---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: September 30, 2010

or

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________________
to _______________________________

Commission File Number: 000-21071

GOLDEN ELEPHANT GLASS TECHNOLOGY, INC.(Exact name of registrant as specified in its charter)

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

123 Chuangye Road, Haizhou District,Fuxin City,
Liaoning People's Republic of China, 123000(Address of
principal executive offices, Zip Code)

(86) 418-399-5066(Registrants telephone
number, including area code)

Not Applicable(Former name, former address and
former fiscal year, if changed since last report)

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 [_] No [X]

---

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

Indicate by check mark whether the registrant is a larger
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 [X]

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

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date: As of July
15, 2011, there were 28,623,996 shares of common stock, par value $0.01 per
share issued
and outstanding.

---

GOLDEN ELEPHANT GLASS TECHNOLOGY, INC.

QUARTERLY REPORT ON FORM 10-Q

INDEX

|        |                                                                                                                                                                         | Page
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|PART I  | FINANCIAL INFORMATION                                                                                                                                                   |     
|        | Item 1. Financial Statements                                                                                                                                            | 1   
|        | Condensed Consolidated Balance
      Sheets as of September 30, 2010 (Unaudited) and December 31, 2009                                                                  | 2   
|        | Condensed Consolidated Statements of Operations
      and Comprehensive (Loss) Income for the Three and Nine Months Ended
      September 30, 2010 and 2009 (Unaudited) | 3   
|        | Condensed Consolidated
      Statements of Cash Flows for the Nine months Ended September 30, 2010 and
      2009 (Unaudited)                                           | 4   
|        | Notes to Consolidated Financial Statements as
      of September 30, 2010 (Unaudited)                                                                                   | 5   
|        | Item 2. Managements Discussion
    and Analysis of Financial Condition and Results of Operations                                                                       | 11  
|        | Item 3. Quantitative and Qualitative
      Disclosures About Market Risk.                                                                                               | 19  
|        | Item 4. Controls and Procedures                                                                                                                                         | 19  
|PART II | OTHER INFORMATION                                                                                                                                                       |     
|        | Item 1. Legal Proceedings.                                                                                                                                              | 20  
|        | Item 1A. Risk Factors.                                                                                                                                                  | 20  
|        | Item 2. Unregistered Sales of
      Equity Securities and Use of Proceeds.                                                                                              | 20  
|        | Item 3. Defaults Upon Senior Securities.                                                                                                                                | 20  
|        | Item 4. (Removed &
      Reserved).                                                                                                                                     | 20  
|        | Item 5. Other Information.                                                                                                                                              | 20  
|        | Item 6. Exhibits                                                                                                                                                        | 20  

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CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, or the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended (the Exchange Act). Forward-looking statements discuss matters that
are not historical facts. Because they discuss future events or conditions,
forward-looking statements may include words such as anticipate, believe,
estimate, intend, could, should, would, may, seek, plan,
might, will, expect, anticipate, predict, project, forecast,
potential, continue negatives thereof or similar expressions.
Forward-looking statements speak only as of the date they are made, are based on
various underlying assumptions and current expectations about the future and are
not guarantees. Such statements involve known and unknown risks, uncertainties
and other factors that may cause our actual results, level of activity,
performance or achievement to be materially different from the results of
operations or plans expressed or implied by such forward-looking statements.

We cannot predict all of the risks and uncertainties.
Accordingly, such information should not be regarded as representations that the
results or conditions described in such statements or that our objectives and
plans will be achieved and we do not assume any responsibility for the accuracy
or completeness of any of these forward-looking statements. These
forward-looking statements are found at various places throughout this Quarterly
Report on Form 10-Q and include information concerning possible or assumed
future results of our operations, including statements about potential
acquisition or merger targets; business strategies; future cash flows; financing
plans; plans and objectives of management; any other statements regarding future
acquisitions, future cash needs, future operations, business plans and future
financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions,
plans, expectations, assumptions and beliefs about future events and are subject
to risks, uncertainties and other factors. Many of those factors are outside of
our control and could cause actual results to differ materially from the results
expressed or implied by those forward-looking statements. In light of these
risks, uncertainties and assumptions, the events described in the
forward-looking statements might not occur or might occur to a different extent
or at a different time than we have described. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date of the Quarterly Report on Form 10-Q. All subsequent written and oral
forward-looking statements concerning other matters addressed in this Quarterly
Report on Form 10-Q and attributable to us or any person acting on our behalf
are expressly qualified in their entirety by the cautionary statements contained
or referred to in this Quarterly Report on Form 10-Q.

Except to the extent required by law, we undertake no
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events, a change in events, conditions,
circumstances or assumptions underlying such statements, or otherwise.

CERTAIN TERMS USED IN THIS QUARTERLY REPORT ON FORM 10-Q

When this report uses the words we, us, our, and the
Company, they refer to Golden Elephant Glass Technology, Inc. and its
consolidated subsidiaries.

Except as otherwise indicated by the context, all references in
this report to

Dollar Come are to Dollar Come Investments Limited, a British
Virgin Island company Fuxin Hengrui are to Fuxin Hengrui Technology Co.
Ltd., a PRC company; Fuxin Xianheng are to Fuxin Xianheng Float Glass Co.
Ltd., a PRC company; Securities Act are to the Securities Act of 1933, as
amended; Exchange Act are to the Securities Exchange Act of 1934, as
amended; RMB are to Renminbi, the legal currency of China; U.S.
dollar, $ and US$ are to the legal currency of the United States; and
China, Chinese and PRC are to the Peoples Republic of China.

---

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Golden Elephant Glass Technology, Inc. Condensed
Consolidated Balance Sheets As of September 30, 2010 and December 31, 2009
(Stated in US Dollars)

|                                   |   | September 30, |  |   | December 31, | 
|---------------------------------- | - | ------------- |  | - | ------------ | 
|                                   |   | 2010          |  |   | 2009         | 
|                                   |   | (Unaudited)   |  |   | (Audited)    | 
|ASSETS                             |   |               |  |   |              | 
|Current assets                     |   |               |  |   |              | 
|Cash and cash equivalents          | $ | 6,681         |  | $ | 7,358        | 
|Restricted cash                    |   | -             |  |   | -            | 
|Trade receivables, net             |   | 3,392,138     |  |   | 3,883,810    | 
|Other receivables, net             |   | 1,791,408     |  |   | 1,886,300    | 
|Prepayments                        |   | 2,147,629     |  |   | 2,795,202    | 
|Inventories                        |   | 1,604,285     |  |   | 1,572,028    | 
|Amount due from a related party    |   | -             |  |   | -            | 
|Deferred taxes                     |   | -             |  |   | -            | 
|Total current assets               |   | 8,942,142     |  |   | 10,144,698   | 
|                                   |   |               |  |   |              | 
|Non-current assets                 |   |               |  |   |              | 
|Property, plant and equipment, net |   | 23,279,019    |  |   | 23,046,810   | 
|Land use right                     |   | 3,223,489     |  |   | 2,855,361    | 
|Deferred taxes                     |   | -             |  |   | -            | 
|TOTAL ASSETS                       | $ | 35,444,649    |  | $ | 36,046,869   | 

See the accompanying notes to condensed consolidated financial
statement

---

Golden Elephant Glass Technology, Inc. Condensed
Consolidated Balance Sheets (Contd) As of September 30, 2010 and December
31, 2009 (Stated in US Dollars)

|                                                                                                                                              |   | September 30, |   |   | December 31, |  
|--------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------- | - | - | ------------ | -
|                                                                                                                                              |   | 2010          |   |   | 2009         |  
|                                                                                                                                              |   | (Unaudited)   |   |   | (Audited)    |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                          |   |               |   |   |              |  
|LIABILITIES                                                                                                                                   |   |               |   |   |              |  
|Current liabilities                                                                                                                           |   |               |   |   |              |  
|Trade payables                                                                                                                                | $ | 10,514,224    |   | $ | 10,307,198   |  
|Bills payable                                                                                                                                 |   | 733,987       |   |   | 719,228      |  
|Other payables and accrued expenses                                                                                                           |   | 2,865,090     |   |   | 3,136,502    |  
|Sales receipt in advance                                                                                                                      |   | 578,880       |   |   | 314,423      |  
|Interest payable                                                                                                                              |   | 3,508,534     |   |   | 2,032,329    |  
|Tax payable                                                                                                                                   |   | 2,547,464     |   |   | 2,496,391    |  
|Amount due to a director                                                                                                                      |   | 106,500       |   |   | 104,358      |  
|Secured bank loans                                                                                                                            |   | 13,027,249    |   |   | 12,765,307   |  
|Loan from related party - Lin Tan                                                                                                             |   | 485,157       |   |   | 631,657      |  
|TOTAL LIABILITIES                                                                                                                             | $ | 34,367,085    |   | $ | 32,507,393   |  
|                                                                                                                                              |   |               |   |   |              |  
|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; issued and outstanding 28,623,996 shares in
      2009 and 2008 |   | 286,240       |   |   | 286,240      |  
|Additional paid-in capital                                                                                                                    |   | 12,001,927    |   |   | 12,001,927   |  
|Statutory reserves                                                                                                                            |   | 714,013       |   |   | 714,013      |  
|Accumulated other comprehensive income                                                                                                        |   | 2,149,760     |   |   | 2,099,065    |  
|Accumulated deficit                                                                                                                           |   | (14,074,376   | ) |   | (11,561,769  | )
|                                                                                                                                              |   |               |   |   |              |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                    |   | 1,077,564     |   |   | 3,539,476    |  
|                                                                                                                                              |   |               |   |   |              |  
|TOTAL LIABILITIES AND STOCKHOLDERS
      EQUITY                                                                                              | $ | 35,444,649    |   | $ | 36,046,869   |  

See the accompanying notes to condensed consolidated financial
statements

---

Golden Elephant Glass Technology, Inc.Condensed
Consolidated Statements of Operations and Comprehensive (Loss) Income For
the three and nine months ended September 30, 2010 and 2009 (Unaudited)
(Stated in US Dollars)

|                                              |   | Three months ended |   |   | Nine months ended |  
|--------------------------------------------- | - | ------------------ | - | - | ----------------- | -
|                                              |   | September 30,      |   |   | September 30,     |  
|                                              |   | (Unaudited)        |   |   | (Unaudited)       |  
|                                              |   | 2010               |   |   | 2009              |  
|                                              |   |                    |   |   |                   |  
|Sales revenues                                | $ | -                  |   | $ | -                 |  
|Cost of sales                                 |   | -                  |   |   | -                 |  
|Gross loss                                    |   | -                  |   |   | -                 |  
|                                              |   |                    |   |   |                   |  
|Other operating income                        |   |                    |   |   |                   |  
|Bad debts recovered                           |   | 3,126,877          |   |   | -                 |  
|Decrease in provision for bad debts           |   | -                  |   |   | -                 |  
|Total other operating income                  |   | 3,126,877          |   |   | -                 |  
|                                              |   |                    |   |   |                   |  
|Operating expenses                            |   |                    |   |   |                   |  
|                                              |   |                    |   |   |                   |  
|Administrative expenses                       |   | 594,819            |   |   | 935,467           |  
|Selling expenses                              |   | -                  |   |   | -                 |  
|Total operating expenses                      |   | 594,819            |   |   | 935,467           |  
|                                              |   |                    |   |   |                   |  
|Loss from operations                          |   | 2,532,058          |   |   | (935,467          | )
|Interest income                               |   | -                  |   |   | -                 |  
|Other income                                  |   | -                  |   |   | 1,095             |  
|Other expense                                 |   | (1,994,489         | ) |   |                   |  
|Government grants                             |   | -                  |   |   | 118               |  
|Finance costs                                 |   | (500,073           | ) |   | (586,625          | )
|                                              |   |                    |   |   |                   |  
|Loss before income taxes                      |   | 37,496             |   |   | (1,520,879        | )
|Income taxes                                  |   | -                  |   |   | (378,058          | )
|Net income                                    |   | 37,496             |   |   | (1,898,937        | )
|                                              |   |                    |   |   |                   |  
|Other comprehensive income                    |   |                    |   |   |                   |  
|                                              |   |                    |   |   |                   |  
|Foreign currency translation adjustments      |   | 29,842             |   |   | 105               |  
|                                              |   |                    |   |   |                   |  
|Comprehensive loss                            | $ | 67,338             |   | $ | (1,898,832        | )
|                                              |   |                    |   |   |                   |  
|Loss per share:                               |   |                    |   |   |                   |  
|basic and diluted                             | $ | (0.00              | ) | $ | (0.07             | )
|                                              |   |                    |   |   |                   |  
|Weighted average number of shares outstanding |   |                    |   |   |                   |  
|:                                             |   |                    |   |   |                   |  
|basic and diluted                             |   | 28,623,996         |   |   | 28,623,996        |  

See the accompanying notes to condensed consolidated financial
statements

---

Golden Elephant Glass Technology, Inc. Condensed
Consolidated Statements of Cash Flows For the nine months ended September
30, 2010 and 2009 (Unaudited) (Stated in US Dollars)

|                                                                                                      |   | Nine months ended |  
|----------------------------------------------------------------------------------------------------- | - | ----------------- | -
|                                                                                                      |   | September 30,     |  
|                                                                                                      |   | (Unaudited)       |  
|                                                                                                      |   | 2010              |  
|Cash flows from operating activities                                                                  |   |                   |  
|                                                                                                      |   |                   |  
|Net (loss) income                                                                                     | $ | (2,512,607        | )
|Adjustments to reconcile net loss to net cash flows
      provided by (used in) operating activities: |   |                   |  
|Depreciation                                                                                          |   | 2,172,290         |  
|Amortization of land use right                                                                        |   | 63,195            |  
|Deferred taxes                                                                                        |   | -                 |  
|Provision (recovery) for doubtful accounts                                                            |   | (3,126,878        | )
|Provision for obsolete inventories                                                                    |   | -                 |  
|Loss from disposal of fixed assets                                                                    |   | 1,760,287         |  
|Changes in operating assets and
      liabilities :                                                   |   |                   |  
|Trade receivables                                                                                     |   | 3,692,500         |  
|Other receivables                                                                                     |   | (75,676           | )
|Prepayments and other current assets                                                                  |   | 643,861           |  
|Inventories                                                                                           |   |                   |  
|Trade payables                                                                                        |   | 207,026           |  
|Bills payable                                                                                         |   |                   |  
|Other payables and accrued expenses                                                                   |   | 366,557           |  
|Sales receipt in advance                                                                              |   | 264,457           |  
|Income tax payable                                                                                    |   | -                 |  
|Amount due to a director                                                                              |   | -                 |  
|Net cash flows provided by (used in) operating
      activities                                       |   | 3,455,013         |  
|                                                                                                      |   |                   |  
|Cash flows from investing activities                                                                  |   |                   |  
|Payments to acquire property, plant and
      equipment                                               |   | (443,100          | )
|Proceeds for disposal of property, plant and equipment                                                |   | 2,658,600         |  
|Payments to construction in progress                                                                  |   | (5,908,000        | )
|Decrease in restricted cash                                                                           |   | -                 |  
|Net cash flows (used in) provided by
      investing activities                                       |   | (3,692,500        | )

See the accompanying notes to condensed consolidated financial
statements

---

Golden Elephant Glass Technology, Inc.Condensed
Consolidated Statements of Cash Flows (Contd) For the nine months ended
September 30, 2010 and 2009 (Unaudited) (Stated in US Dollars)

|                                                                                        |  | Nine months ended |  
|--------------------------------------------------------------------------------------- |  | ----------------- | -
|                                                                                        |  | September 30,     |  
|                                                                                        |  | (Unaudited)       |  
|                                                                                        |  | 2010              |  
|Cash flows from financing activities                                                    |  |                   |  
|Loan from a related party                                                               |  | -                 |  
|Amount due to Tianyuan                                                                  |  | -                 |  
|Proceeds from unsecured loan                                                            |  | -                 |  
|Repayment of bank loans                                                                 |  | -                 |  
|Repayment of unsecured short-term loan                                                  |  | -                 |  
|Net cash flows provided by financing
      activities                                   |  | -                 |  
|                                                                                        |  |                   |  
|Effect of foreign currency translation
      on cash and cash equivalents               |  | 236,810           |  
|                                                                                        |  |                   |  
|Net decrease in cash and cash
      equivalents                                         |  | (677              | )
|                                                                                        |  |                   |  
|Cash and cash equivalents - beginning of
      period                                   |  | 7,358             |  
|                                                                                        |  |                   |  
|Cash and cash equivalents - end of
      period                                         |  | 6,681             |  
|                                                                                        |  |                   |  
|Supplemental disclosures for cash flow
      information:                               |  |                   |  
|Cash paid for :                                                                         |  |                   |  
|Interest                                                                                |  | -                 |  
|Income taxes                                                                            |  | -                 |  
|                                                                                        |  |                   |  
|Non-cash investing and financing activities                                             |  |                   |  
|Consideration of disposal of a subsidiary
      offset by other payable                 |  |                   |  
|Partial of unsecured loan offset by advances to related
      parties                   |  |                   |  
|Amount due from a related party settled by
      offsetting the loan from related party |  | 146,500           |  

See the accompanying notes to consolidated financial statements

---

|1. | Organization and Nature of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Golden Elephant Glass Technology, Inc. (the Company)
      (formerly Nevstar Corporation), was incorporated in the State of Nevada on
      December 2, 1993.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company is engaged in the manufacture and
      distribution of float glasses in the Peoples Republic of China (the
      PRC). The Company's product offerings include float glass, ultra-clear
      glass, colored float glass and high grade glass processed products, and
      are marketed primarily under the "Golden Elephant" brand name.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2. | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The accompanying unaudited condensed consolidated
      financial statements of the Company and its subsidiaries have been
      prepared in accordance with the rules and regulations of the Securities
      and Exchange Commission (the SEC) including the instructions to Form
      10-Q and Regulation S-X. Certain information and note disclosures normally
      included in financial statements prepared in accordance with generally
      accepted accounting principles in the United States of America have been
      condensed or omitted from these statements pursuant to such rules and
      regulation and, accordingly, they do not include all the information and
      notes necessary for comprehensive consolidated financial statements and
      should be read in conjunction with our audited consolidated financial
      statements for the year ended December 31, 2009, included in our Annual
      Report on Form 10-K for the year ended December 31, 2009.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | In the opinion of the management of the Company, all
      adjustments, which are of a normal recurring nature, necessary for a fair
      statement of the results for the three-month periods have been made.
      Results for the interim period presented are not necessarily indicative of
      the results that might be expected for the entire fiscal year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3. | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The accompanying consolidated financial statements have
      been prepared assuming that the Company will continue as a going concern,
      which contemplates the realization of assets and the liquidation of
      liabilities in the normal course of business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company has a history of operating losses, and had
      accumulated deficits of $ 14,074,376 through September 30, 2010. This
      raises substantial doubt about the Companys ability to continue as a
      going concern.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Management plans to address these matters through
      implementing new business plans. The Company is also seeking additional
      private sources of equity or debt financing. However, there is no
      assurance these activities will be successful. The accompanying financial
      statements do not include any adjustments that might be necessary if the
      Company is unable to continue as a going concern.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4. | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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|4. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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.
      Critical accounting estimates used in preparation of the financial
      statements include managements judgments about its valuation of the
      allowance for bad debt.                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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 September 30, 2010 and December 31, 2009, 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. The Company conducts periodic reviews of its customers'
      financial condition and customer payment practices to minimize collection
      risk on accounts receivable.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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 September 30, 2010 and
      December 31, 2009, 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.                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Allowance for doubtful accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company establishes an allowance for doubtful
      accounts based on managements assessment of the collectability 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 judgment 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.                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Inventories (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | management makes judgment 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. In addition, the Company estimates net realizable value
      based on intended use, current market value and inventory aging 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | 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              |  | 3.8%        |  |  | 5%             | 
| | Machinery and tools    |  | 9.5%        |  |  | 5%             | 
| | Motor vehicles         |  | 11.875%     |  |  | 5%             | 
| | Office equipment       |  | 19%         |  |  | 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.

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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4. | 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 cash flows
      attributable to such assets.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Companys long-lived assets include property, plant
      and equipment, construction in progress, goodwill and land use right.
      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.

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.

Research and development expenses
consist primarily of remuneration for research and development staff and
material costs for research and development.

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.                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | 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
      carry forwards 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.                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Value Added Tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | All China-based enterprises are subject to a value added
      tax (VAT) imposed by the PRC government on their domestic product sales.
      The output VAT is charged to customers who purchase goods from the Company
      and the input VAT is paid when the Company purchases goods from its
      vendors. The input VAT can be offset against the output VAT. The VAT
      payable represents the input VAT less than the output VAT. The debit
      balance represents a credit against future collection of output
  VAT.                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | 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.                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | 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 September 30, 2010 and December 31, 2009 were RMB1 for
      $0.1492 and $0.1462 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The accounting standards regarding fair value of
      financial instruments and related fair value measurements defines
      financial instruments and requires fair value disclosures of those
      financial instruments. This accounting standard defines fair value,
      establishes a three-level valuation hierarchy for disclosures of fair
      value measurement and enhances disclosures requirements for fair value
      measures. Current assets and current liabilities qualified as financial
      instruments and management believes their carrying amounts are a
      reasonable estimate of fair value because of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Fair value of financial instruments
  (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | the short period of time between the origination of such
      instruments and their expected realization and if applicable, their
      current interest rate is equivalent to interest rates currently
      available.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | As of September 30, 2010, the carrying amounts of the
      Companys financial instruments, including cash and cash equivalents,
      trade and other receivables, trade, bills and other payables, short-term
      bank loans and loan from Lin Tan approximate their fair values due to the
      short-term maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Off-balance sheet arrangements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company does not have any off-balance sheet
      arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Recently issued accounting
pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Adoption of FASB Accounting Standards
  Codification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | In June 2009, the FASB issued SFAS No. 168, " The FASB
      Accounting Standards Codification and the Hierarchy of Generally Accepted
      Accounting Principlesa replacement of FASB Statement No. 162 ". This
      standard is now included in ASC Topic 105 and established only two levels
      of GAAP, authoritative and non-authoritative. The FASB Accounting
      Standards Codification (the "Codification") became the source of
      authoritative, non-governmental GAAP, except for rules and interpretive
      releases of the SEC, which are sources of authoritative GAAP for SEC
      registrants. All other non-grandfathered, non-SEC accounting literature
      not included in the Codification became non-authoritative. This standard
      is effective for financial statements for interim or annual reporting
      periods ending after September 15, 2009. Effective August 1, 2009, we
      adopted the new guidelines and numbering system prescribed by the
      Codification when referring to GAAP. The adoption had no impact on our
      consolidated financial condition, results of operations or cash
    flows.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Adoption of FASB ASC 805                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Effective January 1, 2009, the Company adopted FASB ASC
      805, Business Combinations. FASB ASC 805 changed accounting for
      acquisitions that close beginning in 2009. FASB ASC 805 extends
  its applicability to all transactions and other events in
      which one entity obtains control over one or more other businesses. It
      broadens the fair value measurement and recognition of assets acquired,
      liabilities assumed, and interests transferred as a result of business
      combinations. FASB ASC 805 expands on required disclosures to improve the
      statement users abilities to evaluate the nature and financial effects of
      business combinations. The adoption of FASB ASC 805 did not have a
      material impact on the Companys financial statements.                                                                                                                                                                                                                                                                                                                                                     

---

|4. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Recently issued accounting pronouncements
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Adoption of FASB ASC 805-20                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Effective January 1, 2009, the Company adopted FASB ASC
      805-20, Non controlling Interests in Consolidated Financial Statements.
      FASB ASC 805-20 requires that a non controlling interest in a subsidiary
      be reported as equity and the amount of consolidated net income
      specifically attributable to the non controlling interest be identified in
      the consolidated financial statements. It also calls for consistency in
      the manner of reporting changes in the parents ownership interest and
      requires fair value measurement of any non controlling equity investment
      retained in a deconsolidation. FASB ASC 805-20 requires retroactive
      adoption of the presentation and disclosure requirements for existing
      minority interests. The adoption FASB ASC 805- 20 did not have material
      impact on the Companys financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Adoption of FASB ASC 815                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Effective January 1, 2009, the Company adopted FASB ASC
      815, Disclosures about Derivative Instruments and Hedging Activities.
      FASB ASC 815 requires enhanced disclosures about (i) how and why the
      Company uses derivative instruments, (ii) how the Company accounts for
      derivative instruments and related hedged items, and (iii) how derivative
      instruments and related hedged items affect the Companys financial
      results. The adoption FASB ASC 815 did not have any impact on the
      Companys financial statements.                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Adoption of FASB ASC 350-30                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Effective January 1, 2009, the Company adopted FASB ASC
      350-30, Determination of the Useful Life of Intangible Assets. FASB ASC
      350-30 amended the factors that should be considered in developing renewal
      or extension assumptions used to determine the useful life of a recognized
      intangible asset. The adoption of FASB ASC 350-30 did not have material
      impact on the Companys financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Adoption of FASB ASC 860                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In June 2009, the FASB issued ASC 860, which eliminates
      the concept of a qualifying special-purpose entity, creates more stringent
      conditions for reporting a transfer of a portion of a financial asset as a
      sale, clarifies other sale-accounting criteria, and changes the initial
      measurement of a transferors interest in transferred financial assets.
      FASB ASC 860 will be effective for transfers of financial assets in years
      beginning after November 15, 2009 and in interim periods within those
      years with earlier adoption prohibited. The adoption of ASC 860 is not
      expected to have a material impact on our consolidated financial position
      or results of operations.                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Adoption of FASB ASU 2009-05                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In August 2009, the FASB issued Accounting Standards
      Update ("ASU") No. 2009-05, "Measuring Liabilities at Fair Value," which
      amends the guidance in ASC 820, Fair Value Measurements
  and Disclosures, to provide guidance on fair value
      measurement of liabilities. If a quoted price in an active market is not
      available for an identical liability, ASU 2009-05 requires companies to
      compute fair value by using quoted prices for an identical liability when
      traded as an asset, quoted prices for similar liabilities when traded as
      an asset or another valuation technique that is consistent with the
      guidance in ASC 820. ASU 2009-05 will be effective for interim and annual
      periods beginning after its issuance and did not have a material impact on
      our consolidated financial position or results of operations.              

---

|5. | 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 September 30,
      1010, 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.                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | 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.                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|6. | (Loss)/earnings per
share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---

During the reporting periods, the basic
and diluted earnings per share are the same.

The per share data reflects the
recapitalization of stockholders equity as if the reorganization occurred as of
the beginning of the first period presented.

|7. | Inventories            |   | Sept. 30,   |  |   | December 31, | 
|-- | ---------------------- | - | ----------- |  | - | ------------ | 
|   |                        |   | 2010        |  |   | 2009         | 
|   |                        |   | (Unaudited) |  |   | (Audited)    | 
|   |                        |   |             |  |   |              | 
|   | Raw materials          | $ | 266,026     |  | $ | 260,677      | 
|   | Finished goods         |   | 1,296,014   |  |   | 1,269,954    | 
|   | Consumables            |   | 42 245      |  |   | 41,397       | 
|   |                        |   |             |  |   |              | 
|   | Balance at end of year | $ | 1 604 285   |  | $ | 1,572,028    | 

As of September 30, 2010, finished
goods with carrying value of $ 1,296,014 were pledged to the banks for the bank
loans granted to the Company.

|8. | Property, plant and equipment |   | Sept. 30,   |   |   | December 31, |  
|-- | ----------------------------- | - | ----------- | - | - | ------------ | -
|   |                               |   | 2010        |   |   | 2009         |  
|   |                               |   | (Unaudited) |   |   | (Audited)    |  
|   | Costs :                       |   |             |   |   |              |  
|   | Buildings                     | $ | 14,748,709  |   | $ | 14,367,853   |  
|   | Plant and machinery           |   | 18,678,206  |   |   | 19,501,325   |  
|   | Office equipment              |   | 131,536     |   |   | 128,891      |  
|   | Leasehold improvements        |   | 3,940,615   |   |   | 3,861,381    |  
|   | Motor vehicles                |   | 369,988     |   |   | 362,550      |  
|   | Construction in progress      |   | 5,986,343   |   |   | 1,377,634    |  
|   |                               |   | 39,914,782  |   |   | 39,599,634   |  
|   |                               |   |             |   |   |              |  
|   | Accumulated depreciation      |   | (16,635,763 | ) |   | (16,552,824  | )
|   |                               |   |             |   |   |              |  
|   | Net                           | $ | 23,279,019  |   | $ | 23,046,810   |  

As of September 30, 2010, certain
property, plant and equipment with aggregate net book value of $ 10,242,110 were
pledged to banks to secure general banking facilities.

|9. | Land use right           |   | Sept. 30,   |   |   | December 31, |  
|-- | ------------------------ | - | ----------- | - | - | ------------ | -
|   |                          |   | 2010        |   |   | 2009         |  
|   |                          |   | (Unaudited) |   |   | (Audited)    |  
|   |                          |   |             |   |   |              |  
|   | Land use right           | $ | 3,830,563   |   | $ | 3,399,240    |  
|   | Accumulated amortization |   | (607,074    | ) |   | (543,879     | )
|   |                          |   |             |   |   |              |  
|   | Net                      | $ | 3,223,489   |   | $ | 2,855,361    |  

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. The Company pledged this
right to a bank as part of its borrowings from the bank.

---

|    |                                    |   |             |  |   |              | 
|--- | ---------------------------------- | - | ----------- |  | - | ------------ | 
|10. | Secured bank loans                 |   | Sept. 30,   |  |   | December 31, | 
|    |                                    |   | 2010        |  |   | 2009         | 
|    |                                    |   | (Unaudited) |  |   | (Audited)    | 
|    |                                    |   |             |  |   |              | 
|    | Bank loans repayable within 1 year | $ | 13,027,249  |  | $ | 12,765,307   | 

As of September 30, 2010, the Companys
banking facilities were as follows:

| | Facilities granted |   | Granted    |  |   | Amount utilized |  |   | Unused | 
| | ------------------ | - | ---------- |  | - | --------------- |  | - | ------ | 
| | Secured bank loans | $ | 13,027,249 |  | $ | 13,027,249      |  | $ | -      | 

The above banking facilities are
secured by the following:

| | (i)   | Finished goods with carrying value of $
  1,296,013;                   
| | ----- | -----------------------------------------------------------------------
| | (ii)  | Property, plant and equipment with carrying value of$
      10,242,110;
| | (iii) | Land use right with carrying value of
  $2,861,918;                    
| | (iv)  | Guarantee executed by Lin Tan and third
  parties.                     

|11. | Amount due to a director                                                                                                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                     
|    | The amount represents other payable due to Mr. Lihui
      Song. The amount is interest-free, unsecured and repayable on
    demand.

| |                                |   | Sept. 30,   |  |   | December 31, | 
| | ------------------------------ | - | ----------- |  | - | ------------ | 
| |                                |   | 2010        |  |   | 2009         | 
| |                                |   | (Unaudited) |  |   | (Audited)    | 
| |                                |   |             |  |   |              | 
| | Total amount due to a director | $ | 106,500     |  | $ | 104,358      | 

|12. | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On May 6, 2008, Dollar Come entered into a loan agreement
      with Ms. Tan to borrow $5,000,000 at the annual interest rate of 8% for
      working capital. The loan was unsecured and due no later than May 5, 2010.
      Under a July 30, 2008 agreement, $3,260,000 of this loan was paid down
      with payment made to Fuxin Zhonglin Industry Limited and W.T. Construction
      Inc., both wholly owned by Ms. Tan. An amount of $1,108,343 was offset by
      advances to related party during 2009. An additional $146,500 of this loan
      was offset during 1stquarter of 2010. The balance of this debt
      at September 30, 2010 is $485,157.                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Company accrued interest payable related to amounts
      due to Ms. Tan totaling $29,109 and $37,902 for the nine months ended
      September 30, 2010 and 2009, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|13. | 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 Liaoning 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 $16,995 and $23,754 for
      the nine months ended September 30, 2010 and 2009, respectively.

---

|14. | Commitments and
contingencies
|--- | -----------------------------

| | a. | Capital commitment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | As of September 30, 2010, the Company had no capital
      commitments in respect of the acquisition of property, plant and equipment
      which contracted for but not provided in the financial
  statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | b. | 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.                                                                                                                                                                         

|15. | Segment information                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                         
|    | The nature of the Companys products, production
      processes, type of customers and distribution methods are substantially
      similar. The Company is 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:-                                                                           

| |        |   | Three months ended |  |   | Nine months ended | 
| | ------ | - | ------------------ |  | - | ----------------- | 
| |        |   | September 30,      |  |   | September 30,     | 
| |        |   | (Unaudited)        |  |   | (Unaudited)       | 
| |        |   | 2010               |  |   | 2009              | 
| |        |   |                    |  |   |                   | 
| | PRC    | $ | -                  |  | $ | -                 | 
| | Others |   | -                  |  |   | -                 | 
| |        |   |                    |  |   |                   | 
| | Total  | $ | -                  |  | $ | -                 | 

---

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

OVERVIEW

Our Company

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 other similar products. Our products are manufactured in our production
facility in Fuxin City, Liaoning Province, China and sold 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 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, in which 300 tons production
line was rented from Fuxin Guangya Flat Glass co. Ltd. which is in
bankruptcy.

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. We
transport our products by train, sea and expressway.

Production Process

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, mixed, and placed into
      a high temperature furnace where they are melted at temperatures in excess
      of 1500 degrees Celsius into molten glass.                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                         
| | 2. | Float Bath. The molten glass compound is
      then 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.Specialized metal oxide coatings
      may be applied to the glass surface while the glass is still hot 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 a controlled
      temperature until it is essentially at room temperature.                                
| |    |                                                                                                                                                                                                                                                                                                         
| | 5. | Inspection.The glass is inspected to
      ensure that it meets desired specifications and quality
    requirements.                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                         
| | 6. | Cutting and Shipping.The float glass is
      cut into large standard sheets or cut to size depending on the intended
      use and then prepared for shipping.                                                                                                                                         

Our Products

---

A description of the uses and benefits of our products:

| | 1. | Heavy Float Glass. Our heavy float glass
      products are customized to our customers desired performance
      specifications and designed to control energy usage, provide thermal
      insulation, act as a noise barrier, and 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.                                                                                                                                                                         
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | 2. | Ultra-Clear Glass and Colored Float Glass.
      Out 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 products 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.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | 3. | Specialty Glass Processed Products. Using a
      variation on the standard float glass production technique, 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.

We own one production line which became operational in August
2003 and has a 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.

Suspension of Production

During the recent global economic crisis, many of our customers
operating in some of the hardest hit sectors, such as the automotive,
construction, and home furnishing industries, were negatively impacted by the
economic downturn and our performance has consequently suffered. From November
2008, we suspended operations of our float glass manufacturing operations to
perform maintenance and system upgrades that would eventually 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. 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. We intend to continue to
take appropriate steps to minimize the adverse effects of the global economic
crisis on our operations and financial performance.

Recent Development

In April 2011, we completed our maintenance program and system
upgrade, and subsequently have been leasing our upgraded self-owned
manufacturing line to a third party in exchange for an annual rent of RMB 6
million, approximately $923,000.

---

Results of Operations

The following table sets forth key components of our results of
operations for the periods indicated, in dollars:

|                                                                |   | Three months ended |   |   | Nine months ended |  
|--------------------------------------------------------------- | - | ------------------ | - | - | ----------------- | -
|                                                                |   | September 30,      |   |   | September 30,     |  
|                                                                |   | (Unaudited)        |   |   | (Unaudited)       |  
|                                                                |   | 2010               |   |   | 2009              |  
|                                                                |   |                    |   |   |                   |  
|Sales revenues                                                  | $ | -                  |   | $ | -                 |  
|Cost of sales                                                   |   | -                  |   |   | -                 |  
|Gross loss                                                      |   | -                  |   |   | -                 |  
|                                                                |   |                    |   |   |                   |  
|Other operating income                                          |   |                    |   |   |                   |  
|Bad debts recovered                                             |   | 3,126,877          |   |   | -                 |  
|Decrease in provision for bad debts                             |   | -                  |   |   | -                 |  
|Total other operating income                                    |   | 3,126,877          |   |   | -                 |  
|                                                                |   |                    |   |   |                   |  
|Operating expenses                                              |   |                    |   |   |                   |  
|                                                                |   |                    |   |   |                   |  
|Administrative expenses                                         |   | 594,819            |   |   | 935,467           |  
|Selling expenses                                                |   | -                  |   |   | -                 |  
|Total operating expenses                                        |   | 594,819            |   |   | 935,467           |  
|                                                                |   |                    |   |   |                   |  
|Loss from operations                                            |   | 2,532,058          |   |   | (935,467          | )
|Interest income                                                 |   | -                  |   |   | -                 |  
|Other income                                                    |   | -                  |   |   | 1,095             |  
|Other expense                                                   |   | (1,994,489         | ) |   |                   |  
|Government grants                                               |   | -                  |   |   | 118               |  
|Finance costs                                                   |   | (500,073           | ) |   | (586,625          | )
|                                                                |   |                    |   |   |                   |  
|Loss before income taxes                                        |   | 37,496             |   |   | (1,520,879        | )
|Income taxes                                                    |   | -                  |   |   | (378,058          | )
|Net income                                                      |   | 37,496             |   |   | (1,898,937        | )
|                                                                |   |                    |   |   |                   |  
|Other comprehensive income                                      |   |                    |   |   |                   |  
|                                                                |   |                    |   |   |                   |  
|Foreign currency translation adjustments                        |   | 29,842             |   |   | 105               |  
|                                                                |   |                    |   |   |                   |  
|Comprehensive loss                                              | $ | 67,338             |   | $ | (1,898,832        | )
|                                                                |   |                    |   |   |                   |  
|Loss per share:                                                 |   |                    |   |   |                   |  
|basic and diluted                                               | $ | (0.00              | ) | $ | (0.07             | )
|                                                                |   |                    |   |   |                   |  
|Weighted average number of shares outstanding basic and diluted |   | 28,623,996         |   |   | 28,623,996        |  

See the accompanying notes to condensed consolidated financial
statements

---

Sales Revenue: Our sales revenue is generated from sales
of our float glass products and ultra-white glass products from the inventory.

For the three months ended September 30, 2009 and the three
months ended September 30, 2010, we did not generate any sales revenue, because
we have suspended our operations since November 2008 as a result of the global
economic recession and since then have commenced only equipment maintenance and
system upgrades.

During the nine months ended September 30, 2010, we did not
generate any sales revenue, as compared to approximately $2.27 million revenue
we generated during the nine months ended September 30, 2009. The decrease in
sales revenue is due suspension of operations since November 2008.

Cost of Sales. Our cost of sales is primarily comprised
of the costs of our raw materials, labor, and overhead.

For the three months ended September 30, 2009 and the three
months ended September 30, 2010, we did not generate any cost of sales due to
the suspension of our operations from November 2008.

During the nine months ended September 30, 2010, we did not
incur any cost of sales, as compared to approximately $3.31 million cost of
sales that we incurred during the nine months ended September 30, 2009. The
decrease in cost of sales is due to the suspension of operations since November
2008.

Administrative Expenses. Administrative expenses consist
of costs associated with staff and support personnel who manage our business
activities and professional fees paid to third parties.

For the three months ended September 30, 2009 and the three
months ended September 30, 2010, our administrative expenses decreased from
approximately $0.94 million to approximately $0.59 million, representing a
decrease of approximately $0.35 million or approximately 37.23% . The
substantial decrease of our administrative expenses was primarily attributable
to the suspension of our operations since November 2008.

For the nine months ended September 30, 2009 and the nine
months ended September 2010, our administrative expenses decreased from
approximately $4.05 million to approximately $2.22 million, representing a
decrease of approximately $1.83 million or approximately 45.19% . The
substantial decrease of our administrative expenses was primarily attributable
to the suspension of our operations since November 2008.

Net Income.

For the three months ended September 30, 2010, we had a net
income of $0.037, compared to a net loss of $1.90 for the same period ended
September 30, 2009. The decrease in our net loss was a result of the recovery of
bad debt for an amount of approximately $3.13 million and the decrease of our
administrative expenses due to the suspension of our operations since November
2008.

For the nine months ended September 30, 2009 and the nine
months ended September 30, 2010, our net loss decreased by $4.28 million or
approximately 63.03%, to approximately $2.51 million during the nine months
ended September 30, 2010 from approximately $6.79 million during the nine months
ended September 30, 2009. The decrease in our net loss was a result of the
recovery of bad debt for an amount of approximately $3.13 million and the
decrease of our administrative expenses due to the suspension of our operations
since November 2008.

---

Liquidity and Capital Resources

As of September 30, 2010, we had cash and cash equivalents of
$6,681. We incurred a net loss of $2,512,607 for nine months ended September 30,
2010 and had accumulated deficits of $14,074,376 as of September 30, 2010. In
addition, we have been implementing a maintenance program for the float glass
production lines since November 2008. During the maintenance period, all
operations of the production lines and all manufacturing of the glass products
are suspended. These matters raise substantial doubt about our ability to
continue as a going concern.

With the improvement of economic environment and glass market,
the management intends to implement its business plan of restoring the
production lines and resuming its business operations, primarily relying on
obtaining capital from collecting trade receivables and other receivables.
However, there is no assurance that these activities will be successful.

The following table sets forth a summary of our cash flows for
the periods indicated, in dollars:

|                                                                          |  | Nine months ended |  
|------------------------------------------------------------------------- |  | ----------------- | -
|                                                                          |  | September 30,     |  
|                                                                          |  | (Unaudited)       |  
|                                                                          |  | 2010              |  
|Net cash flows provided by operating
      activities                     |  | 3,455,013         |  
|Net cash flows used in investing activities                               |  | (3,692,500        | )
|Net cash flows used infinancing
      activities                          |  | -                 |  
|Effect of foreign currency translation on cash and
      cash equivalents |  | 236,810           |  
|Net decrease in cash and cash
      equivalents                           |  | (677              | )
|Cash and cash equivalents - beginning of period                           |  | 7,358             |  
|Cash and cash equivalents - end of
      period                           |  | 6,681             |  

See the accompanying notes to consolidated financial statements

Operating Activities:

Net cash provided in operating activities was $3,455,013 for
the nine month period ended September 30, 2010, as compared to net cash provided
by operating activities of $541,958 for the same period in 2009, representing an
increase of $2,913,055, which was due to an increase in trade receivables.

Investing Activities:

Our main uses of cash for investing activities are payments to
the acquisition of property, plant, and equipment and construction in progress.
Net cash used in investing activities in the nine months ended September 30,
2010 was $3,692,500, as compared to $630,258 of net cash used for investing
activities for the same period in 2009, representing an increase of $3,062,242.
The significant increase of net cash used in investing activities was due to
payments for property, plant, and equipment acquisitions and current
construction projects.

---

Financing Activities:

As of September 30, 2010, 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                       |  | 2.64    |  |  | November 26, 2008 |  |  | 1 year   | 
|China Construction Bank, Fuxin Branch                   |  | 2.95    |  |  | March 24, 2009    |  |  | 1 year   | 
|Shanghai Pudong Development Bank,
      Shenyang Branch |  | 4.35    |  |  | May 28, 2009      |  |  | 1 year   | 
|China Construction Bank, Fuxin Branch                   |  | 0.88    |  |  | April 29, 2009    |  |  | 6 months | 
|China Construction Bank, Fuxin Branch                   |  | 2.05    |  |  | May 22, 2009      |  |  | 6 months | 
|TOTAL                                                   |  | 12.87   |  |  |                   |  |  |          | 

On May 6, 2008, the Companys subsidiary Dollar Come entered
into a loan agreement with Ms. Lin Tan, our Chief Executive Officer, President,
and Chairman, to borrow $5 million at the annual interest rate of 8%. The
agreement has a two-year term and the loan proceed was to be used as working
capital. The loan was unsecured and is due May, 5, 2010. On July 30, 2008,
$3,260,000 of this loan was paid with payment made to Fuxin Zhonglin Industry
Limited and W.T. Construction Inc.; both wholly owned by Ms. Tan. An amount of
$1,108,343 was offset by advances to Ms. Tan during 2009. An additional $146,500
of this loan was offset by advances to Ms. Tan during the first quarter of 2010.
As of September 30, 2010, we owed Ms. Tan approximately $485,157 for the
principal amount in default.

As of September 30, 2010, we have not repaid any of our past
due bank loans because of capital shortage in the first three quarters of 2010.
In the current tight credit market, we cannot give assurances that we can
refinance these loans on favorable terms to us, if at all. Our current available
working capital may not be adequate to sustain our operations at our current
levels through at least the next twelve months. There is 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.

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.

Obligations under Material Contract

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.

---

Seasonality

Our Companys 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 of each year. Our working capital requirements
fluctuate during the period, increasing substantially during the first and
fourth quarters as a result of lower demand for glass products due to the
curtailments of construction works in winter season.

Critical Accounting Policies

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.

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.
Critical accounting estimates used in preparation of the financial statements
include managements judgments about its valuation of the allowance for bad
debt.

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 June 30, 2010 and
December 31, 2009, 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. The Company conducts periodic reviews of its
customers' financial condition and customer payment practices to minimize
collection risk on accounts receivable.

---

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

|          |   | As of September 30, | 
|--------- | - | ------------------- | 
|          |   | 2010                | 
|          |   | (Unaudited)         | 
|Company A | $ | 1,649,929           | 
|Company B |   | 610,313             | 
|Company C |   | 559,878             | 
|Company D |   | 479,610             | 
|Totals    | $ | 3,299,730           | 

Allowance for doubtful accounts

The Company establishes an allowance for doubtful accounts
based on managements assessment of the collectability 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 judgment 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,
management establishes a general provisioning policy to make the 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.

Recently issued accounting pronouncements

Adoption of FASB Accounting Standards Codification

In June 2009, the FASB issued SFAS No. 168, " The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principlesa replacement of FASB Statement No. 162 ". This standard
is now included in ASC Topic 105 and established only two levels of GAAP,
authoritative and non-authoritative. The FASB Accounting Standards Codification
(the "Codification") became the source of authoritative, nongovernmental GAAP,
except for rules and interpretive releases of the SEC, which are sources of
authoritative GAAP for SEC registrants. All other non-grandfathered, non-SEC
accounting literature not included in the Codification became non-authoritative. This standard is effective for financial
statements for interim or annual reporting periods ending after September 15,
2009. Effective August 1, 2009, we adopted the new guidelines and numbering
system prescribed by the Codification when referring to GAAP. The adoption had
no impact on our consolidated financial condition, results of operations or cash
flows.

---

Adoption of FASB ASC 805

Effective January 1, 2009, the Company adopted FASB ASC 805,
Business Combinations. FASB ASC 805 changed accounting for acquisitions that
close beginning in 2009. FASB ASC 805 extends its applicability to all
transactions and other events in which one entity obtains control over one or
more other businesses. It broadens the fair value measurement and recognition of
assets acquired, liabilities assumed, and interests transferred as a result of
business combinations. FASB ASC 805 expands on required disclosures to improve
the statement users abilities to evaluate the nature and financial effects of
business combinations. The adoption of FASB ASC 805 did not have a material
impact on the Companys financial statements.

Adoption of FASB ASC 805-20

Effective January 1, 2009, the Company adopted FASB ASC 805-20,
Non controlling Interests in Consolidated Financial Statements. FASB ASC
805-20 requires that a non controlling interest in a subsidiary be reported as
equity and the amount of consolidated net income specifically attributable to
the non controlling interest be identified in the consolidated financial
statements. It also calls for consistency in the manner of reporting changes in
the parents ownership interest and requires fair value measurement of any non
controlling equity investment retained in a deconsolidation. FASB ASC 805-20
requires retroactive adoption of the presentation and disclosure requirements
for existing minority interests. The adoption FASB ASC 805-20 did not have
material impact on the Companys financial statements.

Adoption of FASB ASC 815

Effective January 1, 2009, the Company adopted FASB ASC 815,
Disclosures about Derivative Instruments and Hedging Activities. FASB ASC 815
requires enhanced disclosures about (i) how and why the Company uses derivative
instruments, (ii) how the Company accounts for derivative instruments and
related hedged items, and (iii) how derivative instruments and related hedged
items affect the Companys financial results. The adoption FASB ASC 815 did not
have any impact on the Companys financial statements.

Adoption of FASB ASC 350-30

Effective January 1, 2009, the Company adopted FASB ASC 350-30,
Determination of the Useful Life of Intangible Assets. FASB ASC 350-30 amended
the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset.
The adoption of FASB ASC 350-30 did not have material impact on the Companys
financial statements.

Adoption of FASB ASC 860

In June 2009, the FASB issued ASC 860, which eliminates the
concept of a qualifying special-purpose entity, creates more stringent
conditions for reporting a transfer of a portion of a financial asset as a sale,
clarifies other sale-accounting criteria, and changes the initial measurement of
a transferors interest in transferred financial assets. FASB ASC 860 will be
effective for transfers of financial assets in years beginning after November
15, 2009 and in interim periods within those years with earlier adoption
prohibited. The adoption of ASC 860 is not expected to have a material impact on
our consolidated financial position or results of operations.

Adoption of FASB ASU 2009-05

---

In August 2009, the FASB issued Accounting Standards Update
("ASU") No. 2009-05, "Measuring Liabilities at Fair Value," which amends the
guidance in ASC 820, Fair Value Measurements and Disclosures, to provide
guidance on fair value measurement of liabilities. If a quoted price in an
active market is not available for an identical liability, ASU 2009-05 requires
companies to compute fair value by using quoted prices for an identical
liability when traded as an asset, quoted prices for similar liabilities when
traded as an asset or another valuation technique that is consistent with the
guidance in ASC 820. ASU 2009-05 will be effective for interim and annual
periods beginning after its issuance and did not have a material impact on our
consolidated financial position or results of operations.

Adoption of FASB ASU 2009-13

In October 2009, the FASB issued ASU No. 2009-13,
Multiple-Deliverable Revenue Arrangements (ASU 2009-13). This update removes
the criterion that entities must use objective and reliable evidence of fair
value in separately accounting for deliverables and provides entities with a
hierarchy of evidence that must be considered when allocating arrangement
consideration. The new guidance also requires entities to allocate arrangement
consideration to the separate units of accounting based on the deliverables
relative selling price. The provisions will be effective for revenue
arrangements entered into or materially modified in our year 2011 and must be
applied prospectively. We are currently evaluating the impact of the provisions
of ASU 2009-13.

Item 3. Quantitative and Qualitative disclosures
About Market Risk.

Smaller reporting companies are not required to provide the
information required by this item.

Item 4. 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 our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures,
our management necessarily was required to apply its judgment in evaluating the
cost benefit relationship of possible controls and procedures.

As required by Rule 13a-15 under the Exchange Act, our Chief
Executive Officer and Chief Financial Officer, Ms. Lin Tan, evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as of September 30, 2010. Based on our assessment, Ms.
Lin Tan  determined that, as of September 30, 2010, and as of
the date that the evaluation was completed, our disclosure controls and
procedures were ineffective to satisfy the objectives for which they are
intended. Our conclusion is based primarily on the occurrence of a significant
number of out-of-period adjustments, which we believe primarily stems from the
fact that we had limited accounting and financial staff with the requisite
qualifications. We are in the process of considering changes in our internal
control over financial reporting in order to address the aforementioned
deficiencies.

Changes in Internal Controls over Financial Reporting

During the quarter ended September 30, 2010, 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.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

---

Item 1A. Risk Factors

Smaller reporting companies are not required to provide the
information required by this item.

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

None.

Item 3. Defaults Upon Senior Securities

As of July 2011, the default amount, maturity date, term
and total arrearage of each of our past due bank loans are as follows:

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

Total**Arrearage****(Principal**&Principal
    
    
    Interest)Banks
    Amounts ($)1
    Maturity Date
    Duration
    ($)China CITIC Bank, Shenyang Branch
    2.75
    November 26, 2008
    1 year
    3.66China Construction Bank, Fuxin Branch
    3.07
    March 24, 2009
    1 year
    4.22Shanghai Pudong Development Bank, Shenyang
      Branch
    4.53
    May 28, 2009
    1 year
    6.39China Construction Bank, Fuxin Branch
    0.92
    April 29, 2009
    6 months
    1.22China Construction Bank, Fuxin Branch
    2.14
    May 22, 2009
    6 months
    2.76TOTAL
    $ 13.41
    -
    
    **$**
      **18.25**


1The increase of the principal amount since June
30, 2010 reflects a change of RMB to USD exchange rate.

On May 6, 2008, the Companys 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
were used for working capital. The loan was unsecured and due no later than May
5, 2010. Under a July 30, 2008 agreement, $3,260,000 of this loan was paid with
payment made to Fuxin Zhonglin Industry Limited and W.T. Construction Inc., both
wholly owned by Ms. Tan. An amount of $1,108,343 was offset by advances to
related party during 2009. An additional $146,500 of this loan was offset during
the first quarter of 2010. As of July 2011, we owe Mr. Tan US $485,157 for
the principal amount in default and US $111,986 for interest incurred
thereof.

As of July 2011, we are in default of bank loans in total
principal amount of US$13.41 million. Consequently, we have incurred arrearage
in a total amount of US$18.25 million as of July 2011.

Item 4. (Removed & Reserved.)

Item 5. Other Information

None.

---

Item 6. Exhibits

Copies of the following documents are included as exhibits to
this report pursuant to Item 601 of Regulation S-K.

|Exhibit | **SEC
      Ref.** | Title of Document                                                                                                                              
|------- | ------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------
|No.     | No.                |                                                                                                                                                
|        |                    |                                                                                                                                                
|1       | 31.1               | Certification of the Chief
      Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002 
|        |                    |                                                                                                                                                
|2.      | 32.1               | Certification of the Chief
      Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002*

*The Exhibits attached to this Form 10-Q shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934
(the "Exchange Act") or otherwise subject to liability under that section, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, as amended, or the Exchange Act, except as expressly set forth by
specific reference in such filing.

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SIGNATURES

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

|                    | GOLDEN ELEPHANT GLASS                                                                                          
|------------------- | ---------------------------------------------------------------------------------------------------------------
|                    | TECHNOLOGY, INC.                                                                                               
|                    |                                                                                                                
|                    |                                                                                                                
|                    |                                                                                                                
|Date: July 15, 2011 | /s/ Lin
      Tan                                                                                              
|                    | Lin Tan                                                                                                        
|                    | President, Chief Executive Officer and Chief
    Financial Officer                                             
|                    | (Duly Authorized Officer, Principal Executive Officer
    and Principal Financial and Chief Accounting Officer)
|                    |                                                                                                                
|                    |                                                                                                                

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