As filed with the Securities and Exchange Commission on February 4, 2011

Registration No. 333-168028

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 5 TO

FORM S-1

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

CHINA SLP FILTRATION TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

Delaware	6770	84-1465393
(State or Other Jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
Incorporation or Organization)	Classification Code Number)	Identification Number)

Shishan Industrial Park

Nanhai District

Foshan City

Guangdong Province, PRC

86-757-86683197

(Address, including zip code, and telephone number including area code,

of registrant’s principal executive offices)

Vcorp Services, LLC

1811 Silverside Road

Wilmington, Delaware 19801

(888) 528-2677

(Name, address, including zip code, and telephone number including area

code, of agent for service)

Copies to:

		Louis A. Bevilacqua, Esq.
Darren Ofsink, Esq.		Joseph R. Tiano, Esq.
Guzov Ofsink, LLC		Jing Zhang, Esq.
600 Madison Avenue		Pillsbury Winthrop Shaw
		Pittman LLP
New York NY 10022		2300 N Street, NW
Tel: (212) 371-8008		Washington, DC 20037
Fax: (212) 688-7273		Telephone (202) 663-8000
		Facsimile (202) 663-8007

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

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 ¨	Smaller Reporting Company x



CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to Be Registered	Proposed Maximum Aggregate Offering Price(1)(2)(3)		Amount of Registration Fee
Common stock, $0.001 par value per share	$	25,000,000	$	1,783
Common stock, $0.001 par value per share (4)		34,236,536		2,442
Underwriter’s warrants and underlying shares of common stock (5)		1,358,696		97
Total			$	4,322	(6)

(1)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o). In accordance with Rule 457(g) under the Securities Act, because the shares of our common stock underlying the Underwriter’s Warrants (as defined below) are registered hereby, no separate registration fee is required with respect to the warrants registered hereby.

(2)

In accordance with Rule 416(a), the registrant is also registering hereunder an indeterminate number of additional shares of common stock that may be issued and resold pursuant to stock splits, stock dividends, anti-dilution provisions, including the anti-dilution provisions under the Underwriter’s Warrants (as defined below), and similar transactions.

(3)

The registration fee for securities to be offered by us is based on an estimate of the Proposed Maximum Aggregate Offering Price of the securities, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(o).

(4)

This Registration Statement also covers the resale under a separate resale prospectus (the “Resale Prospectus”) by selling stockholders of the Registrant of up to 369,725 shares of common stock previously issued to the selling stockholders named in the Resale Prospectus.

(5)

We have agreed to issue warrants to the underwriters (the “Underwriter’s Warrants”) for nominal consideration. The exercise price of the Underwriter’s Warrants is equal to 125% of the price of the common stock offered hereby. The resale of the Underwriter’s Warrants is registered hereunder. The Underwriter’s Warrants will be exercisable for four years commencing one year from the effective date of the registration statement and will therefore cease to be exercisable five years after the effective date of the registration statement. The shares of our common stock underlying the Underwriter’s Warrants are deemed to have the same issuance date as the warrants and are being registered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended. See “Underwriting.”

(6)

Previously paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

Explanatory Note

This Registration Statement includes two forms of prospectus as set forth below:

Prospectus. The first prospectus relates to an underwritten offering of shares of common stock by China SLP Filtration Technology, Inc. through the underwriter named on the cover page of the prospectus.

Resale Prospectus. The second prospectus relates to the resale of 369,725 shares of common stock by the selling stockholders named therein. These shares will be offered and sold at a fixed price of $6 until our common stock becomes quoted on the Over-the-Counter Bulletin Board or listed on an exchange.

None of the underwriters named or referenced in the prospectus is participating or acting as underwriter, dealer or broker in connection with the sale of the shares to be sold pursuant to the resale prospectus.

The resale prospectus and the prospectus are substantively identical, except for the following principal differences:

each contains different outside and inside front covers;

each contains different “Offering” sections in the “Prospectus Summary” section beginning on page 1 for the prospectus and page A-1 for the resale prospectus;

each contains different “Use of Proceeds” sections on page 26 for the prospectus and Page A-26 for the resale prospectus.

the “Capitalization” and “Dilution” sections on pages 28 and 29, respectively, of the prospectus are deleted from the resale prospectus;

a “Selling Stockholder” section is included in the resale prospectus beginning on page A-27;

references to the prospectus will be replaced in the resale prospectus with references to the resale prospectus;

the “Underwriting” section in the prospectus beginning on page 97 is deleted from the resale prospectus and a “Plan of Distribution” is inserted in its place on page A-97.

the “Legal Matters” section in the resale prospectus on page A-103 deletes the reference to counsel for the underwriters; and

the outside back cover of the prospectus is deleted from the resale prospectus.

The registrant has included in this registration statement, after the financial statements, a set of alternate pages to reflect the foregoing differences of the resale prospectus as compared to the prospectus.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, Dated February 4, 2011

4,166,667 Shares

CHINA SLP FILTRATION TECHNOLOGY, INC.

Common Stock

This is our initial public offering. We are offering 4,166,667 shares of our common stock. No public market currently exists for our common stock.

We currently anticipate the public offering price of our common stock will be between $5.00 and $7.00 per share.

We have applied to have our common stock listed on the NASDAQ Capital Market under the symbol “SLPC.”

Investing in our common stock involves a high degree of risk. See the section entitled “Risk Factors” beginning on page 7.

	Per Share	Total
Public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to us	$	$

We have granted the underwriters a 45-day option to purchase up to 625,000 additional shares of common stock from us at the initial public offering price less the underwriting discount and commission.

In connection with this offering, we have agreed to issue to the underwriters a warrant to purchase up to 5% of the shares sold pursuant to the offering (excluding the over-allotment) at $ per share (125% of the price of the shares sold in the offering), which may be exercised on the first anniversary of the date of this prospectus and expiring four years after such anniversary.

Under the terms of a consulting agreement between us and United Best Investment Limited, a Hong Kong company controlled by Li Jun, one of our directors, on the closing of this offering United Best shall receive a fee of $ , which represents 3% of the gross proceeds of this offering.

Delivery of our shares will be made on or about , 2011.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

Brean Murray, Carret & Co.

The date of this prospectus is , 2011

TABLE OF CONTENTS

Prospectus Summary	1
Risk Factors	7
Caution Regarding Forward Looking Statements and Other Information Contained in this Prospectus	26
Use of Proceeds	26
Determination of Offering Price	26
Dividend Policy	27
Exchange Rate Information	27
Capitalization	28
Dilution	29
Market Price of our Common Stock and Related Stockholder Matters	30
Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Our Corporate History	40
Business	45
Additional Disclosure Regarding Conversion of Notes and Exercise of Warrants	61
Shares Eligible for Future Sale	70
Security Ownership of Certain Beneficial Owners and Management	71
Management	73
Executive Compensation	81
Certain Relationships and Related Transactions	85
Description of Securities	87
Material United States Federal Income Tax Considerations	90
Material PRC Income Tax Considerations	94
Underwriting	97
Legal Matters	103
Service of Process and Enforcement of Judgments	103
Experts	103
Where You Can Find More Information	103
Index to Financial Statements	F-1

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with additional or different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted.

This prospectus includes market size, market share and industry data that we have obtained from market research, publicly available information and various industry publications. The third party sources from which we have obtained information generally state that the information contained therein has been obtained from sources believed to be reliable. We have not independently verified any of the data from third party sources nor have we verified the underlying economic assumptions relied upon by those third parties. Similarly, industry forecasts and market research, which we believe to be reliable based upon management’s knowledge of the industry, have not been verified by any independent sources.

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before deciding to invest in our common stock. You should read the entire prospectus carefully, including “Risk Factors” beginning on page 7 and our consolidated financial statements and notes to those consolidated financial statements, before making an investment decision. Unless otherwise indicated, all share amounts and prices described in this prospectus have been adjusted to reflect a 1-for-5 reverse stock split of our common stock effected on March 24, 2010.

References in this prospectus to “China SLP Filtration,” “the Company,” “we,” “us” or “our” refer to China SLP Filtration Technology, Inc. and its consolidated subsidiaries, unless the context requires otherwise.

Our Company

We are a manufacturer of nonwoven fabrics in China. Nonwoven fabrics, or nonwovens, are synthetic fabrics, such as felt and polyester, which are neither woven nor knitted, but instead are made from long fibers, bonded together by chemical, mechanical, heat or solvent treatment.

We currently manufacture two types of PET nonwoven fabrics which are used in a wide range of products, including filtration products, road construction materials, home furnishings, automobile interior insulation and industrial packaging. Our current PET products are sold primarily to PRC-based manufacturers which use our products as raw material components for end-products they sell to their customers operating in the heavy industrial, automotive, construction and home furnishing industries.

We recently developed a process to manufacture PPS nonwoven fabric, which is the key product line around which our long-term growth strategy is centered. We believe that this manufacturing process is proprietary and have applied for a process patent in the PRC and intend to apply for a process patent in the U.S. and Europe. PPS nonwoven fabric is a heat resistant, corrosion-proof and flame retardant fabric, and can be used to manufacture dust filter bags for pollutant dust removal and emissions controls in coal-fired power plants, garbage incinerators and cement factories.

The PRC government recently adopted stringent environmental regulations governing the discharge of carbon and other emissions by coal-fired power plants and other heavy industrial plants. Under these new regulations, which came into effect on January 1, 2010, pollutant emissions cannot exceed 50 milligrams per cubic meter. We believe, based on an article published in China Nonwoven & Industrial Textile (CNIT) in 2010, that less than 10% of the coal-fired boilers in China were equipped with dust removal filtration bags and less than 10% of the bag filters in use were made from PPS fiber.

Bag filters can be used as a cost effective way of meeting the new emission and dust pollutant standards in the PRC because the installation of bag filters is significantly cheaper than installing costly pollutant dust removal equipment, such as engineered scrubbing systems, which we believe could be cost prohibitive for smaller plant operators.

Based on lab tests which we conducted internally, we believe that our PPS nonwoven fabric is superior to other currently available high temperature filtration material because it is lighter, thicker, stronger, has higher air permeability and filtration efficiency and is significantly cheaper to produce. Due to the superior characteristics of our PPS product coupled with the demand created by these new regulations, we believe that our PPS material will become a market leader for high temperature filtration applications.

We intend to continue to manufacture PET nonwovens, but we expect the sales of our PPS nonwoven fabrics to ultimately eclipse the sales of our existing PET nonwoven products and become our main product offering.

Our Growth Strategy

Our growth strategy is as follows:

We plan to commence production of PPS nonwovens in the early part of 2011 for sale to PRC-based operators of coal-fired power plants, garbage incinerators and other manufacturers that are not in compliance with new PRC environmental regulations;

We plan to expand our PPS nonwoven manufacturing facilities and install three new production lines to manufacture PPS nonwoven material, increasing our total annual manufacturing capacity from 8,000 tons to 11,600 tons of nonwoven material; and

We intend to capitalize on our proprietary technology by developing and commercializing our nonwoven products for use in numerous applications.

Our Competitive Strengths

We believe our competitive strengths are as follows:

We offer high quality PET products with lower production and operational costs than products offered by our competitors;

Bag filters made of our PPS material offer plant operators a cost effective alternative to meet new emission and dust pollutant standards in the PRC because using PPS bag filters is significantly cheaper than installing pollutant dust removal equipment;

We believe, based on laboratory tests which we conducted internally, that our PPS material is superior to other high temperature filtration material currently available for use in bag filters because it is lighter, thicker, stronger, has higher air permeability and filtration efficiency, and is significantly cheaper to produce;

We can offer our products at attractive pricing points because our PPS fabric, which like alternative products is priced according to weight, is lighter than alternative products; and

We believe that our proprietary manufacturing processes give us a competitive advantage over our competitors and act as a barrier to entry.

Risk Factors

The implementation of our growth strategy and our ability to grow based on our competitive strengths remain subject to a variety of external and internal challenges. Accordingly, investing in our common stock involves significant risks. Some of the challenges and risks we face are listed below:

We need to raise capital to fully commercialize our PPS manufacturing process and cannot grow and execute our strategic plan if we fail to do so.

We have a limited operating history and no experience manufacturing PPS nonwoven fabric so it is difficult to evaluate our future prospects and historical results of operations.

Our success depends in part on market acceptance of our PPS nonwoven fabric as a preferred material for use in dust filter bags.

If we have miscalculated the future demand for our products, we may wind up unnecessarily spending a significant amount of funds on the expansion of our PPS manufacturing facilities.

We are subject to risks of conducting business in China.

We have significant outstanding short-term borrowings and we may not be able to obtain extensions when this debt matures.

Enforcement against us or our directors and officers may be difficult and investors could be unable to collect amounts due in the event we or any of our directors or officers violates applicable law.

Our executive officers and directors beneficially own a significant portion of our common stock and may take actions that are contrary to an investor's interests and could reduce the value of our stock.

We are a “controlled company” as such term is defined under the Nasdaq Marketplace Rules and our board of directors does not and will not have a majority of independent directors. Accordingly, the Company will lack the checks and balances that an independent Board can bring to management’s decision making process.

You should carefully consider the risks described in “Risk Factors” beginning on page 7 before making a decision to invest in our common stock. If any of these risks actually occurs, our business, financial condition or results of operations would likely be materially adversely affected. In such case, the trading price of our common stock would likely decline, and you may lose all or part of your investment.

Our Industry

The nonwoven fabric industry in the PRC is large and growing, driven primarily by China’s continued economic development. China has experienced rapid economic and industrial growth in the past 30 years. China’s output of iron and steel, cement, coal, fertilizer and power generation all currently rank as first or second in the world (Source: US Department of Commerce and US Department of the Interior). China’s consumption of raw materials currently ranks second in the world (Source: Report from the EIA Energy Information Administration). Due to outdated technology and equipment in China’s chemical, raw materials and energy industries, China has encountered problems of inefficient utilization of energy and resources, as well as heavy pollution due to accelerated urbanization. Reducing emission pollution has been a focus for the Chinese Central Government for several years and is expected to remain a focus moving forward. As China’s government imposes stricter policies on environmental protection, industrial gas and dust emission limits have become stricter. We believe this creates a significant market opportunity for the commercialization of our PPS nonwovens materials.

Corporate Information

Our executive offices are located at Shishan Industrial Park, Nanhai District, Foshan City, Guangdong Province, People’s Republic of China, or PRC, and our telephone number is +86-757-86683197. Our website address is www.silepu.com and the information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which it forms a part.

The Offering

Common stock offered by us		4,166,667 shares (4,791,667 shares if the representative of the underwriters exercises its over-allotment option in full).

Common stock outstanding immediately after this offering		21,814,562 shares, including (i) 15,265,714 shares of common stock currently outstanding, (ii) 1,923,809 shares issuable on conversion of the notes in the aggregate principal amount of $4,040,000, (iii) 4,166,667 shares to be issued in the offering, and (iv) 193,186 shares to be issued to United Best and 265,186 shares to be issued to Primary Capital on the closing of the offering.

Use of proceeds		We intend to use the net proceeds from this offering (i) to repay a short term loan in the amount of $3.9 million which was used as part of the purchase price of approximately $9.6 million for the build-out and purchase of a new production line to manufacture PPS materials which is currently being installed and is expected to be completed in February 2011; and (ii) to purchase two additional production lines to manufacture PPS materials. The balance of the net proceeds is expected to be used for working capital and general corporate purposes. See “Use of Proceeds” on page 26 for more information.

Over-allotment option		We have granted the underwriters an option, exercisable for 45 days after the date of this prospectus, to purchase up to an additional 625,000 shares of common stock to cover over-allotments.

Listing		We have applied to have our common stock listed on the NASDAQ Capital Market.

Lock-up Agreement		We and each of our directors, executive officers and certain principal stockholders have agreed, subject to certain exceptions, not to, including not to announce an intention to, for a period of 90 days from the date of this prospectus, sell, transfer or otherwise dispose of any shares of our common stock without the prior written consent of the underwriters’ representative. See “Underwriting.”

Risk factors		Investing in these securities involves a high degree of risk. As an investor you should be able to bear a complete loss of your investment. You should carefully consider the information set forth in the “Risk Factors” section beginning on page 7.

Summary Consolidated Financial Information

In the table below we provide you with historical consolidated financial data for the fiscal years ended September 30, 2010 and 2009 derived from our audited consolidated financial statements included elsewhere in this prospectus. Historical results are not necessarily indicative of the results that may be expected for any future period. When you read this historical summary consolidated financial data, it is important that you read it along with the appropriate historical consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

	Fiscal Years Ended
	September 30
	2010			2009
Statement of Operations Data:
Net sales	$	19,952,422		$	11,849,712
Cost of sales		13,772,843			7,296,327
Cost of sales related party		-			610,287
Gross profit		6,179,579			3,943,098
Total operating expenses		2,272,881			1,230,611
Operating income		3,906,698			2,712,487
Total other income (expenses)		(1,661,598	)		(266,835	)
Income before income taxes		2,245,100			2,445,652
Net income		2,221,077			2,445,652
Net income per common share, basic and diluted		0.15			0.17
Basic shares outstanding		14,979,390			14,510,204
Diluted shares outstanding		16,227,061			14,510,204
Pro forma net income (loss) per common share, basic and diluted		0.02			N/A

					As of
			As of		September 30, 2010
			September 30, 2010		Pro Forma
	As of		Pro Forma		As adjusted
Balance Sheet Data:	September 30, 2010		(unaudited) (1)		(unaudited) (2)
Current assets	$	9,652,296	$	9,552,296	$	27,652,296
Total assets		26,055,380		25,955,380		44,055,380
Current liabilities		8,981,223		5,017,216		1,117,216
Long-term debt		-		-		-
Total liabilities		8,981,223		5,017,216		1,117,216
Total stockholders’ equity		17,074,157		20,938,164		42,938,164

(1) Pro forma information assumes conversion of the convertible notes into common stock on September 30, 2010.

(2) Pro forma as adjusted amounts represent September 30, 2010 amounts adjusted to reflect (i) the conversion of our outstanding convertible notes in the aggregate principal amount of $4,040,000 (the portion of the outstanding notes with respect to which the maturity date has been extended to June 30, 2011) into 1,923,809 shares of common stock (at a conversion price of $2.10 (based on an assumed offering price of $6.00)), (ii) receipt of net proceeds from the offering estimated to be approximately $22,000,000 (based on the assumed initial public offering price of $6.00 per share), not including any proceeds from the shares that may be offered pursuant to the underwriters’ over-allotment option, and (iii) repayment of short-term bank loans of $3.9 million.

	Fiscal Years Ended
	September 30,
	2010			2009
Cash Flow Data:
Cash Flow from Operating Activities:
Net cash provided by operating activities	$	4,411,689		$	2,700,162

Cash Flow from Investing Activities:
Net cash (used in) investing activities		(5,230,563	)		(1,158,033	)

Cash Flow from Financing Activities:
Net cash provided by (used in) financing activities		2,708,294			(600,498	)

Cash and cash equivalents, beginning of period		3,297,648			2,367,570
Cash and cash equivalents, end of period	$	5,295,301		$	3,297,648

RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below together with all other information contained in this prospectus, including the matters discussed under “Caution Regarding Forward Looking Statements and Other Information Contained in this Prospectus,” before you decide to invest in shares of our common stock. You should pay particular attention to the fact that we are a holding company with substantial operations in China and are subject to legal and regulatory environments that in many respects differ from those of the United States. If any of the following risks, or any other risks and uncertainties that are not presently foreseeable to us, actually occur, our business, financial condition, results of operations, liquidity and our future growth prospects would be materially and adversely affected. You should also consider all other information contained in this prospectus before deciding to invest in shares of our common stock.

Risks Related to Our Business

We need to raise capital to fully commercialize our PPS manufacturing process and may not be able to fully execute on our growth strategy if we fail to do so.

Our core growth strategy is to commence production of PPS fabric and bag filters using our proprietary manufacturing process for sale initially to the numerous coal-fired power plants and subsequently to operators of garbage incinerators and other potential users in the PRC that are not in compliance with environmental regulations. We intend to use the net proceeds raised in this offering to purchase PPS manufacturing equipment and to repay a short-term loan used to purchase manufacturing equipment and may need to raise additional capital in the future through public or private equity offerings or debt financings. We cannot be certain that additional funding will be available on acceptable terms, if at all. As of the date of this prospectus, we believe the U.S. capital markets are facing many difficulties. Potential sources of additional financing may be unwilling or unable to provide us with the additional financing we need to fully carry out our expansion plans. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution and the price of our common stock could decrease. Any debt financing, if available, would result in us incurring interest expenses and we may be required to pledge assets as security for the debt and may be constrained by restrictive financial or operational covenants. If we are unable to raise additional capital, when required, or on acceptable terms, we may have to significantly delay, scale back or discontinue the development or the commercialization of our PPS product, which would harm our business and future growth prospects.

Management recently identified a material weakness in our internal control over financial reporting which required a restatement of our financial statements. If our internal controls and disclosure controls and procedures continue to be ineffective, there may be errors in our financial statements that could require a future restatement, our filings may not be timely filed and investors may lose confidence in our reported financial information, which could lead to a decline in our stock price.

Our management identified material weaknesses and concluded that our internal controls over financial reporting and our disclosure controls and procedures were not effective as of March 31, 2010, June 30, 2010 and September 30, 2010, respectively.

A material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Because our current accounting department is relatively new to U.S. GAAP and the related internal control procedures required of U.S. public companies, our management has determined that they require additional training and assistance in U.S. GAAP matters. Management has determined that our internal audit function is also deficient due to insufficient qualified resources to perform internal audit functions.

These material weaknesses resulted in our inability to detect accounting errors where we failed to record on our financial statements a liability of $75,000 owed to each of United Best and Primary Capital ($150,000 in total) for advisory services rendered in connection with our private placement of convertible notes, which closed on February 12, 2010, as selling, general and administrative expenses for the interim period ended March 31, 2010 and nine month period ended June 30, 2010. We also noted that a grant of 30,000 restricted shares of common stock in June 2010 to one of our directors was not reflected in the originally issued financial statements for the interim period ended June 30, 2010.

The identification of these errors resulted in the restatement of (i) our interim financial statements for the three month and nine month periods ended June 30, 2010 and 2009, as set forth in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 filed on August 16, 2010 and in this registration statement previously filed on July 8, 2010, as amended on September 7, 2010 and October 15, 2010 and (ii) our interim financial statements for the three month and six month periods ended March 31, 2010 and 2009, as set forth in the Quarterly Report on Form 10-Q filed on May 24, 2010, as amended on May 26, 2010 and in this registration statement previously filed on July 8, 2010, as amended on September 7, 2010 and October 15, 2010. This error was not detected by our internal control procedures.

We have taken certain steps to resolve these material weaknesses, including:

In August 2010, we hired Eric Gan as our new chief financial officer;

We are arranging necessary training for our accounting department staff;

We plan to engage external professional accounting or consultancy firms to assist us in the preparation of the U.S. GAAP accounts; and

We have allocated financial and human resources to strengthen the internal control structure and we have been actively working with external consultants to assess our data collection, financial reporting, and control procedures and to strengthen our internal controls over financial reporting.

We believe that the foregoing steps will remediate the material weaknesses identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate. However, there is no guarantee that these improvements will be adequate or successful or that such improvements will be carried out on a timely basis. A material weakness in our internal controls and procedures may lead to further accounting errors, which in turn may result in further restatements of our financial statements. Any of these possible outcomes could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our reporting process, which could adversely affect the trading price of our shares.

If our PPS nonwoven fabric does not achieve wide market acceptance as a preferred material for use in pollutant dust removal bag filters by operators of coal fired power plants, incinerators, cement factories and other potential users, anticipated profits will not materialize and our business will suffer.

We recently developed a manufacturing process to manufacture PPS nonwoven fabric. We intend to commence commercial production of PPS material in the early part of 2011.

PPS nonwoven fabric has many applications including high temperature filtration of pollutant emissions and can be used as the material to manufacture high temperature bag filters for coal-fired power plant emissions, garbage incinerators and cement factories.

The PPS material that we plan to produce is lighter, thicker, and stronger, has higher air permeability and filtration efficiency and is significantly cheaper to produce than other types of high temperature filtration materials currently available in the market place.

Although prototype bag filters made of our PPS product have been tested in laboratories, they have not been tested on site by any potential end user and we do not expect to develop prototype products for testing by any potential end user prior to commence commercial production of PPS products. Our new PPS nonwoven fabric may never achieve broad market acceptance, due to any number of factors, including that the product may not be as effective as our initial testing indicates and competitive material may be introduced which renders our PPS product too expensive or obsolete.

If our PPS material is not broadly accepted in the marketplace for its intended uses, we may not achieve a competitive position in the market, anticipated profits will not materialize and our business will suffer.

We have a limited operating history and have no experience commercially manufacturing PPS nonwoven fabric which is a key component of our growth strategy which makes it difficult to evaluate our future prospects based on historical results of operations.

Our operating history is limited. We currently make two types of PET nonwoven fabrics and we commenced production of one type of PET fabric in 2006 and a second type of PET fabric in 2009. We have not yet begun to commercially manufacture PPS nonwoven fabric. We plan to do so in the early part of 2011. Accordingly, you should consider our future prospects and historical results in light of the risks and uncertainties experienced by early-stage companies in evolving markets such as our ability to:

develop and successfully commercialize PPS nonwovens using our proprietary manufacturing process;

achieve widespread market acceptance of our PPS product for use in high temperature pollutant dust removal bag filters;

increase awareness of our products and continue to develop customer loyalty;

respond to competitive market conditions;

respond to changes in the regulatory environment;

manage risks associated with intellectual property rights;

maintain effective control of our costs and expenses;

raise sufficient capital to sustain and expand our business; and

attract, retain and motivate qualified personnel.

If we are unsuccessful in addressing any of these risks and uncertainties, our business may be materially and adversely affected.

If we cannot extend or renew our currently outstanding short-term loans or if our convertible notes are not converted before their maturity date, we will have to repay these loans with cash on hand or refinance them with another lender or else face a default and potential foreclosure upon the collateral we pledged.

In January 2010, the Chinese government took steps to tighten the availability of credit including ordering banks to increase the amount of reserves they hold and to reduce or limit their lending. In addition, our convertible notes in the principal amount of $4,040,000 mature on June 30, 2011. In December 2010 we repaid our outstanding short-term bank loans totaling RMB 25.4 million and we applied for and obtained official approval for a six month bank loan in the amount of RMB 20 million from the Foshan branch of the Agricultural Bank of China. On December 8, 2010, we obtained a 90 day term loan from Standard Chartered Bank in amount of RMB 6,000,000 for a term of 90 days. Although these short-term bank loans contain no specific renewal terms, in China, it is customary practice for banks and borrowers to negotiate roll-overs or renewals of short-term loans on an on-going basis shortly before they mature. Although we have renewed our short-term loans in the past, we cannot assure you that we will be able to renew these loans in the future as they mature. If we cannot renew them we will have to repay them with cash from operations. We cannot assure you that our business will generate sufficient cash to do so.

We expect that the convertible notes will be converted into our common stock at the closing of this offering. If, however, the convertible notes are not converted before their maturity date, we believe we will be able to obtain additional loans from a bank or raise funds from private sources to pay off the principal and interest due on the notes. We cannot assure you, however, that this will be the case and if we are unable to do so and if our business fails to generate sufficient cash flow from operations to repay these notes, we will be in default.

If we default on these loans and convertible notes, we will incur interest and penalties. In addition, as the loans are secured by our buildings and land if we fail to repay these loans, the lender could take possession of the collateral.

If we have miscalculated the future demand for our products, we may end up unnecessarily spending a significant amount of funds on PPS manufacturing equipment which ultimately we may not have needed and which we may not be able to resell.

We are currently installing a new production line to produce PPS materials and intend to use the net proceeds of this offering to purchase and install two additional production lines to manufacture PPS materials. This will increase our total annual manufacturing capacity from 8,000 tons to 11,600 tons of nonwoven material. The scope and timing of our expansion plans are based on our internal projections and estimated demand for our PPS products. If our projections are incorrect and the actual demand for our PPS products is less than projected, we may expend a significant amount of capital on equipment which ultimately may not have been needed.

If we are unable to adequately protect our intellectual property, we could lose a significant competitive advantage and competitors could use our processes and manufacture and market similar products using similar processes, which could harm our market share and lower our profits.

We hold a number of authorized process patents and have a patent application pending in the PRC for our PPS manufacturing process. We believe that among our competitive strengths are the proprietary manufacturing processes which we have developed and believe act as a barrier to entry for our potential competitors. Our success depends, in part, on our ability to protect these unique processes against competitors and to defend our intellectual property rights when they are violated. If our pending patent application for our PPS manufacturing process is not granted or if we fail to adequately protect our existing process patents, competitors could use our processes, and manufacture and market similar products using similar processes, which could harm our market share and results of operations. Our competitors may challenge, invalidate or avoid the application of any existing or future patents, trademarks, or other intellectual property rights that we receive or license. In addition, patent rights may not prevent our competitors from developing their own processes that produce products that are similar or functionally equivalent to our products. If we lose the protection of our intellectual property our business would suffer.

If PRC environmental regulations change and our PPS product was unable to meet those regulatory changes, our PPS product could become obsolete and this would harm our business and prospects.

To reduce air pollution in China, the Chinese government recently implemented a policy which imposes stricter rules on carbon and other emissions by coal-fired power plants and others. Under these rules which came into effect on January 1, 2010, carbon and other emissions are required to be less than 50 milligrams per cubic meter by the end of 2010. Already, some of the larger, more developed cities, such as Beijing and Tianjin have adopted more stringent rules requiring that emissions be less than 30 milligrams per cubic meter. (Source: Electric Power, May issue, 2008.) We believe, based on laboratory testing, that our PPS material satisfies current PRC governmental requirements and the more stringent local standards. If those regulations were to change and our PPS product were unable to meet those regulatory changes, our PPS product could become obsolete and this would harm our business and prospects.

The introduction by a competitor and market acceptance of a high temperature resistant pollutant emission filtration material which was superior to our PPS material would harm our business.

If a competitor successfully introduces a product which is superior to our PPS products, and that product achieved wide market acceptance, our PPS product could become obsolete and the demand for them would decrease significantly.

As a manufacturer of components our revenues will decrease if there is less demand for the end products in which our products are incorporated.

Our existing PET nonwoven products are sold, and we expect our PPS products will be sold, principally to customers that manufacture a wide range of end-use products, including filtration products, road construction materials, home furnishings, automobile interior insulation, and industrial packaging. Therefore, we are subject to the general changes in economic conditions affecting those industry sectors. If customers that operate in these industry sectors experience a downturn in their business or if they utilize substitutes for our products in their products, demand for our products and our business results will suffer.

Increases in the price of raw materials could reduce our profit margins if we cannot pass the increases on to our customers in the form of higher prices for our products.

Polyester is the primary raw material used by us to manufacture most of our products. The price of polyester fluctuates based on manufacturing capacity, demand and the price of crude oil, among other things. Our PPS product will be made from high quality polyphenylene sulfide resin, which we intend to purchase in the United States. Accordingly, the cost of this raw material will fluctuate with the value of the RMB against the dollar. Even where we are able to pass along at least a portion of raw material price increases to some of our customers, there is often a delay between the time we are required to pay the increased raw material price and the time we are able to pass the increase on to our customers. To the extent we are not able to pass along all or a portion of such increased prices of raw materials, our cost of sales would increase and our operating income would correspondingly decrease. We cannot assure you that the price of polyester will not increase in the future or that we will be able to pass on any increases to our customers.

There are only a small number of suppliers of the raw materials which are required to manufacture our new PPS product all of whom are based in the United States or Asia. We have not entered into any long term supply agreements with any of these suppliers. High demand for this polyphenylene-sulfide resin may result in us being unable to obtain sufficient quantities of this polyphenylene-sulfide resin to meet our customers’ demands for our PPS products which would harm our business.

We recently developed a manufacturing process to manufacture PPS nonwoven fabric, which is the key product line around which our long-term growth strategy is centered. PPS is made from a high quality polyphenylene sulfide resin which is currently not available in China and we will be required to import from the United States and Asia. We have identified less than 10 suppliers in the U.S. and Asian market that can provide us with this high quality polyphenylene-sulfide resin. This exposes us to volatility in the price and availability of these raw materials. We have not entered into any long term supply agreement with any of these potential suppliers so high demand for this polyphenylene-sulfide resin may result in us being unable to obtain sufficient quantities of this polyphenylene-sulfide resin to meet our customers’ demands for our PPS products which would harm our business. Supply interruptions could also arise from shortages labor disputes or weather conditions affecting suppliers’ production, transportation disruptions, or other reasons beyond our control. Additionally, these suppliers could also increase pricing of their products, which would negatively affect our operating results if we were not able to pass these price increases through to our customers.

Increases in energy prices will increase our operating costs and impair our financial results if we cannot pass cost increases on to our customers in the form of higher prices for our products.

We use a significant amount of electricity, gasoline and other energy sources to manufacture and transport our nonwoven products. We do not hedge our exposure to higher prices via energy futures contracts. A substantial increase in the price of fuel and other energy sources would increase our operating costs and could negatively impact our profitability and cash flows if we cannot pass the increases on to our customers.

Our manufacturing capacity is limited so a breakdown in our machinery or material interruption of business could prevent or limit our ability to manufacture our products and cause us to lose revenue and profits and impair our relationships with our customers.

We manufacture all of our existing products and plan to manufacture our new PPS products at our existing facility. We currently have three production lines in operation which manufacture PET products and are currently installing a new production line to manufacture our new PPS products. We plan to purchase and install two additional production lines with the proceeds from this offering. Any breakdown or disruption of our machinery, or interruption of business due to fires, explosion, adverse weather conditions or other catastrophic event, would result in us being incapable of manufacturing nonwovens to meet our production requirements. This may cause us to lose revenue and impair our relationships with our customers. Without our existing production facilities, we would have no other means of manufacturing products until we were able to restore the manufacturing capability at the facility or identify an acceptable contract manufacturer. We do not carry business interruption insurance to cover lost revenue and profits. Furthermore, any interruption in production capability may require us to make large capital expenditures to remedy the situation, which could have a negative effect on our profitability and cash flows.

Our insurance is inadequate so we could be exposed to significant losses if any of our products cause personal injury or illness or if our property is damaged.

We do not maintain product liability insurance and our property and equipment insurance does not cover the full value of our property and equipment, so we could be exposed to significant losses if any of our products cause personal injury or illness or if our property is damaged. Any such loss could harm our business.

Increases in our environmental compliance costs and violations of environmental regulations by us could require us to change business practices, increase our operating costs and lower our profits.

We use a variety of chemicals in our manufacturing operations. As a result, we are subject to a broad range of environmental laws and regulations. We regularly incur costs to comply with these environmental regulations, and those costs could increase significantly with changes in environmental regulations or their interpretation or enforcement which could further increase our operating costs and lower our profits.

Although we have not been subject to material environmental claims in the past, if we fail to comply with any present or future environmental regulations, damages, fines and criminal sanctions could be assessed against us and production could be suspended and our operations could cease. New regulations could also require us to acquire costly equipment or to incur other significant expenses which would lower our profits.

We rely on Mr. Jie Li, our chief executive officer, to manage our business, and if we lose his services, our business and prospects could suffer.

We depend, to a large extent, on the abilities and participation of our current management team, but have a particular reliance upon Mr. Jie Li, our chief executive officer, for the direction of our business. The loss of the services of Mr. Li for any reason could harm our business and prospects. We cannot assure you that Mr. Li will continue to be available to us, or that we will be able to find a suitable replacement for Mr. Li. We have entered into an employment contract with Mr. Li, but that agreement does not guarantee that Mr. Li will continue to manage the company. Although we plan to do so following the closing of this offering, we do not currently have key man insurance on Mr. Li, and if he were unable to continue as our chief executive officer due to death or disability and we were unable to replace him for a prolonged period of time, we could be unable to carry out our long-term business plan, and our future prospects for growth, and our business, could be harmed.

We may have difficulty establishing adequate management, legal and financial controls in the PRC, and such difficulties could reduce the value of any investment in our common stock.

The PRC historically has not adopted a western style of management and financial reporting concepts and practices, or modern banking, computer and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. We may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards. These deficiencies could impair our results of operations.

We may have violated Section 402 of the Sarbanes-Oxley Act of 2002 and Section 13(k) of the Exchange Act and may be subject to sanctions for such violations.

Section 13(k) of the Exchange Act provides that it is unlawful for a company such as ours, which has a class of securities registered under Section 12(g) of the Exchange Act, to directly or indirectly, including through any subsidiary, extend or maintain credit in the form of a personal loan to or for any director or executive officer of the company. Issuers violating Section 13(k) of the Exchange Act may be subject to civil sanctions, including injunctive remedies and monetary penalties, as well as criminal sanctions. The imposition of any of such sanctions on the Company may have a material adverse effect on our financial position, results of operations or cash flows.

On February 12, 2010, we entered into a share exchange agreement with the owners of all of the outstanding shares of Hong Hui, a British Virgin Islands holding company which was incorporated in the British Virgin Islands on January 6, 2010 and our direct, wholly-owned subsidiary. Under the terms of the share exchange agreement we issued and delivered to the Hong Hui stockholders a total of 14,510,204 shares of our common stock in exchange for all of the outstanding shares of Hong Hui. As a result of the share exchange, Hong Hui became our wholly-owned subsidiary and Foshan S.L.P. Special Material Co., Ltd., a PRC operating company, became our indirect wholly-owned subsidiary. At that time, Jie Li, who became our Chief Executive Officer on that date, was indebted on account of a previous loan in the amount of RMB 200,000 (approximately $29,474) made by Foshan.

The existence of indebtedness of Mr. Jie Li at the time the Company acquired Foshan and the continuation of such indebtedness thereafter may constitute a violation of Section 13(k) of the Exchange Act (Section 402(a) of Sarbanes-Oxley). As of September 30, 2010, all loans had been repaid.

We do not have a Majority of Independent Directors.

Our Board of Directors comprises of six members, three of whom are “independent” within the NASDAQ rules. Accordingly, we do not currently have, and following the closing of this offering we will not have, a Board of Directors the majority of whom are “independent” within the meaning of the NASDAQ rules and we will lack the oversight of an independent board.

We fall within the definition of a “controlled company” under the NASDAQ Marketplace Rules which provide that a company is considered a "controlled company" if greater than 50% of its voting power is held by an individual, a group or another company. In order for a group to exist for purposes of this rule, the stockholders forming the group are required to publicly file a notice that they are acting as a group (e.g., Schedule 13D). On December 29, 2010, a group consisting of Bestyield Group Limited, Jie Li, Proudlead Limited, Law Wawai, Pilot Link International Limited, Yang Wei, Li Shiyi, High Swift Limited, Han Hung Yuk, China Investment Management, Inc., Song Huaying, Newise Holdings Limited and Li Jun filed a Schedule 13D disclosing the existence of a group with respect to their holdings in the company. As a “controlled company” we are not subject to the NASDAQ requirements (i) to have a majority of independent board members; (ii) for independent director oversight of executive officer compensation (as set forth in Section 5605(d) of the NASDAQ Marketplace Rule); and (iii) for independent director oversight of director nomination (as set forth in Section 5605(e) of the NASDAQ Marketplace Rule).

Risks Related to Doing Business in China

Our business operations are conducted entirely in the PRC. Because China’s economy and its laws, regulations and policies are different from those typically found in the West and are continually changing, we will face risks including those summarized below.

The PRC may be more susceptible to political, economic, and social upheaval than other nations; any such upheaval could cause us to temporarily or permanently cease operations.

China has experienced unprecedented growth economically in the past three decades. Although the country has relaxed some restrictions on individual liberties, the rule of law is still a relatively new concept. Thus the legal system may not be equipped to handle complicated social and political problems accompanying the country’s fast economic growth. China has an extremely large population, significant levels of poverty, widening income gaps between rich and poor and between urban and rural residents, large minority ethnic and religious populations, and growing access to information about the different social, economic, and political systems to be found in other countries. These conditions make China unique and may make it susceptible to major structural changes. Such changes could include a reversal of China’s movement to encourage private economic activity, labor disruptions or other organized protests, nationalization of private businesses, internal conflicts between the police or military and the citizenry, and international political or military conflict. If any of these events were to occur, it could damage China’s economy and impair our business.

The PRC environmental protection laws and regulations require PRC companies, especially PRC manufacturing companies, to obtain environmental approvals for the commencement and completion of production lines and pollution emission permits. Failure to obtain the necessary environmental approvals and permits may subject us to fines and, in some cases, may even result in the mandated cessation of production, which may in turn impair our normal business operations and expansion plans.

In order to be in compliance with PRC environmental protection laws and regulations, we are required to obtain a construction commencement approval and a completion examination approval for each of our three finished production lines. We are also required to obtain a construction commencement approval from the local environmental protection bureau for one of our production lines that is currently under construction. We have obtained the construction commencement approval and completion examination approval for our three finished production lines.

On November 9, 2010, we submitted the application for the construction commencement approval for the new production line under construction to the local environmental protection bureau and on November 10, 2010, we received comments from them requesting us to complete the environment impact assessment of the new production line before submitting the application for the construction commencement approval. The environmental impact assessment is currently being conducted by a third party authorized by the local environmental bureau. We anticipate that it will be completed within 120 days from commencement (on or before March 10, 2011), but we cannot assure that this will be the case. Once the environmental impact assessment is completed, we intend to resubmit the application for the construction commencement approval together with the environmental impact assessment to the local environmental protection bureau. We anticipate that the construction commencement approval will be issued within 60 days from the submission date but we cannot assure that this will be the case.

In addition, we are required a pollution emission permit for the disposal of waste gases, waste water, waste dust and other waste materials. We do not currently have a pollution emission permit but we are preparing the application for this permit and intend to submit the application after the new production line is completed. The process of obtaining this permit after the application has been submitted can take up to 5 months.

We cannot assure you that we will be able to obtain the construction commencement approval or the pollution emission permit in a timely manner or at all. Failure to obtain this approval and permit may subject us to fines or disrupt our operations and construction, which may materially and adversely affect our business, results of operations and financial condition.

We are subject to comprehensive regulation by the PRC legal system, which is uncertain. As a result, it may limit the legal protections available to us and we may not be now, or remain in the future, in compliance with PRC laws and regulations.

Foshan, our operating company, is incorporated under and is governed by the laws of the PRC, where all of our operations are conducted. The PRC government exercises substantial control over virtually every sector of the PRC economy, including the production, distribution and sale of nonwovens. In particular, we are subject to regulations and administration by local and national branches of the Ministry of Environmental Protection, the Ministry of Commerce, as well as the General Administration of Quality Supervision, Inspection and Quarantine, the State Administration of Foreign Exchange, General Administration of Customs, the State Administration of Taxation and other regulatory bodies. In order to operate under PRC law, we must have valid licenses, certificates and permits, which must be renewed from time to time. If we were to fail to obtain the necessary renewals for any reason, including sudden or unexplained changes in local regulatory practice, we could be required to shut down all or part of our operations temporarily or permanently.

Foshan is subject to PRC accounting laws, which require that an annual audit be performed in accordance with PRC accounting standards. The PRC foreign-invested enterprise laws require that our subsidiary, Foshan, submit periodic fiscal reports and statements to financial and tax authorities and maintain its books of account in accordance with Chinese accounting laws. If PRC authorities were to determine that we were in violation of these requirements, we could lose our business license and be unable to continue operations temporarily or permanently.

The legal and judicial systems in the PRC are still rudimentary. The laws governing our business operations are sometimes vague and uncertain and enforcement of existing laws is inconsistent. Thus, we can offer no assurance that we are, or will remain, in compliance with PRC laws and regulations. Because of the vagaries of implementation, interpretation and enforcement of PRC laws, our ability to enforce commercial claims or to resolve commercial disputes is unpredictable.

We could incur severe penalties if we fail to comply with the Foreign Corrupt Practices Act which prohibits U.S. companies from engaging in bribery and prohibits payments to foreign officials for the purpose of obtaining or retaining business.

We are required to comply with the United States Foreign Corrupt Practices Act, or FCPA, which prohibits U.S. companies from engaging in bribery or making prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some of our competitors, are not subject to these prohibitions. The PRC also strictly prohibits bribery of government officials. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in China. If our competitors engage in these practices, they may receive preferential treatment from personnel of some companies, giving our competitors an advantage in securing business or from government officials who might give them priority in obtaining new licenses, which would put us at a disadvantage. Our employees, agents, representatives and consultants may not always be subject to our control. If any of them violates FCPA or other anti-corruption law, we might be held responsible. We could suffer severe penalties in that event. In addition, the U.S. government may seek to hold us liable for successor liability FCPA violations committed by companies in which we invest or which we acquire.

The RMB is not a freely convertible currency and governmental control of currency conversions could limit our ability to distribute and/or obtain sufficient foreign currency to support our business operations in the future, may affect the value of our stock.

All of our revenue is earned in RMB, and current and future restrictions on currency conversions may limit our ability to use revenue generated in RMB to make dividend or other payments in U.S. dollars. The PRC government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of the PRC. Although the PRC government introduced regulations in 1996 to allow greater convertibility of the RMB for current account transactions, significant restrictions still remain, including the restriction that foreign-invested enterprises like us may buy, sell or remit foreign currencies only after providing valid commercial documents at PRC banks specifically authorized to conduct foreign-exchange business and register foreign exchange transactions with the PRC government. This would impair our ability to pay dividends and could reduce the value of our stock.

In addition, conversion of foreign currencies for capital account items, including direct investment and loans, is subject to governmental approval in the PRC, and companies are required to open and maintain separate foreign-exchange accounts for capital account items. There is no guarantee that PRC regulatory authorities will not impose additional restrictions on the convertibility. In addition, failure to comply with any other PRC foreign exchange regulations may result in difficulties in converting foreign currency funds raised offshore into RMB and injecting such capital into our PRC operating company. These restrictions could prevent us from distributing dividends and thereby reduce the value of our stock.

Fluctuation of the exchange rate of the RMB against the US dollar could result in foreign currency losses.

In 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the United States dollar. Under the new policy, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in an appreciation of the RMB against the United States dollar of approximately 17.5% from July 1, 2005 through September 1, 2009. There remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the United States dollar.

The value of our common stock will be affected by the foreign exchange rate between U.S. dollars and RMB. For example, to the extent that we need to convert U.S. dollars we receive from an offering of our securities into RMB, appreciation of the RMB against the U.S. dollar could reduce the value in RMB of the proceeds of the financing. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of declaring dividends on our common stock or for other business purposes, and the U.S. dollar appreciates against the RMB, the U.S. dollar equivalent of our earnings from our business and dividends would be reduced. In addition, the depreciation of significant U.S. dollar-denominated assets could result in a charge to our income statement and a reduction in the value of these assets.

Our PRC stockholders are required to register with SAFE; their failure to do so could cause us to lose our ability to remit profits out of the PRC as dividends.

The State Administration of Foreign Exchange, or SAFE, issued a public notice in October 2005, or the SAFE No. 75 Notice, requiring PRC residents, including both legal persons and natural persons, to register with the applicable local SAFE branch before establishing or controlling any company outside China, referred to as an “offshore special purpose company” for the purpose of acquiring any assets of or equity interest in PRC companies and raising funds from overseas. In addition, any PRC resident that is the shareholder of an offshore special purpose company is required to amend its SAFE registration with the local SAFE branch with respect to that offshore special purpose company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment or creation of any security interest over any asset located in China. If any PRC shareholder of an offshore special purpose company fails to make the required SAFE registration and amendment, the PRC subsidiaries of that offshore special purpose company may be prohibited from distributing their profits and remitting the proceeds from any reduction in capital, share transfer or liquidation to the offshore special purpose company. Moreover, failure to comply with the SAFE registration and amendment requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

Mr. Jie Li, Mr. Li Jun, Mr. Li Shiyi, Ms. Wei Yang, and Ms. Song Huaying (collectively the “Individual Founders”) are PRC residents and the ultimate shareholders of Foshan. To the best of our knowledge, at the date hereof, the Individual Founders are subject to the registration requirements of SAFE No. 75 Notice. We are informed that Foshan has requested the Individual Founders to make the necessary applications and filings as required under the SAFE No. 75 Notice. We are informed by Foshan that the Individual Founders have liaised with the SAFE branch in Guangdong province and upon its confirmation, they will apply for the SAFE registration. However, we cannot assure you that the SAFE branch in Guangdong province will accept the application or the Individual Founders can obtain the SAFE registration. The failure or inability of the Individual Founders to receive any required approvals or make any required registrations may subject us and the Individual Founders to fines and legal sanctions, restrict our overseas or cross-border investment activities, limit Foshan’s ability to make distributions or pay dividends or affect the ownership structure, as a result of which our business operations and Foshan’s ability to distribute profits to us could be materially and adversely affected.

PRC regulation of loans to and direct investment by offshore holding companies in PRC entities may delay or prevent us from making loans or additional capital contributions to our PRC operating companies, which could materially and adversely affect our liquidity and ability to fund and expand our business.

As an offshore holding company of a PRC operating Company, we may make loans or additional capital contributions to our existing or future PRC operating companies. Any loans to our PRC operating companies are subject to PRC regulations. For example, loans to our operating companies in China to finance their activities may not exceed statutory limits and must be registered with SAFE. If we decide to make capital contributions to our operating entities in the PRC, the PRC Ministry of Commerce, or MOFCOM, (or MOFCOM’s local counterpart, depending on the amount involved) must approve these capital contributions. We cannot assure you that we will be able to obtain these government approvals or registrations on a timely basis, if at all, with respect to any such capital contributions or shareholder loans. If we fail to receive such approvals or registrations, our ability to use the proceeds of this offering to capitalize our PRC operations may be negatively affected, which could adversely affect our ability to fund and expand our business.

On August 29, 2008, SAFE promulgated Circular 142, a notice regulating the conversion by a foreign-invested company of foreign currency into Renminbi by restricting how the converted Renminbi may be used. The notice requires that the registered capital of a foreign-invested company settled in Renminbi converted from the foreign currency-denominated capital may only be used for purposes within the business scope approved by the applicable governmental authority and may not be used for equity investments within the PRC unless specifically provided for in its business scope. In addition, SAFE strengthened its oversight of the flow and use of Renminbi funds converted from the foreign currency denominated capital of a foreign-invested company. The use of such Renminbi may not be changed without approval from SAFE, and may not be used to repay Renminbi loans if the proceeds of such loans have not yet been used. Violations of Circular 142 may result in severe penalties, including imposing substantial fines on us. Therefore, Circular 142 may significantly limit our ability to transfer the net proceeds from this offering to our subsidiary in the PRC, which may adversely affect the business expansion of Foshan.

The new provisions of the PRC Labor Contract Law may substantially increase our labor-related costs in the future.

The PRC Labor Contract Law, which became effective as of January 1, 2008, contains many provisions which are more favorable to employees than prior labor regulations in effect in China. This may substantially increase our labor-related costs in our future operations. According to the new law, an employee is entitled to terminate his or her employment relationship with his or her employer for certain causes, such as delay in payment of wages or social insurance contribution or dissatisfactory labor protection, and under such circumstances the employer is liable to pay compensation to the employee. The amount of such compensation payment shall be one month's salary for each year that the employee has served the employer. If the monthly wage of an employee is three times greater than the average monthly wage in the previous year for employees as announced by the people’s government at the municipal level directly under the central government or at the city-with-district level where the employer is located, the compensation paid must be three times the average monthly wage of employees up to a maximum of not more than 12 years of work. We may also be liable to compensate an employee if we decide to terminate an existing employment contract before its expiration. Under the new law, employees who either have worked for us for 10 years or more or who have had two consecutive fixed-term contracts must be given an “open-ended employment contract” that, in effect, constitutes a lifetime, permanent contract, which is terminable only in the event the employee materially breaches our rules and regulations or is in serious dereliction of his or her duties. Such non-cancelable employment contracts will substantially increase our employment related risks and limit our ability to downsize our workforce in the event of an economic downturn. No assurance can be given that we will not in the future be subject to labor strikes or that we will not have to make other payments to resolve future labor issues caused by the new laws. Furthermore, there can be no assurance that the labor laws will not change further or that their interpretation and implementation will vary, which may substantially increase our labor-related costs in the future.

Our operating subsidiary’s failure to comply with PRC regulations requiring it to open and contribute to housing accounts for its employees could cause us to have to pay unpaid housing funds and subject us to fines and employee claims which would harm our business and reputation.

Under applicable PRC regulations, PRC enterprises are required to open housing fund accounts and contribute funds to those accounts for their employees. The monthly contributions must be at least 5% of each employee’s average monthly income in the prior year. Foshan has not opened the housing funds accounts since its establishment. As of January 24, 2011, the accumulated unpaid amount was approximately RMB 1.80 million (approximately $273,560). The local housing funds administrative authority may require Foshan to pay the funds due within a specified time period. If Foshan fails to do so within the specified time period, the local housing authority may seek judicial enforcement against Foshan to make such payment. Foshan could be also be subject to fines imposed by the housing funds administrative authority of a minimum of RMB10,000 (approximately $1,471) and maximum of RMB 50,000 (approximately $7,353). Our current and former employees are also entitled to claim their housing funds individually by arbitration or action. As of the date of this prospectus, we are not subject to any claims from our employees in connection with our failure to open or contribute to housing fund accounts. If any of our employees brings such action against us and the arbitration award or court judgment was made in their favor, we would have to pay the total amount of housing funds due to the employee. Our payment to rectify our non-compliance with employee’s housing provident funds regulations would require us to divert our financial resources and thus will negatively impact our operations and our liquidity.

We face uncertainty from China’s Circular on Strengthening the Administration of Enterprise Income Tax on Non-Resident Enterprises' Share Transfer (“Circular 698”) which was released in December 2009 with retroactive effect from January 1, 2008.

The Chinese State Administration of Taxation (SAT) released Circular 698 on December 10, 2009 that addresses the transfer of shares by nonresident companies. Circular 698, which is effective retroactively to January 1, 2008, may have a significant impact on many companies that use offshore holding companies to invest in China. Circular 698, which provides parties with a short period of time to comply with its requirements, indirectly taxes foreign companies on gains derived from the indirect sale of a Chinese company. Where a foreign investor indirectly transfers equity interests in a PRC enterprise by selling the shares in an offshore holding company, and the latter is located in a country or jurisdiction where the effective tax burden is less than 12.5% or where the offshore income of his, her, or its residents is not taxable, the foreign investor is required to provide the tax authority in charge of that Chinese resident enterprise with the relevant information within 30 days of the transfers. Moreover, where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise through an abuse of form of organization and there are no reasonable commercial purposes such that the corporate income tax liability is avoided, the PRC tax authority will have the power to re-assess the nature of the equity transfer in accordance with PRC’s “substance-over-form” principle and deny the existence of the offshore holding company that is used for tax planning purposes.

There is uncertainty as to the application of Circular 698. For example, while the term "indirectly transfer" is not defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. Moreover, the relevant authority has not yet promulgated any formal provisions or formally declared or stated how to calculate and quantify the effective tax in the country or jurisdiction and the process of the disclosure to the tax authority in charge of that Chinese resident enterprise. In addition, there are no formal declarations with regard to how to interpret “abuse of form of organization” and “reasonable commercial purpose,” to determine compliance with Circular 698. As a result, we may become at risk of being taxed under Circular 698 and we may be required to expend valuable resources to comply with Circular 698 or to establish that we should not be taxed under Circular 698, which could have a material adverse effect on our financial condition and results of operations.

Enforcement against us or our directors and officers may be difficult and you could be unable to collect amounts due to you in the event that we or any officer or director violates applicable law.

Our operating company, Foshan, is located in the PRC and substantially all of our assets are located in the PRC. Most of our current officers and directors are residents of the PRC, and most of their assets are located in the PRC. As a result, it could be difficult for investors to effect service of process on us or those persons in the United States, or to enforce a judgment obtained in the United States against us or any of these persons. In addition, it may be difficult to bring an original action in a PRC court to enforce liabilities based upon the U.S. federal securities laws against the above foreign persons. Further, it is unclear if extradition treaties now in effect between the U.S. and the PRC would permit effective enforcement against us or our officers and directors of criminal penalties under the U.S. federal securities laws or otherwise. See the section of this prospectus entitled “Service of Process and Enforcement of Judgments” below.

If we lose our land use rights we would be required to identify another site for our operations and obtain the land use rights for that land. We would then have to relocate and move our operations to the new site, which would interrupt our business and would require us to incur relocation and build out costs at the new site, all of which would have a negative effect on our financial condition and results of operations.

We do not own the land where our plant and facility is located, for in China, there is no private ownership of land, and land is owned by the state or rural collective economic organizations. In the case of land used for industrial purposes, land use rights can be obtained from the government for a period of up to 50 years, and are typically renewable. Land use rights, however, can be revoked, and land users can be forced to vacate at any time, if redevelopment of the land is deemed to be in the public interest. The public interest rationale is interpreted quite broadly and the process of land appropriation may be less than transparent. We have incurred costs in building on the land on which our plant and machinery are located. If we lost our land use rights (including as a result of failure of the government to renew our land-use right certificate) we would be required to relocate and move our operations to a new site, which would interrupt our business and would require us to incur relocation and build out costs at the new site, all of which would have a negative effect on our financial condition and results of operations.

The approval of the PRC Securities Regulatory Commission, or the CSRC, may be required in connection with this offering under a recently adopted PRC regulation; any requirement to obtain prior CSRC approval could delay this offering and failure to obtain such approval, if required, could have a material adverse effect on our business and could also create uncertainties for this offering.

On August 8, 2006, six PRC regulatory agencies, including the CSRC, promulgated the “Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors,” or the M&A Rule, which took effect on September 8, 2006 and was further amended on June 22, 2009, to more effectively regulate foreign investment in PRC domestic enterprises. The M&A Rule requires offshore special purpose vehicles, or SPVs, formed for the purposes of overseas listing of equity interests in PRC companies and controlled directly or indirectly by PRC companies or individuals obtain the approval of the CSRC prior to the listing and trading of such SPV’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website a notice specifying the documents and materials that SPVs are required to submit when seeking the CSRC approval for their listings outside of China. The interpretation and application of the M&A Rule is currently unclear. However, our PRC counsel has advised us that based on its understanding of the current PRC laws, rules and regulations and the M&A Rule, the M&A Rule does not require us to obtain prior CSRC approval for this offering and was not required for our reverse acquisition of Hong Hui Holdings Limited because Foshan was established as a qualified foreign-invested enterprise before September 8, 2006, the effective date of the M&A Rule.

However, if the CSRC or another PRC regulatory agency subsequently determines that prior CSRC approval was required, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may limit our operating privileges, delay or restrict the repatriation of the proceeds from this offering into China or payment or distribution of dividends by Foshan, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our common stock. The CSRC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of our common stock. Also, if the CSRC later requires that we obtain its approval, we may be unable to meet or obtain a waiver of the CSRC approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding this CSRC approval requirement could have a material adverse effect on the trading price of our common stock.

We cannot predict when the CSRC will promulgate additional implementing rules or other guidance, if at all. If implementing rules or guidance is issued prior to the completion of this offering and consequently we conclude we are required to obtain CSRC approval, this offering will be delayed until we obtain CSRC approval, which may take several months or longer. Furthermore, any delay in the issuance of such implementing rules or guidance may create additional uncertainties with respect to this offering. Moreover, implementing rules or guidance, to the extent issued, may fail to resolve current ambiguities under the M&A Rule. Uncertainties and/or negative publicity regarding the M&A Rule could have a material adverse effect on the trading price of our common stock.

The M&A Rule establishes more complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

The M&A Rule establishes additional procedures and requirements that could make some acquisitions of Chinese companies by foreign investors more time-consuming and complex than in the past. After the promulgation of the M&A Rule, the PRC government can now exert more control over the acquisitions of Chinese companies, including requirements in some instances that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a Chinese domestic enterprise. We may grow our business in part by acquiring complementary businesses. Complying with the requirements of the M&A Rule to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share by share or asset acquisition of the PRC companies.

The discontinuation of any preferential tax treatment currently available to us in the PRC or imposition of any additional PRC taxes on us could adversely affect our financial condition and results of operations.

Before January 1, 2008, pursuant to the then applicable enterprise income tax laws in China, foreign-invested companies established in China were generally subject to a state and local enterprise income tax, or EIT, at statutory rates of 30% and 3%, respectively, and could often be granted various preferential tax treatments including preferential tax rates and tax holidays. Under the PRC Enterprise Income Tax Law, or the New EIT Law, and its implementing rules, both effective on January 1, 2008, a unified EIT rate of 25% and unified tax deduction standard is applied equally to both domestic-invested enterprises and foreign-invested enterprises, or FIEs. The New EIT Law provides a five-year transitional period starting from its effective date for those enterprises which were established before March 16, 2007, the promulgation date of the New EIT Law. Enterprises established prior to March 16, 2007 are eligible for certain prescribed preferential tax rate in accordance with the then applicable income tax laws and administrative regulations and gradually become subject to the new statutory EIT rate of 25% over a five-year transition period starting from January 1, 2008. For enterprises granted qualified tax holidays, such tax holidays continue until their expiration in accordance with previous tax laws and regulations, but where the tax holiday has not yet started because of a cumulative loss position, such tax holiday shall be deemed to commence from 2008, the first effective year of the New EIT Law. Currently, Foshan enjoys a 12.5% income tax preferential rate, which expires December 31, 2012. Thereafter, the expiration of Foshan’s preferential tax treatment will reduce our profitability and affect our financial results.

We may be classified as a “resident enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

The New EIT Law provides that enterprises established outside of China whose “de facto management bodies” are located in China are considered PRC “tax resident enterprises” and will generally be subject to the uniform 25% PRC EIT rate on their global income. In addition, a tax circular issued by the State Administration of Taxation on April 22, 2009 regarding the standards used to classify certain Chinese-invested enterprises established outside of China as “resident enterprises” clarified that dividends and other income paid by such “resident enterprises” will be considered to be PRC source income, subject to PRC withholding tax, currently at a rate of 10%, when recognized by non-PRC enterprise shareholders. This recent circular also subjects such “resident enterprises” to various reporting requirements with the PRC tax authorities. Under the implementation rules to the New EIT Law, a “de facto management body” is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and other assets of an enterprise. In addition, the tax circular mentioned above details that certain Chinese-invested enterprises will be classified as “resident enterprises” if the following are located or resident in China: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors having voting rights.

Currently, there are no detailed rules or precedents governing the procedures and specific criteria for determining “de facto management bodies” which are applicable to our company or our overseas subsidiary. A substantial majority of the members of our management team as well as the management team of some of our overseas subsidiary are located in China. If our company or any of our overseas subsidiaries is considered a PRC tax resident enterprise for PRC EIT purposes, a number of unfavorable PRC tax consequences could follow. First, our company or our overseas subsidiaries will be subject to the uniform 25% EIT rate as to our global income as well as PRC EIT reporting obligations. Second, dividends payable by us to our investors and gain on the sale of our shares may become subject to PRC withholding tax as described below.

Dividends payable by us to our foreign investors and gain on the sale of our shares may become subject to taxes under PRC tax laws.

Under the New EIT law and its implementation rules, if we are considered a “resident enterprise”, income tax at the rate of 10% must be withheld on dividends payable by us to investors that are “non-resident enterprises” if such investors do not have an establishment or place of business in China or if, the relevant income is not effectively connected with an establishment or place of business in China. Similarly, any gain realized on the transfer of our common stock by such investors is also subject to a 10% PRC withholding income tax if such gain is regarded as income derived from sources within China and we are considered a “resident enterprise” for PRC EIT purposes. It is possible that future guidance issued with respect to the new “resident enterprise” classification could result in a situation in which a withholding tax of 10% for our non-PRC enterprise investors or a potential withholding tax of 20% for individual investors is imposed on dividends we pay to them and with respect to gains realized by such investors upon transfer of our common stock. In addition to the uncertainty surrounding “resident enterprise” classification, it is also possible that the rules may change in the future, possibly with retroactive effect. If we are required under the New EIT law to withhold PRC income tax on our dividends payable to our foreign shareholders, or if you are required to pay PRC income tax on the transfer of our common stock under the circumstances mentioned above, the value of your investment in our common stock may be materially and adversely affected. It is unclear whether holders of our common stock would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas if we are considered a PRC “resident enterprise”.

We rely on dividends paid by Foshan for our cash needs, and any limitation on the ability of Foshan to make payments to us could have a material adverse effect on our ability to conduct our business.

As a holding company, we conduct substantially all of our business through our consolidated subsidiaries incorporated in China. We rely on dividends paid by these PRC subsidiaries for our cash needs, including the funds necessary to pay any dividends and other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses. The payment of dividends by entities established in China is subject to limitations. Regulations in China currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. Foshan is required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves or statutory capital reserve fund until the aggregate amount of such reserves reaches 50% of its respective registered capital. As a result, Foshan’s ability to transfer a portion of its net assets to us in the form of dividends, loans or advances is limited. In addition, if Foshan incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. Any limitations on the ability of Foshan to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

Further, according to the Circular on Issues Concerning Outward Remittance of Profit, Stock Dividends and Stock Bonuses Processed by Designated Foreign Exchange Banks, or Circular 29, issued by the SAFE on September 22, 1998, and amended on September 14, 1999, a foreign-invested enterprise whose registered capital has not been fully paid as provided by the terms of its articles is not allowed to remit its profits or dividends abroad unless a special approval by the SAFE is granted. Circular 29 limits the ability of Foshan to remit funds to us, which could materially and adversely limit our ability to expand our business, make investments or acquisitions, pay dividends and otherwise fund and conduct our business.

All participants in our stock incentive plan who are PRC citizens may be required to register with SAFE and failure to comply may subject us and such participants to fines and legal sanctions. We may also face regulatory uncertainties that could restrict our ability to adopt additional equity compensation plans for our directors, employees and other parties under PRC laws.

In September 2010 we adopted a stock incentive plan under which we may make option grants and other awards to our officers, key employees, directors and consultants. All of our officers and directors, other than Chris Bickel and Richard M. Cohen, are PRC citizens.

On March 28, 2007, SAFE issued the “Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership Plan or Stock Option Plan of An Overseas Listed Company, also known as “Circular 78.” We believe that under Circular 78, PRC citizens and residents who are granted stock or options under our stock incentive plans are required to register with SAFE or its local counterparts and request us (or engage domestic agents) to handle various foreign exchange matters associated with their stock incentive plans. In addition, as the employer, we are (or a PRC agent is) required, on behalf of PRC recipients of stock awards, to apply annually to SAFE or its local offices for a quota for the conversion and/or payment of foreign currencies in connection with the domestic individuals’ exercise of the employee stock options. The foreign exchange proceeds received by the PRC persons from the sale of shares under our stock incentive plan are required to be remitted to bank accounts in China opened by their employers or PRC agents.

The registration and approval requirements set forth in Circular 78 will be burdensome and time consuming on us. If we fail to comply, our PRC subsidiary (if deemed to a domestic agent as defined under Circular 78) and participants of our stock incentive plan who are PRC citizens may be subject to fines and legal sanctions and we may be prevented form granting equity compensation to our officers, key employees, directors and consultants who are PRC citizens, in which event we will have to find alternative methods (such as addition salary and bonuses) to compensate such persons which would adversely affect our cash flow and business operations.

Risks Associated with This Offering

Approximately 92% of our common stock is beneficially owned by a group which includes some of our executive officers and directors; this group may take actions that are contrary to your interests and that could reduce the value of your stock.

On December 29, 2010, a group consisting of Bestyield Group Limited (a company controlled by Jie Li, our chief executive officer), Jie Li, Proudlead Limited (a company controlled by Law Wawai, our president of sales), Law Wawai, Pilot Link International Limited, High Swift Limited, China Investment Management Inc., Song Huaying, and Newise Holdings Limited (a company controlled by Li Jun, one of our directors) and Li Jun filed a Schedule 13D disclosing the existence of a group with respect to their holdings in the Company. This Schedule 13D reported that the “group” beneficially owned an aggregate of approximately 92% of our outstanding common stock. Even assuming conversion of all of the outstanding convertible notes and the exercise of all our warrants, the group will collectively own a significant portion of our outstanding common stock. As a result, they will be able to influence the outcome of stockholder votes on various matters, including the election of directors and extraordinary corporate transactions such as business combinations. In any such stockholder vote, their interests may differ from that of other stockholders and they could cause us to take actions that are contrary to your interests and that could reduce the value of your stock.

We do not intend to pay cash dividends in the foreseeable future which may negatively affect the price of our stock.

We have never paid any cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends by us will depend on our future earnings, financial condition and such other business and economic factors as our management may consider relevant. In addition, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from Foshan, our PRC-based operating company, which, from time to time, may be subject to restrictions on its ability to make distributions to us, including as a result of restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions. See “Risks Related to Doing Business in China” above.

There is currently no trading market for our common stock and an active trading market may not develop after the offering.

Our shares are not currently traded on any exchange. We have applied to have our common stock listed on the NASDAQ Capital Market. On the consummation of the public offering, we believe that we will satisfy the listing requirements and expect that our common stock will be listed. Such listing, however, is not guaranteed. The underwriters are not obligated to make a market in our securities and, even after making a market, can discontinue market making at any time without notice. Neither we nor our underwriters can provide any assurance that an active and liquid trading market in our securities will develop or, if developed, that the market will continue.

Our common stock may be delisted from the NASDAQ which could negatively impact the price of our common stock and our ability to access the capital markets.

The listing standards of the NASDAQ Capital Market provide that a company, in order to qualify for continued listing, must maintain a minimum stock price, satisfy standards relative to minimum shareholders’ equity, minimum market value of publicly held shares and various additional requirements. If, after listing, we fail to comply with all listing standards applicable to issuers listed on the NASDAQ Capital Market, our common stock may be delisted. If our common stock is delisted, it could reduce the price of our common stock and the levels of liquidity available to our shareholders. In addition, the delisting of our common stock could hinder our access to the capital markets and any limitation on liquidity or reduction in the price of our common stock could impair our ability to raise capital. Delisting from the NASDAQ Capital Market could also result in other negative consequences, including the potential loss of confidence by suppliers, customers and employees, the loss of institutional investor interest and fewer business development opportunities.

Future sales or perceived sales of our shares of common stock could depress our stock price.

All of our executive officers and directors and certain of our shareholders have agreed not to sell shares of common stock for a period of 90 days following this offering. In addition, all of the selling stockholders listed in the resale prospectus have agreed not to sell shares of their common stock for a period of 90 days following this offering. See “Underwriting.” Shares subject to these lock-up agreements will become eligible for sale in the public market upon expiration of these lock-up agreements, subject to limitations imposed by Rule 144 under the Securities Act of 1933, as amended. As we are a former “shell” company (as that term is defined in Rule 12b-2 under the Exchange Act), none of the shares held by our current shareholders are freely tradable, however commencing on February 12, 2011 those shares will be eligible for resale under Rule 144 subject to the restrictions set forth in Rule 144. See “Shares Eligible for Future Sale.” If the holders of these shares were to attempt to sell a substantial amount of their holdings at once, the market price of our common stock could decline. Moreover, the perceived risk of dilution from this offering or other potential sales could cause shareholders to attempt to sell their shares and investors to short shares of our common stock, a practice in which an investor sells shares that he or she does not own at prevailing market prices, hoping to purchase shares later at a lower price to cover the sale. As each of these events would cause the number of shares of our common stock being offered for sale to increase, our common stock market price would likely further decline. All of these events could combine to make it very difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

You will experience immediate and substantial dilution in your investment.

The offering price of our common stock is substantially higher than the net tangible book value per share of our common stock, which was $1.08 as of September 30, 2010. Therefore, when you purchase our common stock in this offering at an assumed public offering price of $6.00 per share, you will incur immediate dilution of $4.92 per common share. Holders of the common stock will experience further dilution if options, warrants or other rights to purchase our common stock that are outstanding or that we may issue in the future are exercised or converted, or if we issue additional shares of our common stock, at prices lower than our net tangible book value at such time.

We will retain broad discretion in using the net proceeds from this offering and may spend a substantial portion in ways with which you do not agree.

We currently intend to use the net proceeds from the offering to repay a short term loan in the amount of $3.9 million and purchase two additional production lines to manufacture PPS materials. The balance of the net proceeds is expected to be used for working capital and general corporate purposes. Accordingly our management will retain broad discretion to allocate the net proceeds we receive from this offering. The net proceeds may be applied in ways with which you and other investors in the offering may not agree, or which do not increase the value of your investment. Our management might not be able to achieve a significant return, if any, on any investment of these net proceeds.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND

OTHER INFORMATION CONTAINED IN THIS PROSPECTUS

This prospectus contains some forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties. Forward-looking statements include statements regarding, among other things,

our projected sales, profitability and cash flows;

our growth strategies;

anticipated trends in our industry;

our future financing plans; and

our anticipated needs for working capital.

In some cases they are identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend” or the negative of these words or other variations on these words or comparable terminology. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” as well as in this prospectus generally. In particular, these include statements relating to future actions, future performance, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.

Any or all of our forward-looking statements in this prospectus may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur and you should not place undue reliance on these forward-looking statements.

USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $ ($ if the underwriters exercise their over-allotment option) from the sale of 4,166,667 shares of common stock offered hereby after deducting (i) $ million for underwriting discounts and commissions, (ii) estimated expenses of the offering of $ and (iii) the $ success fee payable on closing to United Best, our foreign advisor, controlled by our director, Mr. Li Jun.

We currently anticipate that we will use the net proceeds we receive from the offering substantially as follows: (i) up to $3.9 million will be used to repay a short term loan in the amount of $3.9 million which was used as part of the purchase price of approximately $9.6 million for the build-out and purchase of a new production line to manufacture PPS materials which is currently being installed and is expected to be completed in February 2011; and (ii) up to approximately $10 million will be used to purchase two additional production lines to manufacture PPS materials. The balance of the net proceeds, if any, is expected to be used for working capital and general corporate purposes. The three new production lines are expected to increase our annual output by 3,600 tons of nonwoven materials to 11,600 tons of nonwoven material.

The short term loan matures on June 21, 2011 and bears interest at the rate of 6.21% per annum.

We believe that the proceeds of this offering when added to our existing working capital will be sufficient to fund our operations for the foreseeable future.

DETERMINATION OF OFFERING PRICE

The public offering price of the common stock offered by this prospectus will be determined by negotiations between us and the underwriters. Factors to be considered in determining the public offering price include:

the information in this prospectus and otherwise available to the underwriters;

the history and the prospects for the industry in which we compete;

our current financial condition and the prospects for our future cash flows and earnings;

the general condition of the economy and the securities markets at the time of this offering;

the recent market prices of, and the demand for, publicly-traded securities of generally comparable companies; and

the public demand for our securities.

The prices at which the common stock will sell in the public market after this offering, however, may not equal or exceed the public offering price.

DIVIDEND POLICY

We do not expect to declare or pay any cash dividends on our common stock in the foreseeable future and we currently intend to retain future earnings, if any, to finance the expansion of our business. The decision whether to pay cash dividends on our common stock will be made by our board of directors, in their discretion, and will depend on our financial condition, operating results, capital requirements and other factors that the board of directors considers significant. In addition, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from Foshan, our PRC-based operating company, which, from time to time, may be subject to restrictions on its ability to make distributions to us, including as a result of restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions.

EXCHANGE RATE INFORMATION

Our business is primarily conducted in China and substantially all of our revenues and expenses are denominated in Renminbi. This prospectus contains translations of Renminbi amounts into U.S. dollars at specific rates solely for the convenience of the reader. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, or at all. The PRC government exercises control over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through intervention in the foreign exchange market on foreign trade.

The following table sets forth information concerning exchange rates between Renminbi and U.S. dollar for the periods indicated. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this prospectus or will use in the preparation of our periodic reports or any other information to be provided to you.

	Exchange Rate
Period	Period End		Average(1)		Low		High
	(RMB per US$1.00)
2005		8.0702		8.1826		8.2765		8.0702
2006		7.8041		7.9579		8.0702		7.8041
2007		7.2946		7.5806		7.8172		7.2946
2008		6.8225		6.9193		7.2946		6.7800
2009		6.8259		6.8295		6.8470		6.8176
2010
Nine-month period ended September 30, 2010		6.6905		6.7984		6.8330		6.6869
June		6.7815		6.8184		6.8323		6.7815
July		6.7735		6.7762		6.7807		6.7709
August		6.8069		6.7873		6.8069		6.7670
September		6.6905		6.7396		6.8102		6.6869
October		6.6707		6.6678		6.6912		6.6397
November		6.6670		6.6538		6.6892		6.6330
December		6.6000		6.6497		6.6745		6.6000

(1) Annual averages and averages for the nine-month period ended September 30, 2010 were calculated by using the average of the exchange rates on the last day of each month during the relevant year. Monthly averages were calculated by using the average of the daily rates during the relevant month.

CAPITALIZATION

The table set forth below depicts our capitalization and cash and cash equivalents as of September 30, 2010, on an actual and pro forma basis, as follows:

On an actual basis;

On a pro forma basis to give effect to the conversion of our issued and outstanding convertible notes in the principal amount of $4,040,000 (representing the part of the outstanding notes that will not be repaid on February 12, 2011 and the maturity date of which has been extended to June 30, 2011) into 1,923,809 shares of common stock (assuming a public offering price of $6 per share) immediately prior to the closing of this offering (which notes are convertible into shares of common stock at $2.10 per share which represents a 65% discount to the assumed $6 offering price); and

On a pro forma basis as adjusted to reflect (i) the sale of 4,166,667 shares of common stock in this offering by us at an assumed public offering price of $6.00 per share, after deducting estimated underwriting discounts and commissions and other offering expenses (assuming the underwriters do not exercise their over-allotment option) and (ii) the 193,186 and 265,186 shares issuable at closing to United Best and Primary Capital, respectively.

						Pro Forma
			Pro Forma			As Adjusted
	Actual		(unaudited)			(unaudited)
Cash	$	5,295,301	$	5,195,301	(1)	$	23,295,301	(2)
Cash equivalents		-		-			-
Total cash and cash equivalents		5,295,301		5,195,301			23,295,301	(2)

Total liabilities		8,981,223		5,017,216			1,117,216	(2)
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 share issued and outstanding; common stock, $0.001 par value; 200,000,000 shares authorized; 15,265,714 shares issued and outstanding, actual; 17,189,523 shares issued and outstanding, pro forma; and 21,814,562 shares issued and outstanding, pro forma as adjusted		15,266		17,190			21,815
Additional paid-in capital (3)		8,375,860		14,853,193			36,848,568
Accumulated other comprehensive income		1,961,422		1,961,422			1,961,422
Retained earnings		6,721,609		4,106,359			4,106,359
Total capitalization (3)	$	17,074,157	$	20,938,164		$	42,938,164

(1) Pro forma cash reflects repayment of a note in the principal amount of $100,000 that matures and is expected to be repaid on February 12, 2011.

(2) Pro forma as adjusted cash and cash equivalents each reflect the receipt of the assumed net proceeds of $22,000,000 from this offering and the use of $3,900,000 of the net proceeds to pay down the outstanding short term bank loans. Pro forma as adjusted total liabilities reflects the repayment of the short term bank loans of $3,900,000.

(3) The increase of $22,000,000 in pro forma as adjusted total capitalization reflects receipt of the assumed net proceeds of this offering of $22,000,000. The increase of $21,995,375 in pro forma as adjusted additional paid-capital reflects the assumed net proceeds of this offering of $22,000,000 less $4,167 (which represents the aggregate par value of the 4,166,667 share being offered in this offering) and $458 (which represents the aggregate par value of the 458,373 shares being issued to Primary Capital and United Best at the closing.) A $1.00 increase (decrease) in the assumed public offering price of $6.00 per share, would increase (decrease) each of the additional paid-in capital and total capitalization by $3,750,000 and ($3,750,000) respectively, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the additional underwriting discounts and commissions and fees payable to United Best resulting from the increase (decrease) in the offering price.

DILUTION

Purchasers of shares of our common stock in the offering will suffer an immediate and substantial dilution in net tangible book value per share. Dilution is the amount by which the public offering price paid by purchasers of our common stock exceeds the net tangible book value per share of common stock after the offering.

Our consolidated net tangible book value (i.e. consolidated tangible assets less consolidated liabilities) as of September 30, 2010 was $16,538,677. Our consolidated net tangible book value per share (consolidated net tangible book value divided by the aggregate number of shares of common stock outstanding) as of September 30, 2010 was $1.08.

Our pro forma consolidated net tangible book value as of September 30, 2010 was $20,402,684, or $1.19 per share of common stock. Pro forma consolidated net tangible book value per share represents our consolidated net tangible book value ($20,402,684) divided by 17,189,524 (the aggregate number of shares of common stock outstanding, assuming conversion of the convertible notes immediately prior to the closing of this offering).

After giving effect to the sale by us of (i) the 4,166,667 shares of common stock in this offering (at an assumed public offering price of $6.00 per share), (ii) the issuance of 193,186 shares to United Best and 265,186 shares to Primary Capital and (iii) the receipt and the application of the estimated net proceeds of $22,000,000 (after deducting the underwriting discounts and commissions, the estimated offering expenses payable by us, and the fee payable to United Best), our pro forma consolidated net tangible book value at September 30, 2010, as adjusted, would have been $42,402,684 or $1.94 per share. This represents an immediate increase in pro forma consolidated net tangible book value to existing stockholders of $0.75 per share and an immediate dilution to new investors of $4.06 per share. Dilution per share represents the difference between the price per share to be paid by new investors for the shares of common stock sold in this offering and the pro forma consolidated net tangible book value per share immediately after this offering.

The following table illustrates this per share dilution:

Consolidated net tangible book value per share as of September 30, 2010	$	1.08
Assumed public offering price		6.00
Pro forma consolidated net tangible book value per share as of September 30, 2010		1.19
Increase in pro forma net tangible book value per share attributable to existing stockholders		0.11
Pro forma consolidated net tangible book value per share, as adjusted for this offering		1.94
Dilution per share to new investors	$	4.06

Assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and the fee payable to United Best:

a $1.00 increase in the assumed public offering price of $6.00 per share would increase (i) our pro forma consolidated net tangible book value after this offering by $3,750,000 ($4,166,667 less underwriter’s commission of $291,667 and fee to United Best of $125,000) and (ii) the dilution per share to new investors by $4.88; and

a $1.00 decrease in the assumed public offering price of $6.00 per share would decrease (i) our pro forma consolidated net tangible book value after this offering by $3,750,000 and (ii) the dilution per share to new investors by $3.23.

The following table sets forth the number of shares of common stock purchased, the total consideration paid, or to be paid to us, and the average price per share paid, or to be paid, by existing stockholders and by the new investors, at an assumed public offering price of $6.00 per share, the midpoint of the range set forth on the cover page of this prospectus, before deducting underwriting discounts and commissions and estimated offering expenses payable by us and the fee payable to United Best.

	Shares Purchased					Total Consideration					Average Price
	Number		Percent			Amount		Percent			Per Share
Existing stockholders		15,265,714		71.5	%	$	17,074,157		37	%	$	1.12
Shares issuable to noteholders immediately prior to closing of the offering		1,923,809		9	%	$	4,040,000		9	%		2.10
New investors in this offering		4,166,667		19.5	%		25,000,000		54	%		6.00
Total		21,356,190		100	%	$	46,114,157		100	%

If the underwriters’ over-allotment option to purchase common stock is exercised in full, the pro forma consolidated net tangible book value after giving effect to this offering would be $2.04 per share, and the dilution in pro forma consolidated net tangible book value per share to investors in this offering would be $3.96 per share. Furthermore, the number of shares of common stock held by existing stockholders would be 17,647,896, or 79% of the aggregate number of shares of common stock outstanding after this offering, and the number of shares of common stock held by new investors would be increased to 4,791,667, or 21% of the aggregate number of shares of common stock outstanding after this offering.

MARKET PRICE OF OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock does not trade and is not quoted on any public market. We have applied to have our common stock listed on the NASDAQ Capital Market. We expect our listing to be effective prior to the date of this prospectus. No assurance can be given that our listing application will be approved.

Holders

As of the close of business on January 31, 2011, we had approximately 212 shareholders of record of our common stock. The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.

Securities authorized for issuance under equity compensation plans

The following table summarizes the equity compensation plans under which our securities may be issued as of September 30, 2010:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted- average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans(excluding securities reflected in column (a))
Equity compensation plans approved by security holders		-		—			—
Equity compensation plan not approved by security holders (1)		400,000	$	(2	)		1,756,218
Total

(1) Our Board of Directors adopted the China SLP Filtration Technology, Inc. 2010 Stock Incentive Plan, or the 2010 Plan, on September 3, 2010. All our officers and key employees, directors and consultants, including those of our subsidiaries and affiliates, who are responsible for or contribute to the management, growth and/or profitability of our business, are eligible for participation in the 2010 Plan. Two Million One Hundred Eighty Six Thousand Two Hundred Eighteen (2,186,218) shares of our common stock (or such number of shares as shall equal ten percent of the shares of common outstanding on a fully diluted basis after giving effect to the offering and the conversion of the note) have been authorized and reserved for the 2010 Plan. We may issue stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards and other stock-based awards under the 2010 Plan.

(2) On September 3, 2010, under the 2010 Plan and in connection with his appointment as Chief Financial Officer, the Board granted Eric Gan an option to purchase 400,000 shares at an exercise price equal to the public offering price of this offering. The option shall vest and be exercisable as follows; 160,000 shares will vest and become exercisable on July 31, 2011; 120,000 shares will vest and become exercisable on July 31, 2012; 120,000 shares will vest and become exercisable on July 31, 2013. In the event that the employment is terminated within 12 months from the employment agreement date by the Company without cause, 160,000 shares shall be vested immediately on the termination date.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion together with our financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that are based on our current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors, including those which we discuss under “Risk Factors” and elsewhere in this prospectus.

Overview

This section discusses and analyzes our results of operations and financial condition, including the results and condition of our operating company, Foshan, which have been consolidated with our own results for all periods presented. This discussion is intended to help you understand our financial results and the current facts and trends that may cause them to change, so that you may make informed judgments about our likely financial results in the future and, insofar as those results may affect our stock price and informed investment decisions.

This discussion should be read in conjunction with our audited financial statements and accompanying notes as of September 30, 2010 and for the year then ended.

References to 2010 and 2009 refer to the fiscal years ended September 30, 2010 and 2009, respectively.

General

We are a PRC based manufacturer of nonwoven fabrics. We currently manufacture two types of PET nonwoven fabrics which are used in a wide range of products, including filtration products, road construction materials, home furnishings, automobile interior insulation and industrial packaging.

Our current PET products are sold primarily to PRC-based manufacturers which use our products as raw material components for end-products they sell to their customers. We recently developed a manufacturing process to manufacture polyphenylene-sulfide fiber, or PPS nonwoven fabric, which is the key product line around which our long-term growth strategy is centered.

Based on lab tests which we conducted internally we believe that our PPS nonwoven fabric is superior to other currently available high temperature filtration material because it is lighter, thicker, stronger, has higher air permeability and filtration efficiency and significantly cheaper to produce. Due to the superior characteristics of our PPS product coupled with the demand created by these new regulations, we believe that our PPS material will become a market leader for high temperature filtration applications. We expect to sell our PPS nonwoven products to operators of coal fired power plants, garbage incinerators and other heavy industrial plants.

We intend to continue to manufacture PET nonwovens but we expect that the sales of our PPS nonwoven fabrics will ultimately eclipse the sales of our existing PET nonwoven products and become our main product offering.

Our manufacturing facility, which is located in Foshan City, Guangdong Province, PRC, currently has three production lines for PET nonwovens with annual product capacity of 8,000 tons. We plan to begin commercial production of our PPS nonwoven fabric in early 2011 with the completion of our first PPS filament production facilities. We also plan to add two more PPS production lines in the latter part of 2011, which will bring our total overall production capacity to 11,600 tons per year.

Important Factors Affecting our Results of Operations

The most significant factors that could affect our financial condition, costs and results of operations in the future are:

Fluctuations in price of polyester: Polyester resin is the principal raw material used in our productions and its price fluctuations affect our business operations. For the year ended September 30, 2010, 98% of our raw materials consisted of polyester, the cost of which increased with the price of crude oil. The increase in the purchase price of our raw materials resulted in a reduction of gross profit by $0.97 million for the fiscal year 2010.

Our ability to successfully commercialize our PPS manufacturing process: Our future growth and profitability will depend on our ability to successfully commercialize our PPS manufacturing process. To date, we have not sold any PPS nonwoven products but expect sales to commence after we commence production of PPS nonwoven material in early 2011.

The effectiveness and market acceptance of our new product offerings. Market perception and acceptance of our PPS nonwoven materials by coal-fired power plants and other potential users as a filtration device for carbon and other emissions will largely dictate the rate at which our company will grow if at all.

Our ability to obtain additional financing. To continue to grow in the future, we will need to purchase more PPS production equipment which will require us to raise additional financing. As of the date of this prospectus, we believe the U.S. capital markets are facing many difficulties. Potential sources of additional financing may be unwilling or unable to provide us with the additional financing we need to fully carry out our expansion plans. If we are unable to obtain additional financing, we will fund our expansion with operating cash flow which may be inadequate to allow us to grow at our desired rate.

Degree of enforcement of new PRC Environmental Regulations. The degree to which the PRC government enforces its recently adopted regulations relating to carbon and other pollutant emissions by coal fired power plant operators and other plant operators that operate coal fired facilities that are not currently in compliance with those regulations will have an impact on the demand for our PPS bag filters.

Possible financial exposure resulting from our failure to contribute housing provident fund: Under PRC regulations we are required to open housing funds accounts and make monthly contributions of at least 5% of each employee’s average monthly income in the previous year. We have not contributed housing funds for our employees because this practice has been permitted by local authorities. The accumulated unpaid amount was approximately RMB 1.80 million (approximately $273,560) as of January 24, 2011. If the local authorities began to enforce these regulations and we are forced to contribute to the funds, our net income for fiscal year 2010 would be reduced by $16,439 and retained earnings would be reduced by $231,648. The housing funds administrative authorities are permitted to impose a fine of not less than RMB10, 000 (approximately $1,471) and no more than RMB50,000 (approximately $7,353) which would further reduce our net income by the amount of the fine.

Tax uncertainty. We believe that our taxable income and deductions were calculated pursuant to the PRC tax laws, regulations and local tax authority enforcement practice. However, changes in PRC tax laws and regulations may have an adverse and retroactive impact on our financial position and results of operations. In addition, the local tax authority at Foshan may change its interpretation and enforcement of the PRC tax laws and regulations which could have an adverse and retroactive impact on our financial position and results of operations. The company is not able to predict any such changes, and thus we cannot reasonably estimate the amount of the potential impact.

Recent Development

On January 31, 2011, we entered into note extension agreements with each holder of our outstanding convertible notes to extend the maturity date of the notes from February 12, 2011 to June 30, 2011, except for Lumen Capital LP who holds a convertible note in the principal amount of $100,000. We expect to repay Lumen Capital the principal amount of $100,000 and accrued interest when the note matures on February 12, 2011.

Results of Operations

Comparison of Fiscal Years Ended September 30, 2010 and 2009

The following table shows, for the periods indicated, information derived from our consolidated statements of income in US dollars and as a percentage of net sales (percentages may not add due to rounding). See the financial statements of the company and the related notes thereto and other financial information included elsewhere in this prospectus.

	Year Ended September 30,
	2010					2009
	Amount			%		Amount		%

Net sales	$	19,952,422			100	$	11,849,712		100
Cost of sales		13,772,843			69		7,906,614		67
Gross profit		6,179,579			31		3,943,098		33
SG&A expense		2,272,881			11		1,219,114		10
Bad debt expense (recovery)		-					11,497		0
Operating income		3,906,698			20		2,712,487		23

Other income (expenses)		(1,661,598	)		8		266,835		2
Income taxes		24,023					-
Net income	$	2,221,077			11	$	2,445,652		21

Net Sales

Net sales consisted of sales of needle punched PET nonwoven fabric and thermal calendared products. Our net sales for the year ended September 30, 2010 were $19,952,422, an increase of $8,102,710, or 68%, from prior year’s net sales of $11,849,712. The increase in net sales was largely attributable to higher sales volume of our newly launched needle-punched nonwoven fabric products. Sales of needle-punched PET products for 2010 were $8,618,407, an increase of $5,766,977, or 202%, compared to $2,851,430 for 2009. In addition, sales of thermal calendared PET materials for 2010 were $11,331,528, an increase of $2,543,161, or 29%, from $8,788,367 for 2009, which was mainly due to higher sales volume.

Cost of Sales

Cost of sales primarily consists of the cost of raw materials, labor and manufacturing overhead expenses.

Our cost of sales for 2010 was $13,772,843, an increase of $5,866,229, or 74%, from $7,906,614 for 2009. Cost of sales represented 69% of net sales for 2010 compared to 67% for 2009, reflecting the higher cost of our products sold in 2010 compared to 2009. Raw material cost increased to $10,937,772, an increase of $5,501,011 from $5,436,761 in 2009 of which production volume increase accounted for approximately 82%, or $4,525,506, and price increase contributed approximately 18%, or $975,505.

As a major component of our cost of sales, the price of raw materials increased in 2010 and contributed 18% of increased cost of sales. Improved demand for end use products in 2010 increased the price of polyester resin which is the principal raw material in our PET nonwoven fabric production. The rise in the price of polyester was more obvious in the later part of 2009. Given the recent rise of crude oil price and the fact that the global economy is recovering, we believe the price of our raw materials will stay at relatively high levels and will continue to adversely affect our PET product gross margin since our ability to pass the increased material cost to customers is limited.

Labor cost accounted for approximately 2% and 3% of the total cost of sales for 2010 and 2009 respectively, reflecting the Company’s effective labor cost control.

Manufacturing overhead expenses were approximately 19% of total cost of sales for 2010, compared to 27% of cost of sales for 2009 reflecting greater capacity utilization rates with the addition of our new production line in February 2009. Manufacturing overhead represented approximately 13% and 16% of the net sales for 2010 and 2009, respectively.

Gross Profit

Our gross profit was $6,179,579 in 2010, an increase of $2,236,481, or 57%, from $3,943,098 in 2009. The increase in gross profit resulted primarily from the increase in our net sales. As a percentage of net sales, gross profit was 31% in 2010, compared to 33% in 2009. The lower gross profit margin was primarily due to increase in raw material cost in 2010 from 2009, offset by improved production efficiency.

Selling, General and Administrative Expenses

Selling expenses include salaries, advertising expenses, rent, cost of manufacturing and all expenses directly related to producing and selling our products. General expenses include general operating expenses that are directly related to the general operation of the company, but excluding selling and administrative expenses. Administrative expenses include executive salaries and other expenses related to the overall administration of the company.

Selling, general and administrative expenses were $2,272,881 in 2010, an increase of $1,053,767, or 87%, from $1,219,114 in 2009 primarily due to (i) increases of $557,500 in legal and accounting fees; (ii) $310,840 in expenses incurred in our efforts to raise capital in the United States; and (iii) $170,308 in stock-based compensation expense.

Other Income and Expenses

Other income in 2010 includes interest income and income from revaluation of the fair value of the Company’s derivative liabilities, while other income in 2009 solely consists of interest income. Other expenses include primarily interest expense of $1,988,832 in 2010, an increase of $1,718,983, or 637%, from $269,849 in 2009. Interest expense as a percentage of net sales increased to 10% in 2010 from 2.3% in 2009. The increase in interest expense was mainly attributed to non-cash expenses recorded as a result of our adoption of derivative accounting rules under FASB ASC 815-40 to record the $4,140,000 of convertible loan notes. These accounting rules require us to record derivative liabilities (warrants) issued in conjunction with the privately placed bridge-loan notes which closed on February 12, 2010 and treat the expenses directly related to the debt financing as discount so that interest is periodically accreted from the discount to the gross amount of the notes issued at its maturity date. This non-cash accretion of interest accounted for $1,524,750, or 77%, of the total interest expense in 2010. Excluding accreted interest, interest expense for 2010 represents approximately 2% of our net sales in 2010.

Provisions under FASB ASC 815 also require us to measure at each reporting period the fair value of the warrants issuable in conjunction with the private placement of convertible notes closed in February 2010. The effect of the revaluation of warrants resulted in other income of $313,000 in 2010.

Income Tax

USA

The Company and its subsidiary and branch divisions are subject to income taxes on an entity basis on income arising in, or derived from, the tax jurisdiction in which they operate. Since the Company had no income generated in the United States, there was no tax expense or tax liability due to the Internal Revenue Service of the United States as of September 30, 2010 and September 30, 2009.

BVI

Hong Hui is incorporated under the International Business Companies Act of the British Virgin Islands and accordingly, is exempted from payment of British Virgin Island’s income taxes.

PRC

Pursuant to the PRC Income Tax Laws, the prevailing statutory rate of enterprise income tax is 25% for Foshan SLP. For 2008 and 2009 Foshan SLP enjoys tax free holidays. From January 2010 onwards, Foshan SLP is taxed at 25% of net income except for the 2010, 2011 and 2012 in which we receive a 50% discount on income tax.

The tax provision for fiscal year was $24,023. The company has recorded zero deferred tax assets or liabilities as of September 30, 2010 and September 30, 2009, net of tax allowance, because all other significant difference in tax basis and financial statement amounts are permanent differences.

Net Income

Net income was $2,221,077 in 2010, a decrease of $224,575, or 9%, from net income of $2,445,652 in 2009. The decrease was due to the non-cash interest expense derived from the convertible notes financing transaction which closed in February 2010. Excluding a $1,524,750 non-cash interest expense relating to accretion of the discounted convertible notes and $313,000 in income from revaluation of warrants issued in conjunction with the notes, net income increased by $987,175, or 40% from 2009.

Foreign Currency Translation Adjustments

Throughout 2010, the RMB rose steadily against the US dollar. As a result of the appreciation of the RMB, we recognized a foreign currency translation gain of $415,775. Given the uncertainty of exchange rate fluctuations, we cannot estimate the effect of these fluctuations on our future business, product pricing, results of operations or financial condition, but the fluctuation of the Renminbi may materially and adversely affect your investment if the current trend of appreciation of the RMB is reversed.

All of our revenue was generated and expenses were incurred in the PRC and Hong Kong in 2010 and were denominated in Renminbi. Our income statement accounts in 2010 were translated at the annual average exchange rate of $1 to RMB 6.8118 and the balance sheet items, except the equity accounts, were translated at the year-end rate of $1 to RMB 6.6912. The equity accounts were stated at their historical rate when the corresponding transactions occurred.

Net foreign currency translation gain was $415,775, or 2% of net sales, in 2010 as compared with the previous year’s net foreign currency translation losses of $57,078, or 0.5 % of net sales.

Liquidity and Capital Resources

The following table sets forth a summary of our net cash flow information for the periods indicated:

	Years Ended September 30,
	2010			2009
	(Consolidated)			(Consolidated)
Net cash provided by operating activities	$	4,411,689		$	2,700,162

Net cash (used in) investing activities	$	(5,230,563	)	$	(1,158,033	)

Net cash provided by (used in) financing activities	$	2,708,294		$	(600,498	)

Net cash inflow	$	1,997,653		$	930,078

We finance our business with cash generated from operations and use short-term bank loans to fund capital expenditures.

Working capital consists mainly of cash and equivalents, accounts receivable, advances to suppliers and inventory. Cash and equivalents, inventory and accounts receivable account for the majority of our working capital.

Our working capital requirements may be influenced by many factors, including our cash flow, competition, relationships with suppliers, and the availability of credit facilities and financing alternatives, none of which can be predicted with certainty.

At September 30, 2010, we had several bank loans in a total amount of $3.8 million (RMB25.4 million) with Agriculture Bank of China, Foshan Branch. These loans were repaid in December 2010. See Note 19 (“Subsequent Events”) to our consolidated financial statements for the current status of these loans.

On February 12, 2010, we completed a financing transaction in which we received net proceeds of $3,409,813 through a private placement of convertible notes and warrants to certain accredited investors.

Operating Activities

For the fiscal year ended September 30, 2010, net cash provided by operating activities was $4,411,689, representing an increase of $1,711,527, or 63%, from $2,700,162 for the fiscal year ended September 30, 2009. The increase was due primarily to an increase in net sales, improved collection of credit sales, increase in clients’ deposits and reduction of advance made to suppliers.

Investing Activities

During 2010, net cash used in investing activities was $5,230,563, an increase of $4,072,530 from $1,158,033 for 2009. The greater investment costs of 2010 were due to our purchases of equipment and expenditures related to outfitting our manufacturing facilities for new PPS production line.

Financing Activities

For 2010, net cash received in financing activities was $2,708,294, an increase of $3,308,792 compared with net cash used in financing activities of $600,498 for 2009. Cash received in 2010 represents net proceeds received from private placement of convertible notes offset by repayments of short term borrowings. Cash used in 2009 represents repayments of short term borrowings.

Loans and Credit Facilities

The balance of our outstanding short-term bank loans as of September 30, 2010 was $3,796,053, as compared with $4,578,409 as of September 30, 2009. We repaid $859,346 of short term bank loans in 2010.

Other than as disclosed in the financial statements, we had no long term debt, capital lease obligations, operating leases or any other long term obligations as of September 30, 2010.

On February 12, 2010, we entered into a note purchase agreement with certain accredited investors for the sale of convertible notes in the aggregate principal amount of $4,140,000 and warrants (which are exercisable only in certain circumstances), with net proceeds for $3.4 million after finance costs. The notes require quarterly interest payments at a rate of 10% per annum. The notes are convertible into shares of common stock at a 65% discount to the offering price upon consummation of a “qualified financing.” This offering is expected to be a “qualified financing.”

The notes were originally scheduled to mature on February 12, 2011. As discussed under “Recent Development” above, on January 31, 2011 we entered into note extension agreements with each of the note holders (other than Lumen Capital) to extend the maturity date of the notes to June 30, 2011. We plan to repay the note in the principal amount of $100,000 held by Lumen Capital on February 12, 2011.

The warrants become void if the notes automatically convert into common stock which is expected to occur upon consummation of this offering in the US capital market. The warrants are exercisable at any time during a five-year period commencing on the closing of a “financing,” which means the first sale (or series of related sales) by us of stock (or debt or equity securities convertible into stock), in a capital raising transaction, occurring after the maturity date (or the date the notes become due pursuant to a default, if earlier) with aggregate gross proceeds of at least $20,000,000. The warrants cannot be exercised if no financing is consummated within the five-year period after the issue date. Please see the section entitled “Our Corporate History - Private Placement” beginning on page 40 for a more complete discussion of the notes and warrants issued in the February 12, 2010 private placement.

Future Cash Commitments

Our planned expansion of our PPS manufacturing facilities in 2011 will require significant investment capital. We intend to use the net proceeds of this offering (i) to repay a short term loan in the amount of $3.9 million which was used as part of the purchase price of approximately $9.6 million for the build-out and purchase of a new production line to manufacture PPS materials; and (ii) to purchase two additional production lines to manufacture PPS materials. The three new production lines are expected to increase our annual output by 3,600 tons of nonwoven materials to 11,600 tons of nonwoven material. The estimated cost of the build out and purchase of all three production lines is approximately $20,000,000 in aggregate. In the future, we may need to raise additional capital if the proceeds from the financings and our operating cash flows are inadequate to continue our capital expansion plans.

Restatement of Previously Issued Financial Statements

In connection with the review by the staff of the Division of Corporation Finance of the Securities and Exchange Commission of the Public Offering Registration Statement, an error in our interim financial statements was identified in that we failed to record on our financial statements a liability of $75,000 owed to each of United Best and Primary Capital ($150,000 in total) for advisory services rendered in connection with our private placement of convertible notes which closed on February 12, 2010. We also noted that a grant of 30,000 restricted shares of common stock in June 2010 to one of our directors was not reflected in the financial statements originally issued.

Accordingly, on November 24, 2010, immediately following the filing of the Current Report on Form 8-K, we filed (i) an amendment on Form 10-Q/A for the period ended June 30, 2010 containing restated interim financial statements for the three and nine month periods ended June 30, 2010 and (ii) an amendment on Form 10-Q/A for the period ended March 31, 2010, containing restated interim financial statements for the three and six month periods ended March 31, 2010.

The principal effects of the restatements are as follows:

As of June 30, 2010, accrued liabilities increased by $150,000 and stockholders’ equity decreased by $150,000. Of this decrease, $150,000 is due to the recording of the $150,000 liability to United Best and Primary Capital.

As of March 31, 2010, accrued liabilities increased by $150,000 and stockholders’ equity decreased by $150,000.

We restated our selling, general and administrative expenses to reflect the fee of $150,000, which resulted in a reduction of income from operations, income before taxes, net income, and earnings per share for both the three months and six months ended March 31, 2010.

We restated our selling, general and administrative expenses to reflect the fee of $150,000 and stock-based compensation of $5,000, which resulted in a $5,000 and $155,000 reduction of income from operations, income before taxes, net income, and earnings per share for three and nine months ended June 30, 2010, respectively.

Critical Accounting Policies and Estimates

Management's discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. See Note 2 to our consolidated financial statements, “Summary of Significant Accounting Policies.” We believe that the following paragraphs reflect the more critical accounting policies that currently affect our financial condition and results of operations:

Method of Accounting

We maintain our general ledger and journals with the accrual method accounting for financial reporting purposes. Accounting policies adopted by us conform to generally accepted accounting principles in the United States and have been consistently applied in the presentation of financial statements, which are compiled on the accrual basis of accounting.

Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles in the United States 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 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 estimates.

Economic and political risks

Our operations are conducted in the PRC. Accordingly, our business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.

Our operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. Our results may be adversely affected by changes in political and social conditions in the PRC and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

Revenue recognition

Revenue represents the invoiced value of goods sold recognized upon the delivery of goods to customers. Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, and the seller’s price to the buyer is fixed or determinable and collectible.

Land use rights

Land use rights are stated at cost less accumulated amortization. Amortization is provided over the respective useful lives, using the straight-line method. The estimated useful life is 50 years.

Property, plant and equipment

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of plant and equipment are as follows:

Building and plant	20 years
Machinery	10 years
Office equipment and computers	5 years
Vehicles	10 years

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.

Accounting for the Impairment of Long-Lived Assets

The long-lived assets held and used by us are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Quantitative and Qualitative Disclosures About Market Risk

Increases in the price of crude oil have a negative impact on the cost of our raw materials. Given the recent rise in the price of crude oil and the fact that the global economy is recovering, we expect that the price of our raw materials will stay at relatively high levels due to the relatively high price of crude oil which may adversely affect our gross margin for our PET products as our ability to pass on the increased material costs to customers is limited. During 2010, all of our raw materials were purchased in the PRC. Because the raw materials for our new PPS products are expected to be sourced from the United States and Japan, we anticipate that, beginning in 2011, over 50% of our raw materials will be purchased from suppliers in the United States and Japan. Accordingly, changes in the value of the RMB relative to the dollar and yen will affect our production costs and gross profit in 2011. However, we believe the RMB will continue to appreciate against the dollar based on the increasing pressure from the US government and so the impact of foreign currency conversion will be favorable to us. In addition, any increase in the dollar cost of oil would be offset by what we believe will be an appreciation of the RMB against the dollar.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonable likely to have a current or future effect on our financial condition.

OUR CORPORATE HISTORY

Perpetual Technologies was organized as Molokai Enterprises, Inc., on November 27, 1996 under the laws of the State of Colorado. From 1996 to 2006, Molokai Enterprises had no active business operations. Molokai changed its domicile from Colorado to Delaware in April 2007 by merging with and into Perpetual Technologies, Inc., a Delaware corporation organized for that purpose on March 15, 2007. From March 15, 2007 until the February 12, 2010 share exchange transaction described below, Perpetual had no operations or substantial assets and was deemed to be a "blank check" or shell company.

On February 12, 2010, our company entered into two related and contemporaneous transactions pursuant to which the ownership of our company changed.

The first transaction involved the surrender and cancellation of 12,640,000 shares of common stock held by a number of our shareholders in exchange for $40,000 in cash paid by Joseph Nemelka, who was a director of our company at that time.

The second transaction involved a share exchange transaction between our company, Hong Hui Holdings Limited, or Hong Hui, and the shareholders of Hong Hui. At the time of the share exchange, Hong Hui owned, and currently still owns, all of the stock of Technic International Limited, or Technic, a Hong Kong holding company which, in turn, owns 100% of the stock of Foshan, the PRC operating company that conducts our current, active business operations. In the share exchange transaction, we acquired direct control of Hong Hui by issuing to the Hong Hui stockholders an aggregate of 14,510,204 shares of our common stock in exchange for all of the outstanding capital stock of Hong Hui. As a result of the share exchange transaction, we became the indirect, 100% shareholder of Technic and its wholly owned subsidiary, Foshan.

In connection with these transactions, our two former directors, Joseph Nemelka and Seth Winterton resigned and Li Jie and Chris Bickel, were appointed as our new directors. Our management was also replaced with Foshan’s management.

On February 12, 2010, our new board of directors approved (i) a one-for-five reverse split of our issued and outstanding common stock and (ii) the change of our name from Perpetual Technologies to China SLP Filtration Technology, Inc. Stockholders holding shares representing a majority of the votes entitled to be cast at a shareholders’ meeting consented in writing to these actions. The reverse split reduced the issued and outstanding shares of common stock from 75,818,571 to 15,235,714 shares. The reverse split and name change were effective on March 24, 2010.

Our current structure, after the reverse merger, is set forth in the diagram below:

Private Placement

On February 12, 2010, we completed a financing transaction in which we raised gross proceeds of $4,140,000 through a private placement of convertible notes and warrants to certain accredited investors.

The material agreements through which the private placement transactions were carried out, the transactions themselves, and the notes and warrants are described below. Full copies of the transaction documents for this private placement have been filed as exhibits to our Form 8-K dated February 12, 2010 on the SEC’s EDGAR database and the summary below is qualified in full by reference to such exhibits. In connection with the private placement, we engaged a placement agent and a financial advisor which received separate cash and equity-based compensation for their services. The financial advisor and placement agent are related parties. See sections entitled “Additional Disclosure Regarding Conversion of Notes and Exercise of Warrants” beginning on page 61 and “Certain Relationships and Related Transactions” beginning on page 85 for additional information regarding compensation to the placement agent and financial advisor.

Note Purchase Agreement

On February 12, 2010, immediately following the closing of a share exchange transaction, we entered into a note purchase agreement with certain accredited investors for the sale of convertible notes, in the aggregate principal amount of $4,140,000, and warrants (which are exercisable only in certain events and will become void if this offering is consummated). The closing of the sale of the notes and warrants occurred on February 12, 2010. The terms of the notes and warrants are set forth below. The note purchase agreement contains representations, warranties and covenants which are customary for transactions of this nature.

Terms of the Notes

The notes have the following material terms:

Maturity: The notes were originally scheduled to mature on February 12, 2011. On January 31, 2011 we entered into note extension agreements with each of the note holders (other than Lumen Capital) to extend the maturity date of the notes to June 30, 2011. We plan to repay the note in the principal amount of $100,000 held by Lumen Capital on February 12, 2011. If principal is not paid on maturity then 150% of the principal amount is payable.

Interest: 10% per annum payable quarterly increasing to 15% if there is a default. $204,464 out of the closing proceeds was placed in escrow to cover most of the interest due in the first six months.

Conversion: In the event of the closing of this offering (or any other equity or series of related financings resulting in aggregate gross proceeds to the company of at least $20,000,000 (or such lesser amount as shall be approved in writing by the holder(s) of notes evidencing at least 50% of the principal amount of the notes then outstanding)), prior to the maturity date of the notes, the principal amount of the notes converts automatically into the securities sold in that financing at a 65% discount to the offering price of such securities. At an assumed offering price of $6.00 per share, the notes will have a conversion price of $2.10 per share. The interest on the notes is payable in cash and does not convert into shares of common stock.

Terms of the Warrants

Set forth below are the material terms of the warrants issued at the closing:

Exercisable: The warrants become void if this offering is consummated. In the event that this offering is not consummated, the warrants are exercisable at any time during a five-year period commencing on the closing of a “financing,” which means the first sale (or series of related sales) by us of stock (or debt or equity securities convertible into stock), in a capital raising transaction, occurring after the maturity date (or the date the notes become due pursuant to a default, if earlier) with aggregate gross proceeds of at least $2,000,000. The warrants cannot be exercised if no “financing” is consummated prior to February 12, 2015.

Number of Shares: The warrants represent the right to purchase 8% of the total shares of common stock outstanding (on a fully-diluted basis) immediately after the closing of the financing.

Exercise Price: The warrants are exercisable at the price for which the shares of common stock (or common stock equivalent if derivative securities are sold) are sold in the financing. If the financing includes more than one type of security, the exercise price shall equal the lowest price per share of common stock or common stock equivalent included in the financing.

Limited Recourse Guaranty and Pledge Agreement

Our obligations under the note are guaranteed by Bestyield Group Limited, a BVI company controlled by Mr. Li, our chief executive officer, and Proudlead Limited, a BVI company controlled by Mr. Law, our President of Sales and a member of our Board of Directors, or the “management shareholders,” under a limited recourse guaranty which is secured by a pledge by the management shareholders of the 8,706,122 shares of our common stock received by the management shareholders in the reverse merger.

Registration Rights Agreement

Under the registration rights agreement, we agreed that if we file a registration statement in connection with a “qualified financing,” we will include in that registration statement for resale the securities issuable on conversion of the notes or the warrants, as the case may be, for an offering to be made on a continuous basis pursuant to Rule 415.

Accordingly, we are including 369,725 of the 1,923,809 shares underlying the notes in the aggregate principal amount of $4,040,000 (assuming a public offering price of $6.00 per share) in our resale prospectus.

In the event the SEC pursuant to Rule 415, does not permit us to register all of the applicable registrable securities in the registration statement, we will use our best efforts to register the registrable securities that were not registered in the initial registration statement, as soon as the SEC permits us to do so. In the case of an underwritten public offering, if the managing underwriter(s) or underwriter(s) reasonably objects to the inclusion of the registrable securities in any registration statement, then if we, after consultation with the managing underwriter, determine that the inclusion of such registrable securities would significantly harm the offering contemplated in such registration statement, and recommend inclusion in such registration statement of fewer or none of the registrable securities, then (x) the number of registrable securities included in the registration statement shall be reduced pro-rata among such holders (based upon the number of registrable securities requested to be included in the registration), or (y) none of the registrable securities shall be included in the registration statement. If securities are being offered for the account of other persons as well as us then the reduction shall not represent a greater fraction of the number of registrable securities than the fraction of similar reductions imposed on such other persons (other than the company).

If (a) we fail to file a registration statement within 30 days of a demand notice, the “demand file date” or (b) the registration statement is not effective within 180 days after filing (or, in the case of subsequent registration statements filed under Rule 415, 90 days after filing or 120 days in the event that registration statement receives a full review), we have agreed to pay the investors two percent (2%) of the aggregate principal amount of the notes for each month (or part thereof) that it is late (capped at 10%). No liquidated damages are payable with respect to any shares required to be omitted as a result of the operation of Rule 415.

BUSINESS

Overview

We are a manufacturer of nonwoven fabric in the PRC. Nonwovens are synthetic fabrics, such as felt or polyester, which are neither woven nor knitted, but instead made from long fibers, bonded together by chemical, mechanical, heat or solvent treatment.

We currently manufacture two types of PET nonwoven fabrics. Our PET nonwoven fabrics are used in a wide range of products, including filtration products, road construction materials, home furnishings, automobile interior insulation and industrial packaging.

We sell our nonwoven fabrics primarily to PRC-based manufacturers that incorporate our fabric products into end products which are sold to customers operating in the heavy industrial, automotive, construction and home furnishing industries. Given the broad range of applications for our products, we are not dependent on any single industry sector or customer to generate revenues. We have many active customers and our two largest clients in 2010, were Dalian Jier Linke Geotextile Material Co., Ltd. and Chendu Sanya Building Material Co., Ltd. which accounted for approximately 19% of our revenues. Our two largest customers in 2009, Chengdu Sanya and Xiantao Ruixin, accounted only for approximately 18% of our revenues in 2009.

Although we intend to continue to generate revenues from the sale of PET nonwovens, the key component to our growth strategy is the successful commercialization and sale of polyphenylene-sulfide fiber, or PPS, nonwoven fabric. PPS nonwoven fabric is a heat resistant, corrosion-proof and flame retardant nonwoven fabric and can be used in many different applications, including as the material for dust filter bags for pollutant dust removal in smoke stacks in coal-fired power plants, garbage incinerators and cement factories. We recently developed a manufacturing process to manufacture polyphenylene-sulfide fiber, or PPS nonwoven fabric, which is the key product line around which our long-term growth strategy is centered. We believe that this manufacturing process is proprietary and have applied for a process patent in the PRC and intend to apply for a process patent in the US and Europe.

We believe that although PPS filtration materials have been used since 1979 in bag filters that are attached to smoke stacks in many of the coal-fired boilers operating in Europe and the United States, less than 10% of the coal fired power plants operating in the PRC are equipped with dust removal filtration bags and less than 10% of the filtration bags in use were made from PPS fiber. (Source “China Power Industry”, issue 4, 2006, page 36.)

Under recently adopted PRC environmental regulations that are being imposed on operators of coal-fired power plants, garbage incinerators and cement factories, which came into effect in January 1, 2010, carbon and other emissions are required to be less than 50 milligrams per cubic meter by the end of 2010. Some of the larger, more developed cities for example Beijing and Tianjin, have adopted even more stringent rules requiring that emissions be less than 30 milligrams per cubic meter. (Source "Electric Power," May, 2008.)

We believe, based on an article published in China Nonwoven & Industrial Textile (CNIT) in 2010, that less than 10% of the coal-boilers in China were equipped with dust removal filtration bags and less than 10% of the filtration bags in use are made from PPS fiber.

Filtration bags offer these and other plant operators a cost effective way of meeting these new emission and dust pollutant standards in the PRC because the installation of bag filters is a significantly cheaper method of achieving compliance with these regulations than installing costly pollutant dust removal equipment such as engineered scrubbing systems, the installation of which would we believe be cost prohibitive for many of these smaller coal fired power plants and other polluters.

Based on laboratory tests which we conducted internally we believe that our PPS nonwoven fabric is superior to other high temperature filtration materials currently available because it is lighter, thicker, stronger, has higher air permeability and filtration efficiency and is significantly cheaper to produce. As nonwovens are sold by weight our product will also be cheaper as it is lighter. Due to the superior characteristics of our PPS product coupled with the demand created by these new regulations we believe that our PPS material will ultimately replace other high temperature filtration materials currently available in the market place, such as PTFE (or Teflon), fiber glass, P84 (polyimide), PBI (polybenzimidazole fiber), PMIA and PSA and the demand for our PPS nonwovens will be significant.

Comparison-Our PPS Product to Other Filtration Materials

		Our PPS Product			PPS needle punching felting			Metamax needle punching felting			P84 needle punching felting			PTFE needle punching felting
Gram weight（g/m2）(1)			450			500			500			500			800
Thickness (mm) (2)			2.2			1.8			2			2			2.5
Air permeability (L/m2/s) (3)		300~400			200～300			200～400			200～300			200～300
Break strength (N/5cm)(4)	Vertical		1400			1250			1300			1100			3260
	Horizontal		1250			1350			1460			1200			3300
Break elongate（%） (5)	Vertical		25			40			50			25			10
	Horizontal		30			60			55			35			15
Working temperature (6)	Continuous		190			190			204			260			260
	Moment		220			220			240			280			300
Price of fiber (in K USD$) (7)		$	14.68		$	20.56		$	22.03		$	55.80		$	41.12
Materials saved (%) (8)			0.0	%		10.0	%		10.0	%		10.0	%		43.8	%
Filtration Efficiency (mg/cbm) (9)		<30			50～100			50～100			50～100			50～100

(1) Gram weight: (g/m2) means grams per meter squared. The higher the gram per meter squared weight, the heavier the fabric/material.

(2) Thickness (mm): the higher the millimeter figure, the thicker the material.

(3) Air permeability: (L/m2/s) means liters per meter squared per second. The more liters that pass per second, the higher the permeability of the fabric/material.

(4) Break strength: (N/5cm) is a unit of measure to demonstrate breakage strength. 1 N ≈ 0.1 KG so that N/5cm = .02. So, a 1400 value = 28. The higher the value the stronger the material.

(5) Break elongate (%) refers to the amount of stretching of a fabric/material before breakage expressed as a percentage. So, a 25% value indicates the material can be stretched 25% prior to breakage.

(6) Working temperature means the continuous operating temperature that a fabric/material can operate in.

(7) Price of fiber (in K USD$) = Price of the fabric/material expressed as K USD$ ($1,000) per metric ton.

(8) Materials saved (%) = Referencing the SLP PPS Product as the denominator, the amount of material that can be saved by utilizing the more efficient PPS material as compared to the other materials.

(9) Filtration Efficiency (mg/cbm) = milligrams per cubic meter. The ability of the fabric/material to eliminate airborne particles. This figure is the minimum size of particles.

We plan to begin commercial production of our PPS nonwoven fabric using our patent pending process in the early part of 2011 with the addition of a high-tech production line with an annual output capacity of 1,200 tons. We plan to use the proceeds from this offering to purchase two additional production lines with additional annual output capacity of 2,400 tons. Although prototype bag filters made of our PPS product have been tested in laboratories, they have not been tested on site by any potential end user and we do not expect to develop prototypes for testing by any end user prior to beginning commercial production.

Our manufacturing facility, which uses manufacturing equipment imported from Germany, is located in Foshan City, Guangdong Province, PRC and occupies more than 10,000 square meters. We currently have three production lines for PET nonwovens with total annual capacity of 8,000 tons of nonwoven fabric.

Our Industry

We operate in the nonwoven segment of the technical textiles industry which is one of the fastest growing sectors of the textile industry worldwide.

Since 1985, the global market size of the technical textiles sector has grown at an average growth rate of 3.8% per year. Total consumption of technical textiles in 2008 reached 19.6 million tons and has been projected to reach 33.8 million tons in 2010 on a worldwide basis. (Source: Textile Lead).

China now manufactures about 20% of the world’s nonwovens and this market share is expected to reach 25% by 2015 according to statistics released by INDA (Association of the Nonwoven Fabrics Industry) in North America and EDANA (European Disposables and Nonwovens Association) in Europe.

Currently in the PRC, there are estimated to be 500-600 nonwovens manufacturers producing nonwovens on an estimated 1,000 to 1,500 lines. (Source: Chinese Technical Textiles and Nonwovens Industry, 2009).

We believe that there is a significant gap between the nonwovens industry in China and the nonwovens industry in Europe and the United States in terms of technical level, quality level, and competitiveness. China’s nonwovens market is still emerging and we believe has a large capacity to develop and expand and we believe that the following factors will contribute to growth in the nonwovens industry in China and our ability to grow as a company:

Lack of market segments: Nonwoven products are used in a variety of applications. Existing markets are expanding and new markets are emerging. China’s nonwoven industry production capacity is still concentrated on normal traditional products, such as polyester wadding, interlining, geo-textile, hygiene, packaging materials and normal filtration materials. Many companies lack clear market focus and are competing in the same market segments which have caused capacity concentration and fierce competition.

Strength for market and product development is not substantial: In China, market demand for higher technology based PET spun-bond product is currently over 40 million cubic meters. These products are currently all imported, mainly from Freudenberg (Taiwan). Some of the domestic Chinese companies have been trying to develop these products but, to date no such products have been launched. If these products are developed at a lower cost in the domestic market, then the Chinese domestic market for highly technical nonwovens will expand.

Our Growth Strategy

Our growth strategy centers around the following strategic initiatives:

Commence production of our PPS nonwoven fabric product. We plan to commence production of PPS nonwoven fabric using our patent pending manufacturing process in the early part of 2011 for sale to PRC-based operators of coal-fired power plants, garbage incinerators and other manufacturers that need to comply with recently adopted PRC environmental regulations.

Expand our manufacturing facilities. In order to commence production of PPS nonwoven fabric, we plan to significantly expand our manufacturing facilities and are currently installing a new production line to manufacture PPS nonwoven materials. We plan to acquire two new production lines with the proceeds of this offering. These three new production lines are expected to increase our total annual manufacturing capacity from 8,000 tons to 11,600 tons of nonwoven materials.

Develop, protect and commercialize our proprietary technology. We hold a number of authorized patents and have a patent application currently pending in the PRC for our PPS nonwoven manufacturing process which we believe is entitled to patent protection. We intend to apply for a process patent for this process in North America and Europe. We intend to capitalize on our proprietary technology by developing and commercializing our products for numerous applications and believe our proprietary technology gives us a competitive advantage and acts as a barrier to entry for our competitors.

Commence marketing and sale of our PPS products to coal fired power plants. To capitalize on China’s “green movement” we plan to focus our sales efforts for our PPS nonwoven material on coal-fired power plants as we believe it is currently the most suitable and largest market for PPS filtration materials. The sales to the coal-fired power plants will be made directly using our existing sales team. We also expect to double the size of our outside sales force to cover the PPS products and market.

Our Competitive Strengths

We believe our competitive strengths are as follows:

We offer high quality products with low production costs. We manufacture our products using what we believe to be proprietary, low cost manufacturing processes with quality manufacturing equipment which allows us to offer PET and PPS nonwoven products which have lower operational and production costs than our competitors’ products.

We believe our PPS material is a superior product. We believe, based on laboratory tests which we conducted internally, that our PPS nonwoven fabric is superior to other currently available types of PPS fabric because it is lighter, thicker, stronger, has higher air permeability and filtration efficiency and significantly cheaper to produce and will ultimately replace other high temperature filter materials, such as PTFE (or teflon), fiber glass, P84 (polyimide), PBI (polybenzimidazole fiber), PMIA and PSA. Similar to most new product offerings, widespread market acceptance of our PPS products for use in dust bag filters by coal fired power plants and other intended users is uncertain before a product is launched.

Our proprietary manufacturing processes present a significant barrier to entry for our potential competitors. We hold a number of authorized patents and have a patent application currently pending in the PRC, including a process patent for the manufacture of PPS nonwovens, and we intend to apply for a process patent in North America and Europe for our PPS nonwoven manufacturing process. Additionally, we have made significant investments in research and development and we believe these proprietary processes could give us a competitive advantage over our competitors and act as a barrier to entry.

We have efficient production and operations management. As a result of our manufacturing equipment and proprietary manufacturing processes, we believe that we exceed industry standards in productivity, reduction of variability and delivery lead time for our existing products. This results in fewer product warranty claims and greater customer satisfaction.

Our Products and Market

We currently manufacture two types of polyester, or PET, nonwoven fabrics: (i) PET continuous filament spun-bond thermal calendared nonwoven fabric, which we began manufacturing in 2006; and (ii) PET filament spun-bond needle-punched geo-membrane and waterproof fabrics, which we began manufacturing in 2009.

In our operations and in this prospectus, we use a variety of technical terms to describe our products based on the manufacturing process used or raw material included in our products. Some of these terms are described below:

“Continuous filament” refers to strands of polymer (plastic) that are continuous as opposed to chopped or cut to certain length.

“Spun Bond” refers to a process of melting polymer pellets melted producing continuous filaments that are cooled and stretched. The filaments are then cut and laid on a moving belt to form a web.

“Thermal Calendered” refers to a process for using heat to bond nonwoven fabric. A calendar is a machine consisting of cylinders or rolls that are stacked and heated to precise temperature. The nonwoven material is passed through (pressed) the cylinders and the polymer based material is bonded using heat and the partial melting of the polymer (plastic).

“Needlepunched” refers to a process where precision cut fibers are distributed onto and across a mesh substrate that is moving. The fibers are then needled (bound together mechanically) by an oscillating needle board (the needle board consists of thousands of evenly spaced needles). The fibers are mechanically bonded by barbed needles entangling the fibers. The density of the fabric is controlled by the number of needle boards used.

“Geo-membranes” refers to types of nonwoven fabric that are permeable fabrics which are designed and applied to be permeable in one direction only. Geo membranes provide a waterproof barrier that allows moisture to penetrate (drain) from one direction while limiting or eliminating the penetration (drainage) from the opposite direction.

Polyester (PET) filament spun-bond thermal calendared nonwoven fabrics.

Our polyester (PET) filament spun-bond thermal calendared nonwoven fabric is made from polyester and performs effectively in high temperatures. It is anti-corrosive, has a long lifespan (between 1 to 2 years for filtration, 5 to 10 years for automotive applications, and 5 years for other applications) and maintains its shape and penetration. This nonwoven is used for filtration and water-drainage, packing and automobile interior decoration and insulation.

Polyester (PET) filament spun-bond needle-punched geo-membrane and waterproof materials.

Geo-membranes are used in engineering, heavy construction, building and pavement construction, hydrogeology and environmental engineering. Geo-membranes are permeable fabrics which have the ability to separate, filter, reinforce, protect and/or drain. These products have a wide range of applications and are currently used in many civil engineering applications including the construction of roads, airfields, railroads, embankments, retaining structures, reservoirs, canals, dams, soil bank protection and coastal engineering.

Our geo-membrane products are made from polyester and are primarily used in the construction industry to improve soil strength and for roof waterproofing. Geo-membranes can be used as a cost-effective alternative to improve soil strength instead of the conventional manner of soil nailing which is a technique for stabilizing slopes and for constructing retaining walls from the top down. With the use of geo-membrane, steep slopes can be planted with vegetation to enhance the aesthetic value. In addition, our geo-membrane product line is used for roof waterproofing based on its excellent water resistant qualities and performance.

In February 2009, we installed a production line with annual capacity of 4,000 tons for the production of polyester (PET) filament, needle-punched, geo-membrane and waterproof materials

PPS nonwoven fabric product

Our growth strategy centers around the production and commercialization of our PPS nonwoven products which are manufactured using a proprietary continuous filament, spun-bond, needle-punched manufacturing process which we recently developed.

Although PPS filtration materials have been used since 1979 in bag filters that are attached to smoke stacks in nearly 80% of the coal-fired boilers operating in Europe and the United States, the use of bag filters made from PPS fabric is not currently widespread in China. (Source “China Power Industry”, issue 4, 2006, page 36 and http://www.resinda.com/product2.asp?brand_id=10&series_id=57)

Our proprietary PPS manufacturing process involves a PPS slice purification technique designed to get sufficiently pure raw materials to produce PPS filtration materials. As part of this process we have developed web formation techniques so that filaments can be used to increase strength and short fibers are no longer necessary. PPS nonwovens made from filaments are stronger than PPS nonwovens made from short fibers.

Our PPS material is produced by the filament spun-bond needle-punched method. Our product can bear temperatures of up to 230 degrees Celsius and is resistant to degradation caused by exposure to acid, alkali or oxidization. In comparison to other high temperature filtration materials, our product has a longer life (3 years at 190 - 230 degrees Celsius), is stronger (because we use filaments rather than short fibers), and has lower operation and production costs.

Market Demand for PPS Products

Under PRC environmental regulations that became effective on January 1, 2010 and which are being imposed on operators of coal-fired power plants, garbage incinerators and cement factories, carbon and other emissions are required to be less than 50 milligrams per cubic meter by the end of 2010. Some of the larger, more developed cities, for example Beijing and Tianjin, have adopted even more stringent rules requiring that emissions be less than 30 milligrams per cubic meter. (Source: "Electric Power” May, 2008).

We believe, based on an article published in China Nonwoven & Industrial Textile (CNIT) in 2001, that less than 10% of the coal-boilers in China were equipped with dust removal filtration bags and of the filtration bags in use less than 10% are made from PPS fiber.

Initially, we intend to market our PPS nonwovens to the coal-fired power plants in the PRC as we believe that this is the largest and most immediately accessible market for our PPS filtration materials. After we have established a foothold in that market, we intend to begin marketing our PPS nonwovens to cement factories and waste incinerators.

PTFE (or teflon), fiber glass, P84 (polyimide), PBI (polybenzimidazole fiber), PMIA and PSA are other materials that are also used to make needle-punched felt that is suitable for high temperature applications such as in bag filters for coal-fired power plants. In comparison to these other high temperature filter materials, we believe, based on laboratory testing, that our PPS nonwoven fabric is stronger, has lower production and operating costs, and has higher filtration efficiency.

Due to the characteristics of our PPS product coupled with the demand created by these new regulations, we believe that our PPS material will ultimately replace other high temperature filtration materials currently available in the market place, such as PTFE (or teflon), fiber glass, P84 (polyimide), PBI (polybenzimidazole fiber), PMIA and PSA and become a widely used filtration material for use in high temperature environments such as coal-fired power plants, garbage incinerators and cement factories.

We have been supported by the Chinese SEPA (State Environmental Protection Agency) in the development and application of our PPS fabric for the coal fired power plants. Our PPS fabric utilized in the bag filter application is the recommended solution to the carbon emissions standard by SEPA. Mr. Su Lei, one of our directors, is a government official within SEPA and has direct responsibility for implementing the recently introduced carbon emission standards at coal fired power plants. With the support of Mr. Su, we have introduced our material as the solution to the carbon emissions control problem to dozens of coal fired power plants in China. All of these meetings resulted in interest in our PPS fabric and the majority of the coal fired power plants we have met with have given us indications of specific purchasing interests as soon as we produce the PPS fabric material in our new facility.

Our Manufacturing Facility and Production Lines

We currently operate three spun-bond production lines. Two of these production lines are thermal calendared lines with annual capacity of 4,000 tons of polyester filament, thermal calendared, nonwoven fabric. The third spun-bond line is a needle-punched production line which commenced operation in February 2009. This production line has an annual capacity of 4,000 tons of polyester filament, needle-punched, geo-membrane and waterproofing material. Currently we have total annual production capacity of 8,000 tons.

We are adding capacity to our existing manufacturing facility with a construction project to increase the factory size, which will house our new PPS lines. A new production line is currently being installed and is expected to be completed in February 2011. We plan to order and install two additional PPS lines using the proceeds of this offering. These three production lines will have an annual output capacity of 3,600 tons of PPS nonwoven material. We have obtained approval from the local foreign trade and economic cooperation bureau to install these three new production lines for this total output capacity. To comply with PRC environmental regulations, we are required to obtain a construction commencement approval from the local environmental protection bureau for the installation of a new production line currently under construction before we begin installation.

Quality Control

We received the ISO9001-9002 Quality Management System Certification in 2003 and again in 2009. We adopted what we believe to be the highest quality standards in the industry and maintain quality control and product quality at high levels. We have strictly embraced the ISO9001 Management System Standards in order to integrate our quality management process and enhance the management system and manufacturing process. We closely inspect our products to guarantee quality according to Q/NHJL1-2008 Enterprise Quality Standards and strictly control the manufacturing process and quality control before any products leave our factory.

Our Customers

We sell our existing products to over 200 customers primarily in the PRC, and also internationally, to manufacturers and converters, which incorporate our products into their finished goods.

In fiscal year 2010, approximately 84 of our net sales were to entities in the PRC and approximately 7% and approximately 9% were made to customers in North America and Europe and other regions, respectively. In fiscal year 2009, approximately 81% of our net sales were to entities in the PRC and approximately 6% and approximately 7% were made to customers in North America and Europe, respectively.

Dalian Geolink Geotextile Material Co., Ltd., our largest customer, accounted for approximately 10.3% of our 2010 net sales. In fiscal year 2009, net sales to this customer accounted for 4.92% of our net sales.

Sales to our top 20 customers represented approximately 65% of our total fiscal year 2010 net sales.

The following chart shows our top ten customers in fiscal year 2010:

Name

Location

Product

Type

Application

Revenue

(USD$)

Percentage

of Sales

Geolink Geotextile Material Co., Ltd

Dalian

Geotextile

Construction

2,054,787

10.30

Chendu Sanya Building Material Co., Ltd.

Chengdu

Geotextile

Construction

1,816,293

9.10

WuJiang Jing shan Fabric

Suzhou

PET

Filtration

1,731,611

8.68

Pentair Water Pool & Spa Inc.

USA

PET

Filtration

1,322,095

6.63

Zhuzhou Shidai

Shanghai

PET

Construction

1,047,566

5.25

Shanghai Rundong Nonwoven Fabric Co., Ltd.

Shanghai

PET

Filtration

856,147

4.29

Xiantao Ruixin

Hubei

Geotextile

Construction

760,395

3.81

Guangzhou Baiyun Meihao Filter Cleaner Factory

Guangzhou

PET

Filtration

560,284

2.81

Nordic Air Filtration A/S

Denmark

PET

Filtration

486,086

2.44

Nan Hai Ying Sheng Trading Ltd.

Guangdong

PET

Filtration

452,243

In fiscal year 2009, approximately 81% of our net sales were to entities in the PRC and approximately 6% and approximately 7% were made to customers in North America and Europe, respectively.

Chengdu Sanya, our largest customer, accounted for approximately 9% of our fiscal year 2009 net sales.

Sales to our top 20 customers represented approximately 49% of our total fiscal year 2009 net sales.

The following chart shows our top ten customers in fiscal year 2009:

Name

Location

Product

Type

Application

Revenue

(USD$)

Percentage of

Sales

Chendu Sanya building Material Co., Ltd.

Chengdu

Geotextile

Construction

1,068,438

9.01

Xiantao Ruixin

Xiantao

Geotextile

Construction

1,037,883

8.75

Sichuan Tianqiang

Sichuan

Geotextile

Construction

706,286

5.95

Geolink

Dalian

Geotextile

Construction

583,192

4.92

Shenzhen Yaming Civil Engineering Equipment Co.,

Shenzhen

PET

Filtration

570,567

4.81

Pentair Water

USA

PET

Filtration

517,467

4.36

Guangzhou Baiyun Meihao Filter Cleaner Factory

Guangzhou

PET

Filtration

435,380

3.67

Shanghai Rundong Nonwoven Fabric Co., Ltd.

Shanghai

PET

Filtration

422,559

3.56

Foshan Nanhai Yingsheng Trading Co., Ltd.

Foshan

PET

Trading

257,546

2.17

Guangzhou Groundsill Basis Engineering Co., Ltd.

Guangzhou

PET

Filtration

227,259

1.92

Raw Materials

The primary raw material that we use to manufacture most of our products is polyester resin. The price of polyester resin fluctuates based on capacity, demand and the price of crude oil.

Our major suppliers of raw materials are Foshan Chemical Fibers Co., Ltd., Kaiping Chunhui Co., Ltd., and Zhuhai Yuhua Polyester Co., Ltd. We believe that the loss of any one or more of our suppliers would not have a long-term material adverse effect on our business because other manufacturers with whom we conduct business would be able to fulfill our requirements. We do not have long term supply contracts with any of our suppliers of raw materials.

During fiscal years 2010 and 2009, we paid approximately$10.9 million and $5.6 million, respectively, for the purchase of raw materials.

Our PPS product will be made from high quality polyphenylene sulfide resin, which we intend to purchase in the United States. Accordingly, the cost of this raw material will fluctuate with the value of the RMB against the dollar.

Sales and Marketing

Our nonwoven products are distributed in 20 provinces in the PRC. In 2003, we began selling our products in Europe, North America and South East Asia.

In fiscal year 2010, approximately 84% and 16% of our net sales were generated from sales made in the PRC and internationally, respectively, compared to approximately 81% and 19%, respectively, in fiscal year 2009.

As of September 30, 2010, we employed 11 direct sales representatives, 8 of whom are engineers who have advanced technical knowledge of our products and the applications for which they are used. 7 of these sales representatives are responsible for national sales and 4 are responsible for international sales. We plan to double the size of our sales force for the PPS product line in the next year to take advantages of anticipated market for our products. Representatives receive a salary plus commission of the revenues they generate.

Our sales process consists of identifying potential customers through cold calls, responses to marketing efforts, and customer referrals. Once a potential customer is identified, our sales people aid in identifying the prospect’s technical requirements and help the customer’s engineers to produce drawings of the finished products desired. Armed with this technical information, our sales personnel then quote pricing, production quantities, and lead times. Most of our customers are repeat customers and the sales force is also responsible for after-sale support, including quality assurances, dispute resolution, and relationship-building.

We promote our products primarily through exhibitions, internet advertising and marketing, and referrals from existing customers as well as suppliers.

We intend to capitalize on China’s “green” movement. We will focus our sales efforts for our PPS nonwoven fabric material on operators of coal- fired power plants as this is currently the most suitable and largest market for PPS filtration materials. The sales to the coal-fired power plants will be made directly using our existing sales team and sales process described above.

Research and Development

Our research and development department has what we believe to be one of the strongest research and development capabilities in the development of products, processes and equipment in the nonwovens industry in China.

As of September 30, 2010, our research and development staff consisted of 20 scientists, professional, engineering and technical personnel. Our research and development team is lead by Mr. Yao Mu, a senior engineer in the industry and the former president of Northwestern Polytechnical University.

We spent approximately $200,000 for each of the last two fiscal years on research and development activities.

In addition, we believe that each of our senior managers possesses a comprehensive technical background. Mr. Li Jie, our chief executive officer and a senior engineer is a certified chemical engineer, the Associate President of the China Industrial Textile Association and is considered an expert in his field. His independent research has been funded by the Central Government. Mr. Ye Xi-Ping, Vice President of Production, is a senior engineer and certified automation engineer.

Intellectual Property

We have three utility model patents and one patent application:

Name	Applicant	Patent Application Date	Patent Application Number	Basis for patent	Status

Polyphenylene sulfide nonwoven spunbond needle production method and device	Foshan SLP Special Materials Company	January 26, 2010	2010101026602	Invention	Pending

Tube-type air distraction apparatus	Dalian Huayang Chemical Fiber Engineering technology Co., Ltd	March 12, 2009	200920011528.3	Utility model	Authorized

New spinning box structure	Dalian Huayang Chemical Fiber Engineering technology Co., Ltd	March 12, 2009	200920011529.8	Utility model	Authorized

Lapper	Dalian Huayang Chemical Fiber Engineering technology Co., Ltd	March 19, 2009	200920012058.2	Utility model	Authorized

The three utility model patents were applied for and were originally owned by Dalian Huayang Chemical Fiber Engineering Technology Co., Ltd., or Dalian. Dalian has taken steps to transfer the three utility patents to Foshan and the State Intellectual Property in the PRC approved the transfer of these three utility patents from Dalian to Foshan on March 29, 2010.

The duration of utility model rights in the PRC is 10 years from the application date and the duration of invention rights in the PRC is 20 years from the application date.

Our patent application for our process invention is currently pending. No significant patents are expected to expire in the next five years. We expect that additional patent applications will be filed as more processes are developed and specific applications are identified.

We have the following registered trademark in the PRC:

Trademark	Registration Number	Term of Validity
Jinglong Nonwoven	3571234	October 21, 2005 to October 20, 2015
Si Le Pu	7161478	September 28, 2010 to September 27, 2020
Graphic	7162185	October 14, 2010 to October 13, 2020

We have the following additional trademark application:

Trademark Application		Application Number		Application Date
S.L.P		7161477		January 12, 2009

To safeguard our proprietary knowledge, trade secrets, and technology, we rely heavily on trade secret protection and non-disclosure/confidentiality agreements with our employees, consultants and third party collaboration partners with access to our confidential information.

Competition

We primarily face domestic competition in our industry. Our main competitors in the PRC are Jiangxi Guoqiao Industrial Corporation Limited and Shaoxing Yaolong Spunbonded Nonwoven Technology Co., Ltd. We compete based on our reputation for quality, product innovation, performance, service and technical support.

Competitors in PPS nonwoven fabric industry will be other manufacturers of PPS material and other materials that are suitable to make bag filters in coal-fired power plants, garbage incinerators and cement plants and other potential end users.

Environmental Matters

As a manufacturer we are subject to a broad range of national, provincial and local laws and regulations relating to the pollution and protection of the environment. Among the many environmental laws applicable to us are laws relating to air emissions, wastewater discharges and the handling, disposal and release of solid and hazardous substances and wastes.

In addition, we are required to obtain a construction commencement approval and a completion examination approval for each of our three new production lines. We are adding capacity to our existing manufacturing facility with a construction project to increase the factory size, which will house our new PPS line(s). A new production line is currently being installed. The installation is expected to be completed in February 2011. We plan to order and install two additional PPS lines using the proceeds of this offering. We have obtained approval from the local foreign trade and economic cooperation bureau to install these three new production lines for this total output capacity. To comply with PRC environmental regulations, we are required to obtain a construction commencement approval from the local environmental protection bureau for the installation of a new production line currently under construction before we begin installation.

Insurance

We maintain worker's insurance and social welfare insurance for our employees. Our operating subsidiary, Foshan, has not purchased social insurance for all of its employees, as of January 24, 2011, the accumulated unpaid amount was approximately RMB 1.50 million (approximately $227,965). If the local labor authority orders us to pay unpaid insurance premiums, we may become obligated to do so thereby increasing our labor costs. We provide life insurance to our executive officers and D & O insurance for two of our independent directors. We do not presently maintain product liability insurance. We maintain property and equipment insurance, however, it does not cover the full value of our property and equipment, which leaves us exposed in the event of loss or damage to our properties or claims filed against us. Other than the above mentioned, we do not maintain any other business or liability insurance.

Employees

As of September 30, 2010, we had a total of 176 employees, including over 20 engineers. The following chart shows the number of our employees involved in the various aspects of our business:

Category	Number of Employees
Manufacturing		109
Sales and Marketing		11
Research and Development		5
Administrative		11
Finance		4
Quality Control		8
Equipment		15
Logistics		13

Employee compensation is composed of a salary plus subsidies based on position, education level, length of service and performance.

PRC Government Regulations

Business license

A company that conducts business in the PRC must have a business license that usually prescribes a scope of business likely to be conducted. Our business license covers our present business to manufacture and sell nonwoven fabrics overseas and domestically. Prior to expanding our business beyond the scope of our business license, we are required to apply for and receive approval from the PRC government.

Employment laws

On June 29, 2007, the Standing Committee of the National People’s Congress of the PRC promulgated the Labor Contract Law of PRC, or the Labor Contract Law, which became effective as of January 1, 2008. On September 18, 2008, the PRC State Council issued the Implementing Rules for the PRC Labor Contract Law, which became effective as of the date of issuance. The Labor Contract Law and its implementing rules impose requirements concerning, among others, the types of contracts to be executed between an employer and its employees and establish time limits for probationary periods and for how long an employee can be placed in a fixed-term labor contract. The Labor Contract Law and its implementation rules also impose greater liabilities on employers, require certain terminations to be based upon seniority rather than merit and significantly affect the cost of an employer’s decision to reduce its workforce. In addition, according to the Labor Contract Law and its implementing rules, if an employer intends to enforce the non-compete provision with its employees in the labor contracts or confidentiality agreements, it has to compensate its employees on a monthly basis during the term of the restriction period after the termination or ending of the labor contract. The Labor Contract Law also requires employers in most cases to provide a severance payment to their employees after their employment relationships are terminated. Due to the limited period of effectiveness of the Labor Contract Law and its implementing rules and the lack of clarity with respect to their implementation and potential penalties and fines, it is uncertain how it will impact our current employment policies and practices.

Environmental regulations

We are subject to various national and local environmental laws and regulations, including those governing the use, discharge and disposal of hazardous substances in the ordinary course of our manufacturing process. The major environmental regulations applicable to us include the PRC Environmental Protection Law, the PRC Environmental Impact Assessment Law, the PRC Regulation on the Administration of Construction Project Environmental Protection, the PRC Law on the Prevention and Control of Water Pollution and its Implementation Rules, the PRC Law on the Prevention and Control of Air Pollution and its Implementation Rules, the PRC Law on the Prevention and Control of Solid Waste Pollution, and the PRC Law on the Prevention and Control of Noise Pollution.

In accordance with the PRC Environmental Impact Assessment Law and the PRC Regulation on the Administration of Construction Project Environmental Protection, we are required to obtain a construction commencement approval and a completion examination approval for each of our three finished production lines and we are also required to obtain a construction commencement approval from the local environmental protection bureau for one of our production lines that is currently under construction. We have received construction commencement approval and the completion examination approval for our three finished production lines. However, we have not obtained the construction commencement approval for the new production line under construction and the pollution emission permits from the local environmental protection bureau.

On November 9, 2010, we submitted the application for the construction commencement approval for the new production line under construction to the local environmental protection bureau and on November 10, 2010, we received comments from them requesting us to complete the environment impact assessment of the new production line before submitting the application for the construction commencement approval. The environmental impact assessment is currently being conducted by a third party authorized by the local environmental bureau. We anticipate that it will be completed within 120 days from commencement (on or before March 10, 2011), but we cannot assure you that this will be the case. Once the environmental impact assessment is completed, we intend to resubmit the application for the construction commencement approval together with the environmental impact assessment to the local environmental protection bureau. We anticipate that the construction commencement approval will be issued within 60 days from the submission date but we cannot assure that this will be the case.

Patent protection in China

The PRC’s intellectual property protection regime is consistent with those of other modern industrialized countries. The PRC has domestic laws for the protection of rights in copyrights, patents, trademarks and trade secrets.

The PRC is also a signatory to most of the world’s major intellectual property conventions, including:

—

Convention establishing the World Intellectual Property Organization (WIPO Convention) (June 4, 1980);

—

Paris Convention for the Protection of Industrial Property (March 19, 1985);

—

Patent Cooperation Treaty (January 1, 1994); and

—

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) (December 11, 2001).

Patents in the PRC are governed by the China Patent Law and its Implementing Regulations, each of which went into effect in 1985. Amended versions of the China Patent Law and its Implementing Regulations came into effect in 2008 and 2010, respectively.

The PRC is signatory to the Paris Convention for the Protection of Industrial Property, in accordance with which any person who has duly filed an application for a patent in one signatory country shall enjoy, for the purposes of filing in the other countries, a right of priority during the period fixed in the convention (12 months for inventions and utility models, and 6 months for industrial designs).

The Patent Law covers three kinds of patents, namely, patents for inventions, utility models and designs. The Chinese patent system adopts the principle of first to file. Therefore, where more than one person files a patent application for the same invention, a patent can only be granted to the person who first filed the application. Consistent with international practice, the PRC only allows the patenting of inventions or utility models that possess the characteristics of novelty, inventiveness and practical applicability. For a design to be patentable, it cannot be identical with or similar to any design which, before the date of filing, has been publicly disclosed in publications in the country or abroad or has been publicly used in the country, and should not be in conflict with any prior right of another.

PRC law provides that anyone wishing to exploit the patent of another must enter into a written licensing contract with the patent holder and pay the patent holder a fee. One broad exception to this rule, however, is that, where a party possesses the means to exploit a patent but cannot obtain a license from the patent holder on reasonable terms and in reasonable period of time, the PRC State Intellectual Property Office, or SIPO, is authorized to grant a compulsory license. A compulsory license can also be granted where a national emergency or any extraordinary state of affairs occurs or where the public interest so requires. The patent holder may appeal such decision within three months from receiving notification by filing a suit in a people’s court.

PRC law defines patent infringement as the exploitation of a patent without the authorization of the patent holder. Patent holders who believe their patent is being infringed may file a civil suit or file a complaint with a PRC local Intellectual Property Administrative Authority, which may order the infringer to stop the infringing acts. A preliminary injunction may be issued by the People’s Court upon the patentee’s or the interested parties’ request before instituting any legal proceedings or during the proceedings. Damages in the case of patent infringement is calculated as either the loss suffered by the patent holder arising from the infringement or the benefit gained by the infringer from the infringement. If it is difficult to ascertain damages in this manner, damages may be reasonably determined in an amount ranging from one or more times the license fee under a contractual license. The infringing party may be also fined by the Administration of Patent Management in an amount of up to four times the unlawful income earned by such infringing party. If there is no unlawful income so earned, the infringing party may be fined in an amount of up to RMB200,000, or approximately $29,500.

Value added tax

Pursuant to the Provisional Regulation of China on Value Added Tax and their implementing rules, all entities and individuals that are engaged in the sale of goods, the provision of repairs and replacement services and the importation of goods in China are generally required to pay VAT at a rate of 17.0% of the gross sales proceeds received, less any deductible VAT already paid or borne by the taxpayer. When exporting goods, the exporter is entitled to a portion or all of the refund of VAT that it has already paid or borne. We are subject to the foresaid rules, and currently we are required to pay VAT at a rate of 17% in our sale or importation of goods while we are entitled to VAT refund at the rate of 16% for our exported goods. We do not enjoy any VAT deduction or exemption treatment.

Foreign currency exchange

Under the PRC foreign currency exchange regulations applicable to us, the Renminbi is convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions. Conversion of Renminbi for capital account items, such as direct investment, loan, securities investment and repatriation of investment, however, is still subject to the approval of the PRC State Administration of Foreign Exchange, or SAFE. Foreign-invested enterprises may only buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign exchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from the SAFE. Capital investments by foreign-invested enterprises outside of China are also subject to limitations, which include approvals by the Ministry of Commerce, the SAFE and the National Development and Reform Commission. We currently do not hedge our exposure to fluctuations in currency exchange rates.

Mandatory statutory reserve and dividend distributions

Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10.0% of its after-tax profit based on PRC accounting standards each year for its general reserves until the cumulative amount of such reserves reaches 50.0% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.

Properties

Our manufacturing facility is located in Foshan City, Guangdong Province, PRC and has over 10,000 square meters of operating space on 33,074 square meters of land. Our land use right was granted by Nanhai State-Owned Land Resource Bureau in 2002 and expires in October 2052. If we want to continue to use the land after the expiration date, we must apply for an extension at least one year prior to the expiration of the granted land use right.

All land in the PRC is owned by the state or rural collective economic organizations and cannot be sold to any individual or entity. Instead, the government grants or allocates land users a “state-owned land use right.”

Granted land use rights are provided by the government in exchange for a grant fee, and carry the rights to pledge, mortgage, lease, and transfer within the term of the grant. Land is granted for a fixed term, generally 70 years for residential use, 50 years for industrial use, and 40 years for commercial and other use. The term is renewable in theory. Unlike the typical case in Western nations, granted land must be used for the specific purpose for which it was granted.

Allocated land use rights are generally provided by the government for an indefinite period (usually to state-owned entities) and cannot be pledged, mortgaged, leased, or transferred by the user. Allocated land can be reclaimed by the government at any time. Allocated land use rights may be converted into granted land use rights upon the payment of a grant fee to the government.

Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings in the ordinary course of our business. We are currently not aware of any legal proceedings in which the ultimate outcome, in our judgment based on information currently available, would have a material adverse affect on our business, financial condition or operating results.

ADDITIONAL DISCLOSURE REGARDING CONVERSION OF NOTES AND EXERCISE OF WARRANTS

As disclosed in more detail under “Our Corporate History-Private Placement” above, we issued convertible notes and warrants to certain accredited investors in a private placement which closed on February 12, 2010. The tables below present some additional information regarding the notes and warrants and their impact on this offering.

If this offering is completed, the notes will convert into shares of our common stock at a 65% discount to the public offering price. In the event this offering is not completed and the notes do not convert into common stock, we intend to repay the notes at maturity. The notes were originally scheduled to mature on February 12, 2011, but all noteholders, except Lumen Capital which is the holder of a note in the principal amount of $100,000, have agreed to extend the maturity date to June 30, 2011. We have paid the interest due on the notes for quarters ended March 31, June 30, September 30, 2010 and December 31, 2010. We believe that we will be able to obtain a credit line sufficient to pay off the principal and interest due on the notes at maturity. We cannot, however, assure you that this will be the case. See the risk factor entitled “If we cannot extend or renew our currently outstanding short-term loans or if our convertible notes are not converted before their maturity date, we will have to repay these loans with cash on hand or refinance them with another lender or else face a default and potential foreclosure upon the collateral we pledged.”

Table 1

The following is a table disclosing the total dollar value of the common stock underlying the convertible notes (using the number of underlying securities and the value for those securities on February 12, 2010, the date of the sale of the convertible notes).

Value of common stock per share on February 12, 2010 (1)		2.45
Conversion price per share of common stock underlying the convertible notes (2)	$	0.86
Total number of shares of common stock issuable at conversion price of $0.86 on conversion of convertible notes in the aggregate principal amount of $4,040,000.		4,697,674
Gross value of 4,697,674 shares underlying the notes on February 12, 2010 at value of $2.45 per share	$	11,509,301
Net value of 4,697,674 shares underlying the notes (3)	$	8,026,046

(1)	This value per share was determined by the company after consultation with its financial advisors and is based on a valuation determined as follows:

As of January 31, 2010, the company, with the assistance of its financial advisors, determined a valuation based on the company’s net profits for the current year and those projected for the next 12 months. The company made a comparable company analysis of 9 mid-cap publicly traded companies which had an average price earnings ratio of 24 times current year and one year of projected earnings. After discussions with potential underwriters, bearing in mind the nature of the company’s business, in particular the fact that the company had not yet commenced production of PPS products, the company accepted that it might to be able to complete a public offering in the current market based on a multiple of approximately 5 times current and projected earnings. Primary Capital then approached potential investors to determine the multiple at which they might be willing to invest in the company in a bridge financing prior to a contemplated public offering based on a multiple of approximately 5 times current and projected earnings. Primary Capital advised the company, that after discussions with potential investors, investors stated that in view of the liquidity risk, they might be willing to invest in a bridge financing at a 65% discount to the proposed 5 times earnings valuation.

Given the fact that as of the date of this valuation, the company was privately issuing convertible notes, the investors and the company agreed that, as of January 31, 2010, a pre-money (i.e. pre- bridge financing) multiple of 1.78 times current and projected net earnings was appropriate for a company that had not raised any capital in a public offering. Since this valuation was agreed to by the company and the investors, management viewed the convertible note financing as an “arms-length” transaction and treated the $2.45 per share pre-money valuation as the stock’s fair value in calculation of the fair value of the company’s warrants. Detailed computation is as below:

Current and projected net profits	$	20,000,000
Multiple		1.78
Pre-bridge money valuation	$	35,560,000
Common stock shares outstanding (pre-bridge and pre public offering)		14,510,204
Valuation per share	$	2.45

(2)

The notes convert into common stock at a 65% discount to the public offering price. However, for purposes of determining the value of the discount on February 12, 2010 we are using the value of the common stock on February 12, 2010 which was $2.45. Based on this the conversion price would be $0.86 per share.

(3)

The 4,697,674 shares issuable on conversion of the notes in the aggregate principal amount of $4,040,000 had a gross value on February 12, 2010 of $11,509,301. This represents a net value, after deducting cost basis of $3,483,255 (or $4,040,000 less $556,745 of interest payable on convertible notes in aggregate principal amount of $4,040,000) of $8,026,046.

Table 2

The following table discloses the dollar amount of each payment (including the value of any payment that we have made or will be made in common stock) in connection with the private placement entered into on February 12, 2010 and the proposed public offering, to any selling stockholder (or any affiliate of a selling stockholder or any person with whom any selling shareholder has a contractual relationship) and to each finder or placement agent regarding the transaction (including any interest payments, liquidated damages, payments made to "finders" or "placement agents," and any other payments or potential payments).

Fees to Primary Capital as placement agent	$	397,000	(1)
Shares issued to Primary Capital	$	1,362,055	(1)
Warrant to Primary Capital	$	152,942	(1)
Fees to United Best	$	1,027,000	(2)
Shares issued to United Best	$	1,362,055	(2)
Warrant to United Best	$	152,942	(2)
Liquidated Damages payable under Registration Rights Agreement	$	404,000	(3)
Interest payable to Noteholders		556,745	(4)
Shares issued to Noteholders	$	8,026,046	(5)
Total Payments made or which may be required to be made by the company to Selling Stockholders and other persons set forth above:	$	13,440,785

(1)

Under the terms of a financial services agreement between Primary Capital and the company, Primary Capital was paid a commission of $202,000 at the closing and is also owed an additional $75,000 for services rendered in connection with the private placement. Primary Capital also entitled to be paid a $15,000 upon completion of this offering and $15,000 for the next succeeding seven calendar quarters for an aggregate amount of $120,000.

At the closing of the financing, Primary Capital received 290,755 shares of our common stock. Primary is also entitled to receive 265,186 shares on closing of the offering. Using a valuation equal of $2.45 (which equals the value of the shares of common stock on February 12, 2010) these 555,941 shares have a value of $1,362,055.

Primary Capital is entitled to receive, on conversion of the notes issued to the investors in the February 2010 private placement (which shall occur upon consummation of this offering), a five-year warrant to purchase 96,190 shares of common stock (which number represents 5% of the 1,923,809 shares of common stock issuable to the noteholders on conversion (assuming a public offering price of $6.00 per share)). However, for purposes of this table we have valued the 96,190 warrants using their “intrinsic value” of $1.59 per share (i.e. the difference between the value of the common stock as of February 12, 2010 of $2.45 less the strike price of $.86 (a 65% discount to the $2.45 value) which amounts to $152,942.

If the note conversion does not occur, Primary Capital will receive a five-year warrant to purchase that number of shares of common stock equal to 5% of the common stock underlying the warrants issued to the investors in the private financing exercisable at the same price at which those investor warrants are exercisable. We have not assigned any value to any future transaction.

Under the terms of the financial services agreement, if any additional transaction is completed between the company and the investors prior to November 2011, Primary Capital is entitled to receive an additional fee equal to between three to four percent of the aggregate consideration paid by the investors depending on the size of the financing. We have not assigned any value to any such future transaction.

(2)

Under the terms of a consulting agreement between United Best and the company, United Best was paid a commission of $202,000 at the closing of the financing. United Best is also owed an additional $75,000 for services rendered in connection with the financing. Under the consulting agreement, as amended, United Best is entitled to be paid on completion of this offering a success fee of $750,000 (which represents 3% of the assumed $25,000,000 in gross proceeds to be received by us in connection with this underwritten offering).

At the closing of the transaction, United Best received 362,755 shares of our common stock for their services. United Best is also entitled to receive 193,186 shares on closing of the offering. Using a valuation equal to $2.45 these 555,941 shares have a value of $1,362,055.

In addition, United Best is entitled to receive, on conversion of the notes issued to the investors in the February 2010 private placement (which shall occur upon consummation of this offering), a five-year warrant to purchase 96,190 shares of common stock (which represents 5% of the 1,923,809 shares of common stock issuable to the noteholders on conversion (assuming a public offering price of $6.00 per share)). For purposes of this table we have valued the 96,190 warrants using their “intrinsic value” of $1.59 per share (i.e. the difference between the value of the common stock as of February 12, 2010 of $2.45 less the strike price of $.86 (a 65% discount to the $2.45 value) which amounts to $152,942.

If the note conversion does not occur, United Best will receive a five-year warrant to purchase that number of shares of common stock equal to 5% of the common stock underlying the warrants issued to the investors in the private financing exercisable at the same price at which those investor warrants are exercisable. We have not assigned any value to any future transaction.

(3)

Under the registration rights agreement dated February 12, 2010 between the company and the noteholders, we are required, subject to the operation of Rule 415, to include in this registration statement for resale the shares underlying the notes. Accordingly, we are registering in a resale prospectus simultaneously herewith 369,725 of the 1,923,809 shares issuable on conversion of the convertible notes in the aggregate principal amount of $4,040,000. If the registration statement is not effective within 180 days after filing we have agreed to pay the investors two percent (2%) of the aggregate principal amount of the notes for each month (or part thereof) that it is late (capped at 10% or $404,000). No liquidated damages are payable with respect to any shares required to be omitted as a result of the operation of Rule 415. For purposes of this table we are using the maximum amount payable. We have no way of knowing whether we will be required to pay some or any of this amount.

(4)

Interest is payable quarterly at the rate of 10% per annum (increasing to 15% if there is a default). As more fully described in table 4 below, a total of $566,745.20 is payable with respect to the notes. Interest of $10,000 payable with respect to the note in the principal amount of $100,000 held by Lumen Capital is not included on this table.

(5)

The notes are convertible into shares of common stock at a discount of 65% of the public offering price. However, for purposes of this table we are valuing the shares underlying the common stock as of February 12, 2010 at a price of $2.45 per share. Accordingly, the $4,040,000 aggregate principal amount of the notes is convertible into 4,697,674 shares which have a gross value on February 12, 2010 of $11,509,301. This represents a net value, after deducting cost basis of $3,483,255 (or $4,040,000 less $556,745 of interest), of $8,026,046.

Table 3

The following table sets forth the gross proceeds from the issuance of the notes to the selling stockholders and net proceeds received by us.

Gross proceeds from sale of the convertible notes (1):	$	4,040,000
Payments in connection with the transaction that we made:
Placement agent and advisory fees payable in connection with the closing of the financing (2)	$	554,000
Legal fees for the financing (3)	$	326,187
Documentation Fees	$	5,000
Total Payments by us:	$	885,187
Balance (net of above expenses) (4)	$	3,154,813

Total payments made or which may be required to be made by the Company to Selling Stockholders and other persons as set forth in Table 2	$	13,440,785
Net loss to company from transaction (5)	$	(9,731,972	)

(1) Excludes the note in the principal amount of $100,000 issued to one of the investors which is being repaid on February 12, 2012 and will not convert into shares of common stock.

(2) Represents fees of $202,000 paid to each of Primary Capital and United Best as placement agent fees. Each of them is entitled to receive an additional $75,000 for their services. Primary Capital is also entitled to be paid a $15,000 upon completion of this offering and $15,000 for the next succeeding seven calendar quarters for an aggregate amount of $120,000 which number is not included in the $554,000. (United Best is also entitled to be paid a success fee of $750,000 or 3% of the gross proceeds received by the company on closing of the public offering.)

(3) This amount includes the payment of legal fees for services rendered in connection with the financing.

(4) $204,464 was held in escrow to pay the interest due on the notes during the first 6 months.

(5) Represents $3,154,813 less $13,440,785 (but adding back placement agent and advisory fees payable in connection with the closing of the financing of $554,000 which are included in the $13,440,785).

Table 4

The following is a table disclosing the interest payments required to be made to the note holders during the life of the convertible notes.

Interest is payable quarterly at the rate of 10% per annum increasing to 15% if there is a default.

Date	Interest Payment Amounts
3/31/2010	$	53,309.60
6/30/2010	$	103,216.44
9/30/2010	$	104,350.68
12/31/2010	$	104,350.68
2/12/2011	$	1,178.08
3/31/2011		99,616.44
6/30/2011		100,723.29
Total:	$	566,745.20	(1)

(1)	This amount includes $10,000 of interest on the $100,000 note held by Lumen Capital which is being repaid on February 12, 2012.

Quarterly interest payments payable with respect to the quarters ended March 31, 2010, June 30, 2010 September 30, 2010, and December 31, 2010 have been made.

Table 5

The following table sets forth the total possible profit the selling shareholders could realize as a result of any conversion discount for the common stock underlying the convertible notes, with the following information disclosed separately.

The value per share of the common stock on February 12, 2010, the date of the sale of the convertible notes		2.45	(1)
The conversion price per share of common stock on February 12, 2010, the date of the sale of the convertible notes	$	0.86	(2)
The total shares underlying the convertible notes with an aggregate principal amount of $4,040,000		4,697,674	(3)
The combined gross value of the 4,697,674 shares underlying the convertible note, calculated by using $2.45 the value per share on the date of the sale of the convertible note		11,509,301	(1)
The total possible discount to the value as of February 12, 2010 (the date of the sale of the convertible note), calculated by subtracting $3,483,255 (the total conversion price on the date of the sale of the convertible note ($4,040,000) less $556,745 of interest paid or payable) from $11,509,301 (the combined value of the 4,697,674 shares of common stock underlying the convertible notes on February 12, 2010)	$	8,026,046

(1)	For purposes of this calculation we have used a valuation of $2.45 per share.

(2)	The notes are convertible at a 65% discount to the proposed public offering price. For purposes of this table we are using a conversion price of $.86 which represents a 65% discount to the $2.45 per share value as of February 12, 2010.

(3)	Based on a conversion price of $0.86 the notes convert into 4,697,674 shares. The interest payable on the notes does not convert into shares of common stock.

Table 6

The following is a table disclosing (i) the gross proceeds paid to us by the selling stockholders in connection with the financing transaction on February 12, 2010, (ii) the payments made by us in that transaction, (iii) the net loss to us from the transaction and (iv) the aggregate potential profit realizable by the selling stockholders in that transaction as a result of a 65% discount price relating to the conversion price of the notes and the discounted exercise price of the warrants issued to the placement agent and financial advisor in connection with the financing transaction:

	Amount
Gross proceeds paid to us:	$	4,040,000	(1)
All payments that have been made by or that may be required to be made by us as set forth in Table 2:	$	13,440,785
Net loss to company from the transaction:	$	(9,731,974	)
Total possible profit assuming conversion of the notes at $0.86 and resale of the 4,697,674 shares underlying the notes at price of $2.45 per share.	$	8,026,046
Total possible profit by United Best assuming exercise of the 240,698 warrants at $.86 and resale of the 240,698 shares underlying the warrants at $2.45 per share.	$	382,710
Total possible profit by United Best from the sale of the 555,941 shares at the price of $2.45 per share.	$	1,362,055
Total possible profit by Primary Capital assuming exercise of the warrants issued to at $.86 and resale of the 240,698 shares underlying the warrants at $2.45.	$	382,710
Total possible profit by Primary Capital from the sale of the 555,941 shares at the assumed offering price of $2.45 per share.	$	1,362,055
Combined total possible profit	$	11,515,576
Percentage of (x) $21,466,831 ((i) the total amount of all possible payments ($13,440,785) and (ii) the total possible discount to the value of the common stock underlying the convertible notes at the time of sale on February 12, 2010 ($8,026,046)) divided by (y) the cash proceeds to the company from the sale of the convertible notes after payment of cash expenses ($3,154,813).		680	%

(1) Excludes the note in the principal amount of $100,000 issued to one of the investors which is being repaid on February 12, 2012 and will not convert into shares of common stock.

Table 7

The following is a table disclosing the value on February 12, 2010 of the warrants issued to the placement agent and the financial advisor. The warrants are exercisable for shares of common stock at a discount of 65% of the public offering price. However for purposes of this calculation we are using the $2.45 valuation for the common stock and calculating the exercise price at $.86 per share.

Value on February 12, 2010 of common stock underlying warrants	$	2.45
Exercise price per share of common stock underlying the warrants (65% discount)	$	.86
Total number of shares of common stock issuable on conversion of notes (with an aggregate principal amount of $4,040,000) at a conversion price of $.86		4,697,674
Number of shares underlying warrants issued to placement agent and financial advisor (10%) (assumes conversion of notes with an aggregate principal amount of $4,040,000)		469,767
Total market price of the 469,767 shares underlying the warrants (using $2.45 value per share)	$	1,150,929
Total exercise price of 469,767 shares underlying the warrants	$	404,000
Total value the 469,767 shares underlying the warrants	$	746,929

Table 8

The following is a table comparing (i) the number of shares of common stock currently outstanding, (ii) the number of shares of common stock currently outstanding held by persons other than the selling stockholders, affiliates of the Company and affiliates of the selling stockholders, (iii) the number of shares registered by the selling stockholders (or their affiliates) in prior registration statements , (iv) the number of shares underlying the notes being registered for resale in this Registration Statement (assuming a public offering price of $6.00 per share; (v) the number of shares issued to the placement agent and financial advisor for services rendered in connection with the private placement that are being registered in the resale prospectus; (vi) the number of shares underlying warrants issued to the placement agent and financial advisor for services rendered in connection with the private placement that are being registered in the resale prospectus; and (vii) the number of other shares being registered by the selling stockholders.

The number of shares of common stock currently outstanding prior to the public offering			15,265,714
The number of shares of common stock currently outstanding held by persons other than the selling stockholders, affiliates of the Company and affiliates of the selling stockholders			1,136,633
The number of shares registered by the selling stockholders (or their affiliates) in prior registration statements			0
The number of shares underlying the notes being registered for resale in the resale prospectus (assuming a public offering price of $6.00 per share and a conversion price of $2.10 per share) (1)			369,725
The number of shares issued to the placement agent and financial advisor for services rendered in connection with the private placement that are being registered in the resale prospectus (1)			0
The number of other shares being registered by the selling stockholders in the resale prospectus (1)			0
The number of shares underlying warrants issued to the placement agent and financial advisor for services rendered in connection with the private placement that are being registered in the resale prospectus (1) .			0

(1) The resale prospectus relates to the sale by the selling stockholders identified in that prospectus of up to 369,725 shares of our common stock comprising 369,725 of the 1,923,809 shares issuable on conversion of the outstanding convertible notes in the aggregate principal amount of $4,040,000 issued in February 2010. A convertible note in the principal amount of $100,000 is being repaid on February 12, 2011 and will not be converted into common stock. The note purchase agreement dated February 12, 2010, pursuant to which the noteholders acquired the convertible notes, is filed as exhibit 10.2 to this registration statement. Under the registration rights agreement dated February 12, 2010 between the company and the noteholders, we are required, subject to the operation of Rule 415, to include in this registration statement for resale the shares underlying the notes.

In the share exchange or “reverse merger” transaction, we acquired control of Hong Hui which owns all of the stock of Technic, which in turn owns of all of the stock of Foshan, by issuing to the Hong Hui stockholders an aggregate of 14,510,204 shares our of common stock in exchange for all of the outstanding capital stock of Hong Hui. One of the Hong Hui stockholders with whom we completed the share exchange was Newise Holdings Limited, a British Virgin Islands company, which received 2,321,633 of our shares. Newise Holdings Limited is controlled by Li Jun, one of our directors. In February 2010, 673,877 of these 2,321,633 shares were sold to Primary Capital and 100,000 were sold to Mr. Ming Liu.

Except as set forth above other than the issuance and sale of the notes and the warrants to the noteholders, and the cash and equity based compensation paid to the placement agent and financial advisor, we have not in the past three years engaged in any securities transaction with any of the selling stockholders, any affiliates of the selling stockholders, or, after due inquiry and investigation, to the knowledge of the our management, any person with whom any selling stockholder has a contractual relationship regarding the transaction (or any predecessors of those persons).

In addition, other than in connection with the contractual obligations set forth in (i) the note purchase agreements and related agreement entered into by us, on the one hand and each of the selling stockholders on the other hand, (ii) the notes and the warrants and (iii) the security documents entered into in connection with the financing transaction, we do not have any agreement or arrangement with the selling stockholders with respect to the performance of any current or future obligations.

Investors’ Warrants

At the closing of the private placement of the notes, the note investors were issued warrants which become exercisable only in certain events. The warrants will be void and of no force and effect if the notes convert into common stock, which would occur automatically at the closing of the offering contemplated by this prospectus.

The warrants are exercisable only if a “financing” is consummated after February 12, 2011 (or the date the notes become due pursuant to a default, if earlier) and prior to February 12, 2015. A “financing” means the first sale of stock (or securities convertible into stock) in a capital raising transaction with gross proceeds of at least $2,000,000.

The warrants will be exercisable to purchase 8% of the total shares of common stock outstanding (on a fully-diluted basis) immediately after the closing of the “financing.” The warrants are exercisable at the price at which the shares of common stock (or common stock equivalent if derivative securities are sold) are sold in the financing. Accordingly, because we cannot determine at this point whether the warrants will become exercisable, the exercise price, the number of shares for which the warrants will be exercisable, or what the market price for the common stock at the time of any possible sale, we cannot calculate the possible profits that the investors would achieve on exercise and sale of the warrants.

Financial Services Agreements and Related Warrants

United Best

United Best, our foreign advisor controlled by Mr. Li Jun, one of our directors, provided financial services in connection with our reverse merger with Hong Hui completed on February 12, 2010. These services included advising the company on structuring the reverse merger, assisting the company in retaining service providers such as accountants, PRC and US attorneys to effect the reverse merger and working with those service providers to facilitate the completion of the reverse merger. Additionally, United Best will assist the Company with on-going communications and coordinating the relationships with service providers during the NASDAQ listing process.

Under the terms of a consulting agreement between United Best and the company United Best was paid a commission of $202,000 at the closing of the convertible notes financing. United Best is also owed an additional $75,000 for services rendered in connection with that transaction. Additionally, under the consulting agreement, as amended, United Best is entitled to be paid on completion of this offering a success fee of $750,000 (which represents 3% of the $25,000,000 gross proceeds to be received by us in connection with the underwritten offering (assuming a public offering of $6.00 per share).

At the closing of the convertible notes financing, United Best received 362,755 shares of our common stock for its services. United Best is also entitled to receive an additional 193,186 shares of closing of this offering.

In addition, as partial consideration for providing these consulting services, United Best is entitled to receive, on conversion of the notes issued to the investors in the February 2010 private placement (which occurs upon consummation of this offering), a five-year warrant to purchase 96,190 shares of common stock (which represents 5% of the 1,923,809 shares of common stock issued to the note holders on conversion (assuming a public offering of $6.00 per share)), exercisable at the price of $2.10 per share (i.e. the price at which the notes convert assuming a public offering of $6.00 per share). Unlike the investor warrants, these warrants will not terminate but instead become exercisable on conversion of the notes and consummation of this offering. If the note conversion does not occur, United Best will receive a five-year warrant to purchase that number of shares of common stock equal to 5% of the common stock underlying the warrants issued to the investors in the private financing exercisable at the same price at which those investor warrants are exercisable.

Primary Capital

Primary Capital provided financial services in connection with the private placement and reverse merger which closed on February 12, 2010. The services provided and to be provided by Primary Capital include the following:

assisting the company in preparing a detailed business plan, financial model and power point presentation;

negotiating and structuring the reverse merger;

acting as placement agent for the February 12, 2010 note financing;

recommending to the company a qualified auditor, securities attorney and investor relations firm, and assisting the company with negotiating the terms of their respective engagements;

advising the company on strategies to increase shareholder value;

assisting the company and its investor relations firm in organizing, and participating with the company in, investor road shows and investor conference calls;

recommending investor conferences in the US and Europe to be attended by the company and a representative of Primary Capital;

identifying strategic relationships and joint venture partners;

identifying and recommending persons to serve on the company’s Board of Directors;

identifying and rendering advice regarding potential acquisitions, including the valuation of the acquisition and financing for the acquisition;

assisting the company in connection with its listing on a U.S. stock exchange;

reviewing and commenting on the company’s SEC filings associated with the company’s transactions; and

advising company regarding its obligations as a U.S. public company.

Under the terms of a financial services agreement between Primary Capital and the company, at the closing of the February 2010 financing Primary Capital was paid a commission of $202,000. Primary Capital is also owed an additional $75,000 for services rendered in connection with the private placement. Primary Capital is also entitled to receive $15,000 on completion of the offering and $15,000 for the next succeeding seven calendar quarters for an aggregate amount of $120,000.

At the closing of the financing, Primary Capital received 290,755 shares of our common stock. Primary is also entitled to receive 265,186 shares of common stock on the closing of this offering.

In addition, for providing these financial services Primary Capital is entitled to receive, on conversion of the notes issued to the investors in the February 2010 private placement (which occurs upon consummation of this offering), a five-year warrant to purchase 96,190 shares of common stock (which number is equal to 5% of the 1,923,809 number of shares of common stock being issued to the noteholders on conversion), exercisable at $2.10 (which equals the price at which the notes convert assuming a public offering of $6.00 per share). Unlike the investor warrants, these warrants will not terminate but instead become exercisable upon conversion of the notes and consummation of this offering. If the note conversion does not occur, Primary Capital will receive a five-year warrant to purchase that number of shares of common stock equal to 5% of the common stock underlying the warrants issued to the investors in the private financing exercisable at the same price at which those investor warrants are exercisable.

Shares being registered in Resale Prospectus

The resale prospectus relates to the sale by the selling stockholders identified in the prospectus of up to 369,725 shares of our common stock comprising 369,725 of the 1,923,809 shares issuable on conversion of the convertible notes in the aggregate amount of $4,040,000 issued in February 2010. A convertible note in the principal amount of $100,000 will be repaid on February 12, 2011 and will not be converted into shares of common stock. The note purchase agreement dated February 12, 2010, pursuant to which the noteholders acquired the convertible notes, is filed as exhibit 10.2 to this registration statement. A form of note extension agreement, dated January 31, 2011, which extended the maturity date of the outstanding convertible notes in the principal amount of $4,040,000 from February 12, 2011 to June 30, 2011, is filed as exhibit 10.21 to this registration statement. Under the registration rights agreement dated February 12, 2010 between the company and the noteholders, we are required, subject to the operation of Rule 415, to include in this registration statement for resale the shares underlying the notes.

SHARES ELIGIBLE FOR FUTURE SALE

This is an offering of 4,166,667 shares of our common stock. As of January 31, 2011, there were (i) 15,265,714 shares of common stock issued and outstanding and (ii) convertible notes in the aggregate principal amount of $4,040,000 convertible into 1,923,809 shares of common stock (assuming a public offering price of $6.00 per share and the repayment of a note in the principal amount of $100,000 on February 12, 2011) and (iii) warrants to purchase 192,380 shares of our common stock to be issued to the placement agent and financial advisor at the closing of this offering. Following this offering (giving effect to (i) the conversion of all of the convertible notes on the closing of this offering and (ii) the issuance at the closing of this offering of 193,186 shares to United Best and 265,186 shares to Primary Capital, but excluding any shares issuable pursuant to the exercise of the over-allotment option), there will be 21,814,562 shares of common stock outstanding. Of these 369,725 shares are being registered simultaneously herewith in a resale prospectus. None of our outstanding shares will be eligible for resale under Rule 144 until February 12, 2011.

Lock-Up Agreements

In June 2010, we entered into lock-up agreements with officers and directors and beneficial owners of more than 5% of our common stock. See “Underwriting – Lock-up Agreements.”

In addition, in June 2010, we entered into lock-up agreements with the selling stockholders listed in the resale prospectus dated as of the date hereof pursuant to which the selling stockholders have agreed not to sell any of the shares of common stock for a period of 90 days following the date of the public offering.

Rule 144

Under Rule 144, a person who has beneficially owned restricted shares of our common stock or warrants for at least six months is entitled to sell his, her or its securities provided that (1) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale, (2) we are subject to the Exchange Act reporting requirements for at least 90 days before the sale and (3) if the sale occurs prior to satisfaction of a one-year holding period, we provide current information at the time of sale.

Persons who have beneficially owned restricted shares of our common stock or warrants for at least six months but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:

1% of the total number of securities of the same class then outstanding, which will equal approximately 214,038 shares immediately after this offering; or

the average weekly trading volume of such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale.

Sales by affiliates must also comply with the manner of sale, current public information and notice provisions of Rule 144. The selling stockholders will not be governed by the foregoing restrictions when selling their shares pursuant to the resale prospectus.

As we are a former “shell” company, persons who wish to sell our securities have also to satisfy the additional requirements of Rule 144(i) which provides that those securities may be sold, subject to the other requirements of Rule 144, after one year has elapsed from the date that the issuer filed "Form 10 information" with the Commission (in our case February 12, 2011) provided that we have filed all reports and other materials required to be filed by section 13 of the Exchange Act during the preceding 12 months.

Registration Rights

Other than the registration rights set forth in (i) the registration rights agreement entered into on February 12, 2010 with the investors in the private placement under which we are obligated, subject to the operation of Rule 415, to register for resale all of shares issued on conversion of the notes, and (ii) the registration rights side agreement entered into on February 12, 2010 with certain stockholders who had acquired their shares prior to the reverse merger, under which we are obligated, subject to the operation of Rule 415, to register for resale 52,001 shares (however, in the event of a Rule 415 comment, these shares would be cut back first), (iii) the agreements entered into with Primary Capital and United Best, under which we are obligated, subject to the operation of Rule 415, to register for resale the 653,510 shares received by Primary Capital and United Best under such agreements, (iv) oral agreements entered into with Li Jun and Ming Liu, we have no other obligation to register under the Securities Act any of our shares of common stock.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of the close of business on January 31, 2011, certain information with respect to the beneficial ownership of our common stock, by (i) each stockholder whom we know to own beneficially more than 5% of our common stock, (ii) each director, (iii) our chief executive officer and each other executive officer whose cash compensation for the most recent fiscal year exceeded $100,000 and (iv) all executive officers and directors as a group. The table reflects the ownership of our equity securities by the foregoing parties after the 1-for-5 reverse stock split which occurred on March 24, 2010.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose of or direct the disposition of) with respect to the security through any contract, arrangement, understanding, relationship or otherwise, subject to community property laws where applicable. Except as indicated below, and subject to applicable community property laws, the persons named in the table below have sole voting and investment power with respect to our common stock shown as beneficially owned by them. A shareholder is also deemed to be, as of any date, the beneficial owner of all securities that such shareholder has the right to acquire within 60 days after that date through (1) the exercise of any option, warrant or right, (2) the conversion of a security, (3) the power to revoke a trust, discretionary account or similar arrangement, or (4) the automatic termination of a trust, discretionary account or similar arrangement.

Unless otherwise indicated, the address for each listed stockholder is: c/o China SLP Filtration Technology, Inc., Shishan Industrial Park, Nanhai District, Foshan City, Guangdong Province PRC.

Name and Address of Shareholder	Amount and Nature of Beneficial Ownership		Percent of Class (1) (2)			Amount and Nature of Beneficial Ownership		Percent of Class (1) (2)(3)
	Before Offering		Before Offering			Post Offering		Post Offering
Owners of More Than 5% Of Class
Bestyield Group Limited (4)		14,099,081		92.4	%		14,099,081		64.6	%
Proudlead Limited (5)		14,099,081		92.4	%		14,099,081		64.6	%
Li Jun (6)		14,099,081		92.4	%		14,099,081		64.6	%
Newise Holdings Limited (6)		14,099,081		92.4	%		14,099,081		64.6	%
Pilot Link International Limited (7)		14,099,081		92.4	%		14,099,081		64.6	%
High Swift Limited (8)		14,099,081		92.4	%		14,099,081		64.6	%
China Investment Management, Inc (9).		14,099,081		92.4	%		14,099,081		64.6	%
Primary Capital, LLC (10)		1,326,008		8.6	%		1,326,008		6	%

Directors and Executive Officers
Li Jie (Chief Executive Officer and a Director) (4)		14,099,081		92.4	%		14,099,081		64.6	%
Law Wawai (President of Sales and a Director) (5)		14,099,081		92.4	%		14,099,081		64.6	%
Eric Gan (Chief Financial Officer) (13)		-		-	%		-		-	%
Li Jun (Director) (6)		14,099,081		92.4	%		14,099,081		64.6	%
Richard M. Cohen (Director) (12)		30,000		*			30,000		*	%
Chris Bickel (Director) (11)		-		-			-		-	%
Su Lie (Director)		-		-			-		-	%

Directors and executive officers as a group (7 persons)		14,129,081					14,129,081			%

*	Less than 1%.

(1) As of the close of business on January 31, 2011, there were 15,265,714 shares of our common stock outstanding. Following the closing of this offering there will be 21,814,562 shares of common stock issued and outstanding.

(2) In determining beneficial ownership of the common stock, the number of shares shown includes shares which the beneficial owner may acquire within 60 days of January 31, 2011 upon exercise of convertible securities, warrants or options. In accordance with Rule 13d-3 in determining the percentage of common stock owned by a person on January 31, 2011 (a) the numerator is the number of shares of the class beneficially owned by such person, including shares which the beneficial owner may acquire within 60 days upon conversion or exercise of the warrants and other convertible securities, and (b) the denominator is the sum of (i) the total shares of that class outstanding on January 31, 2011, and (ii) the total number of shares that the beneficial owner may acquire upon conversion or exercise of other securities. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of the shares.

(3) Following completion of the offering there will a total of 21,814,562 shares of common stock outstanding, including (i) 15,265,714 shares of common stock currently outstanding, (ii) 1,923,809 shares issuable on conversion of the notes, (iii) 4,166,667 shares to be issued in the offering, and (iv) and 193,186 shares to be issued to United Best and 265,186 shares to be issued to Primary Capital on closing of the offering.

(4) Bestyield Group is a BVI company controlled by Mr. Li Jie, our chief executive officer. Its address is PO Box 957 Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands. On December 29, 2010, a group consisting Bestyield Group Limited, Jie Li, Proudlead Limited, Law Wawai, Pilot Link International Limited, High Swift Limited, China Investment Management, Inc., Song Huaying, Newise Holdings Limited and Li Jun filed a Schedule 13D disclosing the existence of a “group” and the beneficial ownership by the group of 14,099,081 shares of common stock. The beneficial ownership by the “group” disclosed in the Schedule 13D includes 4,353,061 shares held by Bestyield Group. Mr. Li has shared voting power with respect to the shares held by the group. Bestyield has guaranteed our obligations to the investors under our outstanding convertible notes issued in February 2010. All of these shares have been pledged to secure the performance of that guaranty.

(5) Proudlead is a BVI company controlled by Law Wawai, our president of sales and a director. Its address is PO Box 957 Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands. The beneficial ownership by the “group” disclosed in the Schedule 13D includes 4,353,061 shares held by Proudlead. Mr. Law has shared voting power with respect to the shares held by the group. Proudlead has guaranteed our obligations to the investors under our outstanding convertible notes issued in February 2010. All of these shares have been pledged to secure the performance of that guaranty.

(6) Newise Holdings Limited is a BVI company controlled by Li Jun, one of our directors. Its address is PO Box 957 Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands. The beneficial ownership by the “group” disclosed in the Schedule 13D includes 1,547,756 shares held by Newise Holdings Limited as well as 362,755 shares beneficially owned by United Best. Mr. Li has shared voting and dispositive power with respect to the shares held by the group. On closing of this offering United Best is also entitled to receive an additional 193,186 shares of common stock and a warrant to purchase 96,190 shares at an exercise price of $2.10 per share (based on an assumed public offering price of $6.00).

(7) Pilot Link International is a BVI company controlled by Li Shiyi and Wei Yang, PRC residents. Its address is PO Box 957 Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands. The beneficial ownership by the “group” disclosed in the Schedule 13D includes 1,668,673 shares held directly by Pilot Link. Li Shiyi and Wei Yang have shared voting and dispositive power with respect to the shares held by the group.

(8) High Swift Limited is a BVI company controlled by Han Hung Yuk, a PRC resident. Its address is PO Box 957 Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands. The beneficial ownership by the “group” disclosed in the Schedule 13D includes 1,088,265 shares held directly by High Swift. Han Hung Yuk has shared voting and dispositive power with respect to the shares held by the group.

(9) China Investment Management, Inc. is a BVI company controlled by Song Huaying, a PRC resident. Its address is PO Box 957 Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands. The beneficial ownership by the “group” disclosed in the Schedule 13D includes 725,510 shares held directly by China Investment Management, Inc. Song Huaying has shared voting and dispositive power with respect to the shares held by group.

(10) Primary Capital received, at the closing of the share exchange agreement, 290,755 shares of common stock and in February 2010 Primary Capital purchased 673,877 shares from Newise Holdings Limited. John Leo has sole voting and dispositive power with respect to the shares held by Primary Capital. Primary Capital’s address is 80 Wall Street, 5th Floor, New York, New York 10005. On closing of this offering, Primary Capital is also entitled to receive an additional 265,186 shares of common stock and a warrant to purchase 96,190 shares at an exercise price of $2.10 per share (based on an assumed public offering price of $6.00).

(11) Chris Bickel is President of Primary Capital. Mr. Bickel does not have voting or dispositive power over the shares held by Primary Capital. Mr. Bickel’s business address is 80 Wall Street, 5th Floor, New York, New York 10005.

(12) Richard M. Cohen is our director, and his business address is 3 Park Avenue, 16th Floor, New York, New York 10016. In May 2010, we entered into a director’s agreement with Richard M. Cohen, which agreement was effective with his election to the Board. Under the terms of that agreement Mr. Cohen on September 3, 2010 was granted 30,000 shares of restricted stock, two-thirds of which are subject to restrictions on transfer and are subject to forfeiture, with the restrictions lapsing as to one-third of the shares on the first anniversary of the date of grant, and as to one-third on the second anniversary of the date of grant, in the event Mr. Cohen continues to be a director on those dates.

(13) On September 3, 2010, Mr. Gan was granted an option to purchase 400,000 shares of common stock at an exercise price equal to the public offering price. The option vests and is exercisable as follows; 160,000 shares will vest and become exercisable on July 31, 2011; 120,000 shares will vest and become exercisable on July 31, 2012; 120,000 shares will vest and become exercisable on July 31, 2013. In the event that the employment is terminated within 12 months from the employment agreement date by the Company without cause, 160,000 shares shall be vested immediately on the termination date. As the option is not currently exercisable, none of the shares underlying the option are included in the table.

MANAGEMENT

Executive Officers and Directors

The following table sets forth information concerning our current directors and executive officers:

Directors and Executive Officers	Position/Title	Age

Li Jie	Chief Executive Officer and a Director	55

Law Wawai	President of Sales and a Director	45

Eric Gan	Chief Financial Officer	48

Chris Bickel	Director	47

Li Jun	Director	47

Richard M. Cohen	Director	59

Su Lei	Director	46

Except for Messrs. Chris Bickel, Richard M. Cohen and Eric Gan, all of our officers and directors are residents of the PRC. In addition, substantially all of our assets are located in the PRC. As a result, it may be difficult or impossible for you to effect service of process within the United States on our company or any of them or to enforce court judgments obtained against them in the United States courts. We have been advised by our PRC counsel that there is uncertainty as to whether the courts of the PRC would (1) recognize or enforce judgments of U.S. courts obtained against our officers or directors or the experts named in this prospectus based on the civil liability provisions of the securities laws of the U.S. or any state in the U.S., or (2) entertain original actions brought in the PRC against our officers or directors or the experts named in this prospectus based on the securities laws of the U.S. or any state in the U.S.

The following is a summary of the biographical information of our directors and officers:

Li Jie was elected director and appointed as our Chief Executive Officer on February 12, 2010. Mr. Li has served as Chief Executive Officer and Managing Director of Foshan SLP Special Materials Co., Ltd. since its inception in 2000. He also serves as Director General of the China Industrial Textile Committee. From 1980 to 2000, he served as R&D director of Dalian Synthetic Fiber Research Institute. We believe that Mr. Li’s knowledge of all aspects of our business and his in-depth understanding of our operations, combined with his years of experience in the nonwovens industry, position him well to serve as our Chairman and Chief Executive Officer. Mr. Li received a bachelor’s degree in Engineering for Chemical Fiber Technique at Dalian Light Industrial School. He received a Masters degree from Chinese Academy of Social Sciences where he studied economic management. Mr. Li is not, and has not been within the last five years, a director of any other publicly traded company.

Law Wawai was elected as a director and appointed as President of Sales on February 12, 2010. From 1997 to February 2010, Mr. Law served as director and general manager of Nanhai Wanzhi Trading Co. From 1987 to 1997, he was sales manger Nanhai Polyester Factor. We believe that Mr. Law’s knowledge of all aspects of the nonwovens business and his in-depth understanding of its operations position him well to serve as a director. Mr. Law received his bachelor’s degree in business management from Nanhai Television University. Mr. Law is not, and has not been within the last five years, a director of any other publicly traded company.

Eric Gan was appointed as our Chief Financial Officer in August 2010. From July 1999 to August 2010 Mr. Gan was a Senior Financial Consultant at The Goetzman Group, a company which provides staffing solutions in all areas of finance and accounting. His assignments while at The Goetzman Group included (i) acting as interim chief financial officer for Rino International Inc. Inc. from January 2007 to September 2007; (ii) acting as interim general accounting manager for Physicals Formula from March 2008 to September 2008; and (iii) overseeing the Sarbanes- Oxley compliance project for Smart & Final from January 2005 to May 2005. Mr. Gan received his Master of Arts from Fudan University, Shanghai in June 1989 and received his Masters in Accounting from the University of Southern California in December 1995.

Chris Bickel was elected as a director on February 12, 2010. Since October 2009, Mr. Bickel has served as President of Primary Capital and is responsible for business development in China. Primary Capital acted as placement agent for the Company’s February 2010 private placement. From 2005 to October 2009, Mr. Bickel was an investment banker at Rosewood Capital Group, LLC (previously an affiliate of Primary Capital and now a branch office ) during which time his investment banking team provided a full range of investment banking, due diligence and business advisory services to private China based companies interested in accessing the U.S. capital markets and being listed in the U.S., as well as advisory services to US based investment banking firms interested in identifying investment banking clients in China. Mr. Bickel was instrumental in originating and financing of a number of PRC companies that are listed on the NASDAQ or whose shares are quoted on the OTCBB. From 2001 through 2004, Mr. Bickel served as Chairman and CEO of Sino UJE Ltd., a Hong Kong based company which is a distributor of medical and industrial instrumentation and technology products. Mr. Bickel was also employed by Spectris Inc. from 1983 to 1996. As an employee of Spectris, Mr. Bickel was involved with and managed the nonwoven sector of its business. Spectris was engaged in providing engineered products for use in nonwovens production. We believe that Mr. Bickel’s extensive past experience in providing business advisory services to private China based companies interested in accessing the U.S. capital markets, including Rino International Corp. and Sino Gas International Holdings, Inc., and helping those companies become successfully listed as well as his over ten years’ experience in the nonwoven market and knowledge with manufacturing practice and the overall market make him a suitable candidate to serve on our board of directors.

Li Jun was elected as a director in February 2010. Mr. Li is the owner and manager of Shanghai Primary Capital Management Co., Ltd., a business advisory firm incorporated in Shanghai China, which he started in 2010. (Shanghai Primary Capital Management Co., Ltd. is not affiliated with Primary Capital.) He provides advisory services to China business owners seeking capital and advisory services related to listing their company on United States stock exchanges. He has over twenty years of experience working in China in various fields and in various capacities. Mr. Li founded Shanghai Rosewood Investment Consulting Co., Ltd in 2005 and participated in four listing and financing transactions in which China based companies received funding from U.S. based investors and listed on in the U.S. From 2001 through 2008, Mr. Li has been the Managing Director of SINO UJE, Ltd., a Hong Kong based company which is a distributor of medical and industrial instrumentation and technology products throughout Asia. From 1994 through 2000, Mr. Li was employed by Nanchang Minerals Machinery Imp and Exp Co., Ltd initially as a salesman, followed by promotions to department director and vice president. From 1987 through 1994, Mr. Li served as an instructor at the University of Military Science and Technology and he retired as a Major from the Chinese People’s Liberation Army. Although he has not been previously engaged in the nonwovens business, we believe that Mr. Li’s business acumen and his extensive past experience in providing business advisory services to private China based companies interested in accessing the U.S. capital markets and helping those companies become successfully listed make him an eminently suitable candidate to serve on our board of directors. Mr. Li received his Bachelor’s and his Master’s degree of Science from Shanghai Jiaotong University. Mr. Li is not, and has not been within the last five years, a director of any other publicly traded company.

Richard M. Cohen was elected as a director in June, 2010. Since 1996, Mr. Cohen has been the President of Richard M. Cohen Consultants, a financial services consulting company that accepts engagements from public and private companies to assist with their corporate governance and corporate finance needs. From 1984 through 1992, Mr. Cohen was an investment banker at both Henry Ansbacher and Furman Selz, where he specialized in mergers & acquisitions, public equity offerings, and restructurings. From 1980 through 1983, Mr. Cohen was a Vice President of corporate development at Macmillan, Inc. Mr. Cohen is a Certified Public Accountant (New York State) and began his career at Arthur Andersen. He received a B.S. from The University of Pennsylvania (Wharton) in 1973 and an M.B.A. from Stanford University in 1975. Although he has not been previously engaged in the nonwovens business we believe that Mr. Cohen’s business acumen and his experience in providing business advisory services to private companies to assist with their corporate governance and corporate finance needs coupled with his experience serving as a director of a number of publicly traded companies make him an eminently suitable candidate to serve on our board of directors. Mr. Cohen currently serves as a director of Helix BioMedix (OTCBB:HXBM), Rodman and Renshaw (NASDQ:RODM), CorMedix (OTCBB:CRMD), Dune Energy, Inc. (AMEX: DNE), for which he served as Chief Financial Officer from November 2003 to April 2005.

Su Lei was elected as a director in August 2010. Mr. Su currently serves as the Associate Director of Information of the State Environmental Protection Agency in China, a position he has held since 2001. Mr. Su has successively acted as Principal Staff Member, Associated Director and Director of China Environmental Protection Industrial Association since September 2001. He also currently serves as the Director of the Working Committee of China Green Star, a position he has held since 2002. China Green Star is a non-profit organization under China's Environmental Protection Association which focuses on promoting the interests of the environmental protection industry. We believe that Mr. Su’s position and experience with the State Environmental Protection Agency and his understanding of public policy matters make him well suited to serve on our board of directors. Mr. Su received a bachelor’s degree in the Electronic Engineering from China Air Force Missile Institute, and he is now a senior engineer in Environment Management.

All of our directors serve on the board until our next annual meeting of the stockholders, and until their successors have been elected and qualified or until their earlier resignation or removal.

Our executive officers serve at the discretion of the board of directors, subject to the terms of any employment agreement they have with the Company. Mr. Bickel is serving on the Board as a designee of Primary Capital. Under the terms of its financial services agreement with the company Primary Capital is entitled to designate one board member and one observer until February 11, 2012.

Family Relationships

There are no family relationships among our directors and executive officers, except the Eric Gan, our chief financial officer, is the brother in law of Li Jun, one of our directors. There is no arrangement or understanding between or among our executive officers and directors pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management shareholders will exercise their voting rights to continue to elect the current board of directors.

Involvement in Certain Legal Proceedings

None of our directors or executive officers has, during the past ten years:

been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Board Independence

In order to be listed on NASDAQ, a company is required to meet certain corporate governance requirements, including, with certain exceptions, the requirement to have a board of directors the majority of whose members are “independent” within the meaning of NASDAQ rules.

As a “controlled company” we are exempt from the requirements of the NASDAQ Marketplace Rules (i) to have a majority of independent board members; (ii) for independent director oversight of executive officer compensation and (iii) for independent director oversight of director nomination. As a controlled company, we remain subject to the NASDAQ audit committee requirements and the requirement that independent directors regularly meet in executive session.

Under NASDAQ Marketplace Rules a company is considered a "controlled company" if greater than 50% of its voting power is held by an individual, a group or another company. In order for a group to exist for purposes of this rule, the stockholders forming the group are required to publicly file a notice that they are acting as a group (e.g., Schedule 13D). On December 29, 2010, a group consisting Bestyield Group Limited, Jie Li, Proudlead Limited, Law Wawai, Pilot Link International Limited, High Swift Limited, China Investment Management Inc., Song Huaying, and Newise Holdings Limited and Li Jun filed a Schedule 13D disclosing the existence of a group with respect to their holdings in the Company.

The Company has disclosed its status as a “controlled company” in its annual report on Form 10-K for the fiscal year ended September 30, 2010 filed on January 3, 2011 and the basis for determining that it is a controlled company.

The Board has determined that three of its six current members, namely Messrs. Chris Bickel, Su Lie and Richard M. Cohen, are “independent” within the meaning of NASDAQ listing standards.

Director Contracts

In May 2010, we entered into a director’s agreement with Richard M. Cohen, which agreement was effective with his election to the Board. Under the terms of that agreement, effective on closing of the offering, Mr. Cohen will be paid an annual retainer of $24,000 for serving as a director (with $2,000 payable at the beginning of each month). In addition, pursuant to the Company’s equity incentive plan, Mr. Cohen was awarded 30,000 shares of restricted two thirds of which are subject to restrictions on transfer and are subject to forfeiture with the restrictions lapsing as to one-third of the shares on the first anniversary of the date of grant and as to one- third on the second anniversary of the date of grant in the event Mr. Cohen continues to be a director on those dates. In addition, the Company will reimburse the director for pre-approved reasonable business-related expenses incurred in good faith in the performance of the director’s duties for the Company.

Committees

The Board currently has three standing committees: Audit Committee, Compensation Committee and Nominating Committee. Each member of these committees is “independent” as defined by NASDAQ and SEC rules and each of these committees has a written charter approved by the Board. Committee members are appointed by the Board based on the recommendation of the Nominating Committee, except that members of the Nominating Committee are appointed by the independent members of the Board. The current members of the committees are as follows:

Director	Audit	Compensation	Nominating
Jie Li
Law Wawai
Li Jun
Chris Bickel	ü	ü	ü
Richard M. Cohen	ü	ü	ü
Su Lei	ü

Audit Committee; Audit Committee Financial Expert

The Audit Committee, established in September 2010, currently consists of three members, Su Lei, Chris Bickel, and Richard M. Cohen, its Chairman. The Board has determined that each of them is independent within the meaning of the NASDAQ listing standards and applicable SEC regulations, and that each member has the financial literacy required by the NASDAQ listing standards.

The Board also has determined that Mr. Cohen is qualified as an "audit committee financial expert" within the meaning of applicable SEC regulations and has the accounting and related financial sophistication required by NASDAQ listing standards.

The function of the Audit Committee, as more fully set forth in its charter, is to (i) oversee our financial statements, our financial reporting process and our system of internal control over financial reporting; (ii) recommend the selection of our registered public accounting firm; (iii) review the extent of non-audit services to be performed by the auditors; and (iv) review the disclosures made in our periodic financial reports.

Compensation Committee

The Compensation Committee, established in September 2010, consists of two members Chris Bickel and Richard M. Cohen. The Board has determined that each of them is independent within the meaning of the NASDAQ listing standards. The functions of the Compensation Committee, as more fully set forth in its charter, are to oversee our compensation policies generally, evaluate senior executive performance, oversee and determine compensation for senior executives and review and recommend to the Board actions regarding director compensation.

Nominating Committee

The Nominating Committee, established in September 2010, currently consists of two members, Chris Bickel and Richard M. Cohen. The Board has determined that each of Messrs. Bickel and Cohen is independent within the meaning of the NASDAQ listing standards.

As more fully set forth in its charter, the primary responsibilities of the Nominating Committee are to: (i) develop and recommend to the Board criteria for selecting qualified director candidates; (ii) identify, review and evaluate individuals qualified to become Board members; (iii) consider committee member qualifications, appointment and removal; and (iv) assist the Board in its annual reviews of the performance of the Board, each committee and management. The Committee has the exclusive authority to make recommendations to the Board for approval for the election of new members to the Board.

To fulfill its responsibilities and duties the Nominating Committee is required to, among other things (i) evaluate the current composition of the Board of Directors and its committees, and determine future requirements for director candidates; (ii) determine the Board’s criteria for selecting new directors, including desired board skills and attributes, and actively seek prospective individuals qualified to become board members; (iii) adopt and maintain a policy concerning the director nomination process; (iv) adopt a policy concerning the consideration of director candidates recommended by stockholders and consider stockholder nominees for election to the Board; (v) evaluate and propose nominations for election to the Board; and (vi) review and make recommendations to the Board concerning membership of Board committees.

The Committee does not assign specific weights to particular criteria. Rather, the Nominating Committee believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities.

The Nominating Committee will consider director nominees recommended for consideration by the stockholders. To have a person considered by the Nominating Committee for recommendation to the Board as a director nominee a stockholder should write to the Corporate Secretary, specifying the nominee's name and qualifications for Board membership and providing confirmation of the nominee's consent to serve as a director. Following verification that the person submitting the recommendation is a stockholder of the Company, all properly submitted recommendations will be brought to the attention of the Nominating Committee at a regularly scheduled Committee meeting.

If a stockholder properly recommends a director nominee, the Nominating Committee will give due consideration to that nominee and will use the same criteria used for evaluating other director nominees, in addition to considering the information relating to the director nominee provided by the stockholder.

Stockholders also may nominate directors for election at our annual meeting of stockholders by following the provisions set forth in our bylaws. The deadline for stockholder nominations is set forth in our by laws. Stockholders and other parties interested in communicating directly with the Board of Directors may do so by writing to: China SLP Filtration Technology, Inc., Attention: Board of Directors, Shishan Industrial Park, Nanhai District, Foshan City, Guangdong Province PRC. Pursuant to a process approved by the Board, the Corporate Secretary reviews all correspondence received by us and addressed to members of the Board and regularly forwards to the Board a summary of such correspondence and copies of all correspondence that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Board committees or otherwise requires the Board's attention. Directors may at any time review a log of all correspondence received by us that is addressed to members of the Board and request copies of any such correspondence.

Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of our internal audit department and handled in accordance with procedures established by the Audit Committee to address such matters.

Compensation Committee Interlocks and Insider Participation

All current members of the Compensation Committee are independent directors. None of the past or present members of our Compensation Committee are present or past employees or officers of ours or any of our subsidiaries. No member of the Compensation Committee has had any relationship with us requiring disclosure under Item 404 of Regulation S-K under the Securities Exchange Act of 1934, as amended. None of our executive officers serves on the board of directors or compensation committee of a company that has an executive officer that serves on our Board or Compensation Committee.

Code of Ethics

We strive to foster a culture of honesty, integrity and accountability.

We have a code of ethics applicable to all employees, including all officers, and including our independent directors, who are not employees of the company, with regard to their company -related activities. The code incorporates our guidelines designed to deter wrongdoing and to promote honest and ethical conduct and compliance with applicable laws and regulations. The code also incorporates our expectations of our employees that enable us to provide accurate and timely disclosure in our filings with the SEC and other public communications. In addition, the code incorporates guidelines pertaining to topics such as complying with applicable laws, rules, and regulations; reporting code violations; and maintaining accountability for adherence to the code.

Waivers of the Code for executive officers and directors may be granted only by the Board. Amendments to the Code must be approved by the Board. We intend to provide disclosure of any such amendments or waivers on our website (www.silepu.com) within four business days of any such amendment or waiver.

EXECUTIVE COMPENSATION

The following is a summary of the compensation we paid to each of our “named executive officers” (as such term is defined in Item 402 of Regulation S-K) for each of the last two fiscal years ended September 30, 2010 and 2009. No executive officer received compensation in excess of $100,000 for any of those two years.

Name and Principal Position	Fiscal Year	Salary ($)	Bonus ($)		Stock Awards ($)	Option Awards ($)		Non-equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)	Total ($)
Li Jie	2010	44,117		-0-	-0-		-0-	-0-		-0-	-0-		44,117
(CEO(1)	2009	-0-		-0-	-0-		-0-	-0-		-0-	-0-		-0-

Seth Winterton	2010	-0-		-0-	-0-		-0-	-0-		-0-	-0-		-0-
(former CEO)(2)	2009	-0-		-0-	-0-		-0-	-0-		-0-	-0-		-0-

Eric Gan (3)	2010	18,000		-0-	-0-		90,310	-0-		-0-	-0-		108,310
	2009	-0-		-0-	-0-		-0-	-0-		-0-	-0-		-0-

(1)	Jie Li was appointed Chief Executive Officer in February 2010.

(2)	Seth Winterton served as Chief Executive Officer of Perpetual Technologies from December 29, 2008 until February 12, 2010.

(3)

Eric Gan was appointed Chief Financial Officer on August 4, 2010. Mr. Gan is paid an annual salary of $120,000. In addition, on September 3, 2010, Mr. Gan was granted an option to purchase up to 400,000 shares of common stock at an exercise price equal to the initial public offering price. The option shall vest and be exercisable as follows; 160,000 shares will vest and become exercisable on July 31, 2011; 120,000 shares will vest and become exercisable on July 31, 2012; 120,000 shares will vest and become exercisable on July 31, 2013. In the event that the employment is terminated within 12 months from the employment agreement date by the Company without cause, 160,000 shares shall be vested immediately on the termination date. This amount of the option award set forth in the table represents the grant date fair value computed in accordance with Accounting Standards Codification, or ASC, Topic 718, and does not reflect whether our named executive officer has actually realized a financial benefit from the award. For information on the assumptions used to calculate the value of the awards, we refer you to Note 14 “Equity and stock based compensation” to our consolidated financial statements for the fiscal year ended September 30, 2010 included elsewhere in this prospectus. In accordance with SEC rules, the amount shown excludes the impact of estimated forfeitures related to service-based vesting conditions.

The following is a summary of the compensation paid by our operating subsidiary Foshan to Li Jie, its President and Chief Executive Officer, for the last two fiscal years ended September 30, 2010 and 2009, respectively. No executive officer of Foshan received compensation in excess of $100,000 for any of these two years.

Name and Principal Position	Fiscal Year	Salary ($)(1)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Li Jie
(President and Chief	2010		44,117		-0-		-0-		-0-		-0-		-0-		-0-		44,117
Executive Officer )	2009		44,117		-0-		-0-		-0-		-0-		-0-		-0-		44,117

(1) The relevant exchange rates for fiscal years ended September 2010 and 2009 are $1 to RMB 6.8 and RMB 6.8, respectively.

	OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
	OPTION AWARDS																STOCK AWARDS
Name (a)	Number of Securities Underlying Unexercised and Earned options (#) (b)		Number of Securities Underlying Unexercised Unearned Options (#) (c)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d)		Option Exercise Price ($) (e)			Option Expiration Date ($) (f)			Number of Shares or Units of Stock that have not Vested (#) (g)		Market Value of Shares of Units of Stock that Have not Vested ($) (h)			Number of Unearned Shares, Units or Other Rights that have not Vested (#) (i)		Market or Payout Value of Unearned Shares, Units or other Rights that have not Vested ($) (j)
Li Jie		-0-		-0-		-0-		-0-			-0-			-0-		-0-			-0-		-0-
Seth Winterton		-0-		-0-		-0-		-0-			-0-			-0-		-0-			-0-		-0-
Eric Gan		-0-		-0-		400,000		(1	)		(2	)		-0-		-0-			-0-		-0-

(1)

On September 3, 2010, Eric Gan was granted an option to purchase up to 400,000 shares of common stock at an exercise price equal to the initial public offering price. The option vests and is exercisable as follows; 160,000 shares will vest and become exercisable on July 31, 2011; 120,000 shares will vest and become exercisable on July 31, 2012; 120,000 shares will vest and become exercisable on July 31, 2013. In the event that the employment is terminated within 12 months from the employment agreement date by the Company without cause, 160,000 shares vests immediately on the termination date.

(2)

The option will expire on September 3, 2015.

Employment Agreement

On November 20, 2008, Mr. Li entered into an employment agreement with Foshan to serve as our President and Chief Executive Officer. Under the agreement, Mr. Li is to be paid a salary of $15,000 per month beginning on the closing date of the public offering. The agreement can be terminated by either party by giving 30 days notice.

On January 1, 2010, Mr. Law entered into an employment agreement with Foshan to serve as our President of Sales. Under the agreement, Mr. Law is to be paid a salary of $5,000 per month beginning on the closing date of the public offering. The agreement can be terminated by either party by giving 30 day notice.

Effective August 5, 2010, Mr. Gan entered into an employment agreement with the Company to serve as Chief Financial Officer. The term is for three years unless sooner terminated as provided in the agreement. Under the agreement Mr. Gan has agreed to perform such duties as shall be consistent with the position of Chief Financial Officer subject to the supervision and direction of the Board. Under the agreement Mr. Gan will receive an annual salary of $120,000 payable in 12 equal payment payable on the 15th day of each month beginning on August 15, 2010). However, prior to the completion of the offering contemplated by this prospectus, Mr. Gan will receive a salary of $6,000 per month (receiving $10,000 for the month during which the Company completes its initial public offering and thereafter). In addition to his annual salary, Mr. Gan will be reimbursed for all reasonable expenses including travel expense between United States and China and will be provided with housing expense during the term of his employment. In addition, on September 3, 2010, Mr. Gan was granted an option to purchase up to 400,000 shares of common stock at an exercise price equal to the initial public offering price. The option shall vest and be exercisable as follows; 160,000 shares will vest and become exercisable on July 31, 2011; 120,000 shares will vest and become exercisable on July 31, 2012; 120,000 shares will vest and become exercisable on July 31, 2013. In the event that the employment is terminated within 12 months from the employment agreement date by the Company without cause, 160,000 shares shall be vested immediately on the termination date.

2010 Stock Incentive Plan

On September 3, 2010, we adopted the 2010 Plan. All officers and key employees, directors of, and consultants to the Company and its subsidiaries and affiliates, who are responsible for or contribute to the management, growth and/or profitability of the business of the Company and/or its subsidiaries and affiliates are eligible for participation in the 2010 Plan. Two Million One Hundred Eighty Six Thousand Two Hundred Eighteen (2,186,218) (or such number as shall be equal to 10% of the outstanding shares on a fully diluted basis after the offering and the conversion of the notes) shares of common stock have been authorized and reserved for the 2010 Plan and any shares that may become available for issuance under awards under the 2010 Plan as a result of expiration or forfeiture. Under the 2010 Plan, the company may issue stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards and other stock-based awards. The 2010 Plan is administered by our Compensation Committee.

The purpose of the 2010 Plan is to enhance the profitability and value of the Company for the benefit of its stockholders by enabling the Company to offer eligible participants stock-based incentives in the Company to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and the Company’s stockholders.

The Compensation Committee does not currently have a set formula for determining who will receive awards and what the amounts of the awards will be and when such awards will be made. The Compensation Committee can make an award in its discretion at any time as consistent with the terms of the 2010 Plan. Long-term equity incentives are intended to reward and will be awarded to eligible participants who help achieve our overall corporate goals and meet their individual employee objectives.

Outstanding Equity Awards

On September 3, 2010, as required by the terms of his agreement with the Company entered into in May 2010, the Board awarded Richard Cohen 30,000 shares of restricted stock two-thirds of which are subject to restrictions on transfer and are subject to forfeiture, with the restrictions lapsing as to one-third of the shares on the first anniversary of the date of grant, and as to one-third on the second anniversary of the date of grant in the event Mr. Cohen continues to be a director on those dates.

On September 3, 2010, under the 2010 Plan and in connection with his appointment as Chief Financial Officer, the Board granted Eric Gan an option to purchase 400,000 shares at an exercise price equal to the public offering price of this offering. The option vests and is exercisable as follows; 160,000 shares will vest and become exercisable on July 31, 2011; 120,000 shares will vest and become exercisable on July 31, 2012; 120,000 shares will vest and become exercisable on July 31, 2013. In the event that the employment is terminated within 12 months from the employment agreement date by the Company without cause, 160,000 shares shall be vested immediately on the termination date.

Except for the foregoing there are no option exercises, options outstanding or restricted stock grants as of the date of this prospectus.

Compensation of Directors

The table below sets forth the compensation of the directors during the last completed fiscal year:

DIRECTOR COMPENSATION

Name (a)	Fees Earned or Paid in Cash ($) (b)		Stock Awards ($) (c)		Option Awards ($) (d)		Non-Equity Incentive Plan Compensation ($) (e)		Nonqualified Deferred Compensation Earnings ($) (f)		All Other Compensation ($) (g)		Total ($) (h)
Law Wawai		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Chris Bickel		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Li Jun		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Richard M. Cohen (1)		-0-		180,000		-0-		-0-		-0-		-0-		180,000
Su Lei		-0-		-0-		-0-		-0-		-0-		-0-		-0-

(1) In May 2010, we entered into a director’s agreement with Richard M. Cohen, which agreement was effective with his election to the Board. Under the terms of that agreement Mr. Cohen is required to be paid an annual retainer of $24,000 for serving as a director (with $2,000 payable at the beginning of each month). Under an oral agreement Mr. Cohen has agreed with us that the payment of the monthly retainer will commence on closing of this offering. We have not made any payments of this retainer as of the date of this prospectus. In addition, pursuant to the 2010 Plan, on September 3, 2010, Mr. Cohen was granted 30,000 restricted shares, two-thirds of which are subject to restrictions on transfer and to forfeiture, with the restrictions lapsing as to one-third of the shares, on the first anniversary of the date of grant, and as to one-third, on the second anniversary of the date of grant in the event Mr. Cohen continues to be a director on those dates. In addition, the Company will reimburse Mr. Cohen for pre-approved reasonable business-related expenses incurred in good faith in the performance of the director’s duties for the Company. The amount set forth in the table above under “Option Awards” represents the grant date fair value of the award computed in accordance with ASC Topic 718.

Except as set forth above as of the date of this prospectus, we have no formal or informal arrangements or agreements to compensate our directors for services they provide as directors. We plan to implement a compensation program for our independent directors, as and when they are appointed, which we anticipate will include such elements as an annual retainer, meeting attendance fees and stock options. The details of that compensation program will be negotiated with each independent director.

None of the directors of Foshan, our PRC-based operating company, are presently being compensated for their service as directors.

Li Jun, our director, is an officer and controlling stockholder of United Best, our foreign advisor. See section entitled “Certain Relationships and Related Transactions” beginning on page 85.

Additional Narrative Disclosure

We have no plans that provide for the payment of retirement benefits, or benefits that will be paid primarily following retirement, including, but not limited to, tax qualified defined benefit plans, supplemental executive retirement plans, tax qualified defined contribution plans and non-qualified defined contribution plans.

There are no contracts agreements, plans or arrangements, whether written or oral, that provide for payment to a named executive officer at, following, or in connection with the resignation, retirement or other termination of a named executive officer or a change in control or the company or a change in the executive officers responsibilities following a change in control, with respect to each named executive officer.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except as set forth below, since October 1, 2008, the Company was not a party to any transaction (where the amount involved exceeded the lesser of $120,000 or 1% of the average of our assets for the last two fiscal years) in which an director, executive officer, holder of more than five percent of our common stock, or any member of the immediate family of any such person have or will have a direct or indirect material interest and no such transactions are currently proposed.

Primary Capital is a beneficial owner of more than 5% of our common stock. Mr. Bickel is also the President of Primary Capital. Chris Bickel is a director of our company serving as a designee of Primary Capital.

assisting the Company in preparing a detailed business plan, financial model and power point presentation;

negotiating and structuring the reverse merger;

acting as placement agent for the February 12, 2010 note financing;

recommending to the Company a qualified auditor, securities attorney and investor relations firm, and assisting the Company with negotiating the terms of their respective engagements;

advising the Company on strategies to increase shareholder value;

assisting the Company and its investor relations firm in organizing, and participating with the Company in, investor road shows and investor conference calls;

recommending investor conferences in the US and Europe to be attended by the Company and a representative of Primary Capital;

identifying strategic relationships and joint venture partners;

identifying and recommending persons to serve on the Company’s Board of Directors;

identifying and rendering advice regarding potential acquisitions, including the valuation of the acquisition and financing for the acquisition;

assisting the Company in connection with its listing on a U.S. stock exchange;

reviewing and commenting on the Company’s SEC filings associated with the Company’s transactions; and

advising Company regarding its obligations as a U.S. public company.

Under the terms of a financial services agreement between Primary Capital and the company, Primary Capital was paid a commission of $202,000 at the closing of the February 2010 private financing. Primary Capital is also owed an additional $75,000 for services rendered in connection with the private placement. Primary Capital is also entitled to receive $15,000 on completion of the offering and $15,000 for the next succeeding seven calendar quarters for an aggregate amount of $120,000.

At the closing of the private financing, Primary Capital received 290,755 shares of our common stock. Primary is also entitled to receive 265,186 shares of common stock on the closing of this offering.

In addition, for providing these financial services Primary Capital is entitled to receive, on conversion of the notes issued to the investors in the February 2010 private placement (which occurs upon consummation of this offering), a five-year warrant to purchase 96,190 shares of common stock (which number is equal to 5% of the 1,923,809 shares of common stock issued to the noteholders on conversion), exercisable at $2.10 (which equals the price at which the notes converted and assumes an initial public offering price of $6.00 per share). Unlike the investor warrants, these warrants will not terminate but instead become exercisable upon conversion of the notes and consummation of this offering. If the note conversion does not occur, Primary Capital will receive a five-year warrant to purchase that number of shares of common stock equal to 5% of the common stock underlying the warrants issued to the investors in the private financing exercisable at the same price at which those investor warrants are exercisable.

Li Jun is a director and is a beneficial owner of more than 5% of our common stock. Mr. Li is an officer and controlling stockholder of United Best, our foreign advisor, provided financial services in connection with the private financing.

Under the terms of a consulting agreement between United Best and the company, United Best was paid a commission of $202,000 at the closing of the financing. United Best is also owed an additional $75,000 for services rendered in connection with the financing. Additionally, under the consulting agreement, as amended, United Best is entitled to be paid fee on completion of this offering a success of $750,000 (which represents 3% of the $25,000,000 in gross proceeds received by us in connection with the underwritten offering, assuming an initial public offering price of $6.00 per share).

At the closing of the private financing, United Best received 362,755 shares of our common stock for their services. United Best is also entitled to receive an additional 193,186 shares on closing of this offering.

In addition, as partial consideration for providing these financial services, United Best is entitled to receive, on conversion of the notes issued to the investors in the February 2010 private placement (which occurs upon consummation of this offering), a five-year warrant to purchase 96,190 shares of common stock (which represents 5% of the number of shares of common stock issued to the note holders on conversion), exercisable at the price of $2.10 per share (i.e. the price at which the notes converted based on the assumed initial public offering price of $6.00 per share). Unlike the investor warrants, these warrants will not terminate but instead become exercisable on conversion of the notes and consummation of this offering. If the note conversion does not occur, United Best will receive a five-year warrant to purchase that number of shares of common stock equal to 5% of the common stock underlying the warrants issued to the investors in the private financing exercisable at the same price at which those investor warrants are exercisable.

For additional information about the nature of the services provided to the company by each of Primary Capital and United Best under their respective agreements, reference is make to “Additional Disclosure Regarding Conversion of Notes and Exercise of Warrants - Financial Services Agreements and Related Warrants” beginning on page 61.

On February 12, 2010, we entered into a share exchange agreement with the owners of all of the ou

CHINA SLP FILTRATION TECHNOLOGY, INC. S-1/A