ITEM 1.

FINANCIAL STATEMENTS.

ITEM 2.

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

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

ITEM 4.

CONTROLS AND PROCEDURES.

ITEM 1.

LEGAL PROCEEDINGS.

ITEM 1A.

RISK FACTORS.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

ITEM 4.

(REMOVED AND RESERVED).

ITEM 5.

OTHER INFORMATION.

ITEM 6.

EXHIBITS.

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Current assets

Cash and cash equivalents

Accrued straight-line rents receivable

Trade receivable

Trade receivable from related parties

Inventories

Deposit with property developer

Prepayments and other receivables

Loans receivable from related parties

Current deferred tax assets

Total current assets

Non-current assets

Real estate and related assets, net

Prepayment for acquisition of properties

Long-term deferred tax assets

Total non-current assets

Current liabilities

Accounts payable

Accounts payable to related parties

Advance from customers

Short-term borrowings

Accrued expenses and other payables

Taxes payable

Loans payable to related parties

Current deferred tax liabilities

Total current liabilities

Non-current liabilities

Long term bank loans

Long term deferred tax liabilities

Total liabilities

Commitment and contingencies

Stockholders’ equity

Preferred Stock,$0.00001 par value 20,000,000 shares authorized, none issued at March 31, 2011 and December 31, 2010

Common stock (US$0.00001 par value, 480,000,000 shares authorized, 399,999,847 and 391,543,500 shares issued and outstanding as of March 31, 2011 and December 31, 2010)

Additional paid in capital

Appropriated retained earnings

Unappropriated retained earnings

Accumulated other comprehensive income

Total stockholders’ equity

Noncontrolling interest

Total equity

Sales

Straight-line rental income

Contingent rental income and others

Total revenue

Cost of goods sold

Expenses applicable to straight-line rental income

Expenses applicable to contingent rental and others

Total cost

Gross profit

Operating expenses

Selling expenses

General and administrative expenses

Total operating expenses

Income (loss) from operations

Other income (expenses)

Interest income

Interest expense

Non-operating income

Non-operating expense

Gain on business combination

Other income (expenses), net

Income (loss) before income tax

Income tax benefit

Net income (loss)

Less: net loss attributable to the noncontrolling interest

Net income (loss) attributable to the Fifth Season’s common stockholders

Comprehensive income (loss):

Net income (loss)

Foreign currency translation adjustment

Comprehensive income (loss)

Less: comprehensive loss attributable to the noncontrolling interests

Comprehensive income(loss) attributable to the Fifth Season’s common stockholders

Basic and diluted weighted average shares outstanding

Basic and diluted earnings(loss) per share

Cash flows from operating activities

Net income (loss)

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation expenses

Gain on business combination

Exchange (gain) loss

Change in operating assets and liabilities:

Accrued straight line rents receivable

Trade receivable from third parties

Trade receivable from related parties

Inventories

Deposit with property developer

Prepayments and other receivables

Accounts payable

Accounts payable to related parties

Advance from customers

Accrued expenses and other payables

Tax payables

Deferred tax assets

Deferred tax liabilities

Net cash (used in) provided by operating activities

Cash flows from investing activities

Purchase of real estate and related assets

Acquisition of subsidiaries, net of cash acquired

Change in amount due from third parties

Change in amount due from related parties

Net cash used in investing activities

Cash flows from financing activities

Proceeds from capital injection by non-controlling interest

Proceeds from capital injection by controlling stockholders

Proceeds from short-term loans

Proceeds from long-term loans

Repayments of short-term loans

Change in amount due to third parties

Change in amount due to related parties

Change in restricted cash

Net cash provided by financing activities

Effect of foreign currency fluctuation on cash and cash equivalents

Net changes in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of period

Supplemental cash flow information:

Interest paid

Income taxes paid

ORGANIZATION AND PRINCIPAL ACTIVITIES

Fifth Season International, Inc. (the “Company” or “Fifth Season International”) was incorporated in the State of Delaware on October 5, 2007. It did not engage in any operations and was an inactive “shell” company from its inception until its reverse acquisition with The Fifth Season (Hong Kong) International Group Limited “Fifth Season HK” on March 31, 2011.

On March 31, 2011, Fifth Season International completed a reverse acquisition transaction through a share exchange with Fifth Season HK and its stockholders Cheng Chushing, Shaoping Lu and Power Guide Investment Limited, whereby Fifth Season International acquired 100% of the issued and outstanding capital stock of Fifth Season HK by issuing 391,543,500 shares to the Fifth Season HK’s stockholders, which constituted 98% of its issued and outstanding shares on a fully-diluted basis of Fifth Season International after the consummation of the reverse acquisition. As a result of the reverse acquisition, Fifth Season HK became Fifth Season International’ wholly-owned subsidiary, The share exchange transaction with Fifth Season HK was treated as a reverse acquisition, with Fifth Season HK as the accounting acquirer and Fifth Season International as the acquired party.

Fifth Season HK is a holding company and, through its consolidated subsidiaries, is principally engaged in the investment, management, assignment, and lease of commercial properties, as well as the operations of department stores; trading and online sales of goods; and hotel management in the People’s Republic of China (“PRC”). Fifth Season International, Fifth Season HK and its subsidiaries are collectively referred to as the “Group.”

Details of the Company’s subsidiaries are summarized as follows:

The Fifth Season Jiashan Investment Management Co., Ltd has not started its operation in hotel management business as of March 31, 2011.

The Fifth Season Tengzhou Property Development Co., Ltd was established by The Fifth Season Tengzhou Enterprise Management Co., Ltd and an unaffiliated non-controlling stockholder in January 2011,

In March 2011, the Fifth Season Shandong Commercial Investment Co., Ltd (“Shandong TFS”) acquired 100% of the equity interest of Zibo Longyun Industrial and Trade Co., Ltd (“Longyun”) from its original individual stockholders.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

As a result of the share exchange on March 31, 2011, Fifth Season HK became a subsidiary of Fifth Season International. The former Fifth Season HK’s stockholders owned a majority of the common stock of the Company. The transaction was regarded as a reverse merger whereby Fifth Season HK was considered to be the accounting acquirer as its shareholders retained control of the Company after the share exchange, although Fifth Season International is the legal parent company. The share exchange was treated as a recapitalization of the Company. As such, Fifth Season HK is the continuing entity for financial reporting purposes. SEC Manual Item 2.6.5.4 Reverse Acquisitions requires that “in a reverse acquisition the historical shareholder’s equity of the accounting acquirer prior to the merger is retroactively reclassified (a recapitalization) for the equivalent number of shares received in the merger after giving effect to any difference in par value of the registrant’s and the accounting acquirer’s stock by an offset in paid in capital.” Therefore, the financial statements have been prepared as if Fifth Season HK had always been the reporting company and then on the share exchange date, had changed its name and reorganized its capital stock.

The consolidated interim financial information as of March, 31, 2011 and for the three month periods ended March, 31, 2011 and 2010 have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, which are normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), have been condensed or omitted as permitted by SEC rules and regulations, although the management believe that the disclosures made are adequate to provide for fair presentation. The interim financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Form 8-K previously filed with the SEC on April 6, 2011.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s consolidated financial position as of March 31, 2011, its consolidated results of operations cash flows for the three-month periods ended March 31, 2011 and 2010, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.

In addition, the consolidated financial statements have been prepared on the basis that the Group will continue to operate throughout the next twelve months as a going concern. The Group’s consolidated current liabilities exceeded its consolidated current assets by approximately US$20.4 million as of March 31, 2011. Based on future projections of the Company’s profits and cash inflows from operations, including commercial property leasing and providing agent service to properties sales, and the anticipated ability of the Group to obtain continued financing or stockholder’s loan to finance its continuing operations, the Group’s management has prepared the consolidated financial statements on a going concern basis.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

Non-controlling interest represents the ownership interests in the subsidiary that are held by owners other than the parent. The non-controlling interest is reported in the consolidated statement of financial position within equity, separately from the parent’s equity and that net income or loss and comprehensive income or loss are attributed to the parent and the non-controlling interest. If losses attributable to the parent and the non-controlling interest in a subsidiary exceed their interests in the subsidiary’s equity, the excess, and any further losses attributable to the parent and the non-controlling interest, is attributed to those interests.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, the Group evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates. Significant judgments and estimates include useful lives for amortization and depreciation, impairment of long-lived assets, fair value measurements, revenue recognition, deferred tax assets and liabilities, which represent critical accounting policies that reflect significant judgments and estimates used in the preparation of the Group’s consolidated financial statements. The relevant amounts could be adjusted in the near term if experience differs from current estimates.

Cash and cash equivalents

Cash and cash equivalents includes currency on hand and demand deposits with banks or other financial institutions. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

Restricted cash

Restricted cash consists of security deposits that serve as collateral for the short-term bank loans.

Accrued straight-line rents receivable

Accrued straight-line rents receivable are recognized and carried at the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements, less an allowance for uncollectible accounts, as needed.

Trade receivable

Trade receivable are recognized and carried at original sales amounts less an allowance for uncollectible accounts, as needed.

Amounts due from third parties/related parties

Accounting policy of trade receivable from related parties are the same as those described in trade receivable. Other than trade receivables, amounts due from third parties/related parties are loans recognized and carried at principle and respective interest of loan after deducting accounts collected or settles, less an allowance for uncollectible accounts, as needed. Interest income is recognized based on contractual interest rate on a straight-line basis over the terms of the respective loan agreements endorsed, if applicable.

Allowance for doubtful accounts

Accrued straight-line rents receivable, trade receivable and due from third parties/related parties are reviewed periodically as to whether they are past due based on contractual terms and their carrying value has become impaired. An allowance for doubtful accounts is recorded in the period in which loss is determined to be probable based on an assessment of specific evidence indicating doubtful collection, historical experience, credit quality of customers, account balance aging and prevailing economic conditions. Receivable balances are written off after all collection efforts have been exhausted.

None of the receivables of the Group are with collateral assets. No material receivable are past due over 90 days or with difficulty in collection. Therefore, no allowance or write-offs were provided for account receivable, accrued straight-line rents receivable or due from third parties/related parties as of March 31, 2011 and December 31, 2010, respectively.

Inventories

Inventories consist of goods purchased, which are stated at lower of cost or market. Cost is determined using weighted average method. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to dispose.

Where there is evidence that market value of inventories, in their disposal in the ordinary course of business, will be less than cost, whether due to physical deterioration, obsolescence, changes in price levels, or other causes, a provision is accrued for the difference with charges to cost of goods sold. No provision was provided for the inventory as of March 31, 2011 and December 31, 2010, respectively.

Real estate and related assets

Other than those acquired in a business combination as described in Note 4, real estate and related assets are recorded at cost and stated at cost less accumulated depreciation. Renovations, replacements and other expenditures that improve or extend the life of assets are capitalized and depreciated over their estimated useful lives. Expenditures for ordinary maintenance and repairs are charged to expense as incurred.

Construction in progress represents capital expenditure in respect of direct costs of construction and design fees of renovations or replacements incurred. Capitalization of these costs ceases and the construction in progress is transferred to tenant improvement when substantially all the activities necessary to prepare the assets for their intended use are completed. Construction in progress is not depreciated.

Depreciation of real estate and related assets is calculated using the straight-line method (after taking into account their respective estimated residual value) over the estimated useful lives of the assets as follows:

Upon the acquisition of real estate assets, the Group allocates the purchase price of real estate to the acquired tangible assets and liabilities based on each case on the fair value of acquired tangible assets such as buildings and tenant improvements, intangible assets such as above and below market leases, acquired in-place leases, customer relationships and other identified intangible assets and assumed liabilities. Except for buildings, no other tangible assets or intangible assets were identified when acquiring the real estate assets for the period ended March 31, 2011 and the year ended December 31, 2010, respectively.

Foreign currency translation and transactions

The functional currencies of the Company is U.S Dollar (or “US$”), and its subsidiaries in the PRC and Hong Kong are the Renminbi (“RMB”) and Hong Kong dollar (“HKD”), respectively.

At the date a foreign currency transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising from the transaction is measured initially in the functional currency of the recording entity by use of the exchange rate in effect at that date. The increase or decrease in expected functional currency cash flows upon settlement of a transaction resulting from a change in exchange rates between the functional currency and the currency in which the transaction is denominated is recognized as foreign currency transaction gain or loss that is included in determining net income for the period in which the exchange rate changes. At each balance sheet date, recorded balances that are denominated in a foreign currency are adjusted to reflect the current exchange rate.

The Group incurred foreign currency exchange gain of US$4,956 for the three months ended March 31, 2011, and exchange loss of US$249,204 for the three months ended March 31, 2010, respectively.

The Group’s reporting currency is U.S Dollar. Assets and liabilities of subsidiaries in the PRC and Hong Kong are translated to the reporting currency at the current exchange rate at the balance sheet dates, and revenues and expenses are translated at the average exchange rates during the reporting periods. Translation adjustments are reported in other comprehensive income.

Contingencies

In the normal course of business, the Group is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, guarantee, government investigations, service liability, and tax matters. The Group records accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Historically, the Group has not experienced any material government or tax authority investigation or service liability claims except for those disclosed in Note 13.

Appropriated retained earnings

The income of the Company’s PRC subsidiaries is distributable to its stockholders after transfer to reserves as required by relevant PRC laws, regulations and the articles of association. As stipulated by the relevant laws and regulations in the PRC, these PRC subsidiaries are required to maintain reserves which are non-distributable to shareholders. Appropriations to the reserves are approved by the respective boards of directors.

Reserves include statutory reserves and discretionary reserves. Statutory reserves can be used to make good previous years’ losses, if any, and may be converted into capital in proportion to the existing equity interests of stockholders, provided that the balance after such conversion is not less than 25% of the registered capital. The appropriation of statutory reserve may cease to apply if the balance of the fund is equal to 50% of the entity’s registered capital. Pursuant to relevant PRC laws and articles of association of the Company’s PRC subsidiaries, the appropriation to the statutory reserves and other reserves is 10% of net profit after deducting accumulated deficit, if any, of respective entity, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the financial statements prepared in accordance with U.S. GAAP might differ from those reflected in the statutory financial statements of the Company’s PRC subsidiaries.

Revenue recognition

Sales of goods

The Group recognizes revenue from sales of various goods when all of the following criteria exist: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) price to the buyer is fixed or determinable; and (4) collectability is reasonably assured.

Delivery does not occur until goods have been shipped to the customers, risk of loss has transferred to the customers and customers’ acceptance has been obtained, or the Group has objective evidence that the criteria specified in customers’ acceptance provisions have been satisfied. The sales price is not considered to be fixed or determinable until all contingencies related to the sale have been resolved. Certain credit terms and limits were granted to customers with low risk of collectability based on the Group’s credit assessment. Historically, no material collectability problem has occurred. Revenue is recognized when delivery occurs and collectability is reasonably assured.

In the PRC, value added tax (the “VAT”) of generally 17% on invoice amount is collected in respect of the sales of goods against the customers on behalf of tax authorities. The VAT collected is not revenue of the Group; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the authorities.

Rental revenue

Minimum contractual rental from leases are recognized on a straight-line basis over the terms of the respective leases. With respect to a particular lease, actual amounts billed in accordance with the lease during any given period may be higher or lower than the amount of rental revenue recognized for the period. Straight-line rental revenue commences when the customer assumes control of the leased premises. Accrued straight-line rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements. Contingent rental revenue, such as percentage rent on sale volume of tenant, is accrued when the contingency is removed.

Service income

The Group provides consulting or agent services for third-party property owners who wish to sell or lease commercial properties in exchange for consulting services on the sale or lease of such properties. Consulting or agent service income is recognized when the services are rendered.

The Group’s PRC subsidiaries are subject to business tax 5% for their revenues from straight-line rental and service, which are recognized after net off business tax.

Advertising expenses

Advertising expenses, which generally represent the cost of promotions to create or stimulate a positive image of the Group or a desire to lease the commercial properties, are expensed as incurred. Advertising costs amounting to US$21,317 and US$117,266 for the three months ended March 31, 2011 and 2010, respectively, were recorded in the selling expenses.

Defined contribution plan

Full-time employees of the Group participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the Group's PRC subsidiaries make contributions to the government for these benefits based on certain percentages of the employees’ salaries. The Group has no legal obligation for the benefits beyond the contributions made.

The total amounts for such employee benefits, which were expensed as incurred, were approximately US191,946 and US$102,186 for the three months ended March 31, 2011 and 2010, respectively.

Income tax

In the PRC, the taxable net income of one subsidiary is not allowed to be offset by the tax loss incurred in another subsidiary within the consolidated financial statements.

The Group recognizes deferred income tax for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Group follows a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Group recognizes interest on non-payment of income taxes under requirement by tax law and penalties associated with tax positions when a tax position does not meet the minimum statutory threshold to avoid payment of penalties. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB 100,000. In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. The tax returns of the Group’s PRC subsidiaries are subject to examination by the relevant tax authorities. The Group did not have any material interest or penalties associated with tax positions and did not have any significant unrecognized uncertain tax positions as of March 31, 2011 and December 31, 2010 respectively.

Earnings per share (“EPS”)

Basic EPS excludes dilution and is computed by dividing net income attributable to common stock holders by the weighted average number of common stocks outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stocks.

Comprehensive income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. All items that are required to be recognized under current accounting standards as components of comprehensive income are reported in the consolidated financial statement that is displayed with the same prominence as other financial statements. During the periods presented, the Group’s comprehensive income represents its net income and foreign currency translation adjustments.

Segment reporting

The internal reporting structure used by management for making operating decisions and assessing performance is used as the source for presenting the Group’s reportable segments. The Group categorizes its operations into two business segments: trading and commercial properties leasing.

As the Group generates all of its revenues from customers in the PRC, no geographical segments are presented.

Fair value measurements

Financial instruments include cash and cash equivalents, restricted cash, accrued straight-line rents receivable, trade receivable, prepayments and other receivables, due from related parties, short-term loans, advance from customers, accounts payable, other payables , amount due to related parties and deposit with property developer. The carrying amounts of these financial instruments approximate their fair value due to the short term maturities of these instruments.

The Group adopted ASC Topic 820 Fair Value Measurements and Disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually).

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

The Group maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs are used to measure fair value:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

The above suppliers accounted for 56% and 16% of accounts payable balance as of March 31, 2011 and 2010, respectively.

Current vulnerability due to certain other concentrations

The Group’s operations may be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for more than 30 years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC’s political, economic and social conditions. There is also no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective.

The Group transacts all of its business in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China (the “PBOC”). However, the unification of the exchange rates does not imply that RMB may be readily convertible into US$ or other foreign currencies. All foreign exchange transactions continue to take place either through the PBOC or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.

Additionally, the value of RMB is subject to changes in central government policies and international economic and political developments affecting supply and demand in the PRC foreign exchange trading system market.

BUSINESS COMBINATION

On March 31, 2011, pursuant to the terms of the Equity Sale and Purchase Agreement dated February 28, 2011, by and among Shandong TFS and two original individual stockholders of Longyun, the Group completed its acquisition of 100% of the equity interest of Longyun (the “Acquisition”). The total consideration was RMB58 million, approximately US$8,846,160 in cash.

Longyun is primarily engaged in marketing and trading of goods, and plans to expand its business to the managing and leasing of commercial properties. As a result of the acquisition, the Group has enhanced its trading business in the near term and expects to enhance its real estate business when Longyun expands to the managing and leasing of commercial properties.

Fair Value Determination and Allocation of Consideration Transferred

For the Acquisition, the Group was obligated to pay a consideration of RMB58 million (approximately $8,846,000) in cash in exchange for 100% equity interest and assumed US$3.2 million of debt of the acquired business. As of March 31, 2011, the Group has paid Rmb38 million to the original stockholders of Longyun. The acquisition was accounted for under the purchase method of accounting, and Longyun was included in the Group's consolidated financial statements from the acquisition date of March 31, 2011. With the assistance of an independent third-party valuation specialist, management reassessed the fair value of the major assets acquired and the liabilities assumed and concluded that a bargain purchase gain amounting to approximately US$7.1 million resulted from the acquisition. Accordingly, the Group recognized the gain as a component of other income in the consolidated statement of income for the three months ended March 31, 2011. Management believes that the Group was able to negotiate a bargain purchase price as a result of the prevailing economic environment and its access to the liquidity necessary to complete the acquisition.

The allocation of purchase price to identifiable tangible assets and assumed liabilities has not yet been finalized. As such, the estimate is subject to change once the Company makes a final determination of the fair value of tangible assets acquired and liabilities assumed, which will be completed within one year from the acquisition date.

The following summarizes the consideration paid for the Acquisition, and the preliminary fair values of the assets acquired and liabilities assumed recognized at the acquisition date:

Cash and cash equivalents

Trade receivables

Inventory

Tangible non-current assets

Other assets

Total assets acquired

Current liabilities

Deferred tax liability

Total liabilities assumed

Net identifiable assets acquired

Less: cash consideration transferred

Gain on business combination

DEPOSIT WITH PROPERTY DEVELOPER

PREPAYMENTS AND OTHER RECEIVABLES

Prepayments and other receivables consist of the following:

Advance to suppliers

Expense paid on behalf of customers and suppliers

Due from third party companies

Rental deposits to lessors

Prepaid office rental, petty cash and others

As of March 31, 2011, due from third party Company amounting to US$305,040 bore an interest rate of basic interest rate of PBOC per annum, while the remaining balances were non-interest bearing loans to third parties for their working capital purposes.

REAL ESTATE AND RELATED ASSETS, NET

Real estate and related assets consist of the following:

Accumulated depreciation for real estate held for operating leasing, including commercial properties and tenant improvements were US$1,467,654 and US$863,388, as of March 31, 2011 and December 31, 2010, respectively.

Certificates of ownership of certain commercial properties with an aggregate carrying value of US$968,502 are in progress of application.

Certain commercial properties with an aggregate carrying value of US$10,041,869 and US$2,398,599 were pledged as collateral for short-term borrowings and long-term borrowings, respectively, as of March 31, 2011.

In addition, certain commercial properties with an aggregate carrying value of US$5,718,220 were pledged as collateral for bank loans of a related party, Hangzhou Huaren Costume Co., Ltd (“Huaren Costume”) as of March 31, 2011.

BORROWINGS

Borrowings consist of the following:

The weighted average interest rate for outstanding short-term borrowings was 17.56% and 25.53% as of March 31, 2011 and December 31, 2010, respectively.

As of March 31, 2011, the outstanding short-term borrowings amounting to US$14,191,986 were pledged by commercial properties amounting to US$10,041,869, among which borrowing from Lishuang Lu was also guaranteed by the ultimate controlling stockholders of the Company. Short-term bank loan from Qishang Bank was guaranteed by Zibo Shudong Synthetic Glass Co.,Ltd, Zibo Bodong machinery packaging Co.,Ltd, Wei Zhao and Yong Liu. Long- term borrowing from Shaopin Lu was guaranteed by the ultimate controlling stockholders of the Company. Long-term borrowing from Zhejiang Zheshang Pawnshop Co, ltd were pledged by commercial properties amounting to US$2,398,599.

The interest expenses were US$2,150,977 and US$145,541 for the three months ended March 31, 2011 and 2010, respectively.

The weighted average amounts of the borrowings were US$45,014,499 for three months ended March 31, 2011.

As of March 31, 2011, the Company is in compliance with the covenant requirements with respect to the outstanding borrowings and all the short-term borrowings matured in April 2011 were subsequently repaid.

ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables consist of the following:

Due to original stockholder of Longyun for acquisition

Due to third parties

Accrued rental expense and other related costs

Accrued interest expense

Payroll and welfare payable

Rental deposits from lessees and others

RESTRICTED NET ASSETS

In accordance with relevant PRC statutory laws and regulations, the Company’s PRC subsidiaries are restricted to transfer funds to the off-shore companies in the form of cash dividends, loans or advances, except for the unrestricted retained earnings, if any.

The Group’s ability to pay dividends or transfer funds to the stockholder through loans, advance is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiary only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s subsidiaries. Gain on business combination recorded in accordance with U.S. GAAP is not distributable as a result of GAAP difference and no unrestricted retained earnings from the Group’s PRC subsidiaries.

Therefore, the Group’s restricted net assets, comprising of the Company’s common stock and net assets of Company’s PRC subsidiaries, were US$41,906,672 and US$ 36,482,012 as of March 31, 2011 and December 31, 2010, respectively.

TAXATION

The Company and its consolidated entities each files tax returns separately.

Value Added Tax (“VAT”)

Pursuant to the provisional regulation of the PRC on VAT and their implementing rules, all entities and individuals (“taxpayers”) that are engaged in the sale of goods in the PRC are generally required to pay VAT at a rate of 17% of the gross sales proceeds received, less any deductible VAT already paid or borne by the taxpayers.

The Group’s PRC subsidiaries are subject to VAT at 17% for their revenues from trading activities, contingent rental and joint operation activities.

Business tax

The Group’s PRC subsidiaries are subject to business tax at 5% for their revenues from straight-line rental and other service.

Income tax

United States

Fifth Season International is subject to United States at a tax rate of 34%.

Hong Kong

In accordance with the relevant tax laws and regulations of Hong Kong, a company, irrespective of its residential status, is subject to tax on all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong. No tax is levied on profits arising abroad, even if they are remitted to Hong Kong. The subsidiaries located in Hong Kong are subject to a Hong Kong profits tax rate of 16.5% on their income generated from Hong Kong for the periods presented.

In accordance with the relevant tax laws and regulations of the PRC, a company registered in the PRC is subject income tax at 25% on the taxable income.

Income (loss) before income tax

Tax at statutory rate

Gain on the business combination

Change in valuation allowance

Non-deductible expenses

Income tax benefit

Current tax expense

Tax loss carryforwards

Deferred tax expense(benefit)

Income tax benefit

Deferred tax assets and deferred tax liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the tax bases used for income tax purposes. Significant components of the Group's deferred tax assets and liabilities are as follows:

Deferred tax assets:

Tax loss carryforwards

Accrued rental expense and other related costs

Total

Less: valuation allowance

Deferred tax assets, net

Deferred tax liabilities:

Effect of differences between assigned value of property and their tax basis

Effect of differences between straight-line rental income and taxable rental income

Net deferred tax liabilities

The Company’s RPC subsidiaries have tax loss carryforwards available amounting to approximate US$0.1 million, US$2.4 million and US$3.1 million, which begin to expire in 2014, 2015 and 2016, respectively, if unused by the offset of future taxable income of the individual subsidiaries.

The Group believes that the remaining tax loss carryforwards from Fifth Season HK amounting to US$0.58 million is unlikely be deductable in the future years and therefore the corresponding deferred tax assets were recognized with full allowance provided

RELATED PARTY TRANSACTIONS AND BALANCES

All the related parties are as follows:

Zhejiang the Fifth Season Investment Co., Ltd. (“Zhejiang Fifth Season”)

Huaren Costume

Hangzhou the Fifth Season Costume Co., Ltd. (“Hangzhou Costume” )

Hangzhou Hengding Plastics & Wood Tools Co., Ltd .(“Hangzhou Hengding”)

Hangzhou Liuhe Industrial Co., Ltd. (“Hangzhou Liuhe”)

Hangzhou Haigang Technology Co., Ltd. (“Hangzhou Haigang”)

The Fifth Season Hangzhou Real Estate Planning and Services Co., Ltd. (“Hangzhou Real Estate”)

The Fifth Season Nantong Commercial Investment Management Co., Ltd. (“Nantong Commercial”)

Jiashan Lijing Mingzuo Entertainment Co., Ltd. (“Jiashan Lijing”)

Hangzhou Yinli Decorative Lighting Co.,Ltd. (“Yinli Decorative Lighting”)

Lianmo Wu

Shaopin Lu

Hongsen Xu

Trade receivables from related parties consist of the following:

Loans receivables from related parties consist of the following:

COMMITMENTS AND CONTINGENCIES

Purchase Commitments

Commitments for the purchase of commercial properties totaled to US$10,799,927858,305 as of March 31, 2011.

Lease commitments

As of March 31, 2011, future minimum rental payments under non-cancellable operating leases having initial or remaining lease terms of more than one year are as follows:

SEGMENT FINANCIAL INFORMATION

The Group determines segments based on how management makes decisions about allocating resources to segments and measuring their performance.

The Group's operations are mainly classified into two principal reportable segments that provide different products or services: commercial properties leasing, and trading. Separate management of each segment is required because each business unit is subject to different marketing, operation, and technology strategies.

Accounting policies of the transactions between segments are the same as those described in the summary of significant accounting policies. Performance is measured by various factors such as segment revenue and segment profit. Individual segment assets are not measurement reviewed by management. All corporate expenses and income tax expenses are allocated to the segments.

SUBSEQUENT EVENT

Management of the Group has evaluated subsequent events through the issuance of the consolidated financial statements and identified the following subsequent events:

On April 19, 2011, the Group obtained a one-year short-term borrowing amounting to Rmb12 million (approximately US$1.8 million) from China Construction Bank with certain properties as collateral.

On May 5, 2011, the Group obtained one-year line of credit amounting up to Rmb 35 million (approximately US$5.3 million) from Shanghai Pudong Development bank for settlement of trade payable with 50% deposit as collateral .

Special Note Regarding Forward Looking Statements

This report contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Description of Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” above. In some cases, you can identify forward- looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this registration statement and the documents that we reference and filed as exhibits to the registration statement completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Use of Certain Defined Terms

Except where the context otherwise requires and for the purposes of this report only:

Sales from trading

Rental and other revenues

Total Revenue

Cost of tangible goods sold

Expenses applicable to rental and other revenue

Costs and expenses applicable to sales and revenues

Gross profit

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Effects of exchange rate change in cash

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of the year

Cash and cash equivalent, End of the period

Short-term borrowings

Lishuang Lu

Mingyou Chen

Shanghai Fuxing Pawnshop Co, ltd

Shanghai Shencai Pawnshop Co, ltd

Shanghai Guoxin Pawnshop Co., ltd

Shanghai Mintong Pawnshop Co., ltd

Subtotal

Entrusted bank loans

China CITIC Bank

Short-term bank loans

China Construction Bank

Qishang Bank

Subtotal

Long-term borrowings

Shaopin Lu

Zhejiang Zheshang Pawnshop Co, ltd

Subtotal

Total