UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

(Mark One)

QANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934         For the fiscal year ended: December 31, 2008



Commission File No. 000-21071

GOLDEN ELEPHANT GLASS TECHNOLOGY, INC.

|Nevada                                                             | 88-0309578                          
|------------------------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of
    incorporation or organization) | (I.R.S. Employer Identification No.)

123 Chuangye Road 
Haizhou District, Fuxin City 
Liaoning 123000 
Peoples Republic of China(Address of Principal Executive
Offices)

(86) 418-3995066(Registrants Telephone Number,
Including Area Code)

Securities registered pursuant to
Section 12(b) of the Exchange Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|None                | None                                     

Securities registered pursuant to
Section 12(g) of the Exchange Act: Common Stock, par value $0.01 per share

Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.

Yes £           
No

Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act.

Yes £           
No Q

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

Yes Q           
No £

Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.

Yes Q           
No £

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of "large accelerated
filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.

|Large Accelerated Filer
    £                                                | Accelerated Filer
    £        
|---------------------------------------------------------------------------- | -------------------------------
|                                                                             |                                
|Non-Accelerated Filer
    £(Do not check if a smaller reporting
    company) | Smaller reporting company
    Q

Indicate by check mark whether
registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes £           
No Q

As of June 30, 2008 (the last
business day of the registrants most recently completed second fiscal quarter),
the aggregate market value of the shares of the Registrants common stock held
by non-affiliates (based upon the closing price of such shares as quoted on the
Electronic Bulletin Board maintained by the Financial Industry Regulatory
Authority) was approximately $33 million. Shares of the Registrants common
stock held by each executive officer and director and each by each person who
owns 10 percent or more of the outstanding common stock have been excluded in
that such persons may be deemed to be affiliates of the Registrant. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.

There were a total of 28,623,996
shares of the registrants common stock outstanding as of March 31, 2009.

Documents Incorporated by Reference:



---

As of June 30, 2008 (the last business day of the registrants
most recently completed second fiscal quarter), the aggregate market value of
the shares of the Registrants common stock held by non-affiliates (based upon
the closing price of such shares as quoted on the Electronic Bulletin Board
maintained by the Financial Industry Regulatory Authority) was approximately $33
million. Shares of the Registrants common stock held by each executive officer
and director and each by each person who owns 10 percent or more of the
outstanding common stock have been excluded in that such persons may be deemed
to be affiliates of the Registrant. This determination of affiliate status is
not necessarily a conclusive determination for other purposes. There were
a total of 28,623,996 shares of the registrants common stock outstanding as of
March 31, 2009.

Documents Incorporated by Reference:

None.

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TABLE OF CONTENTS

|PART I  
|--------
|        
|ITEM 1. 
|ITEM 1A.
|ITEM 1B.
|ITEM 2. 
|ITEM 3. 
|ITEM 4. 
|        
|PART II 
|        
|ITEM 5. 
|ITEM 6. 
|ITEM 7. 
|ITEM 7A.
|ITEM 8. 
|ITEM 9. 
|ITEM 9A.
|ITEM 9B.
|        
|PART III
|        
|ITEM 10.
|ITEM 11.
|ITEM 12.
|ITEM 13.
|ITEM 14.
|        
|PART IV 
|        
|ITEM 15.

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Special Note Regarding Forward Looking Statements

This Annual Report on Form 10-K, including the following Item
1- Business, Item 3  Legal Proceedings, Item 7 - Managements Discussion
and Analysis of Financial Condition and Results of Operations, Item 10-
Director, Executive Officer and Corporate Governance and Item 11  Executive
Compensation contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such statements include, among others, those
concerning our expected financial performance; strategic and operational plans;
management forecast; economies of scales; litigation; potential and contingent
liabilities; managements plans; taxes; as well as all assumptions,
expectations, predictions, intentions or beliefs about future events. You are
cautioned that any such forward-looking statements are not guarantees of future
performance and that a number of risks and uncertainties could cause actual
results of the Company to differ materially from those anticipated, expressed or
implied in the forward-looking statements. The words believe, expect,
anticipate, project, targets, optimistic, intend, aim, will or
similar expressions are intended to identify forward-looking statements. All
statements other than statements of historical fact are statements that could be
deemed forward-looking statements. Risks and uncertainties that could cause
actual results to differ materially from those anticipated include risks related
to our views on the growth of the glass industry, particularly the specialty
float glass industry; general economic crisis, our ability to overcome
competition in the Chinese glass manufacturing market; the impact that a
downturn or negative changes in the industries in which our products are sold
could have on our business and profitability; any decrease in the availability,
or increase in the cost, of raw materials and energy; our ability to
simultaneously fund the implementation of our business plan and invest in new
projects; economic, political, regulatory, legal and foreign exchange risks
associated with international expansion; loss of key members of our senior
management; and unexpected changes to Chinas political or economic situation
and legal environment. Additional disclosures regarding factors that could cause
our results and performance to differ from results or performance anticipated by
this Report are discussed in Item 1A. Risk Factors.

Readers are urged to carefully review and consider the various
disclosures made by us in this Report and our other filings with the SEC. These
reports attempt to advise interested parties of the risks and factors that may
affect our business, financial condition and results of operations and
prospects. The forward-looking statements made in this Report speak only as of
the date hereof and we disclaim any obligation to provide updates, revisions or
amendments to any forward-looking statements to reflect changes in our
expectations or future events.

Use of Terms

Except as otherwise indicated by the context, all references in
this annual report to (i) the Company, we, us, our and Golden Elephant
are to Golden Elephant Glass Technology, Inc., a Nevada corporation, and its
direct and indirect subsidiaries; (ii) Dollar Come are to our direct, wholly
owned subsidiary Dollar Come Investments Limited, a British Virgin Island
company; (iii) Fuxin Hengrui are to our indirect, wholly owned subsidiary
Fuxin Hengrui Technology Co. Ltd., a PRC company; (iv) Fuxin Xianheng are to
our indirect, wholly owned subsidiary Fuxin Xianheng Float Glass Co. Ltd., a PRC
company; (v) Securities Act are to the Securities Act of 1933, as amended;
(vi) Exchange Act are to the Securities Exchange Act of 1934, as amended;
(vii) RMB are to Renminbi, the legal currency of China; (viii) U.S. dollar,
$ and US$ are to the legal currency of the United States; and (ix) China,
Chinese and PRC are to the Peoples Republic of China.

1

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PART I

ITEM 1. BUSINESS.

Overview of Our Business

We are a China-based float glass manufacturer. Our product
offerings include float glass, ultra-clear glass (also called crystal glass),
colored float glass and high grade, glass processed products such as mirrors,
glass artwork, tempered glass, insulated glass, laminated glass, lacquered glass
and similar products. We have been manufacturing our glass products from our
production facility in Fuxin City, Liaoning Province, China since 2002 and sell
our products to end users in China, Asia, Europe, South America and South
Africa.

We design, develop, manufacture and market our products for use
in a variety of end products, including automobiles, commercial and residential
buildings, construction materials, furniture and display cases, lighting
fixtures and decorative glass artwork, bath fixtures and electrical household
appliances, such as refrigerators and microwave ovens. We sell our products to
automakers and auto parts suppliers, building contractors and building material
suppliers and manufacturers of retail goods, both directly and through a broad
distributor network. Our major customers include Anshan Xingsheng Glass
Distribution Office, Guangzhou Runcheng Commerce and Trade Co., Ltd., Feshan
Jianheng Commerce and Trade Co., Ltd and Fujian Chengda Glass Trade Co., Ltd.

Our glass and glass products are manufactured in a broad range
of colors and specifications which are usually measured by thickness and width
and range between 2-23 millimeters in thickness and 3,300 millimeters in width.
Our glass products are marketed primarily under the Golden Elephant brand
name. Our total annual production capacity of our glass products is currently
4.95 million weight cases and we maintain two production lines which have an
aggregate daily melting capacity of over 800 tons.

We strive to be a low cost provider of high quality products.
Our glass products have been given a GB 11615-199 certification by the Chinese
National Quality Standards for glass products and passed the annual inspections
conducted by Chinese National Glass Inspection Committee since 2004. Our
products also have been certified by ISO 9001-2000, a Chinese Quality System and
ESC certification, a European Quality Certification for construction products,
with the valid term from March 24, 2007 to March 24, 2010. We transport our
products by train, sea and expressway.

Our financial and operating results for the fiscal year ended
December 31, 2008 were, and are expected to be for the foreseeable future,
suboptimal due to the worldwide global economic crisis. Since many of our
customers operate in industry segments that have been hardest hit by the
economic crisis, such as the automotive, construction and home furnishing
industries, our performance has consequently suffered. Until the amelioration of
the economic crisis, particularly in the industry segments in which our targeted
customers operate, we expect to continue to experience significant challenges.
In response to these challenges, we will continue to implement what we believe
to be prudent, cost-saving measures in a judicious and timely fashion. Recently,
we suspended operations of our float glass manufacturing operations in order to
perform maintenance and system upgrades that eventually would be needed. We
opted to suspend operations and initiate the maintenance program at a time when
pricing and demand for our products was low in order to minimize the adverse
effect of suspending operations. We intend to continue to take appropriate steps
to minimize the adverse effects of the global economic crisis on our operations
and financial performance.

Our Corporate Structure

Golden Elephant is a Nevada holding company for three direct
and indirect subsidiaries in the BVI and China. Our principal operations in
China are conducted through our operating subsidiary, Fuxin Hengrui, which is
held by our direct wholly-owned subsidiary Dollar Come, a BVI company, and Fuxin
Xianheng, which is jointly held by Dollar Come and Fuxin Hengrui. Dollar Come
has no active business operations other than its ownership of Fuxin Hengrui and
Fuxin Xianheng. Fuxin Hengrui was incorporated in China in September 2002 and is
now 100% owned by Dollar Come. Fuxin Xianheng was incorporated in April
2004 and is now 75% owned by Fuxin Hengrui and 25% owned by Dollar Come.

2

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The following chart reflects our organizational structure as of
the date of this report:



Our Corporate History

We were incorporated on December 2, 1993 in the State of Nevada
under the name of Mesquite Gaming Corp. and were formed to acquire, develop,
construct, own and manage hotel/casino projects. On July 1, 1998, we commenced
active business operations from which we generated revenues. On December 1,
1999, we filed a voluntary petition for relief under Chapter 11 in the United
States Bankruptcy Court, District of Nevada, or the Bankruptcy Court, and acted
as debtor in possession. On July 10, 2000, we again filed a voluntary petition
for relief under Chapter 11 in the Bankruptcy Court and acted as debtor in
possession. On September 6, 2005, the Bankruptcy Court issued a final decree in
the Chapter 11 proceedings, formally removing our Company from the oversight of
the Bankruptcy Court and ending all bankruptcy proceedings.

On March 31, 2008, we completed the reverse acquisition of
Dollar Come as discussed in details below. Dollar Come thereby became our wholly
owned subsidiary and the former controlling stockholders of Dollar Come became
our controlling stockholders. In June 2008, we changed our name to Golden
Elephant Glass Technology, Inc. to reflect the business of Dollar Come and its
subsidiaries.

Reverse Acquisition of Dollar Come

On March 31, 2008, we completed a reverse acquisition
transaction through a share exchange with Dollar Come whereby we issued to Money
Victory Limited, Win-Win Global Investments Inc. and a trust beneficially
holding shares of Dollar Come for 202 individuals located in the PRC who were
the former shareholders of Dollar Come, an aggregate of 23,751,710 shares of our
common stock, in exchange for all of the issued and outstanding capital stock of
Dollar Come. Dollar Come thereby became our wholly owned subsidiary and Ms. Lin
Tan, Ms. Yan Tan and Ms. Hong Tan, owners of Money Victory Limited and Win-Win
Global Investments Inc. became our controlling stockholders.

For accounting purposes, the share exchange transaction was
treated as a reverse acquisition with Dollar Come as the acquirer and Golden
Elephant Glass Technology, Inc. as the acquired party. When we refer in this
report to business and financial information for periods prior to the
consummation of the reverse acquisition, we are referring to the business and
financial information of Dollar Come on a consolidated basis unless the context
suggests otherwise.

3

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Our Operations

Our core product lines can be categorized as float glass
products, consisting primarily of flat glass and specialty float glass products
which are produced using the float glass methodology. The float methodology is
currently used to manufacture virtually all of the flat glass in the world.

This manufacturing process produces a flat sheet of glass and
consists of the following six essential steps:

| | 1. | Batch mixing. The raw materials (silica
      sand, soda ash and dolomite/limestone) are weighed and mixed and placed
      into a high temperature furnace where they are melted at 1500° C into
      molten glass.                                                                                  
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                        
| | 2. | Float bath. The molten glass mixture then
      is directed to a pool of liquid tin on which the molten glass floats
      while hardening. The glass, which is viscous, and the tin, which is fluid,
      does not mix and the contact surface between these two materials is
      perfectly flat.
| |    |                                                                                                                                                                                                                                                                                                        
| | 3. | Coating. At this stage, specialized metal
      oxides coatings can be applied to the glass surface while the glass is
      still hot in the annealing lehr in order to improve its performance or
      enhance its appearance.                                                                      
| |    |                                                                                                                                                                                                                                                                                                        
| | 4. | Annealing. Whether or not the molten glass
      is coated, the molten glass is slowly cooled or annealed as its passes
      into an annealing chamber called a lehr. Here it is cooled at controlled
      temperatures, until it is essentially at room temperature.                              
| |    |                                                                                                                                                                                                                                                                                                        
| | 5. | Inspection. Next the glass is inspected to
      ensure that is meets specifications and quality requirements.                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                        
| | 6. | Cutting and Shipping. Finally, the float
      glass is then cut into large standard sheets or cut to size depending on
      its intended use and is ready to be shipped.                                                                                                                             

A description of the uses of our float glass and our products
benefits are as follows:

- Heavy Float Glass. Our heavy float glass products, which are
  available in a variety of sizes, are manufactured based on our customers
  desired performance specifications with respect to thickness and tolerance,
  total weight, energy efficiency and light transmittance. Our products are
  designed to control energy usage, provide thermal insulation and a noise
  barrier as well as afford safety and security. Heavy float glass products are
  used in a wide variety of products including windows, doors, skylights,
  shelving, tabletops, and automotive applications.
- Ultra-Clear Glass and Colored Float Glass. Our Ultra-Clear
  float glass products are produced to have a higher percentage of light
  transmittance of up to 91.87% (as compared to 80-85% in our heavy float glass
  products) which results in glass product with enhanced clarity and greater
  translucence. This product line is designed to offer functional benefits in
  addition to aesthetic benefits, such as color, shaping, patterns and texture.
  Ultra-Clear Glass is used to produce high end products such as luxury
  chandeliers and artificial crystal crafts.
- Specialty Glass Processed Products. Using a variation on the
  standard float glass production methodology, we manufacture and sell specialty
  float glass products which include mirrors, tempered glass, insulated glass,
  laminated glass, lacquered glass, etc.

Manufacturing Facilities

Our primary manufacturing facility is located in Fuxin City in
Liaoning Province, China. Our goal has been to construct manufacturing
facilities which operate at peak efficiency while maintaining high workplace
safety and environmental compliance standards.

4

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As of December 31, 2008, we had 359 employees working at our
two float glass production lines and various production equipment.

We own one production line which became operative in August
2003 and has daily melting capacity of 500 tons. We lease another production
line from the liquidation committee of Fuxin Guangya Flat Glass Co. Ltd. with a
term ending on the earlier of (i) ten years starting from August 25, 2004; or
(ii) the closing date of the liquidation process for Fuxin Guangya Flat Glass
Co. Ltd. We upgraded this production line and it went into operation in
September 2005. The production line has a daily melting capacity of 300 tons and
up to 1.65 million weight cases production capacity of ultra-clear and colored
float glass annually. Our production lines are designed to operate continuously,
365 days per year, throughout a 6 to 10 years initial operating life. Float
lines are normally capable of several campaigns after the initial operating life
following major repair and upgrade programs.

Full utilization of our production lines means operating on 3
eight-hour shifts per day over a 7-day work week and overtime production may
result in utilization rates exceeding 100%. Our average utilization rate during
2007 and 2008 has been 100% and 94%, respectively.

In November 2008 and January 2009, we implemented maintenance
program for both of our production lines due to limited sales prospects, a
shortage of cash flow and unfavorable macro-economic conditions which have
resulted in a significant decrease in the price of float glass and,
consequently, our cash flow from operations. During the entire maintenance
period, all operations of the production lines and all manufacturing of float
glass products will be suspended and we do not expect to sell any of our own
float glass products. We meet our existing sales orders for float glass products
through subcontracting arrangements, which will shrink our profit margin, and we
expect to experience a significant reduction in new sales of float glass and
float glass products. While we expect the suspension of operations to
significant reduce our sales revenue, we believe that implementing the
maintenance program now, at a time when float glass prices are depressed will
mitigate the negative economic impact and lost revenues from reduced float glass
sales in the future and better position the Company for efficient operations
when and if the prices of float glass return to past levels.

We also maintain a mirror processing line and processing
equipment used to produce mirrors, glass artwork, tempered glass, insulated
glass, laminated glass, lacquered glass and other processed glass products.

Raw Materials

The primary raw materials and components we use to produce our
glass and glass products are pure alkali, heavy oil, sandstone, silica sand,
dolomite/limestone, 520 Fuel Slurry and mirabilite. We also have high energy
requirements due to the extreme nature of the production process. In 2008, our
primary raw materials accounted for approximately 32.1% of our total production
costs and fuel and energy accounted for approximately 42.6% of total production
costs. We attempt to source our raw materials locally or regionally in order to
maintain quality control and minimize transportation costs.

Our former subsidiary Fuxin Hengrui Tianyuan New Energy Sources
Co., Ltd. (Fuxin Tianyuan) has granted us an exclusive license for no
consideration to produce and use a proprietary synthetic fuel oil called 520
Fuel Serum. The exclusive license will expire upon the earlier of the patent
expiration date or the date when Fuxin Tianyuan loses its proprietary rights to
such technology for reasons other than the expiration of the patent. Because of
its lower cost, 520 Fuel Serum can be used as a substitute for heavy fuel oil,
thereby creating significant cost savings for us.

We purchase the majority of our raw materials from suppliers
located in China who are able to furnish us raw materials that meet our quality
standards and terms of delivery. We utilize local suppliers in close proximity
to us, typically within 150 kilometers of our manufacturing facilities, in order
to closely supervise their activities and monitor quality. If geographically
proximate suppliers continue to be able to provide high quality raw materials
and components to us, we intend to continue to source our raw materials and
components from them to take advantage of lower shipping costs and favorable
quality control capabilities. Our suppliers must meet our quality standards and delivery requirements consistently to remain on our
approved supplier list. We utilize at least three suppliers for each major raw
material and we order from each of them in order to avoid dependence on specific
major suppliers. If a supplier furnishes suboptimal materials to us or is
repeatedly late in deliveries, we remove the supplier from our approved supplier
list.

5

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We typically purchase raw materials and components from our
suppliers on credit, with terms requiring payment within 90 days following the
delivery of the raw materials or components. When we purchase raw materials and
components from PRC suppliers, we are able to pay in RMB.

Our largest supplier in terms of annual cash expenditures in
2008 was Liaoyang Xinxin Chemical Co. Ltd., which accounted for approximately
10.6% of our total cost of sales in 2008. No other suppliers accounted for more
than 10% of our total cost of sales in 2008.

The prices of raw materials oscillated significantly in 2008,
especially for heavy oil and pure alkali. The fluctuations in prices did not
affect supply but led to changes in the sources of suppliers in that more
suppliers will come on stream when prices rise. We intend to source supplies
from suppliers that are financially sound to lower the risk of non-supply.

Our Distributors and Customers

We sell approximately 90% of our glass products through various
regional distributors in China. We have established and maintained long term
relationships with major distributors who we believe have local business
experience and established regional sales networks. For the year ended December
31, 2008 and 2007, approximately 52% and 67.2% of our sales revenue came from
our top ten distributors. In 2008, our biggest customer Anshan Xingsheng Glass
Distribution Office (Anshan Xingshen) accounted for approximately 11% of our
total sales revenue. No other customers accounted for more than 10% of our sales
revenue in 2008. We entered a product purchase agreement with Anshan Xingsheng
on January 8, 2008 under which Anshan Xingsheng has agreed to purchase a total
of 300,000 weight case of our glass products from January 2008 to December 2008
for a total consideration of RMB 24 million (approximately $4 million). Anshan
Xingsheng will bear the transportation costs. Anshan has fulfilled its
obligations to buy 300,000 weight case of glass products from us in 2008. We
have entered into an agreement with Anshan for 2009, pursuant to which Anshan
has agreed to purchase a total of 200,000 weight case of our glass products for
an aggregate price of RMB15 million.

Sales and Marketing

As of December 31, 2008, our sales department consisted of 16
employees, each of whom was assigned to be in contact with our primary
distributors. Members of our sales team generate sales leads by contacting
prospective distributors directly and by attending industry trade shows and
exhibitions. In addition, we utilize the internet to advertise and introduce
ourselves to potential customers overseas and established agent sales network in
Africa, Korea, Russia and mid-east area. We are also developing our sales
networks in China by establishing warehouses in many major cities to reduce
intermediary costs, improve profit margin and introduce our new products. We
utilized the new marketing strategy in Dalian, which proved to be successful.

Competition

Our experience is that the global glass manufacture industry is
dominated by several major global manufacturers and then becomes extremely
fragmented with numerous smaller regional manufacturers.

Our major international competitors are NSG/Pilkington Group
Limited, Saint-Gobain, Asahi and Guardian, which manufacture nearly 70% of the
glass produced in the world, and have more resources and greater brand
recognition than we enjoy. While our resources may not be as great as our larger
competitors, we believe our product quality, sales network, and sales and
distribution network in China are superior.

6

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We also compete with approximately 300 small-sized, local
Chinese glass manufacturers. The number of these small companies varies from
time to time. While we may have greater resources than our smaller competitors,
it is possible that these competitors have better access in certain local
markets to customers and prospects or an enhanced ability to customize products
to a regional industry sector. Our major competitors in China include Shandong
Jinjing Science & Technology Stock Co., Ltd., CSG Holding Co., Ltd, Luoyang
Glass Company Limited.

Intellectual Property

Our goal is to utilize our intellectual property to provide us
with a competitive advantage or significant cost savings.

Our subsidiary Fuxin Hengrui holds one invention patent
registration for the combustion method of synthetic petroleum in float glass
melting furnace. Fuxin Hengrui also registered the trademark Golden Elephant
in Chinese characters for various glass products and filed the trademark
application for Golden Elephant in English characters on January 28, 2008,
which is pending registration with the Trademark Office of the State
Administration for Industry and Commerce of China. In addition, pursuant to a
license agreement entered into on August 27, 2008, our former subsidiary Fuxin
Tianyuan has granted us an exclusive license to use two utility model patents
which have been granted by the PRC Patent Office and three technologies
(including 520 Fuel Serum) as to which Fuxin Tianyuan has submitted invention
patent applications with the PRC Patent Office. In the future, we will seek
protection of our intellectual property where we believe there to be strategic
importance in doing so.

We cannot give any assurance that the protection afforded our
intellectual property will be adequate. It may be possible for third parties to
obtain and use, without our consent, intellectual property that we own or are
licensed to use. Unauthorized use of our intellectual property by third parties,
and the expenses incurred in protecting our intellectual property rights, may
adversely affect our business.

Research and Development

Currently, we have approximately 13 employees devoted to our
research and development efforts, which are aimed at finding new varieties of
products, improving existing products, improving overall product quality, and
reducing production costs. In 2008 and 2007, our research and development
expenses amounted to approximately $1.8 million and $0.9 million,
respectively.

Environmental Matters

During glass production, there are unavoidable emissions of
sulfur oxide and other exhaust gases and by-products which can be
environmentally harmful. Our goal is to maintain an environmentally conscious
operation so we have sought to develop, promote and utilize new technologies and
techniques that minimize the environmentally harmful effects of exhaust gas from
our melting kilns. In order to minimize the negative effect of these substances
on the environment, China also has adopted strict environmental standards for
these emissions and discharges of environmental pollutants. Accordingly, our
manufacturing facilities are subject to various pollution control regulations
with respect to noise and air pollution and the disposal of waste and hazardous
materials. We also are subject to periodic inspections by local environmental
protection authorities. We believe we are in material compliance with the
relevant PRC environmental laws and regulations. We are not currently subject to
any pending actions alleging any violations of applicable PRC environmental
laws. Environmental approval is currently pending with Fuxin authorities.

Regulations

Because our operating subsidiaries are located in the PRC, we
are regulated by the national and local laws of the PRC.

We are subject to the environmental regulations described in
the preceding section Environmental Matters.

7

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There is no private ownership of land in China. Upon payment of
a land grant fee, land use rights can be obtained from the government for a
period up to 50 years in the case of industrial land and are typically
renewable. We have received the necessary land use rights certificate for
264,000 square metersof land located in the Glass Industrial Park 123
Chuangye Road, Haizhou District, Fuxin City, Liaoning Province, China.

We are also subject to Chinas foreign currency regulations.
The PRC government has controlled RMB reserves primarily through direct
regulation of the conversion of RMB into other foreign currencies. Although
foreign currencies, which are required for current account transactions, can
be bought freely at authorized PRC banks, the proper procedural requirements
prescribed by PRC law must be met. At the same time, PRC companies are also
required to sell their foreign exchange earnings to authorized PRC banks, and
the purchase of foreign currencies for capital account transactions still
requires prior approval of the PRC government.

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

We do not face any significant government regulation in
connection with the production of our products. We do not require any special
government permits to produce our products other than those permits that are
required of all corporations in China.

Our Employees

As of December 31, 2008, we employed a total of 359 full-time
employees. The following table sets forth the number of our employees by
function.

|Function                        | Number of Employees
|------------------------------- | -------------------
|Senior Management               | 5                  
|Human Resource & Administration | 21                 
|Production                      | 276                
|Marketing                       | 6                  
|Sales                           | 16                 
|Research & Development          | 13                 
|Quality Control                 | 15                 
|Accounting                      | 7                  
|Total                           | 359                

As required by applicable PRC law, we have entered into
employment contracts with most of our officers, managers and employees. We are
working towards entering employment contracts with those employees who do not
currently have employment contracts with us. We believe that we maintain a
satisfactory working relationship with our employees, and we have not
experienced any significant labor disputes or any difficulty in recruiting staff
for our operations.

Our employees in China participate in a state pension scheme
organized by PRC municipal and provincial governments. We are currently required
to contribute to the scheme at the rate of 20% of the average monthly salary.

In addition, we are required by PRC law to cover employees in
China with various types of social insurance, and we believe that we are in
material compliance with the relevant PRC laws.

8

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Seasonality

Our business is seasonal, with the highest proportion of sales and operating income being generated in the second and third quarters of each year, with lesser sales and operating income being generated in the first and fourth quarters fourth
quarters of each year.  Our working capital requirements fluctuate during the year, increasing substantially during the first and fourth quarters as a result of lower demand for glass products due to the curtailment of construction works in winter
season.

ITEM 1A. RISK FACTORS.

RISKS RELATED TO OUR BUSINESS

The report of our independent auditors indicates uncertainty about our ability to continue as a going concern.

Our independent auditors have raised substantial doubt about our ability to continue as a going concern. The fact that we have received this going concern opinion from our independent auditors may make it more difficult for us to raise
capital on favorable terms and could present numerous operational issues for us, such as obtaining favorable pricing and credit from our vendors, retaining and attracting qualified managers and other employees and assuring customers that we can
fulfill orders and warranty obligations.  If we are not able to continue as a going concern, our shareholders may lose all of their investment in the company. Our financial statements do not include any adjustments that might result from the outcome
of this uncertainty.

The global economic crisis could further impair the demand forour products and affecting the overall availability and cost of external financing for our operations.

The continuation or intensification of the global economic crisis and turmoil in the global financial markets has adversely impacted our business, the businesses of our customers from whom we generate revenues and our potential sources of capital
financing. The global economic crisis harmed most industries and has been particularly detrimental to the real estate, construction, automobile and consumer product industry. Since our glass and glass products serve as key components in construction
and building materials, automobiles and electrical household products, our sales and business operations are dependent on the financial health of the these industries and would suffer if our customers experience, or continue to experience, a
downturn in their business. In addition, the lack of availability of credit could lead to a further weakening of the Chinese and global economies and make capital financing of our operations more expensive for us or impossible altogether.
Presently, it is unclear whether and to what extent the economic stimulus measures and other actions taken or contemplated by the Chinese government and other governments throughout the world will mitigate the effects of the crisis on the industries
that affect our business. The impact of the current crisis on our ability to obtain capital financing in the future, and the cost and terms of same, is also unclear. Furthermore, deteriorating economic conditions including business layoffs,
downsizing, industry slowdowns and other similar factors that affect our customers could have further negative consequences and result in lower sales, price reductions in our products and declining profit margins. The economic situation also could
harm our current or future lenders or customers, causing them to fail to meet their obligations to us. No assurances can be given that the effects of the current crisis will not damage on our business, financial condition and results of operations.

The glass manufacturing industry is particularly sensitive to negative macroeconomic conditions which could pose complications for our business and harm our profitability.

Like other suppliers of raw materials, glass manufacturers are particularly dependent on general economic conditions, performance in other industry segments, labor costs, import duties and tariffs, competition and currency exchange rates.  These
macroeconomic factors have historically resulted in wide fluctuations in the glass manufacturing industry both in China and globally.  In our case, future economic downturns, stagnant economies or currency fluctuations, in China or globally, could
decrease the demand for glass or glass products or increase the amount of imports of glass and glass products into China.  Our sales, margins and profitability will be harmed under such circumstances.  In addition, the glass manufacturing industry
is highly reliant upon energy generally and heavy oil in particular, which is the core fuel used in the
production of flat glass. Fluctuations in the price for heavy oil worldwide will
impact our manufacturing costs, our profitability and financial performance.

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The economic crisis has led to sluggish demand and a dramatic
decrease of exports of glass products. In 2008, 41 production lines operated by
various companies in China, including our Company, were forced to cease
operation and enter into maintenance status. Management estimates that the glass
market in the first half of 2009 will continue to experience volatility and the
low demand for glass products will likely continue or may get even worse. The
market may turn around by the end of the third quarter or the fourth quarter of
2009 given the Chinese governments stimulus plan to increase domestic market
demand and fuel economic growth, but no one can predict with certainty.

Our business is capital intensive and our growth strategy
may require additional capital which may not be available on favorable terms or
at all.

A float glass for about 500-ton melting capacity facility is
highly capital intensive, typically costing between $40 million to $90 million
depending on size, location and product complexity. Once operational, a facility
is designed to operate continuously, 365 days per year, throughout an 8 to 10
years initial operating life. Float lines are normally capable of several
campaigns after the initial operating life following major repair and upgrade
programs. We may require additional cash resources due to changed business
conditions, implementation of our strategy to expand our specialty float glass
manufacturing capacity or other investments or acquisitions we may decide to
pursue. As a result of the recent drop in demand for our products following the
onset of the global economic crisis, we need significant additional financing
for working capital. The crisis may cause prolonged declines in investor
confidence in and accessibility to capital markets. Future financing may not be
available on a timely basis, in sufficient amounts or on terms acceptable to us.
Any failure by us to raise additional funds on terms favorable to us, or at all,
could limit our ability to expand our business operations and could harm our
overall business prospects. Further, the sale of additional equity securities
could result in dilution to our stockholders or issuance of securities with
rights, preferences and privileges senior to our currently outstanding
securities. The incurrence of indebtedness would result in increased debt
service obligations and could require us to agree to operating and financial
covenants that would restrict our operations.

Our business will be harmed if the glass industry in
China, which has experienced oversupply problems for several years, does not
realize an increase in demand at the pace we expect.

Historically, the glass industry has been characterized by wide
fluctuations in the demand for, and supply of, glass and glass products. As
recently as 2005 and 2006, these fluctuations have resulted in the glass supply,
especially supply of low cost and low quality glass, greatly outpacing demand
for these products and negatively influencing the high quality flat glass
market. Within the past two years, more than 300 flat glass production
enterprises have commenced business. Most of the newly established glass
production enterprises are smaller businesses using outdated technologies to
produce low quality flat glass. Before the global economic crisis, the demand
for high quality float glass was considerable and over 60 new float glass
production lines became operational in China, producing float glass with higher
quality, consequently supplanting the demand for imported high quality float
glass. The demand for high quality float products was increasing and China was
starting to regulate low quality glass production factories thereby creating a
more favorable competitive environment, but the favorable environment ended with
the onset of the current global economic crisis.

In 2008, although 41 production lines were forced to cease
operations, numerous companies throughout China still have 23 production lines
under construction and 19 lines planned to be built in 2009. If glass prices
trend upward, some of the production lines that have ceased operations may
resume their operations. The irrational increase of production lines is likely
to lead to another oversupply and heightened competition in our industry. Any
prolonged oversupply of glass could result in severe downward pricing pressure
on glass manufacturers and impair our profitability.

10

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Approximately 52% of our sales revenues were derived from
our ten largest customers in 2008 and any reduction in revenues from any of
these customers would reduce our revenues and net income.

While we have over 50 active distributors and customers,
approximately 52% of our sales revenue in 2008 came from our top ten customers,
with Anshan Xingsheng Glass Distribution Office alone accounting for
approximately 11% of our sales revenue in 2008 and 13.3% in 2007. While we are
working on expanding our customer base to reduce our reliance on any single
customer, if we cease to do business at or above current levels with Anshan
Xingsheng Glass Distribution Office or with any other large distributors or
customers which contribute significantly to our sales revenues, and we are
unable to generate additional or substitute sales revenue, our net income would
decline considerably.

Our business is seasonal and if we fall significantly
short of our anticipated earnings the first and fourth quarters, it will
significantly decrease the working capital available to us which may adversely
affect our purchasing abilities.

Our business is seasonal, with most of our sales and operating
income being generated in the second and third quarters of each year, lesser
amounts in the first and fourth quarters of each year. Demand for our glass
products is generally lower in the winter season because construction work is
curtailed in the north of China, during which time transportation can be slowed
by inclement weather as well. Our working capital requirements fluctuate during
the year with increased working capital demands and constraints during the first
and fourth quarters as a result of this seasonality. If we fall significantly
short of our anticipated earnings in either the first or fourth quarter, working
capital available to us in such quarters will decrease. Due to limitations on
borrowing which we are facing as a result of the global credit crunch, a
decrease in working capital may adversely affect our purchasing abilities which
would have a material adverse effect on our revenues.

Our strategy focuses on the development and sale of
specialty glass products so our financial results will be negatively affected if
we cannot timely develop these products or incorrectly gauge the potential
market for them.

We believe that the demand for specialty glass products will
grow at a faster pace than demand for common float glass. Accordingly, our
future research and development initiatives and manufacturing efforts will be
focused on expanding our product offerings in the specialty glass product
segments. We may not be able to develop these products in time to meet market
demand and our sales revenue may not grow at expected rates in these new product
lines. We also may incur expenses relating to the development of new products
that are not offset by sufficient sales revenue generated by new specialty glass
product lines.

Competition in the glass manufacturing industry in China
and elsewhere is intense.

We compete with approximately 300 small-sized, local Chinese
glass manufacturers. The number of these small companies varies from time to
time. While we may have greater resources than our smaller competitors, it is
possible that these competitors have better access in certain local markets to
customers and prospects and lower production and raw material costs. Our major
international competitors are NSG/Pilkington Group Limited, Saint-Gobain, Asahi
and Guardian, manufacture nearly 70% of the glass produced in the world and have
more resources and greater brand recognition than we enjoy. While our resources
may not be as great as our larger competitors, we believe our product quality
and sales and distribution network are superior in China and in the global mid-
and lower quality glass markets. If our competitors are able to gain greater
market share or improve their sales efforts, our sales may decrease, we may be
forced to lower our prices, or our marketing costs may increase, all of which
could negatively impact our financial results.

Any decrease in the availability, or increase in the
cost, of raw materials could materially affect our earnings.

Our glass manufacturing operations depend heavily on the
availability of various raw materials and energy resources. The mix of raw
materials used in the production of flat glass, which is known as the batch, is
mainly composed of three components: silica sand, soda ash, dolomite/limestone,
and mirabilite which represent 99% of all raw materials used in the production
of glass. Silica sand is the main component constituting about 72% of the batch
weight and soda ash represents about 16% of the batch weight, but is one of the
most expensive raw materials used accounting for approximately 60% of the batch cost. Our
fuel costs, particularly heavy oil and electricity, account for over 42.6% of
total manufacturing costs. The availability of raw materials and energy
resources may decrease and their prices may fluctuate greatly, as they did in
2008. We have long-term relationships with several suppliers; however, if our
suppliers are unable or unwilling to provide us with raw materials on terms
favorable to us, we may be unable to produce certain products. This could result
in a decrease in profit and damage to our reputation in our industry. In the
event our raw material and energy costs increase, we may not be able to pass
these higher costs on to our customers in full or at all. Any increase in the
prices for raw materials or energy resources could materially increase our costs
and therefore lower our earnings. Additionally, certain of our supply contracts
are for fixed prices; although we benefit from favorable pricing in some of
these supply contracts if prices for our raw materials go up, if market prices
for these raw materials decline, we may not be able to take advantage of
decreasing market prices, and our profit margins may suffer.

11

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Our expansion could significantly strain our resources,
management and operational infrastructure which could impair our ability to meet
increased demand for our products and hurt our business results.

To grow our business, we will need to expend capital resources
and dedicate personnel to implement and upgrade our accounting, operational and
internal management systems and enhance our record keeping and contract tracking
system. Given the current economic climate, our discretionary spending has been
significantly constrained and our ability to expand infrastructure has been
severely hampered by economic conditions and is highly unlikely. If we cannot
successfully strengthen and optimize our operational infrastructure, we will be
unable to satisfy the demand for our products, which will impair our revenue
growth and hurt our overall financial performance.

Since the acceleration of our maintenance program in late
2008, we started to depend on subcontractors for timely and effective sourcing
of products to fulfill our orders, and we may not be able to acquire products in
sufficient quantities and at acceptable prices to meet our needs which would
impact financial results.

Since we implemented our maintenance program, we are
exclusively relying upon third party subcontractors to fulfill our raw material
needs and our purchase orders. We have no contractual assurances of continued
supply, pricing or access to raw materials or new products, and any
subcontractor could change the terms upon which they sell to us, discontinue
selling to us, or go out of business at any time. We may not be able to acquire
desired products in sufficient quantities on terms acceptable to us in the
future. Any inability to acquire suitable products on acceptable terms or the
loss of one or more of our subcontractors could have a negative effect on our
business and operating results. We may not be able to develop relationships with
new subcontractors, and products from alternative sources, if any, may be of a
lesser quality and/or more expensive than those we currently purchase.

In addition, our subcontractors are subject to certain risks,
including availability of raw materials, labor disputes, financial liquidity,
inclement weather, natural disasters, and general economic and political
conditions that could limit their ability to provide us with quality products on
a timely basis and at a price that is commercially acceptable.

We depend heavily on key personnel, and turnover of key
employees and senior management could harm our business.

Our future business and results of operations depend in
significant part upon the continued contributions of our key technical and
senior management personnel, including Lihui Song, our Chairman and Chief
Executive Officer and Hong Tan, our Chief Financial Officer. They also depend in
significant part upon our ability to attract and retain additional qualified
management, technical, marketing and sales and support personnel for our
operations. If we lose a key employee, if a key employee fails to perform in his
or her current position, or if we are not able to attract and retain skilled
employees as needed, our business could suffer. Significant turnover in our
senior management could significantly deplete our institutional knowledge held
by our existing senior management team. We depend on the skills and abilities of
these key employees in managing the manufacturing, technical, marketing and
sales aspects of our business, any part of which could be harmed by turnover in
the future.

12

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We face risks associated with future investments or
acquisitions.

An important element of our growth strategy is to invest in or
acquire businesses that will enable us, among other things, to expand the
products we offer to our existing target customer base, lower our costs for raw
materials and components and capitalize on opportunities to expand into new
markets. In the future, we may be unable to identify other suitable investment
or acquisition candidates or may be unable to make these investments or
acquisitions on commercially reasonable terms, if at all.

If we complete an investment or acquisition, we may not realize
the anticipated benefits from the transaction. Integrating an acquired business
is distracting and time consuming, as well as a potentially expensive process.
The successful integration of these companies and any other acquired businesses
require us to:

- integrate and retain key management, sales, research and development,
  production and other personnel;
- incorporate the acquired products or capabilities into our offerings from
  an engineering, sales and marketing perspective;
- coordinate research and development efforts; integrate and support
  pre-existing supplier, distribution and customer relationships; and
- consolidate duplicate facilities and functions and combine back office
  accounting, order processing and support functions.

Geographic distance between business operations, the
compatibility of the technologies and operations being integrated and the
disparate corporate cultures being combined also present significant challenges.
Acquired businesses are likely to have different standards, controls, contracts,
procedures and policies, making it more difficult to implement and harmonize
company-wide financial, accounting, billing, information and other systems. Our
focus on integrating operations may also distract attention from our day-to-day
business and may disrupt key research and development, marketing or sales
efforts. If we cannot overcome these challenges, we may not realize actual
benefits from past and future acquisitions, which will impair our overall
business results.

Our acquisition strategy also depends on our ability to obtain
necessary government approvals, as described under Risks Related to Doing
Business in China 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.

Unexpected equipment failures may damage our business due
to production curtailments or shutdowns.

Our glass production lines are extremely specialized and depend
on critical pieces of equipment, such as melting furnaces, float baths, cooling
lehrs and cross cutters. We conduct periodic inspection and maintenance of all
of our equipment to minimize the impact of interruption of production and
prevent breakdown because this machinery is highly specialized and cannot be
repaired or replaced without significant expense and time delay. On occasion,
our equipment may be out of service as a result of unanticipated failures which
may result in material plant shutdowns or periods of reduced production.
Interruptions in production capabilities will inevitably increase production
costs and reduce our sales and earnings. In addition to equipment failures, our
facilities are also subject to the risk of catastrophic loss due to
unanticipated events such as fires, explosions or adverse weather conditions.
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. Although we have business
interruption insurance, we cannot provide any assurance that the insurance will
cover all losses that we experience as a result of the equipment failures. In
addition, longer-term business disruption could result in a loss of customers.
If this were to occur, our future sales levels, and therefore our profitability,
could be adversely affected.

13

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Exporting our glass products outside of China is a core
component of our overall growth strategy, which could subject us to various
economic, political, regulatory, legal and foreign exchange risks.

We currently sell most of our glass in China, but have also
exported our float glass products to Asia, Europe, South America and South
Africa. Our overseas sales accounted for 2.3% of our total sales in 2008 and
5.6% in 2007. We plan to selectively enter international markets in which an
opportunity to sell our products has been identified. The marketing,
distribution and sale of our products overseas expose us to a number of risks,
including:

- fluctuations in currency exchange rates;
- difficulty in designing products that are compatible with product
  standards in foreign countries;
- greater difficulty in accounts receivable collection;
- increased marketing and sales costs;
- difficulty and costs of compliance with foreign regulatory requirements
  and different commercial and legal requirements;
- an inability to obtain, maintain or enforce intellectual property rights
  in foreign countries;
- changes to import and export regulations, including quotas, tariffs and
  other trade barriers;
- delays or difficulties in obtaining export and import licenses;
- repatriation controls on foreign earnings and currency conversion
  restrictions; and
- difficulty in engaging and retaining distributors and agents who are
  knowledgeable about, and can function effectively in, overseas markets.

If we cannot effectively manage these risks, our ability to
conduct or expand our business abroad would be impaired, which may in turn
hamper our business, financial condition and prospects.

Our failure to adequately protect our intellectual
property rights may undermine our competitive position, and litigation to
protect our intellectual property rights may be costly.

We strive to strengthen and differentiate our product portfolio
by developing new and efficient manufacturing processes and innovative products
and product improvements. We have one invention patent for the combustion method
of synthetic petroleum for synfuel made from refinery coke and anthracite. Our
former subsidiary Fuxin Tianyuan has granted us an exclusive license to use two
utility model patents which have been granted by the PRC Patent Office and three
technologies as to which Fuxin Tianyuan has submitted invention patent
application with the PRC Patent Office. Under the exclusive license agreement
with Fuxin Tianyuan, we received the exclusive license for no consideration and
our rights to use such exclusive license expire on the earlier of the expiration
date of such patents or the date when Fuxin Tianyuan loses its proprietary
rights to the patents for reasons other than the expiration of the patents. Our
rights under the exclusive license agreement will not be affected if Fuxin
Tianyuan assigns its patents to any third party. Fuxin Tianyuan will indemnify
us if its patents infringe the rights of any third party. We believe that the
protection of our intellectual property will become increasingly important to
our business. Implementation and enforcement of intellectual property-related
laws in China has historically been lacking due primarily to ambiguities in PRC
intellectual property law. Accordingly, protection of intellectual property and
proprietary rights in China may not be as effective as in the United States or
other countries. We will continue to rely on a combination of patents, trade
secrets, trademarks and copyrights to provide protection in this regard, but
this protection may be inadequate. For example, our pending or future patent
applications may not be approved or, if allowed, they may not be of sufficient
strength or scope. As a result, third parties may use the technologies and
proprietary processes that we have developed and compete with us, which could
negatively affect any competitive advantage we enjoy, dilute our brand and harm
our operating results.

14

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In addition, policing the unauthorized use of our proprietary
technology can be difficult and expensive. Litigation may be necessary to
enforce our intellectual property rights and given the relative unpredictability
of Chinas legal system and potential difficulties enforcing a court judgment in
China, there is no guarantee litigation would result in an outcome favorable to
us. Furthermore, any such litigation may be costly and may divert management
attention away from our core business. An adverse determination in any lawsuit
involving our intellectual property is likely to jeopardize our business
prospects and reputation. We have no insurance coverage against litigation costs
so we would be forced to bear all litigation costs if we cannot recover them
from other parties. All of the foregoing factors could harm our business and
financial condition.

Any disruption in the supply chain of raw materials and
our products could adversely impact our ability to produce and deliver
products.

As a manufacturing company, we face serious challenges in
supply chain management for raw materials and delivery of our products,
especially given vendors general disinclination to bear credit risk in the
current economic climate. Supply chain fragmentation and local protectionism
within China further complicates supply chain disruption risks. Local
administrative bodies and physical infrastructure built to protect local
interests pose transportation challenges for raw material transportation as well
as product delivery. In addition, profitability and volume could be negatively
impacted by limitations inherent within the supply chain, including competitive,
governmental, legal, natural disasters, and other events that could impact both
supply and price. Any of these occurrences could cause significant disruptions
to our supply chain, manufacturing capability and distribution system that could
adversely impact our ability to produce and deliver products.

If our customers and/or the ultimate consumers of
products that use our glass or glass products successfully assert product
liability claims against us due to defects in our products, our operating
results may suffer and our reputation may be harmed.

Our glass and glass products are widely applied in the
manufacturing of many products, including automobiles, construction materials,
furniture and display cases, electrical household appliances, lighting fixtures
and decorative glass artwork. Significant property damage, personal injuries and
even death can result from malfunctioning products. If our glass is not properly
manufactured or installed and/or if people are injured as a result of our
products, we could be subject to claims for damages based on theories of product
liability and other legal theories in some jurisdictions in which our products
are sold. The costs and resources to defend such claims could be substantial
and, if such claims are successful, we could be responsible for paying some or
all of the damages. We do not have product liability insurance. The publicity
surrounding these sorts of claims is also likely to damage our reputation,
regardless of whether such claims are successful. Any of these consequences
resulting from defects in our products would hurt our operating results and
stockholder value.

Our products may become subject to recall in the event of
defects or other performance related issues.

Since we furnish our glass and glass products to participants
in the automotive industry, we are at risk for product recall costs which are
costs incurred when, either voluntarily or involuntarily, a product is recalled
through a formal campaign to solicit the return of specific products due to a
known or suspected performance defect. Costs typically include the cost of the
product, part or component being replaced, the cost of the recall borne by our
customers and labor to remove and replace the defective part or component. Our
glass and glass products have not been the subject of an open recall. If a
recall decision is made, we will need to estimate the cost of the recall and
record a charge to earnings in that period. In making this estimate, judgment is
required as to the quantity or volume to be recalled, the total cost of the
recall campaign, the ultimate negotiated sharing of the cost between us and our
distributor or customer. As a result, these estimates are subject to change.
Excessive recall costs or our failure to adequately estimate these costs may
negatively affect our operating results.

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Certain of our existing stockholders have substantial
influence over our company, and their interests may not be aligned with the
interests of our other stockholders.

Ms. Lin Tan is the indirect, beneficial owner of approximately 54.5% of our common stock.  As a result, she has significant influence over our business, including decisions regarding mergers, consolidations and the sale of all or substantially all
of our assets, election of directors and other significant corporate actions. This concentration of ownership may also have the effect of discouraging, delaying or preventing a future change of control, which could deprive our stockholders of an
opportunity to receive a premium for their shares as part of a sale of our company and might reduce the price of our shares.

Environmental claims or failure to comply with any present or future environmental regulations may require us to spend additional funds and may harm our results of operations.

In recent years, the glass industry has become more heavily regulated, particularly from an environmental perspective due to the use of heavy oil in the production process.  In addition, our business is subject to health and safety laws and
regulations that affect our operations, facilities and products in each of the jurisdictions in which we operate. We believe that we are in compliance with all material environmental, health and safety laws and regulations related to our products,
operations and business activities. Although we have not suffered material environmental claims in the past, the failure to comply with any present or future regulations could result in the assessment of damages or imposition of fines against us,
suspension of production, cessation of our operations or even criminal sanctions.  New regulations could also require us to acquire costly equipment or to incur other significant expenses. Our failure to control the use of, or adequately restrict
the discharge of, hazardous substances could subject us to potentially significant monetary damages and fines or suspension of our business operations, which could cause damage to our business. We have applied to the PRC authorities for an
environmental approval certificate.  If we fail to obtain that certificate in a timely manner or at all, our business will be harmed.

We have limited insurance coverage and do not carry any business interruption insurance, third-party liability insurance for our manufacturing facilities or insurance that covers the risk of loss of our products in shipment.

Operation of our glass manufacturing facilities involves many risks, including equipment failures, natural disasters, industrial accidents, power outages, labor disturbances and other business interruptions. Furthermore, if any of our products are
faulty, then we may become subject to product liability claims or we may have to engage in a product recall. We do not carry any business interruption insurance, product recall or third-party liability insurance for our manufacturing facilities or
with respect to our products to cover claims pertaining to personal injury or property or environmental damage arising from defaults with our products, product recalls, accidents on our property or damage relating to our operations.  Therefore, our
existing insurance coverage may not be sufficient to cover all risks associated with our business.  As a result, we may be required to pay for financial and other losses, damages and liabilities, including those caused by natural disasters and other
events beyond our control, out of our own funds, which could have a material adverse effect on our business, financial condition and results of operations.

We may be exposed to potential risks relating to our internal controls over financial reporting and our ability to have those controls attested to by our independent auditors.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the SEC adopted rules requiring public companies to include a report of management on the companys internal controls over financial reporting in their annual reports,
including Form 10-K.  In addition, the independent registered public accounting firm auditing a companys financial statements must also attest to and report on the operating effectiveness of the companys internal controls.  Under current
law, we were subject to these requirements beginning with our annual report for the fiscal year ending December 31, 2008, although the auditor attestation is not required until our annual report for the fiscal year ending December 31, 2009 assuming
our filing status remains as a smaller reporting company.  We can provide no assurance that we will comply with all of the requirements imposed thereby.  There can be no positive assurance that we will receive a positive attestation from our
independent auditors.  In the event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner or we are unable to receive a positive attestation from our independent auditors
with respect to our internal controls, investors and others may lose confidence in the reliability of our financial statements.

16

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Our holding company structure may limit the payment of
dividends.

We have no direct business operations, other than our ownership
of our subsidiaries. While we have no current intention of paying dividends,
should we decide in the future to do so, as a holding company, our ability to
pay dividends and meet other obligations depends upon the receipt of dividends
or other payments from our operating subsidiaries and other holdings and
investments. In addition, our operating subsidiaries, from time to time, may be
subject to restrictions on their ability to make distributions to us, including
as a result of restrictive covenants in loan agreements, restrictions on the
conversion of local currency into U.S. dollars or other hard currency and other
regulatory restrictions as discussed below. If future dividends are paid in RMB,
fluctuations in the exchange rate for the conversion of RMB into U.S. dollars
may reduce the amount received by U.S. stockholders upon conversion of the
dividend payment into U.S. dollars.

Chinese regulations currently permit the payment of dividends
only out of accumulated profits as determined in accordance with Chinese
accounting standards and regulations. Our subsidiaries in China are also
required to set aside a portion of their after tax profits according to Chinese
accounting standards and regulations to fund certain reserve funds. Currently,
our subsidiaries in China are the only sources of revenues or investment
holdings for the payment of dividends. If they do not accumulate sufficient
profits under Chinese accounting standards and regulations to first fund certain
reserve funds as required by Chinese accounting standards, we will be unable to
pay any dividends.

RISKS RELATED TO DOING BUSINESS IN CHINA

Adverse changes in political and economic policies of the
PRC government could impede the overall economic growth of China, which could
reduce the demand for our products and damage our business.

We conduct substantially all of our operations and generate
most of our revenue in China. Accordingly, our business, financial condition,
results of operations and prospects are affected significantly by economic,
political and legal developments in China. The PRC economy differs from the
economies of most developed countries in many respects, including:

- a higher level of government involvement;
- a early stage of development of the market-oriented sector of the economy;
- a rapid growth rate;
- a higher level of control over foreign exchange; and
- the allocation of resources.

As the PRC economy has been transitioning from a planned
economy to a more market-oriented economy, the PRC government has implemented
various measures to encourage economic growth and guide the allocation of
resources. While these measures may benefit the overall PRC economy, they may
also have a negative effect on us.

Although the PRC government has in recent years implemented
measures emphasizing the utilization of market forces for economic reform, the
PRC government continues to exercise significant control over economic growth in
China through the allocation of resources, controlling the payment of foreign
currency-denominated obligations, setting monetary policy and imposing policies
that impact particular industries or companies in different ways.

Any adverse change in economic conditions or government
policies in China could have a material adverse effect on the overall economic
growth in China, which in turn could lead to a reduction in demand for our
services and consequently have a material adverse effect on our business and
prospects.

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Uncertainties with respect to the PRC legal system could
limit the legal protections available to you and us.

We conduct substantially all of our business through our
operating subsidiaries in the PRC. Our operating subsidiaries are generally
subject to laws and regulations applicable to foreign investments in China and,
in particular, laws applicable to foreign-invested enterprises. The PRC legal
system is based on written statutes, and prior court decisions may be cited for
reference but have limited precedential value. Since 1979, a series of new PRC
laws and regulations have significantly enhanced the protections afforded to
various forms of foreign investments in China. However, since the PRC legal
system continues to rapidly evolve, the interpretations of many laws,
regulations and rules are not always uniform and enforcement of these laws,
regulations and rules involve uncertainties, which may limit legal protections
available to you and us. In addition, any litigation in China may be protracted
and result in substantial costs and diversion of resources and management
attention. In addition, all of our executive officers and all of our directors
are residents of China and not of the United States, and substantially all the
assets of these persons are located outside the United States. As a result, it
could be difficult for investors to affect service of process in the United
States or to enforce a judgment obtained in the United States against our
Chinese operations and subsidiaries.

If we are found to have failed to comply with applicable
laws, we may incur additional expenditures or be subject to significant fines
and penalties.

Our operations are subject to PRC laws and regulations
applicable to us. However, many PRC laws and regulations are uncertain in their
scope, and the implementation of such laws and regulations in different
localities could have significant differences. In certain instances, local
implementation rules and/or the actual implementation are not necessarily
consistent with the regulations at the national level. Although we strive to
comply with all the applicable PRC laws and regulations, we cannot assure you
that the relevant PRC government authorities will not later determine that we
have not been in compliance with certain laws or regulations. Our failure to
comply with the applicable laws and regulations in China could subject us to
administrative penalties and injunctive relief, as well as civil remedies,
including fines, injunctions and recalls of our products. It is possible that
changes to such laws or more rigorous enforcement of such laws or with respect
to our current or past practices could have a material adverse effect on our
business, operating results and financial condition. Further, additional
environmental or safety issues relating to matters that are not currently known
to management may result in unanticipated liabilities and expenditures.

The PRC government exerts substantial influence over the
manner in which we must conduct our business activities.

The PRC government has exercised and continues to exercise
substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by
changes in its laws and regulations, including those relating to taxation,
import and export tariffs, environmental regulations, land use rights, property
and other matters. We believe that our operations in China are in material
compliance with all applicable legal and regulatory requirements. However, the
central or local governments of the jurisdictions in which we operate may impose
new, stricter regulations or interpretations of existing regulations that would
require additional expenditures and efforts on our part to ensure our compliance
with such regulations or interpretations.

Accordingly, government actions in the future, including any
decision not to continue to support recent economic reforms and to return to a
more centrally planned economy or regional or local variations in the
implementation of economic policies, could have a significant effect on economic
conditions in China or particular regions thereof and could require us to divest
ourselves of any interest we then hold in Chinese properties or joint ventures.

Restrictions on currency exchange may limit our ability
to receive and use our sales revenue effectively.

All our sales revenue and expenses are denominated in RMB.
Under PRC law, the RMB is currently convertible under the current account,
which includes trade and service-related foreign exchange transactions, but not
under the capital account, which includes dividends, foreign direct investment
and loans. Currently, our PRC operating subsidiary may purchase foreign currencies for settlement of
current account transactions, and some routine payments under the capital
account, such as payments of dividends to us, without the approval of the State
Administration of Foreign Exchange, or SAFE, by complying with certain
procedural requirements. However, the relevant PRC government authorities may
limit or eliminate our ability to purchase foreign currencies in the future.
Since a significant amount of our future revenue will be denominated in RMB, any
existing and future restrictions on currency exchange may limit our ability to
utilize revenue generated in RMB to fund our business activities outside China
that are denominated in foreign currencies.

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Foreign exchange transactions by PRC operating subsidiaries
under the capital account continue to be subject to significant foreign exchange
controls and require the approval of or need to register with PRC government
authorities, including SAFE. In particular, if our PRC operating subsidiaries
borrow foreign currency through loans from us or other foreign lenders, these
loans must be registered with SAFE, and if we finance the subsidiaries by means
of additional capital contributions, these capital contributions must be
approved by certain government authorities, including the Ministry of Commerce
or their respective local counterparts. These limitations could affect their
ability to obtain foreign exchange through debt or equity financing.

Fluctuations in exchange rates could adversely affect our
business and the value of our securities.

The value of our common stock will be indirectly affected by
the foreign exchange rate between U.S. dollars and RMB and between those
currencies and other currencies in which our sales may be denominated. Because
substantially all of our earnings and cash assets are denominated in RMB,
fluctuations in the exchange rate between the U.S. dollar and the RMB will
affect the relative purchasing power of these proceeds, our balance sheet and
our earnings per share in U.S. dollars. In addition, appreciation or
depreciation in the value of the RMB relative to the U.S. dollar would affect
our financial results reported in U.S. dollar terms without giving effect to any
underlying change in our business or results of operations. Fluctuations in the
exchange rate will also affect the relative value of any dividend we issue that
will be exchanged into U.S. dollars as well as earnings from, and the value of,
any U.S. dollar-denominated investments we make in the future.

Since July 2005, the RMB has no longer been pegged to the U.S.
dollar. Although the Peoples Bank of China regularly intervenes in the foreign
exchange market to prevent significant short-term fluctuations in the exchange
rate, the RMB may appreciate or depreciate significantly in value against the
U.S. dollar in the medium to long term. Moreover, it is possible that in the
future PRC authorities may lift restrictions on fluctuations in the RMB exchange
rate and lessen intervention in the foreign exchange market.

Very limited hedging transactions are available in China to
reduce our exposure to exchange rate fluctuations. To date, we have not entered
into any hedging transactions. While we may enter into hedging transactions in
the future, the availability and effectiveness of these transactions may be
limited, and we may not be able to successfully hedge our exposure at all. In
addition, our foreign currency exchange losses may be magnified by PRC exchange
control regulations that restrict our ability to convert RMB into foreign
currencies.

Restrictions under PRC law on our PRC subsidiaries
ability to make dividends and other distributions could materially and adversely
affect our ability to grow, make investments or acquisitions that could benefit
our business, pay dividends to you, and otherwise fund and conduct our
businesses.

Substantially all of our revenues are earned by our PRC
subsidiaries. However, PRC regulations restrict the ability of our PRC
subsidiaries to make dividends and other payments to their offshore parent
company. PRC legal restrictions permit payments of dividend by our PRC
subsidiaries only out of their accumulated after-tax profits, if any, determined
in accordance with PRC accounting standards and regulations. Each of our PRC
subsidiaries is also required under PRC laws and regulations to allocate at
least 10% of our annual after-tax profits determined in accordance with PRC GAAP
to a statutory general reserve fund until the amounts in said fund reaches 50%
of our registered capital. Allocations to these statutory reserve funds can only
be used for specific purposes and are not transferable to us in the form of
loans, advances or cash dividends. Any limitations on the ability of our PRC
subsidiaries 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.

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Under the New EIT Law, we may be classified as a
resident enterprise of China. Such classification will likely result in
unfavorable tax consequences to us and our non-PRC stockholders.

China passed a new Enterprise Income Tax Law, or the New EIT
Law, and its implementing rules, both of which became effective on January 1,
2008. Under the New EIT Law, an enterprise established outside of China with de
facto management bodies within China is considered a resident enterprise,
meaning that it can be treated in a manner similar to a Chinese enterprise for
enterprise income tax purposes. The implementing rules of the New EIT Law define
de facto management as substantial and overall management and control over the
production and operations, personnel, accounting, and properties of the
enterprise. Because the New EIT Law and its implementing rules are new, no
official interpretation or application of this new resident enterprise
classification is available. Therefore, it is unclear how tax authorities will
determine tax residency based on the facts of each case.

If the PRC tax authorities determine that Golden Elephant Glass
Technology, Inc. is a resident enterprise for PRC enterprise income tax
purposes, a number of unfavorable PRC tax consequences could follow. First, we
may be subject to the enterprise income tax at a rate of 25% on our worldwide
taxable income as well as PRC enterprise income tax reporting obligations. In
our case, this would mean that income such as interest on offering proceeds and
non-China source income would be subject to PRC enterprise income tax at a rate
of 25%. Second, although under the New EIT Law and its implementing rules
dividends paid to us from our PRC subsidiaries would qualify as tax-exempt
income, we cannot guarantee that such dividends will not be subject to a 10%
withholding tax, as the PRC foreign exchange control authorities, which enforce
the withholding tax, have not yet issued guidance with respect to the processing
of outbound remittances to entities that are treated as resident enterprises for
PRC enterprise income tax purposes. Finally, it is possible that future guidance
issued with respect to the new resident enterprise classification could result
in a situation in which a 10% withholding tax is imposed on dividends we pay to
our non-PRC stockholders and with respect to gains derived by our non-PRC
stockholders from transferring our shares. We are actively monitoring the
possibility of resident enterprise treatment for the 2009 tax year and are
evaluating appropriate organizational changes to avoid this treatment, to the
extent possible.

If we were treated as a resident enterprise by PRC tax
authorities, we would be subject to taxation in both the U.S. and China, and our
PRC tax may not be creditable against our U.S. tax.

If the China Securities Regulatory Commission, or CSRC,
or another PRC regulatory agency determines that CSRC approval is required in
connection with the reverse acquisition of Dollar Come, the reverse acquisition
may be cancelled, or we may become subject to penalties.

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 became effective on
September 8, 2006. The M&A Rule, among other things, requires that an
offshore company controlled by PRC companies or individuals that have acquired a
PRC domestic company for the purpose of listing the PRC domestic companys
equity interest on an overseas stock exchange must obtain the approval of the
CSRC prior to the listing and trading of such offshore companys securities on
an overseas stock exchange. On September 21, 2006, the CSRC, pursuant to the
M&A Rule, published on its official web site procedures specifying documents
and materials required to be submitted to it by offshore companies seeking CSRC
approval of their overseas listings.

In the opinion of our PRC counsel, Guangdong Hanyu Law Firm,
the M&A Rule does not apply to our reverse acquisition of Dollar Come
completed on March 31, 2008. However, if the CSRC or another PRC governmental
agency subsequently determines that we should have obtained CSRC approval for
such reverse acquisition transaction, we may face regulatory actions or other
sanctions from the CSRC or other PRC regulatory agencies. These regulatory
agencies may impose fines and penalties on our operations in China and limit our
operating privileges in China, 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 shares.

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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, including requirements in some
instances that the PRC Ministry of Commerce be notified in advance of any
change-of-control transaction and in some situations, require approval of the
PRC Ministry of Commerce when a foreign investor takes control of a Chinese
domestic enterprise. In the future, we may grow our business in part by
acquiring complementary businesses, although we do not have any plans to do so
at this time. The M&A Rule also requires PRC Ministry of Commerce anti-trust
review of any change-of-control transactions involving certain types of foreign
acquirers. 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 PRC 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.

You may have difficulty enforcing judgments against us.

We are a Nevada holding company and most of our assets are
located outside of the United States. Most of our current operations are
conducted in the PRC. In addition, most of our directors and officers are
nationals and residents of countries other than the United States. A substantial
portion of the assets of these persons is located outside the United States. As
a result, it may be difficult for you to effect service of process within the
United States upon these persons. It may also be difficult for you to enforce in
U.S. courts judgments on the civil liability provisions of the U.S. federal
securities laws against us and our officers and directors, most of whom are not
residents in the United States and the substantial majority of whose assets are
located outside of the United States. In addition, there is uncertainty as to
whether the courts of the PRC would recognize or enforce judgments of U.S.
courts. Courts in China may recognize and enforce foreign judgments in
accordance with the requirements of the PRC Civil Procedures Law based on
treaties between China and the country where the judgment is made or on
reciprocity between jurisdictions. China does not have any treaties or other
arrangements that provide for the reciprocal recognition and enforcement of
foreign judgments with the United States. In addition, according to the PRC
Civil Procedures Law, courts in the PRC will not enforce a foreign judgment
against us or our directors and officers if they decide that the judgment
violates basic principles of PRC law or national sovereignty, security or the
public interest. So, it is uncertain whether a PRC court would enforce a
judgment rendered by a court in the United States.

RISKS RELATED TO THE MARKET FOR OUR STOCK GENERALLY

Our common stock is quoted on the OTC Bulletin Board
which may have an unfavorable impact on our stock price and liquidity.

Our common stock is quoted on the OTC Bulletin Board. The OTC
Bulletin Board is a significantly more limited market than the New York Stock
Exchange or NASDAQ system. The quotation of our shares on the OTC Bulletin Board
may result in a less liquid market available for existing and potential
stockholders to trade shares of our common stock, could depress the trading
price of our common stock and could have a long-term adverse impact on our
ability to raise capital in the future.

We are subject to penny stock regulations and
restrictions.

The SEC has adopted regulations which generally define
so-called penny stocks to be an equity security that has a market price less
than $5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exemptions. If our common stock becomes a penny stock, we may
become subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule.
This rule imposes additional sales practice requirements on broker-dealers that
sell such securities to persons other than established customers and accredited
investors (generally, individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000, or $300,000 together with their spouses). For
transactions covered by Rule 15g-9, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchasers
written consent to the transaction prior to sale. As a result, this rule may
affect the ability of broker-dealers to sell our securities and may affect the
ability of purchasers to sell any of our securities in the secondary market.

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For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction in a penny stock, of a
disclosure schedule prepared by the SEC relating to the penny stock market.
Disclosure is also required to be made about sales commissions payable to both
the broker-dealer and the registered representative and current quotations for
the securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stock.

There can be no assurance that our common stock will qualify
for exemption from the Penny Stock Rule. In any event, even if our common stock
were exempt from the Penny Stock Rule, we would remain subject to Section
15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any
person from participating in a distribution of penny stock, if the SEC finds
that such a restriction would be in the public interest.

Certain provisions of our Articles of Incorporation may
make it more difficult for a third party to effect a change-in-control.

Our Articles of Incorporation authorize the board of directors
to issue up to 10,000,000 shares of preferred stock. The preferred stock may be
issued in one or more series, the terms of which may be determined at the time
of issuance by the board of directors without further action by the
stockholders. These terms may include voting rights including the right to vote
as a series on particular matters, preferences as to dividends and liquidation,
conversion rights and redemption rights provisions. The issuance of any
preferred stock could diminish the rights of holders of our common stock, and
therefore could reduce the value of such common stock. In addition, specific
rights granted to future holders of preferred stock could be used to restrict
our ability to merge with, or sell assets to, a third party. The ability of the
board of directors to issue preferred stock could make it more difficult, delay,
discourage, prevent or make it more costly to acquire or effect a
change-in-control, which in turn could prevent the stockholders from recognizing
a gain in the event that a favorable offer is extended and could materially and
negatively affect the market price of our common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not Applicable.

ITEM 2. PROPERTIES.

There is no private land ownership in China. Individuals and
companies are permitted to acquire land use rights for specific purposes. We
were granted land use rights from the PRC government for 264,000 square meters
of land located in the Glass Industrial Park at 123 Chuangye Road, Haizhou
District, Fuxin City, Liaoning Province, China. We also have 21 properties
located at 123 Chuangye Road, Haizhou District, Fuxin City, Liaoning Province,
China. The land use rights will expire on September 18, 2052. We have placed
mortgages on the land and 19 properties to secure certain bank loans for an
amount up to approximately $8.3 million.

We also lease land use right for 108,068 square meters and 42
properties (aggregated surface of 22,470.22 square meters) from Fuxin Guangya
Flat Glass Co. Ltd. We believe that all our properties have been adequately
maintained, are generally in good condition and are suitable and adequate for
our business.

Dongfang Company, which is owned by our majority stockholder
Ms. Lin Tan, transferred some properties including a hotel and some villas to
Fuxin Hengrui to be used as collateral for a bank loan. In March 2008, Fuxin
Hengrui transferred the properties back to Dongfang Company after the bank loan
was repaid.

ITEM 3. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits
and legal proceedings which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties and an adverse result in these
or other matters may arise from time to time that may harm our business. We are
currently not aware of any such legal proceedings or claims that we believe will have a material
adverse affect on our business, financial condition or operating results.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted during the fourth quarter of our 2008
fiscal year to a vote of security holders, through the solicitation of proxies
or otherwise.

PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock is quoted on the OTC Bulletin Board maintained
by the Financial Industry Regulatory Authority under the symbol GOEG.OB, but
has not been traded in the Over-The-Counter market except on a limited and
sporadic basis. The CUSIP number is 381004 100.

The following table sets forth, for the periods indicated, the
high and low bid prices of our common stock. These prices reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not represent
actual transactions.

|                             |   | **Closing Bid Prices (1)** | 
|---------------------------- | - | -------------------------- | 
|                             |   | High                       | 
|Year Ended December 31, 2008 |   |                            | 
|1stQuarter                   |   | N/A                        | 
|2ndQuarter                   | $ | 4.00                       | 
|3rdQuarter                   | $ | 6.00                       | 
|4thQuarter                   | $ | 6.00                       | 
|                             |   |                            | 
|Year Ended December 31, 2007 |   |                            | 
|1stQuarter                   |   | N/A                        | 
|2ndQuarter                   |   | N/A                        | 
|3rdQuarter                   |   | N/A                        | 
|                             |   |                            | 
|4thQuarter                   | $ | 1.25                       | 

_______________(1) The above table sets forth the range of
high and low closing bid prices per share of our common stock as reported by
www.quotemedia.com for the periods indicated.

Approximate Number of Holders of Our Common Stock

As of March 31, 2009, there were approximately 689 stockholders
of record of our common stock. The number of record holders does not include
persons who held our common stock in nominee or street name accounts through
brokers.

Dividends

We have never declared or paid a cash dividend. Any
future decisions regarding dividends will be made by our board of directors. We
currently intend to retain and use any future earnings for the development and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Our board of directors has complete discretion on whether to
pay dividends, subject to the approval of our stockholders. Even if our board of
directors decides to pay dividends, the form, frequency and amount will depend
upon our future operations and earnings, capital requirements and surplus, general financial
condition, contractual restrictions and other factors that the board of
directors may deem relevant.

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Securities Authorized for Issuance Under Equity Compensation
Plans

We do not have in effect any compensation plans under which our
equity securities are authorized for issuance and we do not have any outstanding
stock options.

Recent Sales of Unregistered Securities

We have not sold any equity securities during the fiscal year
ended December 31, 2008 that were not previously disclosed in a quarterly report
on Form 10-Q or a current report on Form 8-K that was filed during the 2008
fiscal year.

Purchases of Our Equity Securities

No repurchases of our common stock were made during the fourth
quarter of our fiscal year ended December 31, 2008.

ITEM 6. SELECTED FINANCIAL DATA.

Not Applicable.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

The following managements discussion and analysis should be
read in conjunction with our financial statements and the notes thereto and the
other financial information appearing elsewhere in this report. In addition to
historical information, the following discussion contains certain
forward-looking information. See Special Note Regarding Forward Looking
Statements above for certain information concerning those forward looking
statements. Our financial statements are prepared in U.S. dollars and in
accordance with U.S. GAAP.

Overview of Our Business

We are a leading China-based float glass manufacturer. We have
been manufacturing glass products from our production facility in Fuxin City,
Liaoning Province, China since 2002 and sell our products to end users in China,
Asia, Europe, South America and South Africa. Our product offerings include
float glass, ultra-clear glass (also called crystal glass), colored float glass
and high grade, glass processed products. Our glass products are mostly used in
a variety of end products, such as automobiles, commercial and residential
buildings, construction materials, furniture and display cases, lighting
fixtures and decorative glass artwork, bath fixtures electrical household
appliances, such as refrigerators and microwave ovens. Our glass and glass
products are manufactured in a broad range of specifications and marketed
primarily under the Golden Elephant brand name. As of December 31, 2008, we
believe we ranked second in the Northeast China glass market based on production
capacity.

We sell our products directly, and indirectly through a broad
distributor network, to automakers and auto parts suppliers, building
contractors and building material suppliers and manufacturers of retail goods
and we are increasingly exporting our products to the international market. Our
primary focus has been to increase sales of our float glass, ultra-clear glass,
colored float glass and high grade, glass processed products.

As of December 31, 2008, we had 359 employees working at our
two manufacturing facilities, one of which is a high grade float glass
production line and the second of which is a colored float glass production
line. Daily melting capacity of these manufacturing lines is approximately 800
tons.

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Fiscal 2008 has been one of the most challenging years in our
history and we face near term operating challenges. We face strong competition,
which led to lower prices for our glass products. At the same time, the cost of
raw materials increased significantly during the year. Our challenge was
compounded by the onset of the global economic crisis, which negatively impacted
demand for our products and our ability to meet working capital needs. In
November 2008 and January 2009, we accelerated a maintenance program for our two
float glass production lines due to the shortage of cash flow and current
economic conditions which have resulted in a significant decrease in the price
of float glass since the winter of 2008. Our maintenance program involves
performing routine maintenance, making required upgrades to the production
lines, and improving the technology for manufacturing higher end ultra-clear
glass products. During the maintenance period, all operations of the production
lines and all manufacturing of float glass products are suspended. We determined
that the immediate cessation of operations at a time when demand for our
products is comparatively low is prudent was better option than performing
maintenance and suspending operations during favorable economic period. We meet
our existing sales orders for float glass products through subcontracting
arrangements and expect a significant reduction in new sales of float glass and
float glass products.

The acceleration of our maintenance program did not affect our
gross profit significantly. However, the acceleration caused an impairment of
nearly $2.8 million. In addition, we realized an increase in provision for
doubtful debts by $6.9 million. Management believes that we will slowly reap the
benefits of the improved quality of our products that is expected to result from
the current maintenance program, but the acceleration of the maintenance program
could have a negative near-term impact our revenue and net income in 2009.

While the current global economic crisis brought challenges, we
also believe the downturn offers opportunities. The drop in demand has made raw
material suppliers more willing to partner with glass producers to counter the
adverse effects of gyrating raw material prices. The crisis also taught us to be
more cost efficient and energy efficient and, moreover, gave us the opportunity
to attract and retain skilled employees.

Principal Factors Affecting our Financial
Performance

We believe that the following factors will continue to affect
our financial performance:

Recovery of the glass industry in China. The
glass industry has been shifting from a period of prosperity and growth to a
period of economic contraction. Over the past 20 years, global glass demand in
most modern countries has grown more quickly than GDP. Since 2005, the demand
for glass in China has been outpaced by supply, resulting in a slowdown in
growth in the industry. The slowdown largely resulted from government
regulations constraining growth, environmental problems and costly raw materials
and high fuel expenses. In 2008, Chinas glass industry was heavily affected by
the global economic crisis. To offset slowing global growth, on November 5,
2008, at the State Council meeting, Premier Wen Jiabao offered a RMB4 trillion
($586 billion) stimulus package for the next two years and announced the
government would move to a proactive fiscal and a moderately relaxed monetary
policy. Pursuant to the stimulus package, the Chinese government has committed
to increase domestic demand and fuel economic growth by promoting the recovery
of ten major industries, including automobile and construction. The actions
taken by the Chinese government should significantly increase the demand for
glass products which are essential for construction and automobile industries
and will provide market opportunities for the Company. Management believes that
we will benefit the stimulus plan and the central governments relaxed monetary
policy.

Increasing demand for specialty glass products.Another important trend that should positively affect our financial
condition is the increasing demand by architects and participants in the
automotive industry for high-end, value-added glass products using ultra-clear
glass and ultra-thin glass. We believe that we can capitalize on this trend in
the long term as we have the current capacity to manufacture specialty
glass.

Fluctuations in raw material and production costs.Our operations require substantial amounts of a variety of raw materials
and components, particularly silica sand, soda ash and dolomite/limestone, which
can be costly and are susceptible to fluctuations in price and availability.
Fuel and energy costs, which account for over 42.6% of total production costs, have likewise shown price and supply
volatility in recent years. Any significant increases in the prices of our raw
materials and/or fuel and energy requirements can have a direct and negative
impact on our gross margin and our ability to meet working capital needs. We
attempt to offset disadvantageous price fluctuations in raw materials by
sourcing large quantities to achieve economies of scale, entering into long term
supply agreements and by attempting to develop alternative raw material and
energy substitutes. Ultimately, we may need to raise the price of our products
in order to recover higher raw material and fuel energy costs so that we can
maintain our profit margin.

25

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Increase in exports.We plan to expand sales of
our products to foreign markets. In 2008, we exported our glass and glass
products to South Africa and Eastern Europe. Our sales to foreign customers were
$1.4 million, or approximately 2.3% of our total sales revenue. Although our
exports dropped nearly 50% from fiscal year 2007 due to the current global
economic crisis, we believe export remains a growth area for future
operations.

Taxation

United States

Golden Elephant Glass Technology, Inc. is incorporated in the
State of Nevada and is subject the tax laws of United States at a tax rate of
34%. No provision for income taxes in the United States has been made as Golden
Elephant Glass Technology, Inc. incurred no taxable income for federal tax
purposes. In addition, no deferred tax on undistributed earnings of its non-U.S.
subsidiaries was provided, as it is our current policy to reinvest these
earnings in non-U.S. operations.

British Virgin Islands

Dollar Come Investments Limited was incorporated in the BVI,
and, under the current laws of the BVI, is not subject to income taxes.

PRC

Before the implementation of New EIT law, FIEs established in
the PRC, unless they enjoy preferential tax treatments granted by Chinese
government, such as two-year exemption and three-year half reduction, are
generally subject to an enterprise income tax, or EIT, rate of 33.0%, which
includes a 30.0% state income tax and a 3.0% local income tax. On March 16,
2007, the National Peoples Congress of China passed the New EIT Law, and on
November 28, 2007, the State Council of China passed the Implementing Rules for
the EIT Law, or Implementing Rules, both of which took effect on January 1,
2008. The New EIT Law and Implementing Rules impose a unified EIT of 25.0% on
all domestic-invested enterprises and FIEs, unless they qualify under certain
limited exceptions. Therefore, nearly all FIEs are subject to the new tax rate
alongside other domestic businesses rather than benefiting from the old tax laws
applicable to FIEs, and its associated preferential tax treatments, beginning
January 1, 2008.

Despite these pending changes, the New EIT Law gives the FIEs
established before March 16, 2007, or Old FIEs, such as our subsidiaries Fuxin
Hengrui and Fuxin Xianheng, a five-year grandfather period during which they can
continue to enjoy their existing preferential tax treatments. During this
five-year grandfather period, the Old FIEs which enjoyed tax rates lower than
25% under the original EIT law shall gradually increase their EIT rate by 2% per
year until the tax rate reaches 25%. In addition, the Old FIEs that are eligible
for the two-year exemption and three-year half reduction or five-year
exemption and five-year half-reduction under the original EIT law are allowed
to remain to enjoy their preference until these holidays expire. The
discontinuation of any such special or preferential tax treatment or other
incentives would have an adverse effect on any organizations business, fiscal
condition and current operations in China.

In addition to the changes to the current tax structure, under
the New EIT Law, an enterprise established outside of China with de facto
management bodies within China is considered a resident enterprise and will
normally be subject to an EIT of 25.0% on its global income. The
Implementing Rules define the term de facto management bodies as an
establishment that exercises, in substance, overall management and control over
the production, business, personnel, accounting, etc., of a Chinese enterprise.
If the PRC tax authorities subsequently determine that a company should be
classified as a resident enterprise, then the organizations global income will
be subject to PRC income tax of 25.0% .

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As approved by the relevant PRC tax authority, Fuxin Hengrui
and Fuxin Xianheng were entitled to a two-year exemption from EIT followed by a
50.0% tax exemption for the next three years, commencing from the first
cumulative profit-making year in the fiscal financial year. The tax holiday of
Fuxin Hengrui commenced in 2004. Accordingly, Fuxin Hengrui was entitled to an
EIT tax rate of 12.5% for 2008 and will be subject to an EIT rate of 25% from
2009. Our subsidiary Fuxin Xianhengs tax holiday commenced in 2008, therefore,
Fuxin Xianheng is exempted from EIT in 2008 and 2009 and will be subject to a
reduced EIT rate of 12.5% from 2010 to 2012.

Results of Operations

The following table sets forth key components of our results of
operations for the periods indicated, both in dollars and as a percentage of our
net sales.

(All amounts, other than percentages, in thousands of U.S.
dollars)

|                                               |  | Fiscal Year Ended |  
|---------------------------------------------- |  | ----------------- | -
|                                               |  | December 31       |  
|                                               |  | 2008              |  
|                                               |  | In                |  
|                                               |  | Thousands         |  
|                                               |  |                   |  
|Sales Revenue                                  |  | 60,724            |  
|                                               |  |                   |  
|Cost of Sales                                  |  | 49,894            |  
|                                               |  |                   |  
|Gross Profit                                   |  | 10,830            |  
|                                               |  |                   |  
|Other Operating Income                         |  | 509               |  
|                                               |  |                   |  
|Operating Expenses                             |  |                   |  
|Administrative Expenses                        |  | 1,933             |  
|Research and development
      expenses        |  | 1,762             |  
|Selling Expenses                               |  | 206               |  
|Increase in provision
      for doubtful debts |  | 6,687             |  
|Impairment of property, plant andequipment     |  | 2,757             |  
|Impairment of goodwill                         |  | 394               |  
|Total Operating Expenses                       |  | 13,739            |  
|                                               |  |                   |  
|(Loss)/Income Before Income Taxes              |  | (3,669            | )
|                                               |  |                   |  
|Income Taxes                                   |  | (85               | )
|                                               |  |                   |  
|Minority Interests                             |  | 5                 |  
|                                               |  |                   |  
|Net  (Loss)/ Income                            |  | (3,749            | )

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Fiscal Year Ended December 31, 2008 Compared to Fiscal
Year Ended December 31, 2007

Sales Revenue. Our sales revenue increased $12.6
million, or 26.2%, to $60.7 million in 2008 from $48.1 million in 2007. This
increase was mainly attributable to increased sales due to increase in sales
volume. While we experienced the aforementioned year over year revenue growth,
comparable growth in the future given the current economic climate is extremely
unlikely.

Cost of Sales. Our cost of sales increased $13.1
million, or 35.6%, to $49.9 million in 2008 from $36.8 million in 2007. This
increase was mainly due to increase in sales volume and growing production
costs. As a percentage of sales revenue, the cost of goods sold increased to
82.2% in 2008 from 76.4% in 2007. Such percentage increase was attributable to
increase in costs of raw materials.

Gross Profit. Our gross profit decreased $0.6 million,
or 5.3%, to $10.8 million in 2008 from $11.4 million in 2007. Gross profit as a
percentage of sales revenue was 17.8% in 2008, as compared to 23.6% in 2007.
Such percentage decrease was mainly due to increase in costs of raw materials.
Administrative Expenses. Our administrative expenses increased $0.3
million, or 18.7%, to $1.9 million in 2008 from $1.6 million in 2007. As a
percentage of sales revenue, administrative expenses decreased to 3.2% in 2008,
as compared to 3.3% in 2007. This percentage decrease was primarily attributable
to the fact that the profits grew faster than administrative expenses.

Research and development Expenses Our research and
development expenses increased $0.9 million, or 104.8%, to $1.8 million in 2008
from $0.9 million in 2007. As a percentage of sales revenue, research and
development expenses increased to 2.9% in 2008, as compared to1.8% in 2007. This
percentage increase was primarily attributable to our increased research efforts
to replace heavy oil with an electric-aided solution and to replace alkali with
glass cullet.

Increase in provision for doubtful debts and Impairment
ofPPE and Goodwill. Our provision for doubtful debts and
impairment of PPE and goodwill increased $9.8 million, to $9.8 million in 2008
from $53,891 in 2007. As a percentage of sales revenue, provision for doubtful
debts and impairment of PPE and goodwill expenses increased to 16.2% in 2008, as
compared to 0.1% in 2007. This percentage increase was primarily attributable to
increased items of provision for doubtful debts and impairment of property,
plant and equipment according to US GAAP after we announced the suspension of
production.

Selling Expenses. Our selling expenses decreased
$475,734, or 69.8%, to $205,955 in 2008 from $681,689 in 2007. As a percentage
of sales revenue, selling expenses decreased to 0.3% in 2008, as compared to
1.4% in 2007. This percentage decrease was primarily attributable to the
decrease of our transportation expenses resulting from the decrease of export
sales in 2008. Export sales constituted approximately 5.6% of our sales revenue
in 2007 as compared to 2.3% in 2008. For export sales, our contracts are
normally FOB (free on board) contracts, that is, our customers bear freight
charge, but we bear transportation costs from our factories to ports and related
custom expenses. However, for domestic sales, except for sales of our new
product ultra-clear glass products and our deep-processed glass products, our
customers bear transportation costs. Although we launched the ultra-clear glass
products in 2007 for which we normally bear transportation costs, the increase
of transportations costs resulting from the sales of ultra-clear glass products
was more than offset by the decrease of transportation costs caused by the
decrease of export sales in 2008.

Total Expenses. Our total expenses increased $10.5
million, or 328.1%, to $13.7 million in 2008 from $3.2 million in 2007. As a
percentage of sales revenue, total expenses increased to 22.6% in 2008, as
compared to 6.6% in 2007. This percentage increase was primarily attributable to
increase in provision for doubtful debts, impairment of property, plant and
equipment and R&D expenses.

(Loss) Income before Income Taxes and Minority Interests. Income before income taxes and minority interests decreased $11.1
million, or 149.3%, to $-3.7 million in 2008 from $7.4 million in 2007. Income
before income taxes as a percentage of sales revenue decreased to -6% in 2008,
as compared to 15.5% in 2007 due to increase in provision for doubtful debts and impairment of property, plant
and equipment after we announced the suspension of production.

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Income Taxes. The decrease in income taxes $580,145 in
2007 to $85,068 in 2008 was mainly due to (i) decrease in taxable income; (ii) the change in PRC
income tax rate from 33% in 2007 to 25% in 2008 of Fuxin Hengrui and (iii) tax
holiday granted to Xianheng of 100% tax exemption which commenced in 2008.

Net (Loss) Income. Our net income decreased $10.6
million, or 154.7%, to $-3.7 million in 2008 from $6.9 million in 2007, as a
result of the factors described above.

Liquidity and Capital Resources

As of December 31, 2008, we had cash and cash equivalents of
approximately $141,419. The following table provides detailed information about
our net cash flow for all financial statements periods presented in this report.

Cash Flow (All amounts in thousands of U.S. dollars)

|                                                                          |   | Fiscal Year Ended December
      31, |  
|------------------------------------------------------------------------- | - | ------------------------------------ | -
|                                                                          |   | 2008                                 |  
|Net cash (used in) provided by operating
      activities                 | $ | (2,631                               | )
|Net cash (used in) investing activities                                   |   | (3,656                               | )
|Net cash provided by financing activities                                 |   | 6,359                                |  
|Effect of foreign currency translation on cash and cash
      equivalents |   | 7                                    |  
|Net increase (decrease) in cash and cash
      equivalents                |   | 79                                   |  

Operating Activities

Net cash used in operating activities was $2.6 million in 2008,
as compared to $0.9 million net cash provided by operating activities for the
same period in 2007. This $3.5 million increase in net cash used in operating
activities was mainly attributable to decreased advanced payment by our
customers and lower profitability.

Investing Activities

Our main uses of cash for investing activities are payments to
the acquisition of property, plant and equipment and restricted cash pledged as
deposit for bills payable issuance.

Net cash used in investing activities was $3.7 million in 2008,
as compared to $1.7 million in 2007. This $2.0 million increase in net cash used
for investing activities was mainly attributable to expenses for equipment
purchased for electricity-aided solution and increase in advances to related
parties.

Financing Activities

Net cash provided by financing activities was $6.4 million in
2008, as compared to $306,598 in 2007. The change was mainly due to loans
provided by a major shareholder to the Company in 2008 and the proceeds from our
August 2008 PIPE financing.

Advances to Related Parties

The decrease in balance from $2.0 million as of December 31,
2007 to $1.1 million as of December 31, 2008 was mainly due to the full
repayment, amounting to $2.0 million, of advances made to Fuxin Zhongling
Industry Limited and W.T. Construction Inc., which both are wholly owned by Ms.
Lin Tan, the controlling shareholder of the Companys holding company. The
balance of $1.1 million as of December 31, 2008 represents advances made to Ms.
Lin Tan during 2008.

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Trade Receivables

[Accounts receivable aging was 47 days for 2008 ] The days
sales outstanding was 47 days for 2008, as compared to 43 days for 2007. The
increase in our accounts receivable aging was mainly because we granted very
favorable credit terms to those customers who purchased our ultra-clear glass in
2007, so as to promote this new product which we produced for the first time in
2007. As of December 31, 2007, the outstanding trade receivables relating to the
sales of ultra-clear glass accounted for a significant part of our total trade
receivables balance. As of the date of this report, we have received most of
such receivables relating to our ultra-clear glass sold in 2007 and made
doubtful debt provision for the outstanding balance based on our accounting
policy. We do not expect to grant the same favorable credit terms for
ultra-clear glass sales in the future because we have established a good
customer base through our sales in 2007. We expect that the credit term granted
to ultra-clear glass customers in the future will be around 30 days.

Bank Loans

As of December 31, 2008, the amount, maturity date and term of
each of our bank loans are as follows:

(All amounts, other than percentages, in millions of U.S.
dollars)

|Banks                                                   |   | Amounts |  |  | Maturity Date     |  |  | Duration | 
|------------------------------------------------------- | - | ------- |  |  | ----------------- |  |  | -------- | 
|China CITIC Bank, Shenyang Branch                       |   | 2.63    |  |  | November 26, 2008 |  |  | 1 year   | 
|China Construction Bank, Fuxin Branch                   |   | 2.93    |  |  | March 24, 2009    |  |  | 1 year   | 
|Shanghai Pudong Development Bank, Shenyang
      Branch |   | 4.32    |  |  | May 28, 2009      |  |  | 1 year   | 
|China Construction Bank, Fuxin Branch                   |   | 0.88    |  |  | April 29, 2009    |  |  | 6 months | 
|China Construction Bank, Fuxin Branch                   |   | 2.04    |  |  | May 22, 2009      |  |  | 6 months | 
|TOTAL                                                   | $ | 12.80   |  |  |                   |  |  |          | 

On May 6, 2008, our subsidiary Dollar Come entered into a loan
agreement with Ms. Lin Tan to borrow $5 million at the annual interest rate of
8%. The agreement has a two-year term and the loan proceeds will be used as
working capital.

On July 24, 2008, we consummated a private placement
transaction in which we issued and sold to certain accredited investors
approximately 3.3 million shares of our common stock for an aggregate purchase
price of approximately $5 million.

We repaid bank loans in the amount of $16.7 million in 2008. We
have approximately $12.8 million bank loans that will mature in the next 12
months and we may decide to refinance these loans upon maturity. We believe that
we maintain good relationships with the banks we deal with. However, we cannot
assure you that we will be able to obtain bank to refinance these bank loans
when they mature, especially if the current credit crisis persists. We will require additional cash resources, including loans, to
meet our expected capital expenditure and working capital for the next 12
months. In addition, we may, in the future, require additional cash resources
due to changed business conditions, implementation of our strategy to expand our
production capacity or other investments or acquisitions we may decide to
pursue. If our own financial resources are insufficient to satisfy our capital
requirements, we may seek to sell additional equity or debt securities or obtain
additional credit facilities. The sale of additional equity securities could
result in dilution to our stockholders. The incurrence of indebtedness would
result in increased debt service obligations and could require us to agree to
operating and financial covenants that would restrict our operations. Financing
may not be available in amounts or on terms acceptable to us, if at all. Our
independent auditors have raised substantial doubt about our ability to continue
as a going concern. The fact that we have received this going concern opinion
from our independent auditors may make it more difficult for us to raise capital
on favorable terms. Any failure by us to raise additional funds on terms
favorable to us, or at all, could limit our ability to expand our business
operations and could harm our overall business prospects.

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Obligations Under Material Contracts

Below is a summary of our current obligations under material
contracts.

In connection with the entry into the Securities Purchase
Agreement, on July 24, 2008, the Company entered into a make good escrow
agreement (the " Make Good Escrow Agreement") with Win-Win Global
Investments, Inc. (the "Pledgor"), the investors listed in the
Securities Purchase Agreement, Roth Capital Partners, LLC (" Roth") and STC, pursuant to which the Pledgor agreed to certain "make good"
provisions in the event that the Company does not meet certain income thresholds
for fiscal years 2008 and/or 2009 discussed in the Securities Purchase
Agreement. Pursuant to the Make Good Escrow Agreement, the Pledgor established
an escrow account and delivered to STC certificates evidencing 1,669,398 shares
of the Companys common stock held by the Pledgor (the " Make Good Shares") along with blank stock powers, to be held for the benefit of the
investors. The Pledgor agreed that if the after tax net income (the " ATNI") for the Companys 2008 fiscal year is less than $10,000,000 or the
ATNI for the Companys 2009 fiscal year is less than $14,000,000 (after the
exclusion of certain items from the calculation), then, in each case, the
Pledgor will transfer to the investors, on a pro rata basis, 50% of the Make
Good Shares within 10 business days after the Companys annual report on Form
10-K is filed for the respective fiscal year. In such event, the Pledgors
obligation to transfer the Make Good Shares continues to apply to each of the
investors, even if an investor has transferred or sold all or any portion of its
securities, and each of the investors shall have the right to assign its rights
to receive a pro rata portion of the Make Good Shares in conjunction with
negotiated sales or transfers of any of its securities. If the ATNI for the
Companys 2008 fiscal year is no less than $10,000,000 (after the exclusion of
certain items from the calculation), 50% of the Make Good Shares will be
released to the Pledgor. If the ATNI for the Companys 2009 fiscal year is no
less than $14,000,000 (after the exclusion of certain items from the
calculation), then the remaining 50% of the Make Good Shares will be released to
the Pledgor. The parties also agreed that for purposes of determining the ATNI
under the Securities Purchase Agreement, the release of the Make Good Shares to
the Investors or the Pledgor as a result of the operation of the Make Good
Agreement shall not be deemed to be an expense, charge, or other deduction from
revenues even though GAAP may require contrary treatment. The Make Good Escrow
Agreement will terminate upon the distribution of all the Make Good Shares. As
we did not meet the ATNI for 2008, 834,699 shares will be released to the
investors on a pro rata basis.

Critical Accounting Policies

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

Cash and cash equivalents

Cash and cash equivalents include all cash, deposits in banks
and other highly liquid investments with initial maturities of three months or
less to be cash equivalents. As of December 31, 2008 and 2007, almost all the
cash and cash equivalents were denominated in RMB and were placed with banks in
the PRC. They are not freely convertible into foreign currencies and the
remittance of these funds out of the PRC is subject to exchange control
restrictions imposed by the PRC government. The remaining insignificant balance
of cash and cash equivalents were denominated in U.S. dollars.

31

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Allowance for doubtful accounts

We established an allowance for doubtful accounts based on
managements assessment of the collectibility of trade receivables and other
receivables. A considerable amount of judgment is required in assessing the
amount of the allowance. We consider the historical level of credit losses and
apply percentages to aged receivable categories. We make judgments about the
creditworthiness of each customer based on ongoing credit evaluations, and
monitor current economic trends that might impact the level of credit losses in
the future. If the financial condition of the customers were to deteriorate,
resulting in their inability to make payments, a larger allowance may be
required.

Based on the above assessment, we established a general
provisioning policy to make allowance equivalent to 10% of gross amount of trade
receivables and other receivables due over 6-12 months, 25% gross amount of
trade receivables and other receivables due over 1-2 years and 50% of gross
amount of trade receivables and other receivables due over 2-3 years and 100% of
gross amount of trade receivables and other receivables due over 3 years.
Additional specific provision is made against trade receivables aged less than 6
months to the extent which they are considered to be doubtful.

Bad debts are written off when identified. We extend unsecured
credit to customers ranging from three to six months in the normal course of
business. We do not accrue interest on trade receivables.

After we announced suspension of production, management
increased provision for doubtful debts to $7.2 million, compared to $494,384 in
2007.

Historically, losses from uncollectible accounts did not
significantly deviate from the general allowance estimated by us and no
significant additional bad debts have been written off directly to the profit
and loss. This general provisioning policy has not changed in the past since
establishment and we consider that the aforementioned general provisioning
policy is adequate and not too excessive and do not expect to change this
established policy in the near future.

Inventories

Inventories are stated at the lower of cost or market value.
Cost is determined on a weighted average basis and includes all expenditures
incurred in bringing the goods to the point of sale and putting them in a
saleable condition. In assessing the ultimate realization of inventories, we
make judgments as to future demand requirements compared to current or committed
inventory levels. Our reserve requirements generally increase as our projected
demand requirements; decrease due to market conditions, product life cycle
changes. We estimate the demand requirements based on market conditions,
forecasts prepared by our customers, sales contracts and orders in hand. In
addition, we estimate net realizable value based on intended use, current market
value and inventory ageing analyses. We write down the inventories for estimated
obsolescence or unmarketable inventory equal to the difference between the cost
of inventories and the estimated market value based upon assumptions about
future demand and market conditions.

Based on the above assessment, we established a general
provision to make a 50% provision for inventories aged over 1 year. As of
December 31, 2008 and 2007, no general provision for inventories was made.
Historically, the actual net realizable value is close to our estimation.

Impairment of long-lived assets

Long-lived assets are tested for impairment in accordance with
SFAS No. 144 and Accounting Principles Board (APB) Opinion 18, Equity Method
of Accounting for Investments in Common Stock, respectively. The Company
periodically evaluates potential impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be
recoverable. The Company recognizes impairment of long-lives assets and investment in an affiliate in the event that the net book
values of such assets exceed the future undiscounted cashflows attributable to
such assets.

32

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The Companys long-lived assets include property, plant and
equipment, construction in progress, land use right and goodwill. These assets
were reviewed for impairment whenever events or circumstances indicate that
their carrying values may not be recoverable.

The following are examples of such events or changes in
circumstances:

- An adverse change in the business climate or market price of
a long-lived assets;
- An adverse change in the extent or manner in which a long-lived
assets is used or in its physical condition; or
- Current operating losses for long-lived assets or projected or
forecasted losses that demonstrate that the losses will be continuing.

For the fiscal reporting period, an impairment loss of
property, plant and equipment was recognized due to the recoverable value was
less than its carrying value.

As of December 31, 2008, goodwill was evaluated for impairment
in connection with the Companys annual assessment. As a result of this
assessment by the management, goodwill was fully impaired resulting in a
non-cash charge to earnings of $393,831 due to the operations of the production
lines and all manufacturing of the float glass products of Fuxin Hengrui were
suspended since January 2009.

Revenue recognition

Revenue from sales of our products is recognized when the
significant risks and rewards of ownership have been transferred to the buyer at
the time of delivery, the sales price is fixed or determinable and collection is
reasonably assured.

Foreign currency translation

The functional currency of the Company is RMB and RMB is not
freely convertible into foreign currencies. We maintain our financial statements
in the functional currency. Monetary assets and liabilities denominated in
currencies other than the functional currency are translated into the functional
currency at rates of exchange prevailing at the balance sheet date. Transactions
denominated in currencies other than the functional currency are translated into
the functional currency at the exchanges rates prevailing at the dates of the
transaction. Exchange gains or losses arising from foreign currency transactions
are included in the determination of net income for the respective periods.

For financial reporting purposes, our financial statements
which are prepared using the functional currency have been translated into
United States dollars. Assets and liabilities are translated at the exchange
rates at the balance sheet dates and revenue and expenses are translated at the
average exchange rates and stockholders equity is translated at historical
exchange rates. Any translation adjustments resulting are not included in
determining net income but are included in foreign exchange adjustment to other
comprehensive income, a component of stockholders equity. The exchange rates in
effect at December 31, 2008 and 2007 were RMB1 for $0.1467 and $0.1371
respectively. There is no significant fluctuation in exchange rate for the
conversion of RMB to US dollars after the balance sheet date.

Recent Accounting Pronouncements

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of
Generally Accepted Accounting Principles (SFAS 162). Effective 60 days
following the SECs approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles. The Board does not expect that this
Statement will result in a change in current practice. However, transition
provisions have been provided in the unusual circumstance that the application
of the provisions of this Statement results in a change in practice.
The management is in the process of evaluating the impact that SFAS 162 will
have on the Companys financial statements upon adoption.

33

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In March 2008, FASB issued SFAS No. 161, "Disclosures about
Derivative Instruments and Hedging Activities - an amendment to FASB Statement
No. 133" (SFAS 161). SFAS 161 is intended to improve financial standards for
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity's financial
position, financial performance, and cash flows. Entities are required to
provide enhanced disclosures about: (a) how and why an entity uses derivative
instruments; (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations; and (c) how
derivative instruments and related hedged items affect an entity's financial
position, financial performance, and cash flows. It is effective for financial
statements issued for fiscal years beginning after November 15, 2008, with early
adoption encouraged. The management is in the process of evaluating the impact
that SFAS 161 will have on the Companys financial statements upon adoption.

In December 2007, the FASB issued SFAS No. 160 Non controlling
Interests in Consolidated Financial Statements - an amendment of ARB No. 51
(SFAS 160). SFAS 160 establishes accounting and reporting standards for the
non controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. The guidance will become effective for the fiscal year beginning
after December 15, 2008. The management is in the process of evaluating the
impact that SFAS 160 will have on the Companys financial statements upon
adoption.

In December 2007, the FASB issued SFAS No. 141 (Revised)
Business Combinations (SFAS 141 (Revised)). SFAS 141 (Revised) establishes
principles and requirements for how the acquirer of a business recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any non controlling interest in the acquiree. The
statement also provides guidance for recognizing and measuring the goodwill
acquired in the business combination and determines what information to disclose
to enable users of the financial statements to evaluate the nature and financial
effects of the business combination. The guidance will become effective for the
fiscal year beginning after December 15, 2008. The management is in the process
of evaluating the impact that SFAS 141 (Revised) will have on the Companys
financial statements upon adoption.

In February 2007, the FASB issued SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities - Including an Amendment
of FASB Statement No. 115 (SFAS 159). SFAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value.
Entities that elect the fair value option will report unrealized gains and
losses in earnings at each subsequent reporting date. The fair value option may
be elected on an instrument-by-instrument basis, with few exceptions. SFAS 159
also establishes presentation and disclosure requirements to facilitate
comparisons between companies that choose different measurement attributes for
similar assets and liabilities. The requirements of SFAS 159 are effective for
our fiscal year beginning January 1, 2008. The adoption of this statement has no
material effect on the Company's financial statements.

Off Balance Sheet Arrangements

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

Seasonality

Our business is seasonal, with the highest proportion of sales
and operating income being generated in the second and third quarters of each
year, with lesser sales and operating income being generated in the first and
fourth quarters fourth quarters of each year. Our working capital requirements
fluctuate during the year, increasing substantially during the first and fourth
quarters as a result of lower demand for glass products due to the curtailment
of construction works in winter season.

34

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.

Not Applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements required by this item begin on page
F-1 hereof.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Exchange Act) that are designed to ensure that
information that would be required to be disclosed in Exchange Act reports is
recorded, processed, summarized and reported within the time period specified in
the SECs rules and forms, and that such information is accumulated and
communicated to our management, including to our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.

As required by Rule 13a-15 under the Exchange Act, our
management, including our Chief Executive Officer, Mr. Lihui Song, and Chief
Financial Officer, Ms. Hong Tan, evaluated the effectiveness of the design and
operation of our disclosure controls and procedures as of December 31, 2008.
Based on our assessment, Mr. Song and Ms. Tan determined that, as of December
31, 2008, and as of the date that the evaluation of the effectiveness of our
disclosure controls and procedures was completed, our disclosure controls and
procedures were effective to satisfy the objectives for which they are intended.

Internal Controls Over Financial Reporting

Managements Annual Report on Internal Control over
Financial Reporting.

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting for the Company. Internal
control over financial reporting refers to the process designed by, or under the
supervision of, our Chief Executive Officer and Chief Financial Officer, and
effected by our Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of our financial reporting and
the preparation of financial statements for external purposes in accordance with
U.S. GAAP, and includes those policies and procedures that:

| | (1) | pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      our assets;                                                                                                                                                       
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                  
| | (2) | provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with U.S. GAAP, and that our receipts and expenditures are
      being made only in accordance with the authorization of our management and
      directors; and
| |     |                                                                                                                                                                                                                                                                                                                  
| | (3) | provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of our
      assets that could have a material effect on the financial
    statements.                                                                                               

Our management assessed the effectiveness of our internal
control over financial reporting as of December 31, 2008. In making this
assessment, management used the framework set forth in the report entitled
Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on that evaluation, our
management concluded that our internal control over financial reporting is
effective, as of December 31, 2008.

35

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This annual report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Managements report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the SEC that permit the
Company to provide only managements report in this annual report.

Changes in Internal Controls over Financial Reporting.

During the fiscal year ended December 31, 2008, there were no
changes in our internal control over financial reporting identified in
connection with the evaluation performed during the fiscal year covered by this
report that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.

Directors and Executive Officers

The following sets forth the name and position of each of our
current executive officers and directors.

|NAME         | AGE | POSITION                                                        
|------------ | --- | ----------------------------------------------------------------
|Lihui Song   | 46  | Chairman, Chief Executive
      Officer and President           
|Hong Tan     | 38  | Chief Financial Officer, Treasurer, Secretary
      and Director
|Fuyi Zhao    | 58  | Director                                                        
|Guangli Yang | 51  | Director                                                        
|He Li        | 30  | Director                                                        

Lihui Song. Mr. Song has been our Chief Executive
Officer, President and Chairman of our board since March 31, 2008. From 2004 to
July 2007, Mr. Song served as the Chairman of Fuxin Hengrui. Since December 28,
2005, he has served as the Chief Executive Officer at Fuxin Hengrui. In 2006, he
was the Chairman and CEO of Hong Kong Dollar Come. In 2002, he established Fuxin
Guangya High Technology Co. Ltd, the predecessor of Fuxin Hengrui, and served as
its Chairman and General Manager. During his tenure, Mr. Song established a
500-ton float glass production line with an investment of RMB230 million. From
1984 to 2002, Mr. Song was working for Fuxin Glass Company as assistant
engineer, engineer, senior engineer, deputy manager, and manager. He was named
Young Expert Contributing to Local Development by Fuxin City. Mr. Song earned
his Bachelors Degree in silicate material from Liaoning Light Industry
Institute in 1984.

Hong Tan. Ms. Tang has been our Chief Financial Officer,
Treasurer, Secretary and a member of our Board of Directors since February 24,
2009. Ms. Tang has served as the director of Win-Win Global Investments, Inc.
since June 2006. Prior joining Win-Win Global Investments, Inc., she was the
financial director of Fuxin Zhixin Technology Co., Ltd. from 2002 to 2006. She
has a Bachelors Degree in accounting and attended the accounting training
program at Qinghua University from 2004 to 2006.

Guangli Yang. Ms. Yang has been a member of our Board of
Directors since February 24, 2009. Ms. Yang has over 25 years of accounting,
auditing and consulting experience. She has served as the business director of
Liaoning Boyuqi Accounting Firm since 2007 and the Vice President of Finance of
Jinzhou Hengda International Logistics Development Co., Ltd. since 2008. Prior to joining Liaoning
Boyuqi Accounting Firm, Ms. Yang worked as the director of the auditing
department of Jinzhou Chengxin Accounting Firm from 1995 to 2007. Ms. Yang has a
Bachelors Degree in economics.

36

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Fuyi Zhao. Mr. Zhao has been a member of our Board of
Directors since February 24, 2009. Mr. Zhao is the secretary general of the
Building Material Industry Association of Liaoning Province. He served as the
general manager of Shenyang Xingguang Cement Company from 1999 to 2008. Mr. Zhao
has extensive management and sales experience in the building material area and
holds a Masters Degree in business management.

He Li. Ms. Li has been a member of our Board of
Directors since February 24, 2009. Ms. Li has severed as the chairperson and
general manager of JJLC Pty Ltd. since 2006 and the customer consultant of ANZ
Bank since 2007. She also served as the marketing director of Salvatore
Farragamo and Aunew Group in 2008. Ms. Li holds a Bachelors Degree in
financing.

Except as noted above, there are no agreements or
understandings for any of our executive officers or directors to resign at the
request of another person and no officer or director is acting on behalf of, nor
will any of them act at the direction of, any other person. Directors are
elected until their successors are duly elected and qualified.

Family Relationships

Ms. Hong Tan is the sister-in-law of Mr. Lihui Song, our
Chairman, Chief Executive Officer and President. There are no family
relationships among any of our officers and directors.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or
executive officers has been convicted in a criminal proceeding, excluding
traffic violations or similar misdemeanors, or has been a party to any judicial
or administrative proceeding during the past five years that resulted in a
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws, except for matters
that were dismissed without sanction or settlement. Except as set forth in our
discussion below in Certain Relationships and Related Transactions, and
Director Independence, none of our directors, director nominees or executive
officers has been involved in any transactions with us or any of our directors,
executive officers, affiliates or associates which are required to be disclosed
pursuant to the rules and regulations of the SEC.

Promoters and Certain Control Persons

We did not have any promoters at any time during the past five
fiscal years.

Section 16(A) Beneficial Ownership Reporting Compliance

Under U.S. securities laws, directors, certain executive
officers and persons holding more than 10% of our common stock must report their
initial ownership of the common stock, and any changes in that ownership, to the
SEC. The SEC has designated specific due dates for these reports. Based solely
on our review of copies of such reports filed with the SEC, we believe that the
required reports were filed on time in fiscal year 2008.

Code of Ethics

We have not adopted a code ethics. However, we intend to adopt
a code of ethics in the future. We envision that the code of ethics will apply
to all of our employees, officers and directors.

37

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Material Changes to Director Nomination Procedures

There have been no material changes to the procedures by which
stockholders may recommend nominees to our board of directors since such
procedures were last disclosed.

Audit Committee and Audit Committee Financial Expert

Our Board of Directors established an audit committee on March
3, 2009 and appointed Mr. Fuyi Zhao, Ms. Guangli Yang and Ms. He Li to serve as
members of the committee, each of whom our board determined to be independent
as that term is defined by Rule 4200(a)(15) of the Marketplace Rules of The
Nasdaq Stock Market, Inc. Ms. Yang was appointed as the Chair of the audit
committee.

Our audit committee oversees our accounting and financial
reporting processes and the audits of our financial statements. Our audit
committee is responsible for, among other things:

- selecting our independent auditors and pre-approving all auditing and
  non-auditing services permitted to be performed by our independent auditors;
- reviewing with our independent auditors any audit problems or difficulties
  and managements response;
- reviewing and approving all proposed related-party transactions;
- discussing the annual audited financial statements with management and our
  independent auditors;
- reviewing major issues as to the adequacy of our internal controls and any
  special audit steps adopted in light of significant internal control
  deficiencies;
- annually reviewing and reassessing the adequacy of our audit committee
  charter;
- meeting separately and periodically with management and our internal and
  independent auditors;
- reporting regularly to the full board of directors; and
- such other matters that are specifically delegated to our audit committee
  by our board of directors from time to time.

Our board of directors has determined that Ms. Yang possesses
the accounting or related financial management experience that qualifies her as
financially sophisticated within the meaning of Rule 4350(d)(2)(A) of the Nasdaq
Marketplace Rules and that she is an audit committee financial expert as
defined by the rules and regulations of the SEC.

ITEM 11. EXECUTIVE COMPENSATION.

Summary Compensation Table  2008 and 2007

The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to the named persons for
services rendered in all capacities during the noted periods. No other executive
officers received total annual salary and bonus compensation in excess of
$100,000.

|Name and Principal Position        |  | Year |  |  | Salary |  |  | Bonus |  |  | All Other    |  |  | Total  | 
|---------------------------------- |  | ---- |  |  | ------ |  |  | ----- |  |  | ------------ |  |  | ------ | 
|                                   |  |      |  |  | ($)    |  |  | ($)   |  |  | Compensation |  |  | ($)    | 
|                                   |  |      |  |  |        |  |  |       |  |  | ($)          |  |  |        | 
|Lihui Song,                        |  | 2008 |  |  | 45,050 |  |  | 0     |  |  | 0            |  |  | 45,050 | 
|Chairman, President and CEO (1)    |  | 2007 |  |  | 50,767 |  |  | 0     |  |  | 0            |  |  | 50,767 | 
|Timothy P. Halter,                 |  | 2008 |  |  | 0      |  |  | 0     |  |  | 0            |  |  | 0      | 
|Former Chief Executive Officer (2) |  | 2007 |  |  | 0      |  |  | 0     |  |  | 0            |  |  | 0      | 

38

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| | (1) | On March 31, 2008, we acquired Dollar Come in a reverse
      acquisition transaction that was structured as a share exchange and in
      connection with that transaction, Mr. Song became our Chairman, Chief
      Executive Officer and President. Prior to the effective date of the
      reverse acquisition, Mr. Song was the Chief Executive Officer of Fuxin
      Hengrui. The annual, long term and other compensation shown in this table
      include the amount Mr. Song received from Fuxin Hengrui prior to the
      consummation of the reverse acquisition.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (2) | Timothy P. Halter tendered his resignation to our Company
      upon the closing of the reverse acquisition on March 31, 2008. His
      resignation from all offices he held with us became effective on March 31,
      2008 and his resignation from his position as our director became
      effective on April 19, 2008.                                                                                                                                                                                                                                                   

Employment Agreements

Our subsidiary Fuxin Hengrui has entered into an employment
agreement with Mr. Lihui Song, our Chairman, Chief Executive Officer and
President, which became effective as of December 28, 2005. Pursuant to the terms
of the employment agreement, Fuxin Hengrui agreed to pay Mr. Song an annual
salary of RMB360,000 (approximately US$60,000) as consideration for his services
as Chief Executive Officer of Fuxin Hengrui. The initial term of the employment
agreement is for two (2) years. Fuxin Hengrui also agreed to provide Mr. Song
with free lodging and other related fringe benefits (not including meals) and a
company car and agreed to reimburse 70% of Mr. Songs medical expenses. The
employment agreement also contains customary non-competition and confidentiality
provisions.

On March 3, 2009, we entered into an employment agreement with
our Chief Financial Officer, Ms. Hong Tan. Pursuant to the employment agreement,
we agreed to pay Ms. Tan an annual salary of RMB 200,000 (approximately
US$33,333) and she will be eligible for performance based bonuses as determined
in the sole discretion of the Companys Board of Directors. The term of the
employment agreement is for two (2) years. The employment agreement also
contains customary non-solicitation, non-competition and confidentiality
provisions.

Outstanding Equity Awards at Fiscal Year End

None of our executive officers received any equity awards,
including, options, restricted stock or other equity incentives during the
fiscal year ended December 31, 2008.

Compensation of Directors

The following table sets forth certain information concerning
the compensation paid to our directors for services rendered to us during the
fiscal year ending December 31, 2008:

|Name         | Fees      | Stock  | Option | Non-Equity   | Nonqualified | All Other    | Total
|------------ | --------- | ------ | ------ | ------------ | ------------ | ------------ | -----
|             | earned or | Awards | Awards | Incentive    | Deferred     | Compensation | ($)  
|             | paid in   | ($)    | ($)    | Plan         | Compensation | **($)**      |      
|             | cash      |        |        | Compensation | Earnings     |              |      
|             |           |        |        | **($)**      | ($)          |              |      
|Fuyi Zhao    | 0         | 0      | 0      | 0            | 0            | 0            | 0    
|Guangli Yang | 0         | 0      | 0      | 0            | 0            | 0            | 0    
|He Li        | 0         | 0      | 0      | 0            | 0            | 0            | 0    

On February 24, 2009, we entered into independent director
agreements with Mr. Fuyi Zhao, Ms. Guangli Yang and Ms. He Li. Under the terms
of the independent director agreements, we agreed to pay Mr. Zhao an annual fee
of RMB 20,000 (approximately $3,333), Ms. Yang an annual fee of RMB 25,000
(approximately $4,167) and Ms. Li an annual fee of RMB 20,000 (approximately
$3,333),as compensation for the services to be provided by them as independent directors. In addition, we agreed to reimburse the
directors for pre-approved reasonable business related expenses incurred in good
faith in the performance of their duties for the Company. The independent
director agreements also contain customary non-competition and confidentiality
provisions.

39

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Security Ownership of Certain Beneficial Owners and
Management

The following table sets forth, as of March 31, 2009, certain
information with respect to the beneficial ownership of our common stock by (i)
each director and executive officer, (ii) each person known by us to be the
beneficial owner of five percent or more of the outstanding shares of common
stock, and (iii) all directors and executive officers as a group. Unless
otherwise indicated, the person or entity listed in the table is the beneficial
owner of, and has sole voting and investment power with respect to, the shares
indicated. Unless otherwise specified, the address of each of the persons set
forth below is in care of the Company at 123 Chuangye Road, Haizhou District,
Fuxin City, Liaoning Province, Peoples Republic of China.

|Name & Address of Beneficial                                        |  | Office, If Any              |  |  | Amount and Nature |   |  | Percent of Class(2 | )
|------------------------------------------------------------------- |  | --------------------------- |  |  | ----------------- | - |  | ------------------ | -
|Owner                                                               |  |                             |  |  | of Beneficial     |   |  |                    |  
|                                                                    |  |                             |  |  | Ownership(1       | ) |  |                    |  
|Officers and
      Directors                                        | 
|Lihui Song (3)                                                      |  | Chairman, CEO and President |  |  | 15,438,612        |   |  | 53.9%              |  
|Hong Tan                                                            |  | CFO and Director            |  |  | 1,425,103         |   |  | 5.0%               |  
|Fuyi Zhao                                                           |  | Director                    |  |  | 0                 |   |  | *                  |  
|Guangli Yang                                                        |  | Director                    |  |  | 0                 |   |  | *                  |  
|He Li                                                               |  | Director                    |  |  | 0                 |   |  | *                  |  
|All officers and
      directors as a group (5 persons named above) |  |                             |  |  | 16,863,715        |   |  | 58.9%              |  
|5% Security Holders                                                 |  |                             |  |  |                   |   |  |                    |  
|Money Victory
      Limited                                         |  |                             |  |  | 15,438,612        |   |  | 53.9%              |  
|Lin Tan (4)                                                         |  |                             |  |  | 15,438,612        |   |  | 53.9%              |  
|Lihui Song
      (3)                                                |  |                             |  |  | 15,438,612        |   |  | 53.9%              |  
|Win-Win Global Investments Inc.                                     |  |                             |  |  | 7,125,513         |   |  | 24.9%              |  
|Yan Tan (5)                                                         |  |                             |  |  | 5,700,410         |   |  | 19.9%              |  
|Hong Tan (6)                                                        |  |                             |  |  | 1,425,103         |   |  | 5.0%               |  
|*Less than 1%                                                       |  |                             |  |  |                   |   |  |                    |  

| | (1) | Beneficial Ownership is determined in accordance with the
      rules of the SEC and generally includes voting or investment power with
      respect to securities. Each of the beneficial owners listed above has
      direct ownership of and sole voting power and investment power with
      respect to the shares of our common stock.                                    
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                   
| | (2) | As of March 31, 2009, a total of 28,623,996 shares of our
      common stock are considered to be outstanding pursuant to SEC Rule
      13d-3(d)(1). For each Beneficial Owner above, any options exercisable
      within 60 days have been included in the denominator.                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                   
| | (3) | Includes 15,438,612 shares held by Money Victory Limited,
      a BVI company, of which Mr. Songs wife, Lin Tan, is a 77.51% owner. Mr.
      Song disclaims his beneficial ownership of shares of our common stock held
      by Money Victory Limited except to the extent of his pecuniary interest
      therein..                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                   
| | (4) | Includes 15,438,612 shares held by Money Victory Limited,
      a BVI company, of which Ms. Lin Tan is a 77.51% owner. Ms. Tan disclaims
      her beneficial ownership of shares of our common stock held by Money
      Victory Limited except to the extent of her pecuniary interest
      therein. Ms. Lin Tan is the sister of Ms. Hong Tan, our CFO, and Ms. Yan
      Tan.

40

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| |     |                                                                                                                                                               
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (5) | Includes 5,700,410 shares held by Win-Win Global
      Investments Inc., a BVI company, for which Ms. Yan Tan is deemed to be the
      80% beneficial owner. 
| |     |                                                                                                                                                               
| | (6) | Includes 1,425,103 shares held by Win-Win Global
      Investments Inc., a BVI company, for which Ms. Hong Tan is deemed to be
      the 20% beneficial owner.

Changes in Control

There are currently no arrangements which may result in a
change in control of the Company.

Securities Authorized for Issuances under Equity
Compensation Plans

We do not have in effect any compensation plans under which our
equity securities are authorized for issuance and we do not have any outstanding
stock options.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.

Related Party Transactions

The following includes a summary of transactions since the
beginning of the 2007 fiscal year, or any currently proposed transaction, in
which we were or are to be a participant and the amount involved that exceeded
or exceeds the lesser of $120,000 or one percent of the average of our total
assets at year-end for the last two completed fiscal years, and in which any
related person had or will have a direct or indirect material interest (other
than compensation described under Item 11. Executive Compensation). We believe
the terms obtained or consideration that we paid or received, as applicable, in
connection with the transactions described below were comparable to terms
available or the amounts that would be paid or received, as applicable, in
arms-length transactions.

On May 6, 2008, our subsidiary Dollar Come entered into a loan
agreement with Ms. Lin Tan to borrow US$5 million at the annual interest rate of
8%. The agreement has a two-year term and the loan proceeds will be used as
working capital.

On August 6, 2008, we advanced $1,108,343 to Ms. Lin Tan, the
spouse of our Chairman, a sister of our CFO, and controlling shareholder of
Money Victory Limited. As of December 31, 2008, Ms. Lin Tan owed us $1,108,343.
During the fiscal year 2008, Ms. Lin Tan advanced $285,918 to us for the purpose
of operating activities. As of December 31, 2008, we owed Ms. Tan $285,918.

Except as set forth in our discussion above, none of our
directors, director nominees or executive officers has been involved in any
transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and
regulations of the SEC.

The company is controlled by Money Victory Limited,  a holding
company that owns 53.9% of our outstanding common stock, and by Win-Win Global
Investments Inc., a holding company that owns 24.9% of our outstanding common
stock. Money Victory Limited is owned 77.51% by Ms. Lin Tan and Win-Win Global
Investments Inc. is owned 20% by Ms. Hong Tan and 80% by Ms. Yan Tan.

41

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

Independent Auditors Fees

The following is a summary of the fees billed to the Company by
PKF Hong Kong, Certified Public Accounts for professional services rendered for
the fiscal years ended December 31, 2008 and 2007:

|                   |   | Year Ended December 31, | 
|------------------ | - | ----------------------- | 
|                   |   | 2008                    | 
|Audit Fees         | $ | 98,022                  | 
|Audit-Related Fees | $ | 34,596                  | 
|Tax Fees           | $ | 0                       | 
|All Other Fees     | $ | 0                       | 
|TOTAL              | $ | 132,618                 | 

Audit Fees consisted of fees billed for professional services
rendered by the principal accountant for the audit of our annual financial
statements and review of the financial statements included in our Form 10-Q or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements.

Audit-Related Fees consisted of fees billed for assurance and
related services by the principal accountant that were reasonably related to the
performance of the audit or review of the our financial statements and are not
reported under the paragraph captioned Audit Fees above.

Tax Fees consisted of fees billed for professional services
rendered by the principal accountant for tax compliance, tax advice, and tax
planning.

All Other Fees consisted of fees billed for products and
services provided by the principal accountant, other than the services reported
above under other captions of this Item 14.

Pre-Approval Policies and Procedures

Under the Sarbanes-Oxley Act of 2002, all audit and non-audit
services performed by our auditors must be approved in advance by our Board of
Directors to assure that such services do not impair the auditors independence
from us. In accordance with its policies and procedures, our Board of Directors
pre-approved the audit service performed by PKF Hong Kong, Certified Public
Accounts for our financial statements as of and for the year ended December 31,
2008.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Financial Statements and Schedules

The financial statements are set forth under Item 8 of this
Annual Report on Form 10-K. Financial statement schedules have been omitted
since they are either not required, not applicable, or the information is
otherwise included.

Exhibit List

The following exhibits are filed as part of this report or
incorporated by reference:

|Exhibit | Description                                                                                                                                                                                                                                       
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     |                                                                                                                                                                                                                                                   
|2.1     | Share Exchange Agreement, dated March 31, 2008,
      by and among the registrant, Dollar Come and its shareholders
      (incorporated by reference to Exhibit 2.1 to the registrants current
      report on Form 8-K filed on March 31, 2008).

42

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|3.1   | Amended and Restated Articles of
    Incorporation of the registrant (incorporated by reference to Schedule 14C
    Information filed on May 1, 2008).                                                                                                                                                                                                  
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.2   | Amended and Restated Bylaws of the registrant
      adopted on April 21, 2008 (incorporated by reference to Exhibit 3.2 to the
      registrants current report on Form 8-K filed on April 25, 2008).                                                                                                                                                  
|10.1  | Securities Purchase Agreement,
      dated July 24, 2008 by and among the registrant, Dollar Come Investments
      Limited, Fuxin Hengrui Technology Co., Ltd. and the investors listed
      therein (incorporated by reference to Exhibit 10.1 to the registrants
      current report on Form 8-K filed on July 25, 2008).                         
|10.2  | Registration Rights Agreement, dated July 24,
      2008 by and among registrant and the investors signatory thereto (
      incorporated by reference to Exhibit 10.2 to the registrants current
      report on Form 8-K filed on July 25, 2008).                                                                                                    
|10.3  | Cash Escrow Agreement, dated
      July 24, 2008 by and among the registrant, Roth Capital Partners, LLC and
      Securities Transfer Corporation (incorporated by reference to Exhibit 10.3
      to the registrants current report on Form 8-K filed on July 25, 2008).                                                                             
|10.4  | Holdback Escrow Agreement, dated July 24, 2008
      by and among the registrant, the investors listed therein and Securities
      Transfer Corporation (incorporated by reference to Exhibit 10.4 to the
      registrants current report on Form 8-K filed on July 25, 2008).                                                                       
|10.5  | Make Good Escrow Agreement,
      dated July 24, 2008 by and among the registrant, Win-Win Global
      Investments Inc. and Tri-State Title & Escrow, LLC (incorporated by
      reference to Exhibit 10.5 to the registrants current report on Form 8-K
      filed on July 25, 2008).                                                               
|10.6  | Form of Lockup Agreement, dated July 24, 2008
      by and between the registrant and the stockholders listed therein
      (incorporated by reference to Exhibit 10.6 to the registrants current
      report on Form 8-K filed on July 25, 2008).                                                                                                    
|10.7  | Industrial Products Purchase
      Agreement between Tangshan SanYou Chemical Industry, Inc. and Fuxin
      Hengrui Technology Co. Ltd., dated January 1, 2007 (English Translation)
      (incorporated by reference to Exhibit 10.5 to the registrants current
      report on Form 8-K filed on March 31, 2008).                                   
|10.8  | Industrial and Mineral Products Purchase
      Agreement between Xinxing Material Sales agency of Fuxin Economic
      Development Zone and Fuxin Hengrui Technology Co. Ltd., dated July 14,
      2007 (English Translation) (incorporated by reference to Exhibit 10.6 to
      the registrants current report on Form 8-K filed on March 31, 2008).
|10.9  | Industrial and Mineral Products
      Purchase Agreement between Panjin Yidong Petrochemical Co., Ltd and Fuxin
      Hengrui Technology Co. Ltd, dated on August 30, 2007 (English Translation)
      (incorporated by reference to Exhibit 10.7 to the registrants current
      report on Form 8-K filed on March 31, 2008).                        
|10.10 | Sales Contract between Fuxin Hengrui Technology
      Co. Ltd. and Guangzhou Jingyao Glass Products Co. Ltd., dated March 9,
      2007 (English Translation) (incorporated by reference to Exhibit 10.8 to
      the registrants current report on Form 8-K filed on March 31, 2008).                                                                 
|10.11 | Sales Contract between Fuxin
      Hengrui Technology Co. Ltd. and Fuxin Guangmingwuzi Co. Ltd., dated
      December 4, 2006 (English Translation) (incorporated by reference to
      Exhibit 10.9 to the registrants current report on Form 8-K filed on March
      31, 2008).                                                                     
|10.12 | Debt Settlement Agreement between Fuxin Hengrui
      Technology Co. Ltd. and FuXin DongFang Glass Co., Ltd., dated June 30,
      2006 (English Translation) (incorporated by reference to Exhibit 10.10 to
      the registrants current report on Form 8-K filed on March 31, 2008).                                                                
|10.13 | Loan Agreement between Fuxin
      Hengrui Technology Co. Ltd. and China Construction Bank (Fuxin Branch),
      dated March 24, 2007 (English Translation) (incorporated by reference to
      Exhibit 10.2 to the registrants current report on Form 8-K filed on March
      31, 2008).                                                             

43

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|10.14 | Loan Agreement between Fuxin
      Hengrui Technology Co. Ltd. and Shanghai Pudong Development Bank (English
      Translation) (incorporated by reference to Exhibit 10.3 to the
      registrants current report on Form 8-K filed on March 31, 2008).                                                                   
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.15 | Loan Agreement between Fuxin Hengrui Technology
      Co. Ltd. and China CITIC Bank ShenYang Branch, dated November 30, 2007
      (English Translation) (incorporated by reference to Exhibit 10.4 to the
      registrants current report on Form 8-K filed on March 31, 2008).                                          
|10.16 | Loan Agreement between Dollar
      Come Investments Limited and Lin Tan, dated May 6, 2008 (English
      Translation) (incorporated by reference to Exhibit 10.1 to the
      registrants current report on Form 8-K filed on May 8, 2008).                                                                              
|10.17 | License Agreement between Fuxin Hengrui
      Tianyuan New Energy Co., Ltd. and Fuxin Hengrui Technology Co. Ltd., dated
      August 27, 2008 (English Translation) (incorporated by reference to
      Exhibit 10.20 to the registrants registration statement on Form S-1 filed
      on August 29, 2008).              
|10.18 | Lease Agreement between Fuxin
      Xianheng Float Glass Co. Ltd. and Trustee in Bankruptcy of Fuxin Guangya
      Flat Glass Co., Ltd, dated August 25, 2004 (English Translation)
      (incorporated by reference to Exhibit 10.1 to the registrants current
      report on Form 8-K filed on March 31, 2008).         
|10.19 | Employment Agreement between Fuxin Hengrui
      Technology Co. Ltd. and Lihui Song (English Translation) (incorporated by
      reference to Exhibit 10.11 to the registrants current report on Form 8-K
      filed on March 31, 2008).                                                                                  
|10.20 | Employment Agreement, dated
      March 3, 2009, between Golden Elephant Glass Technology, Inc. and Hong Tan
      (incorporated by reference to Exhibit 10.1 to the registrants current
      report on Form 8-K filed on March 4, 2009).                                                                                 
|10.21 | Golden Elephant Glass Technology, Inc.
      Independent Directors Contract, dated as of February 24, 2009, by and
      between Golden Elephant Glass Technology, Inc. and Fuyi Zhao (incorporated
      by reference to Exhibit 10.1 to the registrants current report on Form
      8-K filed on February 24, 2009).   
|10.22 | Golden Elephant Glass
      Technology, Inc. Independent Directors Contract, dated as of February 24,
      2009, by and between Golden Elephant Glass Technology, Inc. and Guangli
      Yang (incorporated by reference to Exhibit 10.2 to the registrants
      current report on Form 8-K filed on February 24, 2009).
|10.23 | Golden Elephant Glass Technology, Inc.
      Independent Directors Contract, dated as of February 24, 2009, by and
      between Golden Elephant Glass Technology, Inc. and He Li (incorporated by
      reference to Exhibit 10.3 to the registrants current report on Form 8-K
      filed on February 24, 2009).       
|10.24 | Indemnification Agreement,
      dated as of February 24, 2009, by and between Golden Elephant Glass
      Technology, Inc. and Fuyi Zhao (incorporated by reference to Exhibit 10.4
      to the registrants current report on Form 8-K filed on February 24,
      2009).                                                
|10.25 | Indemnification Agreement, dated as of February
      24, 2009, by and between Golden Elephant Glass Technology, Inc. and
      Guangli Yang (incorporated by reference to Exhibit 10.5 to the
      registrants current report on Form 8-K filed on February 24, 2009).                                                   
|10.26 | Indemnification Agreement,
      dated as of February 24, 2009, by and between Golden Elephant Glass
      Technology, Inc. and He Li (incorporated by reference to Exhibit 10.6 to
      the registrants current report on Form 8-K filed on February 24, 2009).                                                          
|21    | List of Subsidiaries (incorporated by reference
      to Exhibit 21 to the registrants registration statement on Form S-1 filed
      on August 29, 2008).                                                                                                                                                                 
|31.1* | Certifications of Chief
      Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002                                                                                                                                                                                                             

44

---

|31.2* | Certifications of Chief
      Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002
|----- | ---------------------------------------------------------------------------------------------------------------
|32.1* | Certification of Chief Executive Officer
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002       
|32.2* | Certification of Chief Financial Officer
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002       

*Filed herewith.

45

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Golden Elephant Glass Technology, Inc.

Consolidated Financial Statements
(Stated in US dollars)





---

Golden Elephant Glass Technology, Inc.Consolidated
Financial Statements



Index to Consolidated Financial Statements



|                                                                            | Pages     
|--------------------------------------------------------------------------- | ----------
|Report of Independent Registered Public
      Accounting Firm               | F-1       
|Consolidated Statements of Operations and Comprehensive
      (Loss) Income | F-2       
|Consolidated Balance Sheets                                                 | F-3 - F-4 
|Consolidated Statements of Cash Flows                                       | F-5 - F-6 
|Consolidated Statements of Stockholders
      Equity                       | F-7       
|Notes to Consolidated Financial Statements                                  | F-8 - F-35



---

Report of Independent Registered Public Accounting
Firm

To the Board of Directors and Stockholders ofGolden
Elephant Glass Technology, Inc.

We have audited the accompanying consolidated balance sheets of
Golden Elephant Technology, Inc. (the Company) and its subsidiaries as of
December 31, 2008 and 2007, and the related consolidated statements of
operations and comprehensive (loss) income, stockholders equity and cash flows
for each of the two years in the period ended December 31, 2008. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company and its subsidiaries as of December 31, 2008 and 2007, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31, 2008 in conformity with accounting
principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 3(i) to the consolidated financial statements, the Company
incurred a net loss for the year ended December 31, 2008 and had net current
liabilities and accumulated (deficit) as of December 31, 2008. In addition, due
to deteriorating global economic environment and shrinking gross profit margin
of float glass, the Company is implementing a maintenance program for the
upgrades of float glass production lines, of which the operations are suspended
during the maintenance period. These matters raise substantial doubt about the
Companys ability to continue as a going concern. The management believes that
the suspension of production lines during deteriorating global economic
environment provides an opportunity to mitigate the negative economic impact to
the Company and the upgrades are expected to improve the profitability in the
future. However, the Company has no assurance with respect to the maintenance
program. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



PKF Certified Public AccountantsHong Kong, China
April 15, 2009

F-1

---

Golden Elephant Glass Technology, Inc.Consolidated Statements of Operations and Comprehensive (Loss)
Income(Stated in US Dollars)

|                                                                |   | Year ended December 31, |  
|--------------------------------------------------------------- | - | ----------------------- | -
|                                                                |   | 2008                    |  
|                                                                |   |                         |  
|Sales revenues                                                  | $ | 60,723,960              |  
|Cost of sales                                                   |   | 49,893,845              |  
|Gross profit                                                    |   | 10,830,115              |  
|Other operating income                                          |   |                         |  
|Decrease
      in provision for doubtful debts                  |   | -                       |  
|Gain on
      disposal of a subsidiary - Note 4(b)              |   | 508,981                 |  
|Total other operating income                                    |   | 508,981                 |  
|Operating expenses                                              |   |                         |  
|Administrative expenses                                         |   | 1,933,266               |  
|Research and development expenses                               |   | 1,761,554               |  
|Selling
      expenses                                          |   | 205,955                 |  
|Increase
      in provision for doubtful debts                  |   | 6,687,230               |  
|Impairment of property, plant and equipment - Note 14           |   | 2,757,229               |  
|Impairment of goodwill                                          |   | 393,831                 |  
|                                                                |   | 13,739,065              |  
|(Loss)/income from
      operations                             |   | (2,399,969              | )
|Interest
      income                                           |   | 46,968                  |  
|Other
      income                                              |   | 90,425                  |  
|Government grants - Note 5                                      |   | 17,021                  |  
|Finance
      costs - Note 6                                    |   | (1,423,272              | )
|Equity in
      net loss of an unconsolidated affiliate         |   | -                       |  
|(Loss)/income before
      income taxes and minority interests  |   | (3,668,827              | )
|Income taxes - Note 7                                           |   | (85,068                 | )
|Minority interests                                              |   | 4,994                   |  
|Net (loss)/income                                               | $ | (3,748,901              | )
|Other comprehensive
      income                                |   |                         |  
|Foreign currency
      translation adjustments                  |   | 1,054,913               |  
|Comprehensive (loss)/income                                     | $ | (2,693,988              | )
|(Loss)/earnings per share (Note 8) -
      Basic                | $ | (0.14                   | )
|-
      Diluted                                                 | $ | (0.14                   | )
|Weighted average number
      of shares outstanding (Note 8) :- |   |                         |  
|- Basic                                                         |   | 26,263,342              |  
|- Diluted                                                       |   | 26,294,577              |  



See the accompanying notes to consolidated financial statements

F-2

---

Golden Elephant Glass Technology, Inc.Consolidated Balance Sheets(Stated in US Dollars)

|                                                            |   | As of December 31, | 
|----------------------------------------------------------- | - | ------------------ | 
|                                                            |   | 2008               | 
|                                                            |   |                    | 
|ASSETS                                                      |   |                    | 
|Current assets                                              |   |                    | 
|Cash and cash equivalents                                   | $ | 141,419            | 
|Restricted cash - Note 9                                    |   | 733,500            | 
|Trade receivables, net - Note 10                            |   | 7,893,130          | 
|Other receivables, net - Note 11                            |   | 2,371,514          | 
|Prepayments - Note 12                                       |   | 4,291,918          | 
|Inventories - Note 13                                       |   | 4,367,298          | 
|Amount due from a related party - Note 21                   |   | 1,108,343          | 
|Amount
      due from an unconsolidated affiliate - Note 20 |   | -                  | 
|Deferred taxes - Note 7                                     |   | 24,939             | 
|Total current assets                                        |   | 20,932,061         | 
|Investment in an unconsolidated
      affiliate - Note 5    |   | -                  | 
|Property, plant and
      equipment, net - Note 14          |   | 24,485,104         | 
|Land use
      right - Note 15                              |   | 2,813,236          | 
|Goodwill                                                    |   | -                  | 
|Deferred
      taxes - Note 7                               |   | 290,009            | 
|TOTAL ASSETS                                                | $ | 48,520,410         | 

See the accompanying notes to consolidated financial
statements

F-3

---

Golden Elephant Glass Technology, Inc.Consolidated Balance Sheets (Contd)(Stated in US
Dollars)

|                                                                                                                                                                                              |   | As of December 31, |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------------ | -
|                                                                                                                                                                                              |   | 2008               |  
|                                                                                                                                                                                              |   |                    |  
|LIABILITIES AND
      STOCKHOLDERS EQUITY                                                                                                                                                    |   |                    |  
|LIABILITIES                                                                                                                                                                                   |   |                    |  
|Current
      liabilities                                                                                                                                                                     |   |                    |  
|Trade payables - Note 9                                                                                                                                                                       | $ | 11,116,809         |  
|Bills payable - Note 9                                                                                                                                                                        |   | 1,467,000          |  
|Other payables and accrued expenses - Note 17                                                                                                                                                 |   | 6,164,252          |  
|Sales receipt in advance - Note 18                                                                                                                                                            |   | 501,397            |  
|Dividend payable - Note 19                                                                                                                                                                    |   | -                  |  
|Income tax payable                                                                                                                                                                            |   | 70,361             |  
|Amount due to a director - Note 20                                                                                                                                                            |   | 37,527             |  
|Amount due to a related party - Note 21                                                                                                                                                       |   | 285,918            |  
|Secured short-term bank loans - Note 22                                                                                                                                                       |   | 12,808,964         |  
|Loan from Madam Tan - Note 23                                                                                                                                                                 |   | 1,740,000          |  
|TOTAL LIABILITIES                                                                                                                                                                             |   | 34,192,228         |  
|COMMITMENTS AND CONTINGENCIES- Note 24                                                                                                                                                        |   |                    |  
|STOCKHOLDERS EQUITY                                                                                                                                                                          |   |                    |  
|Preferred stock : par value
      $0.01 per share Authorized 10,000,000 shares, none issued and outstanding                                                                                   |   | -                  |  
|Common stock : par value $0.01 per share
      Authorized 150,000,000 shares in 2008 and 2007; issued and outstanding
      28,623,996 shares in 2008 and 23,751,710 shares in 2007 - Note 25 |   | 286,240            |  
|Additional paid-in capital - Note 25                                                                                                                                                          |   | 12,001,927         |  
|Statutory reserves - Note
      26                                                                                                                                                            |   | 714,013            |  
|Accumulated other comprehensive income                                                                                                                                                        |   | 2,131,248          |  
|Accumulated
      (deficit)/retained earnings                                                                                                                                                 |   | (805,246           | )
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                                    |   | 14,328,182         |  
|TOTAL LIABILITIES AND STOCKHOLDERS
      EQUITY                                                                                                                                              | $ | 48,520,410         |  

See the accompanying notes to consolidated financial statements

F-4

---

Golden Elephant Glass Technology, Inc.Consolidated Statements of Cash Flows(Stated in US
Dollars)

|                                                                                                                       |   | Year ended December 31, |  
|---------------------------------------------------------------------------------------------------------------------- | - | ----------------------- | -
|                                                                                                                       |   | 2008                    |  
|                                                                                                                       |   |                         |  
|Cash flows from operating
      activities                                                                             |   |                         |  
|Net (loss)/income                                                                                                      | $ | (3,748,901              | )
|Adjustments to reconcile net
      (loss) income to net cash flows (used in)/provided by operating activities
      :- |   |                         |  
|Depreciation                                                                                                           |   | 2,906,565               |  
|Amortization of land use right                                                                                         |   | 61,854                  |  
|Share of result of unconsolidated affiliate                                                                            |   | -                       |  
|Gain on disposal of a subsidiary                                                                                       |   | (508,981                | )
|Impairment of property, plant and equipment                                                                            |   | 2,757,229               |  
|Impairment of goodwill                                                                                                 |   | 393,831                 |  
|Provision for/(recovery of) doubtful debts                                                                             |   | 6,687,230               |  
|Deferred taxes                                                                                                         |   | 15,930                  |  
|Minority interests                                                                                                     |   | (4,994                  | )
|Changes
      in operating assets and liabilities :-                                                                   |   |                         |  
|Restricted cash                                                                                                        |   | 629,478                 |  
|Trade
      receivables                                                                                                |   | (8,826,699              | )
|Other receivables                                                                                                      |   | (142,171                | )
|Prepayments                                                                                                            |   | (2,272,606              | )
|Inventories                                                                                                            |   | 923,883                 |  
|Trade
      payables                                                                                                   |   | 2,724,578               |  
|Bills payable                                                                                                          |   | (2,093,377              | )
|Other
      payables and accrued expenses                                                                              |   | 4,418,156               |  
|Sales receipt in advance                                                                                               |   | (6,076,825              | )
|Amount
      due to a director                                                                                         |   | 36,615                  |  
|Amount due from an
      unconsolidated affiliate                                                                      |   | -                       |  
|Income
      tax payable                                                                                               |   | (511,770                | )
|Net cash flows (used in)/provided by operating
      activities                                                        |   | (2,630,975              | )
|                                                                                                                       |   |                         |  
|                                                                                                                       |   |                         |  
|Cash flows from investing
      activities                                                                             |   |                         |  
|Advances to related parties                                                                                            |   | (2,831,035              | )
|Payments to acquire property,
      plant and equipment                                                                |   | (2,317,527              | )
|Payment for construction in progress                                                                                   |   | (35,938                 | )
|Proceeds from disposal of
      property, plant and equipment                                                          |   | 1,417,279               |  
|Proceeds from disposal of land use right                                                                               |   | 246,759                 |  
|Cash outflow from acquisition
      of 10.85% equity interest of Fuxin Hengrui                                         |   | -                       |  
|Net cash outflow from acquisition of 35%
      equity interest of Tianyuan - Note 4(a)                                 |   | (135,594                | )
|Net cash outflow from
      disposal of 70% equity interest of Tianyuan - Note 4(b)                                    |   | (163                    | )
|Cash inflow from RTO                                                                                                   |   | 464                     |  
|Net cash flows used in investing
      activities                                                                      | $ | (3,655,755              | )

See the accompanying notes to consolidated financial statements

F-5

---

Golden Elephant Glass Technology, Inc.Consolidated Statements of Cash Flows (Contd)(Stated in
US Dollars)

|                                                                                    |   | Year ended December 31, |  
|----------------------------------------------------------------------------------- | - | ----------------------- | -
|                                                                                    |   | 2008                    |  
|                                                                                    |   |                         |  
|Cash flows from financing
      activities                                          |   |                         |  
|Amount
      due to a related party                                                 | $ | 202,839                 |  
|Dividend
      paid to former stockholders of Fuxin Hengrui                         |   | (642,942                | )
|Proceeds
      from loan from Madam Tan                                             |   | 5,000,000               |  
|Proceeds
      from bank loans                                                      |   | 13,952,003              |  
|Repayment
      of bank loans                                                       |   | (16,678,200             | )
|Proceeds
      from issuance of shares in connection with the private placement     |   | 4,524,963               |  
|Net
      proceeds from issuance of shares                                          |   | -                       |  
|                                                                                    |   |                         |  
|Net cash flows provided by
      financing activities                               |   | 6,358,663               |  
|Effect of foreign currency
      translation on cash and cash equivalents           |   | 6,826                   |  
|Net increase/(decrease) in cash and
      cash equivalents                          |   | 78,759                  |  
|Cash and cash equivalents -
      beginning of year                                 |   | 62,660                  |  
|Cash and cash equivalents - end of
      year                                       | $ | 141,419                 |  
|Supplemental disclosures for cash
      flow information                            |   |                         |  
|Cash paid for :-                                                                    |   |                         |  
|Interest                                                                            | $ | 1,040,786               |  
|Income taxes                                                                        | $ | 582,809                 |  
|Non-cash financing activities                                                       |   |                         |  
|Consideration of disposal of
      a subsidiary offset by other payable - Note 4(b) | $ | 709,200                 |  
|Part of loan from Madam Tan
      offset by advances to related parties - Note 23   | $ | 3,260,000               |  

See the accompanying notes to consolidated financial
statements

F-6

---

Golden Elephant Glass Technology, Inc.Consolidated Statements of Stockholders Equity(Stated in US Dollars)

|                                                                    |  | Common stock |        |   | Additional paid-in 
    capital |  |   | Statutory reserves 
    (Note 26 | ) |   | Accumulated other comprehensive income |  |   | Retained earnings/ accumulated (deficit) |  |   | Total      |  
|------------------------------------------------------------------- |  | ------------ | ------ | - | ------------------------------- |  | - | -------------------------------- | - | - | -------------------------------------- |  | - | ---------------------------------------- |  | - | ---------- | -
|No. of shares                                                       |  |              | Amount
|                                                                    |  |              |        |   |                                 |  |   |                                  |   |   |                                        |  |   |                                          |  |   |            |  
|Balance, January 1, 2007                                            |  | 23,751,710   |        | $ | 237,517                         |  | $ | 7,513,186                        |   | $ | 79,446                                 |  | $ | 405,859                                  |  | $ | (3,267,365 | )
|Net income                                                          |  | -            |        |   | -                               |  |   | -                                |   |   | -                                      |  |   | -                                        |  |   | 6,859,160  |  
|Foreign currency translation adjustments                            |  | -            |        |   | -                               |  |   | -                                |   |   | -                                      |  |   | 670,476                                  |  |   | -          |  
|Appropriation to reserves                                           |  | -            |        |   | -                               |  |   | -                                |   |   | 586,171                                |  |   | -                                        |  |   | (586,171   | )
|Balance, December 31, 2007                                          |  | 23,751,710   |        |   | 237,517                         |  |   | 7,513,186                        |   |   | 665,617                                |  |   | 1,076,335                                |  |   | 3,005,624  |  
|Recapitalization                                                    |  | 1,250,090    |        |   | 12,501                          |  |   | -                                |   |   | -                                      |  |   | -                                        |  |   | (13,573    | )
|Shares issued for proceeds of $5.07 million                         |  | 3,338,790    |        |   | 33,388                          |  |   | 5,041,575                        |   |   | -                                      |  |   | -                                        |  |   | -          |  
|Cost of raising capital                                             |  | -            |        |   | -                               |  |   | (2,503,383                       | ) |   | -                                      |  |   | -                                        |  |   | -          |  
|Warrants issued in connection with private placement - Note
    30  |  | -            |        |   | -                               |  |   | 252,947                          |   |   | -                                      |  |   | -                                        |  |   | -          |  
|Shares issued in connection with private placement - Note
    25(d) |  | 283,406      |        |   | 2,834                           |  |   | 1,697,602                        |   |   | -                                      |  |   | -                                        |  |   | -          |  
|Net loss                                                            |  | -            |        |   | -                               |  |   | -                                |   |   | -                                      |  |   | -                                        |  |   | (3,748,901 | )
|Foreign currency translation adjustments                            |  | -            |        |   | -                               |  |   | -                                |   |   | -                                      |  |   | 1,054,913                                |  |   | -          |  
|Appropriation to reserves                                           |  | -            |        |   | -                               |  |   | -                                |   |   | 48,396                                 |  |   | -                                        |  |   | (48,396    | )
|Balance, December 31, 2008                                          |  | 28,623,996   |        | $ | 286,240                         |  | $ | 12,001,927                       |   | $ | 714,013                                |  | $ | 2,131,248                                |  | $ | (805,246   | )

See the accompanying notes to consolidated financial
statements



F-7

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|1. | Corporate information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Golden Elephant Glass Technology, Inc.
(the Company), formerly known as Nevstar Corporation, was incorporated in the
State of Nevada on December 2, 1993. The Companys shares are quoted for trading
on the Over-The-Counter Bulletin Board in the United States of America.
Pursuant to the Share Exchange
Agreement dated March 31, 2008, the Company acquired 100% ownership interest in
Dollar Come Investments Limited (Dollar Come), a limited company incorporated
in the British Virgin Islands on February 12, 2004 with authorized common stock
of $50,000 divided into 50,000 ordinary shares of $1 each, at a consideration
for the issuance of the Companys 23,751,710 new shares to the former
stockholders of Dollar Come (Dollar Come Former Stockholders).
The aforesaid transaction was completed
on March 31, 2008 and thereafter Dollar Come became a wholly owned subsidiary of
the Company and Dollar Come Former Stockholders became the majority stockholders
of the Company. This transaction constituted a reverse takeover transaction
(RTO).
On March 31, 2008, the Company's board
of directors approved a change in the Company's fiscal year end from June 30 to
December 31, subject to approval of an amendment of the Company's Amended and
Restated Bylaws, in connection with the RTO.
On July 24, 2008, the Company completed
a private placement pursuant to which the Company issued and sold 3,338,790
shares of its common stock to certain accredited investors for $5,074,963 in
gross proceeds. In connection with this private placement, the Company paid a
fee of $355,247 to Roth Capital Partners, LLC and WLT Brothers Capital for their
services as placement agent for the private placement and issued Roth Capital
Partners, LLC a warrant for the purchase of 166,940 shares of the common stock
in the aggregate.
On August 29, 2008, the Company issued
to New Fortress Group Limited 283,406 shares of its common stock for the
advisory and consulting services rendered by Haoaide Investment Advisory Co.,
Limited in connection with the private placement transaction described above.
Haoaide Investment Advisory Co., Limited assigned its rights to receive the
common stock to New Fortress Group Limited.
Dollar Come is a holding company whose
primary operations are conducted through its subsidiaries located in the Liuling
Province of the Peoples Republic of China (the PRC).
Following the RTO, through Dollar Come,
the Company indirectly owned Fuxin Hengrui Technology Co., Ltd. (Fuxin
Hengrui), Fuxin Xianheng Float-Glass Co., Ltd. (Xianheng) and Fuxin Hengrui
Tianyuan New Energy Sources Co., Ltd. (Tianyuan).

F-8

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Golden Elephant Glass Technology, Inc.Notes to Consolidated Financial Statements(Stated in US Dollars)

|1. | Corporate information (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Fuxin Hengrui was incorporated in the PRC on September 18, 2002 with registered capital of $5,030,000 (RMB41,600,000, which are not divided into shares) and engaged in manufacture and distribution of float glasses in Liuling
Province. The entire equity interest of Fuxin Hengrui was directly held by Dollar Come.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Xianheng was incorporated in the PRC on April 1, 2004 with registered capital of $60,500 (RMB500,000, which are not divided into shares) of which 25% equity interest was directly held by Dollar Come whilst 75% equity interest
was indirectly held by Dollar Come through Fuxin Hengrui. During the reporting periods, Xianheng engaged in manufacture and distribution of float and ultra-clear glasses in Liuling Province since June 1, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On May 17, 2006, Fuxin Hengrui together with, Madam Lin Tan (Madam Tan), one of the directors of Fuxin Hengrui established Tianyuan in the PRC with registered capital of $1,251,000 (RMB10 million, which are not
dividend into shares). On May 16, 2006, according to the payment schedule, Fuxin Hengrui contributed $131,355 to its registered capital representing 35% equity interest. Pursuant to a special resolution passed on October 12, 2007, the registered
capital of Tianyuan was reduced from $1,251,000 to $375,000 which was effective from January 16, 2008. On January 16, 2008, Fuxin Hengrui further acquired 35% equity interest in Tianyuan from Madam Tan at a total consideration of
$143,955, and thereafter, Tianyuan become a subsidiary of the Company. Tianyuan is principally engaged in manufacturing of coal water mixture to assess energy alternative for industrial boiler. On May 17, 2008, Fuxin Hengrui disposed of its 70%
equity interest in Tianyuan to a third party at a total consideration of $709,200 (RMB5,000,000).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | More details and accounting treatment on investment in Tianyuan are set out in Notes 4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2. | Description of business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Following the RTO as detailed in note 1 and 3(ii), the Company commenced to be engaged in the manufacture and distribution of float glasses in the PRC. The Companys product offerings include float glass, ultra-clear glass,
colored flat glass and high grade, glass processed products such as mirrors, tempered glass, insulated glass, etc., and marketed primarily under the Golden Elephant brand name. The major target markets of the Companys products are
the PRC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The raw materials used in production are mainly divided into four groups, soda ash, heavy oils, silica sand and dolomite, which are primary sourced from suppliers located in the PRC. The production facilities of the Company are
located in Liuling Province of the PRC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

F-9

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Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|3. | Basis of presentation
|-- | ---------------------
|   |                      
|   | (i)                  
|   |                      
|   |                      
|   |                      
|   |                      
|   |                      
|   |                      
|   |                      
|   | (ii)                 
|   |                      
|   |                      

F-10

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Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|4. | Acquisition and disposal
|-- | ------------------------
|   |                         
|   | (a)                     



| |                                          |   | As of            |  
| | ---------------------------------------- | - | ---------------- | -
| |                                          |   | January 16, 2008 |  
| |                                          |   |                  |  
| | Cash and cash equivalents                | $ | 8,361            |  
| | Other receivables and prepayments        |   | 625,451          |  
| | Property, plant and
      equipment, net |   | 575,726          |  
| | Inventories                              |   | 609,068          |  
| | Other assets                             |   | 76,091           |  
| | Other payables and accrued expenses      |   | (405,255         | )
| | Other liabilities                        |   | (1,309,628       | )
| | Net assets                               | $ | 179,814          |  
| | 35% equity interest acquired             | $ | 62,935           |  
| | Goodwill                                 |   | 81,020           |  
| | Consideration                            | $ | 143,955          |  
| | Satisfied by :-                          |   |                  |  
| | Cash payment                             | $ | 143,955          |  
| | Net cash paid to acquire Tianyuan        | $ | 135,594          |  

The Company, with advice from an
independent appraiser, has identified all assets acquired (including intangible
assets which meets either the separability criterion or the contractual-legal
criterion in accordance with Statement of Financial Accounting Standard (SFAS)
No. 141R para. 3k) as of the date of acquisition with a conclusion that there
were no other significant identifiable intangible assets (such as trademark,
patents and favorable or unfavorable lease arrangements) noted as operating
history of Tianyuan is limited.

F-11

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Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|**4.** | Acquisition and disposal (Cont)
|------ | --------------------------------
|       |                                 
|       |                                 



| |                                                    |   | Three months ended March 31, (Unaudited) | 
| | -------------------------------------------------- | - | ---------------------------------------- | 
| |                                                    |   |                                          | 
| |                                                    |   | 2008                                     | 
| |                                                    |   |                                          | 
| | Revenue                                            | $ | 11,825,710                               | 
| | Net income (loss)                                  | $ | 1,981,072                                | 
| | Earnings (loss) per share: basic and
      diluted | $ | 0.08                                     | 

This unaudited pro forma financial
information is presented for informational purposes only. The unaudited pro
forma financial information may not necessarily reflect the future results of
operations or the results of operations would have been had the Company owned
and operated this business as of the beginning of the period presented.

| | (b) | According to the share transfer agreement signed between
      Fuxin Hengrui and a third party, Fuxin Hengrui disposed of its 70% equity
      interest in Tianyuan to a third party at a total consideration of $709,200
      (RMB5,000,000). The disposal was completed on May 17, 2008.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                            
| |     | The assets and liabilities arising from the disposal as
      of May 17, 2008 were as follows :-                                                                                                                                                                                           



| | Property, plant and equipment                       | $ | 468,371  |  
| | --------------------------------------------------- | - | -------- | -
| | Construction in progress                            |   | 113,626  |  
| | Inventories                                         |   | 714,379  |  
| | Other receivables, deposits and prepayments         |   | 734,812  |  
| | Cash and cash equivalents                           |   | 163      |  
| | Trade payables                                      |   | (37,053  | )
| | Other payables and accruals                         |   | (546,570 | )
| | Amount due to a director                            |   | (245,616 | )
| | Amount due to a shareholder                         |   | (974,708 | )
| | Unsecured short-term loans                          |   | (57,120  | )
| | Minority interests                                  |   | (51,085  | )
| | Net assets disposed                                 |   | 119,199  |  
| | Release of goodwill                                 |   | 81,020   |  
| | Gain on disposal of a subsidiary                    |   | 508,981  |  
| | Consideration                                       | $ | 709,200  |  
| | Satisfied by :-                                     |   |          |  
| | Non cash transaction arising from
      disposal :- |   |          |  
| | Consideration offset by other payable               | $ | 709,200  |  
| | Net cash outflow on disposal of
      Tianyuan      | $ | (163     | )

F-12

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Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|5. | Summary of significant accounting
  policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Principles of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The consolidated financial statements include the
      accounts of the Company and its subsidiaries. All significant
      inter-company accounts and transactions have been eliminated in
      consolidation. The results of subsidiary acquired or disposed of during
      the years are included in the consolidated statements of operations and
      comprehensive (loss) income from the effective date of acquisition or up
      to the date of disposal.                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Goodwill represents the excess of the purchase price of
      an acquired business over the fair value of the identifiable assets
      acquired and liabilities assumed. Pursuant to the provisions of SFAS No.
      142 Goodwill and Other Intangible Assets, goodwill is not amortized and
      is subjected to an annual impairment test which occurs in the fourth
      quarter of each fiscal year.                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Goodwill will be written down only when and if impairment
      is identified and measured, based on future events and
  conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Minority interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Minority interests resulted from the consolidation of 70%
      owned subsidiary, Tianyuan, where the Company has control over its
      operation before its disposal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Investment in an unconsolidated
affiliate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company accounted for the 35% investment in Tianyuan
      (an investment in which the Company exercised significant influence but
      did not control until January 16, 2008) using the equity method, under
      which the share of Tianyuans net income was recognized in the period in
      which it is earned by Tianyuan.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In preparing financial statements in conformity with
      accounting principles generally accepted in the United States of America,
      management makes estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosures of contingent assets and
      liabilities at the dates of the financial statements, as well as the
      reported amounts of revenues and expenses during the reporting periods.
      These accounts and estimates include, but are not limited to, the
      valuation of accounts receivable, inventories, deferred income taxes,
      provision for warranty and the estimation on useful lives of property,
      plant and equipment. Actual results could differ from those
    estimates.

F-13

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Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|5. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Concentrations of credit risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Financial instruments that potentially subject the
      Company to significant concentrations of credit risk consist principally
      of cash and cash equivalents, trade receivables and other receivables. As
      of December 31, 2008 and 2007, substantially all of the Companys cash and
      cash equivalents and restricted cash were held by major financial
      institutions located in the PRC, which management believes are of high
      credit quality. With respect to other receivables and trade receivables,
      the Company extends credit based on an evaluation of the customers
      financial condition. The Company generally does not require collateral for
      trade receivables and other receivables and maintains an allowance for
      doubtful accounts of trade receivables and other receivables.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | During the reporting periods, customers representing 10%
      or more of the Companys consolidated sales are
:-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



| |           |   | Year ended December 31, | 
| | --------- | - | ----------------------- | 
| |           |   | 2008                    | 
| |           |   |                         | 
| | Company A | $ | 6,856,951               | 
| | Company B |   | -                       | 
| |           | $ | 6,856,951               | 

Details of customers for 10% or more of
the Companys trade receivables are :-

| |           |   | As of December 31, | 
| | --------- | - | ------------------ | 
| |           |   | 2008               | 
| |           |   |                    | 
| | Company A | $ | 1,589,632          | 
| | Company B |   | -                  | 
| | Company C |   | -                  | 
| | Company D |   | 1,172,836          | 
| | Company E |   | 1,431,077          | 
| | Company F |   | 2,100,565          | 
| | Company G |   | 964,541            | 
| |           | $ | 7,258,651          | 

Cash and cash equivalents

Cash and cash equivalents include all
cash, deposits in banks and other highly liquid investments with initial
maturities of three months or less to be cash equivalents. As of December 31,
2008 and 2007, almost all the cash and cash equivalents were denominated in
Renminbi (RMB) and were placed with banks in the PRC. They are not freely
convertible into foreign currencies and the remittance of these funds out of the
PRC is subject to exchange control restrictions imposed by the PRC government.
The remaining insignificant balance of cash and cash equivalents were
denominated in US dollars.

F-14

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Golden Elephant Glass Technology, Inc.Notes to Consolidated Financial Statements(Stated in US Dollars)

|5. | Summary of significant accounting policies (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Restricted cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Deposits in banks pledged as securities for bills payable (note 9) that are restricted in use are classified as restricted cash under current assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Allowance for doubtful accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company establishes an allowance for doubtful accounts based on managements assessment of the collectibility of trade receivables and other receivables. A considerable amount of judgment is required in assessing the
amount of the allowance, the Company considers the historical level of credit losses and applies percentages to aged receivable categories. The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations,
and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability to make payments, a larger allowance may be required.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Based on the above assessment, during the reporting years, the management establishes the general provisioning policy to make allowance equivalent to 10% of gross amount of trade receivables and other receivables due over 6-12
months, 25% gross amount of trade receivables and other receivables due over 1-2 years and 50% of gross amount of trade receivables and other receivables due over 2-3 years and 100% of gross amount of trade receivables and other receivables due over
3 years. Additional specific provision is made against trade receivables aged less than 6 months to the extent which they are considered to be doubtful.                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Bad debts are written off when identified. The Company extends unsecured credit to customers ranging from three to six months in the normal course of business. The Company does not accrue interest on trade receivables.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Historically, losses from uncollectible accounts have not significantly deviated from the general allowance estimated by management and no significant additional bad debts have been written off directly to the profit and loss.
This general provisioning policy has not changed in the past since establishment and management considers that the aforementioned general provisioning policy is adequate and not too excessive and does not expect to change this established policy in
the near future.                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Inventories are stated at the lower of cost or market value. Cost is determined on a weighted average basis and includes all expenditures incurred in bringing the goods to the point of sale and putting them in a saleable
condition. In assessing the ultimate realization of inventories, management makes judgments as to future demand requirements compared to current or committed inventory levels. The reserve requirements generally increase as the projected demand
requirements, decrease due to market conditions, product life cycle changes. The Company estimates the demand requirements based on market conditions, forecasts prepared by its customers, sales contracts and orders in hand.                          

F-15

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Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|5. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Inventories (Contd)                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In addition, the Company estimates net realizable value
      based on intended use, current market value and inventory ageing analyses.
      The Company writes down the inventories for estimated obsolescence or
      unmarketable inventory equal to the difference between the cost of
      inventories and the estimated market value based upon assumptions about
      future demand and market conditions.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Based on the above assessment, the Company establishes a
      general provision of 50% for inventories aged over 1 year. As of December
      31, 2008 and 2007, no general provision for inventories were provided.                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Historically, the actual net realizable value is close to
      the management estimation.                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Property, plant and equipment                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Property, plant and equipment are stated at cost less
      accumulated depreciation. Cost represents the purchase price of the asset
      and other costs incurred to bring the asset into its existing use.                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Depreciation is provided on straight-line basis over
      their estimated useful lives. The principal depreciation rates are as
      follows :-                                                                                                                                                                                                                                                                     



| |                        |  | Annual rate |  |  | Residual value | 
| | ---------------------- |  | ----------- |  |  | -------------- | 
| |                        |  |             |  |  |                | 
| | Buildings              |  | 1.9%        |  |  | 5%             | 
| | Plant and machinery    |  | 9.5%        |  |  | 5%             | 
| | Motor vehicles         |  | 11.875%     |  |  | 5%             | 
| | Office equipment       |  | 19%         |  |  | 5%             | 
| | Tools                  |  | 9.5%        |  |  | 5%             | 
| | Leasehold improvements |  | 12.5%       |  |  | Nil            | 

Construction in progress mainly
represents expenditures in respect of the Companys warehouses and factories
under construction. All direct costs relating to the acquisition or construction
of the Companys warehouses and factories are capitalized as construction in
progress. No depreciation is provided in respect of construction in progress.

Maintenance or repairs are charged to
expense as incurred. Significant improvements and renewals that extend the
useful life of the asset are capitalized. Upon sale or disposition, the
applicable amounts of asset cost and accumulated depreciation are removed from
the accounts and the net amount less proceeds from disposal is charged or
credited to income.

Land use right

Land use right is stated at cost less
accumulated amortization. Amortization is provided using the straight-line
method over the terms of the lease of 50 years obtained from the relevant PRC
land authority.

F-16

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Golden Elephant Glass Technology, Inc.Notes to Consolidated Financial Statements(Stated in US Dollars)

|5. | Summary of significant accounting policies (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Impairment of long-lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Long-lived assets are tested for impairment in accordance with SFAS No. 144 and Accounting Principles Board (APB) Opinion 18, Equity Method of Accounting for Investments in Common Stock, respectively. The Company
periodically evaluates potential impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company recognizes impairment of long-lives assets and investment in an affiliate in
the event that the net book values of such assets exceed the future undiscounted cashflows attributable to such assets.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Companys long-lived assets include property, plant and equipment, construction in progress, land use right and goodwill. These assets were reviewed for impairment whenever events or circumstances indicate that their
carrying values may not be recoverable.                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The following are examples of such events or changes in circumstances:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | For the fiscal reporting period, an impairment loss of property, plant and equipment was recognized due to the recoverable value was less than its carrying value.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | As of December 31, 2008, goodwill was evaluated for impairment in connection with the Companys annual assessment. As a result of this assessment by the management, goodwill was fully impaired resulting in a non-cash charge
to earnings of $393,831 due to the operations of the production lines and all manufacturing of the float glass products of Fuxin Hengrui were suspended since January 2009.                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Revenue from sales of the Companys products is recognized when the significant risks and rewards of ownership have been transferred to the buyer, the sales price is fixed or determinable and collection is reasonably
assured.                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Advertising and research and development expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Advertising, research and development expenses are charged to expense as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Advertising expenses amounting to $nil and $4,894 for two years ended December 31, 2008 and 2007 respectively are included in selling expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Research and development expenses consist primarily of remuneration for research and development staff and material costs for research and development.                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-17

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|5. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company adopted the provisions of SFAS No. 123R,
      which requires the use of the fair value method of accounting for
      share-based compensation. Under the fair value based method, compensation
      cost related to employee stock options or similar equity instruments which
      are equity-classified awards, is measured at the grant date based on the
      value of the award and is recognized over the requisite service period,
      which is usually the vesting period. SFAS 123R also requires measurement
      of cost of a liability-classified award based on its current fair
      value.                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Government grant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Government grant income represents the cash receipt from
      the relevant government authorities for technical development. Such
      government grant is unconditional, non-refundable and without any
      restrictions on usage at the time of grant to and receipt by the Company.
      Government grant is recognized as income at the time when the approval
      documents are obtained from the relevant government authorities and when
      they are received. The Company received such government grants of $17,021
      and $89,536 for the years ended December 31, 2008 and 2007
      respectively.                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company uses the asset and liability method of
      accounting for income taxes pursuant to SFAS No. 109 Accounting for
      Income Taxes. Under the asset and liability method of SFAS No. 109,
      deferred tax assets and liabilities are recognized for the future tax
      consequences attributable to temporary differences between the financial
      statements carrying amounts of existing assets and liabilities and loss
      carryforwards and their respective tax bases. Deferred tax assets and
      liabilities are measured using enacted tax rates expected to apply to
      taxable income in the years in which those temporary differences are
      expected to be recovered or settled.                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Off-balance sheet arrangements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company does not have any off-balance sheet
      arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company has adopted SFAS No. 130, Reporting
      Comprehensive Income, which establishes standards for reporting and
      display of comprehensive income, its components and accumulated balances.
      Components of comprehensive income include net income and less foreign
      currency translation adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The functional currency of the Company is RMB and RMB is
      not freely convertible into foreign currencies. The Company maintains its
      financial statements in the functional currency. Monetary assets and
      liabilities denominated in currencies other than the functional currency
      are translated into the functional currency at rates of exchange
      prevailing at the balance sheet date. Transactions denominated in
      currencies other than the functional currency are translated into the
      functional currency at the exchanges rates prevailing at the dates of the
      transaction. Exchange gains or losses arising from foreign currency
      transactions are included in the determination of net income for the
      respective periods.

F-18

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|5. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Foreign currency translation (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | For financial reporting purposes, the financial
      statements of the Company which are prepared using the functional currency
      have been translated into United States dollars. Assets and liabilities
      are translated at the exchange rates at the balance sheet dates and
      revenue and expenses are translated at the average exchange rates and
      stockholders equity is translated at historical exchange rates. Any
      translation adjustments resulting are not included in determining net
      income but are included in foreign exchange adjustment to other
      comprehensive income, a component of stockholders equity. The exchange
      rates in effect at December 31, 2008 and 2007 were RMB1 for $0.1467 and
      $0.1371 respectively. There is no significant fluctuation in exchange rate
      for the conversion of RMB to US dollars after the balance sheet
    date.                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Fair value of financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | In September 2006, the Financial Accounting Standard
      Board (FASB) issued SFAS No. 157, Fair Value Measurements (SFAS
      157). SFAS 157 defines fair value, establishes a framework for measuring
      fair value in generally accepted accounting principles (GAAP), and expands
      disclosures about fair value measurements. SFAS 157 does not require any
      new fair value measurements; however, the standard will impact how other
      fair value based GAAP is applied. Subsequently, the FASB issued FSP FAS
      157-2 which delayed the effective date of SFAS 157 for all nonfinancial
      assets and nonfinancial liabilities, except those that are recognized or
      disclosed at fair value in the financial statements on a recurring basis
      (at least annually) to fiscal years beginning after November 15, 2008. The
      Company adopted SFAS 157 on January 1, 2008. The adoption of SFAS 157 did
      not materially impact the Companys financial position, results of
      operations or cash flows.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | SFAS No. 107 Disclosures About Fair Value of Financial
      Instruments (SFAS 107) requires the disclosure of the estimated fair
      value of financial instruments including those financial instruments for
      which SFAS No. 159 fair value option was not elected. As of December 31,
      2008, the carrying amounts of the Companys financial instruments,
      including cash and cash equivalents, restricted cash, trade and other
      receivables, trade, bills and other payables approximate their fair values
      due to the short-term maturity. The carrying amounts of secured short-term
      bank loans and loan from Madam Tan approximate their fair values because
      the applicable interest rates approximate current market rates.                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Basic and diluted earnings (loss) per
  share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Company reports basic earnings (loss) per share in
      accordance with SFAS No. 128, Earnings Per Share. Basic earnings (loss)
      per share is computed using the weighted average number of shares
      outstanding during the periods presented. The weighted average number of
      shares of the Company represents the common stock outstanding during the
      reporting periods. Diluted earnings (loss) per share is computed using the
      weighted average number of common shares outstanding during the periods
      plus the effect of dilutive securities outstanding during the periods. At
      December 31, 2008, the Company had outstanding warrants convertible into
      shares of common stock, which was used in the computation of diluted loss
      per share.                                                                                                                                                                                                                                                       

F-19

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|5. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Recently issued accounting
pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In May 2008, the FASB issued SFAS No. 162, The Hierarchy
      of Generally Accepted Accounting Principles (SFAS 162). Effective 60
      days following the SECs approval of the Public Company Accounting
      Oversight Board amendments to AU Section 411, The Meaning of Present
      Fairly in Conformity With Generally Accepted Accounting Principles. The
      Board does not expect that this Statement will result in a change in
      current practice. However, transition provisions have been provided in the
      unusual circumstance that the application of the provisions of this
      Statement results in a change in practice. The management is in the
      process of evaluating the impact that SFAS 162 will have on the Companys
      financial statements upon adoption.                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In March 2008, FASB issued SFAS No. 161, "Disclosures
      about Derivative Instruments and Hedging Activities - an amendment to FASB
      Statement No. 133" (SFAS 161). SFAS 161 is intended to improve financial
      standards for derivative instruments and hedging activities by requiring
      enhanced disclosures to enable investors to better understand their
      effects on an entity's financial position, financial performance, and cash
      flows. Entities are required to provide enhanced disclosures about: (a)
      how and why an entity uses derivative instruments; (b) how derivative
      instruments and related hedged items are accounted for under Statement 133
      and its related interpretations; and (c) how derivative instruments and
      related hedged items affect an entity's financial position, financial
      performance, and cash flows. It is effective for financial statements
      issued for fiscal years beginning after November 15, 2008, with early
      adoption encouraged. The management is in the process of evaluating the
      impact that SFAS 161 will have on the Companys financial statements upon
      adoption.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In December 2007, the FASB issued SFAS No. 160
      Noncontrolling Interests in Consolidated Financial Statements - an
      amendment of ARB No. 51 (SFAS 160). SFAS 160 establishes accounting and
      reporting standards for the noncontrolling interest in a subsidiary and
      for the deconsolidation of a subsidiary. The guidance will become
      effective for the fiscal year beginning after December 15, 2008. The
      management is in the process of evaluating the impact that SFAS 160 will
      have on the Companys financial statements upon adoption.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In December 2007, the FASB issued SFAS No. 141 (Revised)
      Business Combinations (SFAS 141 (Revised)). SFAS 141 (Revised)
      establishes principles and requirements for how the acquirer of a business
      recognizes and measures in its financial statements the identifiable
      assets acquired, the liabilities assumed, and any noncontrolling interest
      in the acquiree. The statement also provides guidance for recognizing and
      measuring the goodwill acquired in the business combination and determines
      what information to disclose to enable users of the financial statements
      to evaluate the nature and financial effects of the business combination.
      The guidance will become effective for the fiscal year beginning after
      December 15, 2008. The management is in the process of evaluating the
      impact that SFAS 141 (Revised) will have on the Companys financial
      statements upon adoption.                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In February 2007, the FASB issued SFAS No. 159, The Fair
      Value Option for Financial Assets and Financial Liabilities - Including an
      Amendment of FASB Statement No. 115 (SFAS 159). SFAS 159 permits
      entities to choose to measure many financial instruments and certain other
      items at fair value. Entities that elect the fair value option will report
      unrealized gains and losses in earnings at each subsequent reporting date.
      The fair value option may be elected on an instrument-by-instrument basis,
      with few exceptions. SFAS 159 also establishes presentation and disclosure
      requirements to facilitate comparisons between companies that choose
      different measurement attributes for similar assets and liabilities. The
      requirements of SFAS 159 are effective for our fiscal year beginning
      January 1, 2008. The adoption of this statement has no material effect on
      the Company's financial statements.                                                                                                                                                                                                    

F-20

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|6. | Finance costs
|-- | -------------



Year ended December 31,2008
    
    
    2007Interest expenses
    $
    1,369,173
    
    $
    1,065,714Bills discounting charges
    
    46,312
    
    
    6,887Bank charges and net exchange loss
    
    7,787
    
    
    101,550$
    1,423,272
    
    $
    1,174,151




|7. | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | United States                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company is incorporated in the United States of
      America and is subject to United States of America tax law. No provisions
      for income taxes have been made as the Company has no taxable income for
      the reporting periods. The applicable income tax rates for the Company for
      the reporting periods are 34%. The Company has not provided deferred taxed
      on undistributed earnings of its non-U.S. subsidiaries as of December 31,
      2008, as it is the Companys current policy to reinvest these earnings in
      non-U.S. operations.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | BVI                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Dollar Come was incorporated in the BVI and, under the
      current laws of the BVI, is not subject to income taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | PRC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Before the implementation of the new enterprise income
      tax (EIT) law (as discussed below), Foreign Invested Enterprises (FIE)
      established in the PRC are generally granted certain benefits or holiday
      by the relevant tax authority. On March 16, 2007, the National Peoples
      Congress of China passed the new Corporate Income Tax Law (EIT Law), and
      on November 28, 2007, the State Council of China passed the Implementing
      Rules for the EIT Law (Implementing Rules) which took effect on January
      1, 2008. The EIT Law and Implementing Rules impose a unified EIT of 25% on
      all domestic-invested enterprises and FIEs, unless they qualify under
      certain limited exceptions. Therefore, nearly all FIEs are subject to the
      new tax rate alongside other domestic businesses rather than benefiting
      from the old tax laws applicable to FIEs, and its associated preferential
      tax treatments, beginning January 1, 2008.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Despite these changes, the EIT Law gives the FIEs
      established before March 16, 2007 (Old FIEs), such as our subsidiary
      Fuxin Hengrui and Xianheng, a five-year grandfather period during which
      they can continue to enjoy their existing preferential tax treatments.
      During this five-year grandfather period, the Old FIEs which enjoyed tax
      rates lower than 25% under the original EIT Law shall gradually increase
      their EIT rate by 2% per year until the tax rate reaches 25%. In addition,
      the Old FIEs that are eligible for the two-year exemption and three-year
      half reduction or five-year exemption and five-year half-reduction
      under the original EIT Law, are allowed to remain to enjoy their
      preference until these holidays expire.                                                                                                                                                                                       

F-21

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|7. | Income taxes (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | In addition to the changes to the current tax structure,
      under the EIT Law, an enterprise established outside of China with de
      facto management bodies within China is considered a resident enterprise
      and will normally be subject to an EIT of 25% on its global income. The
      Implementing Rules define the term de facto management bodies as an
      establishment that exercises, in substance, overall management and control
      over the production, business, personnel, accounting, etc., of a Chinese
      enterprise. If the PRC tax authorities subsequently determine that the
      Company should be classified as a resident enterprise, then the
      organizations global income will be subject to PRC income tax of
    25%.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Under the income tax law and the related implementing
      rules, FIEs engaging in manufacturing businesses with a term of operation
      exceeding ten years may, subject to approval from local taxation
      authorities, be entitled to a two-year tax exemption from PRC EIT starting
      from the year they become profitable and a 50% tax reduction for the three
      years thereafter.                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | As approved by the relevant PRC tax authority, Fuxin
      Hengrui and Xianheng was entitled to a two-year exemption from EIT
      followed by a 50% tax exemption for the next three years, commencing from
      the first cumulative profit-making year in the fiscal financial year. The
      tax holiday of Fuxin Hengrui commenced in 2004. Accordingly, Fuxin Hengrui
      is entitled to a 50% reduction on EIT tax rate of 12.5% for 2008 and will
      be subject to an EIT rate of 25% from 2009. Xianhengs tax holiday
      commenced in 2008, therefore, Xianheng is exempted from EIT in 2008 and
      2009 and will be subject to a reduced EIT rate of 12.5% from 2010 to
      2012.                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | In July 2006, the FASB issued Interpretation No. 48,
      Accounting for Uncertainty in Income Taxes (FIN 48). This
      interpretation requires recognition and measurement of uncertain income
      tax positions using a more-likely-than-not approach. The Company adopted
      FIN 48 on January 1, 2007. The management evaluated the Companys tax
      positions and considered that no additional provision for uncertainty in
      income taxes is necessary as of December 31, 2008.                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The components of the provision for income taxes from
      continuing operations are :-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



| |                      |   | Year ended December 31, | 
| | -------------------- | - | ----------------------- | 
| |                      |   | 2008                    | 
| |                      |   |                         | 
| | Current taxes - PRC  | $ | 69,138                  | 
| | Deferred taxes - PRC |   | 15,930                  | 
| |                      | $ | 85,068                  | 

F-22

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|7. | Income taxes (Contd)                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                               
|   | The effective income tax expenses differs from the PRC
      statutory income tax rate of 25% and 33% for 2008 and 2007 respectively
      from continuing operations in the PRC as follows
:-



| |                                                               |   | Year ended December 31, |  
| | ------------------------------------------------------------- | - | ----------------------- | -
| |                                                               |   | 2008                    |  
| |                                                               |   |                         |  
| | Provision for income taxes at statutory
      income tax rate | $ | (917,207                | )
| | Non-deductible items for tax                                  |   | 2,752,770               |  
| | Income not subject to tax                                     |   | (380,738                | )
| | Tax holiday                                                   |   | (1,369,757              | )
| | Utilization of tax losses                                     |   | -                       |  
| | Others                                                        |   | -                       |  
| |                                                               | $ | 85,068                  |  

During the two years ended December 31,
2008 and 2007, the aggregate amounts of benefit from tax holiday were $1,369,757
and $498,942 and the respective basic and diluted earnings per share effect were
$0.052 and $0.021 respectively.

Deferred tax assets/(liabilities) as of
December 31, 2008 and 2007 are composed of the following :-

| |                                    |   | As of December 31, | 
| | ---------------------------------- | - | ------------------ | 
| |                                    |   | 2008               | 
| |                                    |   |                    | 
| | Current deferred tax assets :-     |   |                    | 
| | Allowance for doubtful
      debts | $ | -                  | 
| | Accrued liabilities                |   | 24,939             | 
| |                                    | $ | 24,939             | 

| |                                                     |   |          |   |   |          |  
| | --------------------------------------------------- | - | -------- | - | - | -------- | -
| | Non current deferred tax assets/(liabilities) :-    |   |          |   |   |          |  
| | Depreciation of
      property, plant and equipment | $ | (112,101 | ) | $ | (177,548 | )
| | Amortization of land use right                      |   | 18,109   |   |   | 45,391   |  
| | Deferred expenses                                   |   | 384,001  |   |   | 309,616  |  
| |                                                     | $ | 290,009  |   | $ | 177,459  |  

F-23

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|8. | (Loss)/earnings per share                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                    
|   | The following table sets forth the computation of basic
      and diluted earnings per share (EPS) for the reporting periods
  :-



Year ended December 31,2008
    
    
    2007Numerator :-Net (loss)/income
    $
    (3,748,901
    )
    $
    6,859,160DenominatorWeighted average common shares used to compute
      basic EPS
    
    26,263,342
    
    
    23,751,710Dilutive potential from assumed exercise of warrants
    
    31,235
    
    
    -Weighted average common shares used to
      compute diluted EPS
    
    26,294,577
    
    
    23,751,710(Loss)/earnings per share - Basic
    $
    (0.14
    )
    $
    0.29(Loss)/earnings per share - Diluted
    $
    (0.14
    )
    $
    0.29




|   | The per share data reflects the recapitalization of
      stockholders equity as if the reorganization occurred as of the beginning
      of the first period presented.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                          
|9. | Restricted cash, bills and trade
  payables                                                                                                                              



| |                                                          |   | As of December 31, | 
| | -------------------------------------------------------- | - | ------------------ | 
| |                                                          |   | 2008               | 
| |                                                          |   |                    | 
| | Bank deposits held as collateral for bills
      payable | $ | 733,500            | 

The Company is requested by certain of
its suppliers to settle by issuance of bills for which the banks add their
undertakings to guarantee their settlement at maturity. These bills are
interest-free with maturity of three to six months from date of issuance. As
security for the banks undertakings, the Company is required to deposit with
such banks equal to 30% to 100% of the bills amount at the time of issuance and
pledge restricted cash and pay bank charges. These deposits will be used to
settle the bills at maturity.

Trade payables represent trade
creditors on open account. They are interest-free and unsecured. The normal
credit term given by these suppliers to the Company ranges from one to three
months.

F-24

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|10. | Trade receivables
|--- | -----------------



| |                                 |   | As of December 31, |  
| | ------------------------------- | - | ------------------ | -
| |                                 |   | 2008               |  
| |                                 |   |                    |  
| | Trade receivables               | $ | 15,036,843         |  
| | Allowance for doubtful accounts |   | (7,143,713         | )
| |                                 | $ | 7,893,130          |  

An analysis of the allowance for
doubtful accounts for the years ended December 31, 2008 and 2007 is as follows
:-

| |                                              |   | Year ended December 31, | 
| | -------------------------------------------- | - | ----------------------- | 
| |                                              |   | 2008                    | 
| |                                              |   |                         | 
| | Balance at beginning of year                 | $ | 27,677                  | 
| | Addition/(reversal) of bad debt expense, net |   | 7,101,743               | 
| | Translation adjustments                      |   | 14,293                  | 
| | Balance at end of year                       | $ | 7,143,713               | 



|11. | Other receivables
|--- | -----------------



| |                                        |   | As of December 31, |  
| | -------------------------------------- | - | ------------------ | -
| |                                        |   | 2008               |  
| |                                        |   |                    |  
| | Advances to third parties - Note 11(a) | $ | 1,694,228          |  
| | Advance to staff                       |   | 223,183            |  
| | Other receivables                      |   | 520,511            |  
| |                                        |   | 2,437,922          |  
| | Allowance for doubtful accounts        |   | (66,408            | )
| |                                        | $ | 2,371,514          |  

F-25

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|11. | Other receivables (Cont)                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                           
|    | An analysis of the allowance for doubtful accounts for
      the years ended December 31, 2008 and 2007 is as follows
  :-



| |                                              |   | Year ended December 31, |  
| | -------------------------------------------- | - | ----------------------- | -
| |                                              |   | 2008                    |  
| |                                              |   |                         |  
| | Balance at beginning of year                 | $ | 466,707                 |  
| | (Reversal)/addition of bad debt expense, net |   | (414,513                | )
| | Translation adjustments                      |   | 14,214                  |  
| | Balance at end of year                       | $ | 66,408                  |  



|    | Note :-    
|--- | -----------
|    |            
|    | (a)        
|    |            
|12. | Prepayments



| |                                         |   | As of December 31, | 
| | --------------------------------------- | - | ------------------ | 
| |                                         |   | 2008               | 
| |                                         |   |                    | 
| | Prepayment for raw materials            | $ | 2,856,226          | 
| | Prepayment for rental expenses          |   | 1,133,218          | 
| | Prepayment for construction in progress |   | 237,055            | 
| | Prepayment for factory tools            |   | 43,699             | 
| | Prepayment for utilities expenses       |   | 10,806             | 
| | Prepayment for other expenses           |   | 10,914             | 
| |                                         | $ | 4,291,918          | 

F-26

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|13. | Inventories
|--- | -----------
|    |            

| |                |   | As of December 31, | 
| | -------------- | - | ------------------ | 
| |                |   | 2008               | 
| |                |   |                    | 
| | Raw materials  | $ | 1,000,698          | 
| | Finished goods |   | 3,325,595          | 
| | Consumables    |   | 41,005             | 
| |                | $ | 4,367,298          | 

|    |                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | No (recovery of)/provision for obsolete inventories were
      (credited)/charged to operations for two years ended December 31, 2008 and
      2007.                   
|    |                                                                                                                                                                         
|    | As of December 31, 2008, finished goods with carrying
      value of $424,113 were pledged to the banks for the bank loans (Note
      22(b)(i)) granted to the Company.
|    |                                                                                                                                                                         
|14. | Property, plant and
equipment                                                                                                                                           
|    |                                                                                                                                                                         

| |                                        |   | As of December 31, |  
| | -------------------------------------- | - | ------------------ | -
| |                                        |   | 2008               |  
| | Costs :-                               |   |                    |  
| | Buildings                              | $ | 14,416,991         |  
| | Plant and machinery                    |   | 22,112,758         |  
| | Office equipment                       |   | 127,656            |  
| | Tools                                  |   | 187,331            |  
| | Leasehold improvements                 |   | 3,874,586          |  
| | Motor vehicles                         |   | 478,683            |  
| |                                        |   | 41,198,005         |  
| | Accumulated depreciation               |   | (13,998,930        | )
| | Construction in progress - Note 14(ii) |   | 43,258             |  
| | Impairment loss                        |   | (2,757,229         | )
| | Net                                    | $ | 24,485,104         |  

An analysis of assets pledged to banks
for banking facilities (Note 22(b)(ii)) is as follows :-

| |                          |   | As of December 31, |  
| | ------------------------ | - | ------------------ | -
| |                          |   | 2008               |  
| | Costs :-                 |   |                    |  
| | Buildings                | $ | 10,228,227         |  
| | Plant and machinery      |   | 7,221,824          |  
| |                          |   | 17,450,051         |  
| | Accumulated depreciation |   | (4,576,278         | )
| | Net                      | $ | 12,873,773         |  

F-27

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|14. | Property, plant and equipment (Cont)
|--- | -------------------------------------
|    |                                      
|    | (i)                                  
|    |                                      

| |                                            |   | Year ended December 31, | 
| | ------------------------------------------ | - | ----------------------- | 
| |                                            |   | 2008                    | 
| |                                            |   |                         | 
| | Cost of sales and overheads of inventories | $ | 2,683,158               | 
| | Other                                      |   | 223,407                 | 
| |                                            | $ | 2,906,565               | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                           
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | During the two years ended December 31, 2008 and 2007,
      property, plant and equipment with carrying amount of $1,417,279 and $263
      was disposed of at a total consideration of $1,417,279 and $263
      respectively resulting in no gain or loss respectively.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                           
|    | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Construction in progress                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Construction in progress mainly comprises capital
      expenditure for construction of the Companys warehouses and
    factories.                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The carrying amount of property, plant and equipment is
      not recoverable if the recorded value of the asset group exceeds the sum
      of the undiscounted cash flows expected to result from the use and
      eventual disposition of the property, plant and equipment. In 2008, the
      Companys business experienced downturns in the float glass markets,
      particularly in the fourth quarter of 2008. The decline in home and
      building construction, which negatively impacted this business and the
      extended recovery time forecasted in these markets, triggered an
      impairment.                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | In late January 2009, the Company decided to implement a
      maintenance program for 500 tons float glass production lines. During the
      maintenance period, all operations of the production lines and all
      manufacturing of the float glass products will be suspended. As a result
      and in connection with the Companys annual test for impairment, the
      Company determined that the recoverable value of the Companys property,
      plant and equipment was less than its carrying value in accordance with
      SFAS No. 144. Accordingly, the Company recorded an impairment loss of
      $2,757,229 for the fiscal reporting period.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|15. | Land use right                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

| |                          |   | As of December 31, |  
| | ------------------------ | - | ------------------ | -
| |                          |   | 2008               |  
| |                          |   |                    |  
| | Right to use land        | $ | 3,116,313          |  
| | Accumulated amortization |   | (303,077           | )
| |                          | $ | 2,813,236          |  

The Company obtained the right from the
relevant PRC land authority for a period from November 20, 2002 to September 18,
2052 to use the lands on which the office premises, production facilities and
warehouse of the Company are situated. This right was pledged to a bank for the
bank loans granted to the Company (Note 22(b)(iii)).

During the two years ended December 31,
2008 and 2007, amortization amounted to $61,854 and $60,379 respectively.

F-28

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|15. | Land use right (Cont)                                                                                                                                                                 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                        
|    | During the year ended December 31, 2008, land use right
      with carrying amount of $246,759 was disposed of at a total consideration
      of $246,759 resulting in no gain or loss.
|    |                                                                                                                                                                                        
|    | The estimated aggregate amortization expenses for land
      use right for the five succeeding years is as follows
:-                                                                  
|    |                                                                                                                                                                                        

| | Year |   |         | 
| | ---- | - | ------- | 
| |      |   |         | 
| | 2009 | $ | 61,854  | 
| | 2010 |   | 61,854  | 
| | 2011 |   | 61,854  | 
| | 2012 |   | 61,854  | 
| | 2013 |   | 61,854  | 
| |      | $ | 309,270 | 

|    |                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|16. | Trademark                                                                                                                                                                           
|    |                                                                                                                                                                                     
|    | The Company currently owns a trademark, namely Golden
      Elephant which was registered in the PRC. The cost of application has
      been recognized as expenses when incurred.
|    |                                                                                                                                                                                     
|17. | Other payables and accrued
  expenses                                                                                                                                               
|    |                                                                                                                                                                                     

| |                                                          |   | As of December 31, | 
| | -------------------------------------------------------- | - | ------------------ | 
| |                                                          |   | 2008               | 
| |                                                          |   |                    | 
| | Accrued audit fee                                        | $ | 99,756             | 
| | Payable for acquisition of property, plant and equipment |   | 1,081,470          | 
| | Accruals for factory construction                        |   | 6,723              | 
| | Loans from third parties - Note 17(a)                    |   | 1,433,762          | 
| | Accrued interest expenses                                |   | 333,532            | 
| | Accrued legal and professional fee                       |   | 150,868            | 
| | Other accrued expenses                                   |   | 543,667            | 
| | Value added tax and other tax payable                    |   | 2,079,783          | 
| | Staff welfare payable - Note 17(b)                       |   | 281,312            | 
| | Other payables                                           |   | 153,379            | 
| |                                                          | $ | 6,164,252          | 



| | Notes :- |                                                                                                                                                                                                                                                                                                                                                     
| | -------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |          |                                                                                                                                                                                                                                                                                                                                                     
| | (a)      | The amounts are interest-free, unsecured and
      repayable on demand.                                                                                                                                                                                                                                                                             
| |          |                                                                                                                                                                                                                                                                                                                                                     
| | (b)      | Staff welfare payable represents accrued staff
      medical, industry injury claims, labor and unemployment insurances. All of
      which are third parties insurance and the insurance premiums are based on
      certain percentage of salaries. The obligations of the Company are limited
      to those premiums contributed by the Company.

F-29

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|18. | Sales receipt in advance                                                                                                                                                                         
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                  
|    | The amount represents 100% sales deposit received from
      local customers.                                                                                                                    
|    |                                                                                                                                                                                                  
|19. | Dividend payable                                                                                                                                                                                 
|    |                                                                                                                                                                                                  
|    | The amount represents the dividend declared by the
      directors of Fuxin Hengrui and payable to the former stockholders of Fuxin
      Hengrui.                                               
|    |                                                                                                                                                                                                  
|20. | Amount due from an unconsolidated affiliate / amount
      due to a director                                                                                                                     
|    |                                                                                                                                                                                                  
|    | The amounts are interest-free, unsecured and repayable on
      demand.                                                                                                                          
|    |                                                                                                                                                                                                  
|21. | Amount due from / to a related party                                                                                                                                                             
|    |                                                                                                                                                                                                  
|    | The amounts represent advance made to / loan from Madam
      Tan, who is a controlling shareholder of the Companys holding company,
      are interest-free, unsecured and repayable on demand.
|    |                                                                                                                                                                                                  
|22. | Secured short-term bank
loans                                                                                                                                                                    



| |                                    |   | As of December 31, | 
| | ---------------------------------- | - | ------------------ | 
| |                                    |   | 2008               | 
| | Bank loans repayable as follows :- |   |                    | 
| | Within 1 year - Note 22(a)         | $ | 12,808,964         | 

Notes :-

(a)

The
weighted-average interest rate for short-term loans as of December 31, 2008 and
2007, were 8.3% and 7.89%, respectively.

As of December 31, 2008, the Companys
banking facilities were as follows :-

| | Facilities granted |   | Granted    |  |   | Amount utilized |  |   | Unused | 
| | ------------------ | - | ---------- |  | - | --------------- |  | - | ------ | 
| |                    |   |            |  |   |                 |  |   |        | 
| | Secured bank loans | $ | 12,808,964 |  | $ | 12,808,964      |  | $ | -      | 



| | (b)                                                                                                                              | The above banking facilities were
      secured by the following :-
| | -------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------
| |                                                                                                                                  |                                                                    
| |                                                                                                                                  | (i)                                                                
| |                                                                                                                                  | (ii)                                                               
| |                                                                                                                                  | (iii)                                                              
| |                                                                                                                                  | (iv)                                                               
| |                                                                                                                                  |                                                                    
| | During the reporting periods, there
      was no covenant requirement under the banking facilities granted to the
      Company.

F-30

---

Golden Elephant Glass Technology, Inc. Notes to
Consolidated Financial Statements (Stated in US Dollars)

|23. | Loan from Madam Tan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | On May 6, 2008, Dollar Come entered into a loan agreement
      with Madam Tan to borrow $5,000,000 at the annual interest rate of 8%. The
      term of the agreement was not more than two years and the loan proceed was
      used as working capital of the Company. Pursuant to the agreement dated
      July 30, 2008, $3,260,000 unsecured loan was offset with advances made to
      Fuxin Zhonglin Industry Limited and W.T. Construction Inc., both are
      wholly owned by Madam Tan.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|24. | Commitments and contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | a.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | b.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



| | Within one year   | $ | 440,100   | 
| | ----------------- | - | --------- | 
| | Two to five years |   | 1,760,400 | 
| | After five years  |   | 293,400   | 
| |                   | $ | 2,493,900 | 



| |    | The rental expense relating to the operating leases was
      $432,398 and $395,010 for the two years ended December 31, 2008 and 2007
      respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | c. | Environmental                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The Companys operations are subject to the laws and
      regulations in the PRC relating to the generation, storage, handling,
      transportation and discharge of certain materials, substances and waste
      into the environment, and various other health and safety matters.
      Governmental authorities have the power to enforce compliance with their
      regulations, and violators may be subject to fines, injunctions or both.
      The Company must devote substantial financial resources to ensure
      compliance, and the management believes that it is in substantial
      compliance with all the applicable laws and regulations.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The Company has not incurred any significant expenditure
      for environmental remediation, is currently not involved in any
      environmental remediation and has not accrued any amounts for
      environmental remediation relating to its operations. Under existing
      legislation, management believes that there are no probable liabilities
      that will have a material adverse effect on the financial position,
      operating results or cash flows of the Company.                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The Company incurred normal routine pollutant discharge
      fees of $2,948 and $3,862 for the two years ended December 31, 2008 and
      2007 respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

F-31

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|25. | Common stock and additional paid-in
  capital
|--- | ---------------------------------------------



| |                                                                                    |  | Common stock                                                     |  |   |         | 
| | ---------------------------------------------------------------------------------- |  | ---------------------------------------------------------------- |  | - | ------- | 
| |                                                                                    |  | Number of
      shares as adjusted for forward
      stock split |  |   | Amount  | 
| |                                                                                    |  |                                                                  |  |   |         | 
| | Balance, January 1, 2007, December 31, 2007
      and January 1, 2008 - Note 25(a) |  | 23,751,710                                                       |  | $ | 237,517 | 
| | Recapitalization - Note 25(b)                                                      |  | 1,250,090                                                        |  |   | 12,501  | 
| | Shares issued for proceeds of $5.07 million
      - Note 25(c)                     |  | 3,338,790                                                        |  |   | 33,388  | 
| | Cost of raising capital                                                            |  | -                                                                |  |   | -       | 
| | Warrants issued in connection with private
      placement - Note 30               |  | -                                                                |  |   | -       | 
| | Shares issued in connection with private placement - Note
      25(d)              |  | 283,406                                                          |  |   | 2,834   | 
| | Balance, December 31, 2008                                                         |  | 28,623,996                                                       |  | $ | 286,240 | 



|        | Notes :-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|**26.** | Statutory reserves                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | In accordance with the relevant laws and regulations of
      the PRC and articles of association of the Company, it is required to
      appropriate 10% of its net income, after offsetting any prior years
      losses, to the statutory reserve. When the balance of such reserve reaches
      50% of the registered capital, any further appropriation is optional. Upon
      approval from the board of directors of the Company, the statutory reserve
      can be used to offset accumulated losses or to increase registered
      capital.

F-32

---

Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

27.

Defined
contribution plan

Pursuant to the relevant PRC
regulations, the Company is required to make contributions at a rate of 24.4% of
average salaries of latest fiscal year ended of Liuling Province Fuxin City to a
defined contribution retirement scheme organized by a state-sponsored social
insurance plan in respect of the retirement benefits for the Companys employees
in the PRC. The only obligation of the Company with respect to retirement scheme
is to make the required contributions under the plan. No forfeited contribution
is available to reduce the contribution payable in the future years. The defined
contribution plan contributions were charged to the consolidated statement of
operations. The Company contributed $95,884 and $86,079 for the year ended
December 31, 2008 and 2007, respectively.

28.

Segment
information

The nature of the products, their
production processes, the type of their customers and their distribution methods
are substantially similar, they are considered as a single reportable segment
under FAS 131, "Disclosures about Segments of an Enterprise and Related
Information".

All of the Companys long-lived
assets are located in the PRC during the reporting periods. Geographic
information about the revenues, which are classified based on the customers, is
set out as follows :-

| |        |   | Year ended December 31, | 
| | ------ | - | ----------------------- | 
| |        |   | 2008                    | 
| |        |   |                         | 
| | PRC    | $ | 59,314,640              | 
| | Others |   | 1,409,320               | 
| | Total  | $ | 60,723,960              | 



|29. | Related party transactions                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                 
|    | Apart from the transactions as disclosed in notes 19, 20,
      21, 22(b)(iv) and 23 to the financial statements, during the two years
      ended December 31, 2008 and 2007, the Company had the following
      transactions with Tianyuan :-



| |                                                                                                |   | Year ended December 31, | 
| | ---------------------------------------------------------------------------------------------- | - | ----------------------- | 
| |                                                                                                |   | 2008                    | 
| |                                                                                                |   |                         | 
| | Purchase of coal water mixture and heavy
      oil based on a pre-agreed basis by both parties | $ | 37,020                  | 
| | Rental income based on market value                                                            | $ | -                       | 

During the two years ended December 31,
2008 and 2007, the Company had the following transaction with Madam Tan :-

| |                                     |   | Year ended December 31, | 
| | ----------------------------------- | - | ----------------------- | 
| |                                     |   | 2008                    | 
| |                                     |   |                         | 
| | Interest expenses paid to Madam Tan | $ | 150,055                 | 

F-33

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Golden Elephant Glass Technology, Inc. Notes to
Consolidated Financial Statements (Stated in US Dollars)

|30. | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | On July 24, 2008, the Company granted a warrant for the
      purchase of 166,940 shares of common stock with an exercise price of
      $1.824 to Roth Capital Partners, LLC for the services in connection with
      the private placement on the same date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The Company estimated the fair value of each warrant
      award on the date of grant using the Black-Scholes option-pricing model
      and the assumption noted in the following table. Expected volatility is
      based on the historical and implied volatility of a peer group of publicly
      traded entities. The expected term of warrants gave consideration to
      historical exercises, post-vesting cancellations and the warrants
      contractual term. The risk-free rate for the expected term of the warrants
      is based on the U.S. Treasury Constant Maturity at the time of grant. The
      assumptions used to value warrants granted during the year ended December
      31, 2008 were as follows :-
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |                         |  | Year ended   | 
| | ----------------------- |  | ------------ | 
| |                         |  | December 31, | 
| |                         |  | 2008         | 
| |                         |  |              | 
| | Risk free interest rate |  | 2.92%        | 
| | Expected volatility     |  | 214%         | 
| | Expected life (years)   |  | 3            | 
| |                         |  |              | 

|    | The grant-date fair value of a warrant granted is
      $1.5152 per share. The Company valued the options by Black-Scholes
      option-pricing model with the amount of $252,947, which recorded as cost
      of raising capital against additional paid-in capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|31. | Make good escrow agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | In connection with the 2008 private placement agreement,
      for the benefit of the investors, the Companys shareholder Win-Win Global
      Investments, Inc. (Win-Win Global) has agreed to place into escrow an
      aggregate of 1,669,398 shares for investors of common stock owned by
      Win-Win Global (Escrow Shares). One-half of the Escrow Shares
      (Potential 2008 Make Good Shares) were pledged to secure the Companys
      commitment to achieve the 2008 Guaranteed ATNI (as defined below) and
      one-half of the Escrow Shares (Potential 2009 Make Good Shares) were
      pledged to secure the Companys commitment to achieve the 2009 Guaranteed
      ATNI (as defined below).
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | If the After-Tax Net Income (ATNI) for the fiscal year
      ended December 31, 2008 was less than $10,000,000, the first tranche
      834,699 would be distributed to the investors for no additional
      consideration. If the ATNI for the fiscal year ending December 31, 2009 is
      less than $14,000,000, the second tranche 834,699 would be distributed to
      the investors for no consideration. Any shares not distributed to the
      investors would be released back to Win-Win Global. For the purpose of
      determining whether or not the ATNI threshold has been met, the return of
      any shares to Win-Win Global will not be deemed an expense to the Company.                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The ATNI is $(3,748,901) for the fiscal year ended
      December 31, 2008 and thus the Company has not achieved the 2008
      Guaranteed ATNI. The first tranche Escrow Shares 834,699 shares will be
      delivered to the investors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

F-34

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Golden Elephant Glass Technology, Inc.Notes to
Consolidated Financial Statements(Stated in US Dollars)

|32. | Reclassification of certain items in the Consolidated
      Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The reclassification of items (a) and (b) has no impact
      on the sales revenues, income from operations, net income and cash flows
      of the Company for the year ended December 31, 2007 and the total assets
      and total liabilities of the Company as of December 31, 2007.                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The reclassification of item (c) and (d) has no impact on
      the sales revenues, income from operations and net income of the Company
      for the year ended December 31, 2007 and the total assets and total
      liabilities of the Company as of December 31, 2007 except the net cash
      flows provided by operating activities was changed from $1,006,078 to
      $893,044 and the net cash flows used in investing activities was changed
      from $1,796,027 to $1,682,993.                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|33. | Subsequent event                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | On March 3, 2009, the Company entered into an employment
      agreement with the Companys Chief Financial Officer, Ms. Hong Tan.
      Pursuant to the employment agreement, the Company will pay Ms. Hong Tan an
      annual salary of RMB200,000 (approximately US$33,333) and she will be
      eligible for performance based bonuses as determined in the sole
      discretion of the Companys Board of Directors. The term of the employment
      agreement is for two years. The employment agreement also contains
      customary non-solicitation, non-competition and confidentiality
      provisions.

F-35

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SIGNATURES

In accordance with section 13 or
15(d) of the Securities Exchange Act of 1934, the Registrant caused this Report
on Form 10-K to be signed on its behalf by the undersigned, thereto duly
authorized individual.

|Date: April 15, 2009 |                                      
|-------------------- | -------------------------------------
|                     | GOLDEN ELEPHANT GLASS TECHNOLOGY,INC.
|                     |                                      
|                     | By: /s/ Lihui Song                   
|                     | Lihui Song                           
|                     | Chief Executive Officer and President

In accordance with the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

|Signature        | Title                                                            | Date          
|---------------- | ---------------------------------------------------------------- | --------------
|                 |                                                                  |               
|/s/ Lihui Song   | Chairman, Chief Executive Officer and President                  | April 15, 2009
|Lihui Song       | (Principal Executive Officer)                                    |               
|                 |                                                                  |               
|/s/ Hong Tan     | Chief Financial Officer, Treasurer, Secretary
      and Director | April 15, 2009
|Hong Tan         | (Principal Financial and Accounting Officer)                     |               
|                 |                                                                  |               
|/s/ Fuyi Zhao    | Director                                                         | April 15, 2009
|Fuyi Zhao        |                                                                  |               
|                 |                                                                  |               
|/s/ Guangli Yang | Director                                                         | April 15, 2009
|Guangli Yang     |                                                                  |               
|                 |                                                                  |               
|/s/ He Li        | Director                                                         | April 15, 2009
|He Li            |                                                                  |               

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