promotion and terminate the cooperation with the company due to the instability of the railway program. The operators determine in their sole discretion to broadcast the railway program or not. We cannot monitor the operator’s daily work. The advertisers were concerned about our lack of control over the frequency of program broadcasting and therefore purchased fewer advertising spots from us which resulted in the decrease of revenue from railway media broadcast.

We generate revenue from the “Journey through China on the Train” program which is the only railway media broadcast we produced so far. In February 2009, our wholly-owned subsidiary, Fuzhou Fuyu Advertising Co., Ltd., entered into a six-year exclusive agreement with China’s Railway Media Center to create an infomercial program named “Journey through China on the Train”, pursuant to which we produce 20-minute monthly episodes focused on tourist destinations around China and travel ideas and tips with product placement advertisements. The infomercial program is broadcasted on all high speed motor trains in China with TV panels made available by the Ministry of Railways of PRC and cable TV channels. We agree to pay an annual fee of approximately $46,154 or RMB 300,000 to Railway Media Center for the first three years and approximately $53,846 or RMB 350,000 for the second three years. We generate revenue from selling product placement advertisements. However, since the program is broadcasted manually by train attendants, we have no control over the frequency of program broadcasting, which results in the substantial instability of our railway media revenue. We generated approximately $0.38 million from the “Journey through China on the Train” program for the nine months ended September 30, 2012 as compared to approximately $3.12 million for the same period in prior year.

During this period, advertisement revenue from FETV also has experienced a decrease of 41.65% from $23.55 million to $13.74 million due to actions by domestic media authorities restricting the broadcasting manner and content of TV advertising. The new restricting content of TV advertising included shopping programs, mini ads and certain medical advertisements. On August 1, 2010, Fuyu, our wholly-owned subsidiary, entered into a Fujian Education Television Channel Project Management Agreement (the “Agreement”), with Fujian Education Media Limited Company, a wholly state-owned company organized by the Fujian Education TV Station under the laws of the People’s Republic of China (“Fuijan Education Media”), pursuant to which, Fujian Education Media granted to us five years of exclusive management rights for the FETV channel from August 1, 2010 to July 31, 2015. Under the management contract, we obtained the full rights to provide programming and content management services and to re-sell all advertising airtime of FETV. We have leveraged the FETV assets to produce high quality TV programming focused on tourism, successfully promoting our own tourist attractions branding the FETV station around the tourism theme and creating a network of potential partners for our tourism business, including hotels, travel agents, and entertainment resorts.

Tourism

Tourism revenue increased slightly by approximately $0.04 million or approximately 0.57% from approximately $7.30 million for the nine months ended September 30, 2011 to approximately $7.34 million for the nine months ended September 30, 2012, including approximately $3.93 million from Great Golden Lake resort, $2.38 million from Yunding Park, and $1.03 million from Hua’an Tulou. The primary resources of the revenues are entrance fees, tour shuttle bus fees, and restaurants. The tourism revenue remains steady.

Cost of Revenue

Cost of revenues decreased by approximately $1.93 million or approximately 18.28%, from approximately $10.53 million for the nine months ended September 30, 2011 to approximately $8.6 million for the nine months ended September 30, 2012. The decrease in cost of revenue was primarily due to a decrease in cost of revenue of advertisement, partially offset by an increase in cost of revenue of tourism.

Cost of revenue from advertisement decreased by approximately $2.62 million or approximately 38.27%, from approximately $6.85 million for the nine months ended September 30, 2011 to approximately $4.23 million for the nine months ended September 30, 2012. The Railway media clients demanded less broadcast programs due to the instability of the railway broadcasting, so the decrease in cost of media businesses was primarily due to the decrease of railway program productions. Also the business tax decreased along with the decrease in the Company’s advertising revenue.

Tourism

Cost of revenue from tourism increased by approximately $0.7 million or approximately 18.91%, from approximately $3.68 million for the nine months ended September 30, 2011 to approximately $4.38 million for the nine months ended September 30, 2012. The increase was primarily due to the increase in depreciation cost for the new construction of tourism destination in Yunding.

Gross profit

Gross profit decreased approximately $10.58 million, or approximately 45.14%, from approximately $23.45 million for the nine months ended September 30, 2011 to approximately $12.86 million for the nine months ended September 30, 2012. Our gross profit margin was approximately 59.92% for the nine months ended September 30, 2012, compared to approximately 69.01% for the same period in 2011, representing a decrease of approximately 9.09 percentage points.

Gross profit from advertisement decreased by approximately $9.93 million, or approximately 50.08%, from approximately $19.83 million for the nine months ended September 30, 2011 to approximately $9.9 million for the nine months ended September 30, 2012. Gross profit margin from advertisement was approximately 70.08% for the nine months ended September 30, 2012, compared to approximately 74.33% for the same period in 2011. This decrease was primarily attributable to the instability of revenue generated from the railway media broadcasts, as compared with the same period in 2011 and that the fixed costs associated with FETV’s commercial airtime remained constant.

Tourism

Gross profit from tourism decreased by approximately $0.65 million, or approximately 18.09%, from approximately $3.62 million for the nine months ended September 30, 2011 to approximately $2.96 million for the nine months ended September 30, 2012. Gross profit margin from tourism was approximately 40.36% for the nine months ended September 30, 2012, compared to approximately 49.56% for the same period in 2011. The decrease of gross profit margin was primarily attributable to fixed cost derived from depreciation of property and equipment at tourism spots that remained steady despite the decrease in tourism revenue at Great Golden Lake resort and Hua’an Tulou, and the increased interest expense as well as increase in depreciation cost for the new construction of tourism destination in Yunding, partially offset by increases in tourists and tourism revenue at Yunding Park.

Selling Expenses

Selling expenses were approximately $4.75 million for the nine months ended September 30, 2012, compared to approximately $3.7 million for the nine months ended September 30, 2011, which represents an increase of approximately $1.05 million, or approximately 28.27%. The increase in selling expense was primarily due to the increase in variable costs associated with the expansions at Yunding Park during the nine months ended September 30, 2012.

General and Administrative Expenses

General and administrative expenses were approximately $3.44 million for the nine months ended September 30, 2012, compared to approximately $3.54 million for the nine months ended September 30, 2011, which represents a decrease of approximately $0.1 million, or approximately 2.82%. General and administrative expenses remained substantially steady.

Interest expense

Interest expense was approximately $0.99 million for the nine months ended September 30, 2012, representing an increase of approximately $0.76 million or approximately 333.89%, compared to the approximately $0.23 million for the nine months ended September 30, 2011. The increase in interest expense was primarily because most constructions were completed by September 30, 2012, resulting in interest related constructions to be capitalized for the nine months ended September 30, 2012 as compared with the same period in 2011.

Income Tax

Income tax was approximately $2.46 million for the nine months ended September 30, 2012, representing a decrease of approximately $2.98 million or approximately 54.77%, compared to the approximately $5.43 million income tax for the nine months ended September 30, 2011. The decrease was primarily attributable to the lower revenue generated from the Tulou tourism destination, as well as the decrease in the railway media revenue for the nine months ended September 30, 2012 as compared with the same period in 2011. The provision for income tax for the nine months ended September 30, 2012 was mainly derived from the advertisement segment.

Net Income

As a result of the above factors, we have net income of approximately $1.06 million for the nine months ended September 30, 2012 as compared to net income of approximately $10.57 million for the nine months ended September 30, 2011, representing a decrease of approximately $9.51 million or approximately 89.98%. The decrease was primarily attributable to the lower revenue generated from the Tulou tourism destination, as well as the decrease of the railway media revenue and the increased interest expense for the nine months ended September 30, 2012 as compared with the same period in 2011.

Results of Operations for the Three Months ended September 30, 2012 as Compared to the Three Months ended September 30, 2011

During the three months ended September 30, 2012 and 2011, we are organized into two main business segments – tourism and advertisement. The following table presents a summary of operating information for the three months ended September 30, 2012 and 2011:

	For the three months			For the three months						Increase/
	ended			ended			Increase/			(Decrease)
	September 30,			September 30,			(Decrease)			Percentage
(All amounts, other than percentage, in U.S. Dollar)	2012			2011			U.S. Dollar ($)			(%)
Net revenue
Advertisement	$	3,168,963		$	8,322,439		$	(5,153,476	)		(61.92	)
Tourism		3,152,618			2,885,042			267,576			9.27
Total net revenue		6,321,581			11,207,481			(4,885,900	)		(43.59	)

Cost of revenue
Advertisement		1,236,714			2,141,129			(904,415	)		(42.24	)
Tourism		1,618,473			1,389,869			228,604			16.45
Total cost of revenue		2,855,187			3,530,998			(675,811	)		(19.14	)

Gross profit		3,466,394			7,676,483			(4,210,089	)		(54.84	)

Selling expenses		2,104,616			1,596,304			508,312			31.84
General and administrative expenses		1,019,861			1,174,569			(154,708	)		(13.17	)
Income from operations		341,917			4,905,610			(4,563,693	)		(93.03	)
Other expense, net		(77,203	)		(23,648	)		(53,555	)		226.47
Interest income		11,645			27,942			(16,297	)		(58.32	)
Interest expense		(870,698	)		(26,454	)		(844,244	)		3,191.37
Less: Provision for income tax		451,471			1,715,696			(1,264,225	)		(73.69	)
Net income (Loss）		(1,045,810	)		3,167,754			(4,213,564	)		(133.01	)
Net loss attributable to non-controlling interest		70,399			40,852			29,547			72.33
Net income(loss) attributable to China Yida Holding Co.	$	(975,411	)	$	3,208,606		$	(4,184,017	)		(130.40	)

Net Revenue

Net revenue decreased by approximately $4.89 million or 43.59%, from approximately $11.21 million for the three months ended September 30, 2011 to approximately $6.32 million for the three months ended September 30, 2012. The decrease in net revenue was primarily due to the decrease in the revenue from advertisement.

Our revenue from advertisement decreased by approximately $5.15 million or 61.92% from approximately $8.32 million for the three months ended September 30, 2011 to approximately $3.17 million for the three months ended September 30, 2012.

We generate revenue from the “Journey through China on the Train” program which is the only railway media broadcast we produced so far. In February 2009, our wholly-owned subsidiary, Fuzhou Fuyu Advertising Co., Ltd., entered into a six-year exclusive agreement with China’s Railway Media Center to create an infomercial program named “Journey through China on the Train”, pursuant to which we produce 20-minute monthly episodes focused on tourist destinations around China and travel ideas and tips with product placement advertisements. The infomercial program is broadcasted on all high speed motor trains in China with TV panels made available by the Ministry of Railways of PRC and cable TV channels. We agree to pay an annual fee of approximately $46,154 or RMB 300,000 to Railway Media Center for the first three years and approximately $53,846 or RMB 350,000 for the second three years. We generate revenue from selling product placement advertisements. However, since the program is broadcasted manually by train attendants, we have no control over the frequency of program broadcasting, which results in the substantial instability of our railway media revenue. We generated approximately $0.11 million from the “Journey through China on the Train” program for the three months ended September 30, 2012 as compared to approximately $0.5 million for the same quarter in prior year.

During this period, advertisement revenue from FETV also has experienced a decrease of 60.73% from $7.78 million to $3.06 million due to actions by domestic media authorities restricting the broadcasting manner and content of TV advertising. The new restricting content of TV advertising included shopping programs, mini ads and certain medical advertisements. On August 1, 2010, Fuyu, our wholly-owned subsidiary, entered into a Fujian Education Television Channel Project Management Agreement (the “Agreement”), with Fujian Education Media Limited Company, a wholly state-owned company organized by the Fujian Education TV Station under the laws of the People’s Republic of China (“Fuijan Education Media”), pursuant to which, Fujian Education Media granted to us five years of exclusive management rights for the FETV channel from August 1, 2010 to July 31, 2015. Under the management contract, we obtained the full rights to provide programming and content management services and to re-sell all advertising airtime of FETV. We have leveraged the FETV assets to produce high quality TV programming focused on tourism, successfully promoting our own tourist attractions branding the FETV station around the tourism theme and creating a network of potential partners for our tourism business, including hotels, travel agents, and entertainment resorts.

Tourism

Our revenue from tourism increased by approximately $0.27 million or approximately 9.27%, from approximately $2.89 million for the three months ended September 30, 2011 to approximately $3.15 million for the three months ended September 30, 2012, including approximately $2.03 million from Great Golden Lake resort, $0.87 million from Yunding Park, and $0.25 million from Huan’an Tulou. The primary sources of the revenues are entrance fees, tour shuttle bus fees and restaurants. The slight increase in tourism business was primarily due to the revenue increase at Yunding Park due to effective marketing promotion activities and advertisement in China that led to an increase in number of tourists.

Cost of Revenue

Cost of revenue decreased by approximately $0.68 million or approximately 19.14%, from approximately $3.53 million for the three months ended September 30, 2011 to approximately $2.86 million for the three months ended September 30, 2012. The decrease in cost of revenue was primarily due to a decrease in cost of revenue of the advertisement business, partially offset by an increase in cost of revenue of the tourism business.

Our cost of revenue from advertisement decreased by approximately $0.9 million or approximately 42.24%, from approximately $2.14 million for the three months ended September 30, 2011 to approximately $1.24 million for the three months ended September 30, 2012. The Railway media clients demanded less broadcast programs due to the instability of the railway broadcasting, so the decrease in cost of media businesses was primarily due to the decrease of railway program productions. Also the business tax decreased along with the decrease in the Company’s advertising revenue.

Tourism

Our cost of revenue from tourism for the three months ended September 30, 2012 increased by approximately $0.29 million or approximately 16.45%, from approximately $1.39 million for the three months ended September 30, 2011 to approximately $1.62 million for the three months ended September 30, 2012. The increase was primarily due to the increase in depreciation cost for the new construction of tourism destination in Yunding.

Gross profit

Gross profit decreased approximately $4.21 million, or approximately 54.84%, from approximately $7.68 million for the three months ended September 30, 2011 to approximately $3.47 million for the three months ended September 30, 2012. Our gross profit margin was approximately 54.83% for the three months ended September 30, 2012, compared to approximately 68.49% for the same period in 2011, representing a decrease of approximately 13.66 percentage points.

Our gross profit from advertisement decreased by approximately $4.25 million, or approximately 68.74%, from approximately $6.18 million for the three months ended September 30, 2011 to approximately $1.93 million for the three months ended September 30, 2012. Our gross profit margin from advertisement was approximately 60.97% for the three months ended September 30, 2012, compared to approximately 74.27% for the same period in 2011, representing a decrease of approximately 13.3 percentage points.

Tourism

Our gross profit from tourism increased by approximately $0.03 million, or approximately 2.61%, from approximately $1.5 million for the three months ended September 30, 2011 to approximately $1.53 million for the three months ended September 30, 2012. Our gross profit margin from tourism was approximately 48.66% for the three months ended September 30, 2012, compared to the gross profit margin of tourism of approximately 51.82% for the same period in 2011.

Selling Expenses

Our selling expenses were approximately $2.1 million for the three months ended September 30, 2012, compared to approximately $1.6 million for the three months ended September 30, 2011, which represents an increase of approximately $0.51 million, or approximately 31.84%. The increase in selling expense was primarily due to the increase in variable costs associated with the expansions at Yunding Park during the three months ended September 30, 2012.

General and Administrative Expenses

Our general and administrative expenses were approximately $1.02 million for the three months ended September 30, 2012, compared to approximately $1.17 million for the three months ended September 30, 2011, which represents a slight decrease of approximately $0.15 million, or approximately 13.17%. General and administrative expenses decreased because the expenses in US decreased.

Interest expense

Interest expense was approximately $0.87 million for the three months ended September 30, 2012, representing an increase of approximately $0.84 million or approximately 3191.37%, compared to the approximately $0.03 million for the three months ended September 30, 2011. The increase in interest expense was primarily because most constructions were completed by September 30, 2012 so there was no interest related constructions to be capitalized for the three months ended September 30, 2012 as compared with the same period in 2011.

Income Tax

Income tax was approximately $0.45 million for the three months ended September 30, 2012, representing a decrease of approximately $1.26 million or approximately 73.69%, compared to the approximately $1.72 million for the three months ended September 30, 2011. The decrease was primarily attributable to the lower revenue generated from the Tulou tourism destination, as well as decrease in the railway media revenue for the three months ended September 30, 2012 as compared with the same period in 2011. The provision for income tax for the three months ended September 30, 2012 was mainly derived from the advertisement segment.

Net Income (Loss)

As a result of the above factors, we have net loss of approximately $1.05 million for the three months ended September 30, 2012 as compared to net income of approximately $3.17 million for the three months ended September 30, 2011, representing a decrease of approximately $4.21 million or approximately 133.01%. The decrease was primarily attributable to the lower revenue generated from the Tulou tourism destination as well as the decrease of the railway media revenue, and the increased interest expense for the three months ended September 30, 2012 as compared with the same period in 2011.

Liquidity and Capital Resources

Our principal sources of liquidity during the nine months ended September 30, 2012 include cash from operations and proceeds from long-term & short-term loans.

As of September 30, 2012, we had cash and cash equivalents of approximately $8.42 million as compared to approximately $5.69 million as of December 31, 2011, representing an increase of $2.73 million. Our principal sources of liquidity during the nine months ended September 30, 2012 include cash from operations and proceeds from loans. Net proceeds from short-term and long-term loans for the nine months ended September 30, 2012 and 2011 were approximately $9.83 million and $10.54 million, respectively.

As of September 30, 2012, our working capital deficit was approximately $4.42 million, compared to working capital of approximately $3.76 million as of December 31, 2011.

The following table sets forth a summary of our cash flows for the years indicated:

	For the nine months ended September 30,
	2012		2011

Net cash provided by operating activities	$	10,619,976	$	16,268,581
Net cash used in investing activities	$	(15,344,685)	$	(21,227,991	)
Net cash provided by financing activities	$	7,429,658	$	11,854,354

Net cash provided by operating activities was approximately $10.62 million for the nine months ended September 30, 2012, compared to approximately $16.27 million for the nine months ended September 30, 2011. The decrease of $5.65 million was primarily due to the decrease in net income during the nine months ended September 30, 2012 as compared to the same period in prior year.

Net cash used in investing activities was approximately $15.34 million for the nine months ended September 30, 2012, compared to approximately $21.23 million for the nine months ended September 30, 2011. The decrease of $5.89 million in net cash used in investing activities was primarily due to the decrease in expenditures on activities related to obtaining land use rights and on property at the China Yang-sheng Paradise and the City of Caves.

Net cash provided by financing activities amounted to approximately $7.43 million for the nine months ended September 30, 2012, compared to approximately $11.85 million for the nine months ended September 30, 2011, representing a decrease of approximately $4.42 million. The decrease in net cash provided by financing activities was mainly because of more repayment of long term loans during the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011.

Bank loans

The Company has seven bank loans from three institutional lenders for the development of the tourism destinations.

1.	A loan for approximately $0.95 million from Fujian Haixia Bank (formerly known as Merchant bank of Fuzhou). The loan bears interest at 9.184% per annum, and is due November 4, 2012. It is guaranteed by Fujian Jintai Tourism Development Co., Ltd.
2.	A loan for approximately $1.58 million from Fujian Haixia Bank (formerly known as Merchant bank of Fuzhou). The loan bears interest at 8.4% per annum, and is due August 16, 2013. It is guaranteed by Fujian Jintai Tourism Development Co. Ltd. and Yida Travel Service Co., Ltd.
3.	A loan for approximately $1.58 million from China Minsheng Banking Corp, Ltd. The loan bears interest at 8% per annum, and has been paid off in October 2012.
4.	A loan for approximately $12.78 million from Industrial and Commercial Bank of China Limited. The loan bears interest at 7.76% per annum. $1,965,501 (RMB 12,420,000) will be due in each twelve-month period as of September 30, 2013, 2014, 2015, 2016, 2017, 2018 respectively and $991,567 (RMB 6,270,000) will be due in the twelve-month period as of September 30, 2019. It is collateralized by the right to collect ticket sales at the Great Golden Lake.
5.	A loan for approximately $9.89 million from Industrial and Commercial Bank of China Limited. It bears interest at 6.40% per annum. $1,266,023 (RMB 8,000,000), $1,740,782 (RMB 11,000,000), $2,057,288 (RMB 13,000,000), $2,215,540 (RMB 14,000,000), $1,978,161 (RMB 12,500,000), and $633,012 (RMB 4,000,000) will be due in each of the twelve-month period as of September 30, 2013, 2014, 2015, 2016, 2017 and 2018. It is secured by credit guarantee of Fujian Jintai and the right to collect ticket sales at Yunding Park as additional collateral.
6.	A loan for approximately $4.95 million from Industrial and Commercial Bank of China Limited. The loan bears interest at 7.76% per annum. $791,264 (RMB 5,000,000) will be due in each twelve-month period as of September 30, 2013, 2014, 2015, 2016, 2017, 2018 respectively, and $197,819 (RMB 1,250,000) will be due in the twelve-month period as of September 30, 2019. It is collateralized by the right to collect ticket sales at the Tulou tourism destination, fixed assets of Fujian Tulou and personal guarantee by directors as additional collateral.
7.	A loan for approximately $9.02 million from China Minsheng Banking Corp, Ltd. The loan bears interest at 11.97% per annum. $2,848,552 (RMB 18,000,000), $5,380,598 (RMB 34,000,000), and $791,263 (RMB 5,000,000) will be due in each twelve-month period as of September 30, 2013, 2014, and 2015 respectively. It is secured by credit guarantee of Fujian Jintai, collateralized by the fixed assets of Fujian Yida and personal guarantees by two of the Company’s directors as additional collateral.

In the coming 12 months, we have approximately $10.99 million in bank loans that will mature. We plan to replace these loans with new bank loans in approximately the same aggregate amounts.

We believe we can arrange capitals or funds for construction projects based on the actual cash flow expenditures, which means we can accelerate the construction when we have more cash flows and we can slow down the construction when we are lack of funds. We believe that our currently available working capital, credit facilities referred to above and the expected additional credit facility should be adequate to sustain our operations at the current level for the next twelve months.

Obligations Under Material Contracts

Below is a table setting forth the Company’s material contractual obligations as of September 30, 2012:

			Payment due by period
Contractual Obligations	Total		1 year		1-3 years		3-5 years		More than 5 years

Bank Loans	$	40,755,770	$	10,985,915	$	15,483,461	$	9,707,231	$	4,579,163
Operating Lease Obligations		13,870,281		307,392		544,105		544,672		12,474,112
Obligation under airtime rights		2,206,033		2,206,033				-		-
Total	$	56,832,084	$	13,499,340	$	16,027,566	$	10,251,903	$	17,053,275

Management Rights Commitments

The Company paid approximately $556,418 and $486,048 to the Taining government for the nine months ended September 30, 2012 and 2011, respectively, and recorded as cost of revenue.

The Company paid approximately $283,430 and $231,190 to the Taining government for the three months ended September 30, 2012 and 2011, respectively, and recorded as cost of revenue.

Compensation For Using Nature Resources Commitments

The Company paid approximately $325,749 and $329,127 to the Taining government for the nine months ended September 30, 2012 and 2011, respectively, and recorded as selling expenses.

The Company paid approximately $169,186 and $157,153 to the Taining government for the three months ended September 30, 2012 and 2011, respectively, and recorded as selling expenses.

The Company paid approximately $107,296 and $280,747 to the Hua’an government for the nine months ended September 30, 2012 and 2011, respectively, and recorded as selling expenses.

The Company paid approximately $22,813 and $73,923 to the Hua’an government for the three months ended September 30, 2012 and 2011, respectively, and recorded as selling expenses.

2012-2013 Outlook

In 2012, we will continue constructing and developing Yunding Park’s second phase of construction and the three new tourism projects, the Ming Dynasty Entertainment World in Bengbu City, Anhui province, the China Yang-sheng (Nourishing Life) Paradise in Zhangshu City, Jiangxi province, and the City of Caves in Fenyi City, Jiangxi province, which represent our commitment to expanding our business operations by applying our current business model to the development of other valuable tourist destinations out of Fujian province and throughout China. The construction was in line with our schedule. We expect to complete the first phase construction of these three new projects and open them to the public in the first half of 2013. In addition, in June 2011, we announced the establishment of our new subsidiary, Fujian Yida Travel Service Co., Ltd. In May and June 2012, we further established five new wholly-owned subsidiaries, including Zhangshu (Yida) Real Estate Development Co., Ltd., Bengbu (Yida) Real Estate Development Co., Ltd., Zhangshu (Yida) Investment Co., Ltd., Fenyi (Yida) Property Development Co., Ltd., Bengbu (Yida) Investment Co., Ltd , the primary business focus of which will be in tourism-related real estate investment, project management, and consulting in China. In July 2012, we established Fujian (Yida) Culture and Tourism Performing Arts Co., Ltd, the primary business focus of which will be to operate Yunding performance and show events.

Over the next three years, we will mainly focus on developing our six tourist destinations. All required construction funds will be funded either from our net income and operating cash flow or will be financed through bank loans.

Critical Accounting Policies

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates, and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our condensed consolidated financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our condensed consolidated financial statements.

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The functional currency is the Chinese Renminbi, however the accompanying condensed consolidated financial statements have been translated and presented in United States Dollars ($).

In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows of the Company for the periods presented. The results of operations for the three and nine months ended September 30, 2012are not necessarily indicative of operating results expected for the full year or future interim periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report of Form 10-K for the year ended December 31, 2011.

Principles of consolidation

The accompanying condensed consolidated financial statements include the accounts of China Yida and its wholly-owned subsidiaries Keenway Limited, Hong Kong Yi Tat, Fujian Jintai, Fuyu, Hongda, Fujian Yida, Yida Tulou, Anhui Yida, Yongtai Yunding, Zhangshu Yida, Fenyi Yida, Yida Travel, Fenyi Development, Bengbu Yida, Zhangshu Development, Zhangshu Investment, and the accounts of its variable interest entity, Fujian Jiaoguang. All significant inter-company accounts and transactions have been eliminated in consolidation.

Consolidation of Variable Interest Entities

The carrying amount and classification of Fujian Jiaoguang’s assets and liabilities included in the Condensed Consolidated Balance Sheets are as follows:

	September 30, 2012		December 31, 2011
Total current assets *	$	12,260,868	$	12,091,197
Total assets	$	12,268,307	$	12,098,729
Total current liabilities #	$	10,633,430	$	10,011,732
Total liabilities	$	10,633,430	$	10,011,732

*Including intercompany receivables of $12,254,575 and $12,090,456 as at September 30, 2012 and December 31, 2011, respectively, to be eliminated in consolidation.

# Including intercompany payables of $9,639,134 and $9,009,187 as at September 30, 2012 and December 31, 2011, respectively, to be eliminated in consolidation.

Use of estimates and assumptions

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results. The most significant estimates reflected in the condensed financial statements include depreciation, useful lives of property and equipment, deferred income taxes, useful life of intangible assets and contingencies. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the condensed consolidated financial statements in the period they are determined to be necessary.

Cash and cash equivalents

Accounts receivable

Advances and prepayments

Property and equipment

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets or lease term as follows:

Building	20 years
Electronic Equipment	5 to 8 years
Transportation Equipment	8 years
Office Furniture	5 to 8 years
Leasehold Improvement and Attractions	Lesser of term of the lease or the estimated useful lives of the assets

Intangible assets

Intangible assets consist of acquisition of management right of tourism destinations, commercial airtime rights and land use rights for tourism destinations. They are amortized on the straight line basis over their respective lease periods. The lease period of management right, commercial airtime rights and land use rights is 30 years, 3 years and 40 years, respectively.

Impairment

Revenue recognition

Revenues from advance tourism destinations ticket sales are recognized when the tickets are used. Revenues from our contractors who have tourism contracts with us are generally recognized over the period of the applicable agreements commencing with the tourists visiting the tourism destinations. The Company also sells admission and activities tickets for a tourism destination which the Company has the management right.

The Company sells the television airtime to third parties. The Company records advertising sales when advertisements are aired.

Profit sharing costs are recorded as cost of revenue. Profit sharing arrangements with the local governments for the management rights:

For the nine months ended September 30, 2012
	Fujian Jintai		Tulou

Gross receipts	$	3,926,123	$	1,033,337

Profit sharing costs		556,418		-
Nature resource compensation expenses		325,749		107,296
Total paid to the local governments		882,167		107,296

Net receipts	$	3,043,956	$	926,041

For the nine months ended September 30, 2011
	Fujian Jintai		Tulou

Gross receipts	$	3,887,167	$	2,498,718

Profit sharing costs		486,048		-
Nature resource compensation expenses		329,127		280,747
Total paid to the local governments		815,175		280,747

Net receipts	$	3,071,992	$	2,217,971

For the three months ended September 30, 2012
	Fujian Jintai		Tulou

Gross receipts	$	2,028,011	$	245,453

Profit sharing costs		283,430		-
Nature resource compensation expenses		169,186		22,813
Total paid to the local governments		452,616		22,813

Net receipts	$	1,575,395	$	222,640

For the three months ended September 30, 2011
	Fujian Jintai		Tulou

Gross receipts	$	1,852,473	$	678,554

Profit sharing costs		231,190		-
Nature resource compensation expenses		157,153		73,923
Total paid to the local governments		388,343		73,923

Net receipts	$	1,464,130	$	604,631

Advertising costs

Post-retirement and post-employment benefits

Foreign currency translation

Income taxes

China Yida is subject to U.S. Federal and California state examination by tax authorities for years after 2007, and the PRC tax authority for years after 2006.

Fair values of financial instruments

Stock-based compensation

Recent accounting pronouncements

Inflation and Seasonality

Our operating results and operating cash flows historically have not been materially affected by inflation or seasonality.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable because we are a smaller reporting company.

Item 4. Controls and Procedures.

(a)	Evaluation of disclosure controls and procedures . Our disclosure controls and procedures are designed to ensure (i) that information required to be disclosed by us in the reports we file or submit under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (ii) that information required to be disclosed by us in the reports it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of September 30, 2012, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were not effective at the reasonable assurance level due to the following reason:

	We did not have sufficient skilled accounting personnel that are either qualified as Certified Public Accountants in the U.S. or that have received education from U.S. institutions or other educational programs that would provide enough relevant education relating to U.S. GAAP. The Company’s CFO and Financial Manager have limited experience with U.S. GAAP and are not U.S. Certified Public Accountants. Further, our operating subsidiaries are based in China and in accordance with PRC laws and regulations, are required to comply with PRC GAAP, rather than U.S. GAAP. Thus, the accounting skills and understanding necessary to fulfill the requirements of U.S. GAAP-based reporting, including the preparation of financial statements and consolidation, are inadequate, and determined to be a material weakness.

	In an effort to remedy this material weakness in the future, we will do the following:

	●	develop a comprehensive training and development plan, for our finance, accounting and internal audit personnel, including our Chief Financial Officer, Financial Manager, and others, in the principles and rules of U.S. GAAP, SEC reporting requirements and the application thereof.
	●	design and implement a program to provide ongoing company-wide training regarding the Company’s internal controls, with particular emphasis on our finance and accounting staff.
	●	implement an internal review process over financial reporting to review all recent accounting pronouncements and to verify that the accounting treatment identified in such report have been fully implemented and confirmed by our internal control department. In the future, we will continue to improve our ongoing review and supervision of our internal control over financial reporting.

	We believe that the foregoing steps will remediate the significant deficiencies identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate.

	Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

(b)	Changes in internal control over financial reporting . During the period covered by this report, there was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Risk factors describing the major risks to our business can be found under Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2011. Other than the risk factor included above, there has been no material change in our risk factors from those previously discussed in the Annual Report on Form 10-K.

●	WE HAVE A CONTRACTUAL RELATIONSHIP WITH FUJIAN JIAOGUANG MEDIA WHICH MAY BE IN NON-COMPLIANCE WITH PRC LAWS AND DOES NOT PROVIDE THE SAME OPERATIONAL CONTROL AS A DIRECT EQUITY INTEREST.

Our contractual relationship with Fujian Jiaoguang Media was structured as a contractual relationship as opposed to a direct equity interest in order to comply with PRC law. We have received a PRC legal counsel attesting that this structure is in compliance with the PRC law. However, the PRC law may be subject to change or the government may review the structure and determine that this contractual relationship is not in compliance with PRC laws and force the termination of this relationship. Additionally, the contractual relationship between us and Fujian Jiaoguang Media does not provide us with the same operational control as a direct equity interest. Therefore, we are subject to the risks associated with contractual rights as opposed to owning the company. Such risks could include breach of contract or failure to honor the terms of the contract. In the event that we are not unable to maintain effective control of this entity, we would not be able to continue to consolidate our financial results. However, these risks are mitigated by the fact that the shareholders of Fujian Jiaoguang Media are Chairman Minhua Chen and Ms. Yanling Fan who are also our majority shareholders.

Fujian Jiaoguang Media has transferred all its operations to our wholly-owned subsidiaries and no longer contributes any revenue to us. All the revenue we have realized from this entity is not realized directly from our wholly-owned subsidiary. Although Fujian Jiaoguang is no longer generating revenues, it continues to incur expenses to maintain its business status as a corporate entity. Fujian Jiaoguang is a variable interest entity subject to consolidation into the Company and fully controlled by the Company’s management. Therefore, expenses incurred at Fujian Jiaoguang had been included in the Company’s audited consolidated statement of income and comprehensive income. As a result of Fujian Jiaoguang being a variable interest entity instead of a directly owned subsidiary, you may face increased risks associated with the possession, security and control over the chops for this entity and control over the individuals who may have access to its bank accounts.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit No.		Description

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
32.1		Certification of Principal Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
32.2		Certification of Principal Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
101.INS		XBRL Instance Document †
101.SCH		XBRL Taxonomy Extension Schema Document †
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document †
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document †
101.LAB		XBRL Taxonomy Extension Label Linkbase Document †
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document †

*		Filed herewith.
**		In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.
†		Furnished herewith. XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNA TURES

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

	CHINA YIDA HOLDING, CO.

Date: November 13, 2012	By:	/s/ Chen Minhua
		Chen, Minhua Chief Executive Officer (Duly Authorized Officer and Principal Executive Officer)

Date: November 13, 2012	By:	/s/ Yongxi Lin
		Yongxi Lin Chief Financial Officer (Principal Financial Officer)

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