U.S. Securities and Exchange Commission


Washington,
D.C. 20549


FORM
10-Q






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





o     TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the Transition Period From ____to _____





000-53272


(Commission
File Number)





DÉCOR PRODUCTS
INTERNATIONAL, INC.


(Exact
name of small business issuer as specified in its charter)





Nevada
                20-8211061(State
      or other jurisdiction of
                (IRS
      Employer Identification No.)incorporation
      or organization)





No.
6 Economic Zone, Wushaliwu, Chang’an Town


Dongguan, Guangdong
Province, China


(Address
of principal executive offices)





(86)
769-85533948


(Issuer’s
telephone number, including area code)





Indicate
by check mark whether the registrant (1) 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 xNo o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted 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 oNo o





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





Large
      accelerated filer o
            
            Accelerated
      filer oNon-accelerated
      filer o
            
            Smaller
      reporting company x(Do
      not check if smaller reporting company)




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





Number of
shares of common stock outstanding as of November 10,
2010:   6,866,122









TABLE OF CONTENTSPART
      I. FINANCIAL INFORMATIONPage No.ITEM
      1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                              
                              1Condensed
      Consolidated Balance Sheets as of September 30, 2010 and December 31,
      2009
                              
                              1Condensed
      Consolidated Statements of Operations and Comprehensive Income for the
      Three and Nine Months ended September 30, 2010 and 2009
                              
                              2Condensed
      Consolidated Statements of Cash Flows for the Nine Months ended September
      30, 2010 and 2009
                              
                              3Condensed
      Consolidated Statement of Stockholders’ Equity for the Nine Months Ended
      September 30, 2010
                              
                              4Notes
      to Condensed Consolidated Financial Statements
                              
                              5ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS
                              
                              17ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK
                              
                              23ITEM
      4. CONTROLS AND PROCEDURES
                              
                              23PART
      II. OTHER INFORMATIONITEM
      1. LEGAL PROCEEDINGS
                              
                              24ITEM
      1A. RISK FACTORS
                              
                              24ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
    PROCEEDS
                              
                              24ITEM
      3. DEFAULTS UPON SENIOR SECURITIES
                              
                              24ITEM
      4. REMOVED AND RESERVED
                              
                              24ITEM
      5. OTHER INFORMATION
                              
                              24ITEM
      6. EXHIBITS
                              
                              24SIGNATURES
                              
                              25









ITEM
1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





DÉCOR
PRODUCTS INTERNATIONAL, INC.


CONDENSED
CONSOLIDATED BALANCE SHEETS


AS
OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009


(Currency
expressed in United States Dollars (“US$”), except for number of
shares)




September
      30, 2010
                                          
                                          
                                          December
      31, 2009(Unaudited)
                                          
                                          
                                          (Audited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                                          
                                          $
                                          446,758
                                          
                                          
                                          $
                                          777,332Accounts
      receivable, trade
                                          
                                          
                                          13,768,696
                                          
                                          
                                          
                                          13,203,074Inventories
                                          
                                          
                                          842,148
                                          
                                          
                                          
                                          276,149Advances
      to suppliers
                                          
                                          
                                          1,475,299
                                          
                                          
                                          
                                          1,320,231Deposits
      and prepayments
                                          
                                          
                                          12,598
                                          
                                          
                                          
                                          335,221Total
      current assets
                                          
                                          
                                          16,545,499
                                          
                                          
                                          
                                          15,912,007Non-current
      assets:Plant
      and equipment, net
                                          
                                          
                                          10,862,225
                                          
                                          
                                          
                                          8,095,917Construction
      in progress
                                          
                                          
                                          7,013,996
                                          
                                          
                                          
                                          6,041,515TOTAL
      ASSETS
                                          
                                          $
                                          34,421,720
                                          
                                          
                                          $
                                          30,049,439LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable, trade
                                          
                                          $
                                          579,923
                                          
                                          
                                          $
                                          665,542Short-term
      bank borrowings
                                          
                                          
                                          -
                                          
                                          
                                          
                                          570,408Current
      portion of long-term bank borrowings
                                          
                                          
                                          279,597
                                          
                                          
                                          
                                          1,118,791Convertible
      notes payable, net
                                          
                                          
                                          1,968,670
                                          
                                          
                                          
                                          1,220,708Promissory
      notes payable
                                          
                                          
                                          405,000
                                          
                                          
                                          
                                          405,000Amount
      due to a related party
                                          
                                          
                                          696,160
                                          
                                          
                                          
                                          1,328,126Income
      tax payable
                                          
                                          
                                          554,184
                                          
                                          
                                          
                                          520,473Accrued
      liabilities and other payable
                                          
                                          
                                          1,140,884
                                          
                                          
                                          
                                          695,711Total
      current liabilities
                                          
                                          
                                          5,624,418
                                          
                                          
                                          
                                          6,524,759Long-term
      liabilities:Long-term
      bank borrowings
                                          
                                          
                                          1,045,072
                                          
                                          
                                          
                                          71,046Total
      liabilities
                                          
                                          
                                          6,669,490
                                          
                                          
                                          
                                          6,595,805Commitments
      and contingenciesStockholders’
      equity:Preferred
      stock, $0.001 par value; 1,666,667 shares authorized; 0 shares issued and
      outstanding, respectively
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Common
      stock, $0.001 par value; 33,333,333 shares authorized; 6,866,122 shares
      issued and outstanding, respectively
                                          
                                          
                                          6,866
                                          
                                          
                                          
                                          6,866Additional
      paid-in capital
                                          
                                          
                                          2,126,130
                                          
                                          
                                          
                                          2,126,130Statutory
      reserve
                                          
                                          
                                          795,215
                                          
                                          
                                          
                                          795,215Accumulated
      other comprehensive income
                                          
                                          
                                          3,376,884
                                          
                                          
                                          
                                          2,586,657Retained
      earnings
                                          
                                          
                                          21,447,135
                                          
                                          
                                          
                                          17,938,766Total
      stockholders’ equity
                                          
                                          
                                          27,752,230
                                          
                                          
                                          
                                          23,453,634TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                          
                                          $
                                          34,421,720
                                          
                                          
                                          $
                                          30,049,439


See
accompanying notes to condensed consolidated financial statements.




1




DÉCOR
PRODUCTS INTERNATIONAL, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


AND
COMPREHENSIVE INCOME


FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009


(Currency
expressed in United States Dollars (“US$”), except for number of
shares)


(Unaudited)




Three
      months ended September 30,
                                                
                                                
                                                Nine
      months ended September 30,2010
                                                
                                                
                                                2009
                                                
                                                
                                                2010
                                                
                                                
                                                2009Revenues,
      net
                                                
                                                $
                                                6,824,543
                                                
                                                
                                                $
                                                7,442,839
                                                
                                                
                                                $
                                                19,704,867
                                                
                                                
                                                $
                                                17,116,465Cost of revenue(inclusive of depreciation)
                                                
                                                
                                                4,219,836
                                                
                                                
                                                
                                                4,280,341
                                                
                                                
                                                
                                                11,843,787
                                                
                                                
                                                
                                                9,494,871Gross
      profit
                                                
                                                
                                                2,604,707
                                                
                                                
                                                
                                                3,162,498
                                                
                                                
                                                
                                                7,861,080
                                                
                                                
                                                
                                                7,621,594Operating
      expenses:Sales
      and marketing
                                                
                                                
                                                311,541
                                                
                                                
                                                
                                                341,045
                                                
                                                
                                                
                                                917,570
                                                
                                                
                                                
                                                1,001,334Professional
      and consulting fee
                                                
                                                
                                                102,700
                                                
                                                
                                                
                                                71,428
                                                
                                                
                                                
                                                276,878
                                                
                                                
                                                
                                                1,266,555Stock
      based compensation
                                                
                                                
                                                -
                                                
                                                
                                                
                                                339,096
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                339,096General
      and administrative
                                                
                                                
                                                193,257
                                                
                                                
                                                
                                                171,678
                                                
                                                
                                                
                                                563,400
                                                
                                                
                                                
                                                698,449Total
      operating expenses
                                                
                                                
                                                607,498
                                                
                                                
                                                
                                                923,247
                                                
                                                
                                                
                                                1,757,848
                                                
                                                
                                                
                                                3,305,434Income
      from operations
                                                
                                                
                                                1,997,209
                                                
                                                
                                                
                                                2,239,251
                                                
                                                
                                                
                                                6,103,232
                                                
                                                
                                                
                                                4,316,160Other
      income (expense):Interest
      income
                                                
                                                
                                                664
                                                
                                                
                                                
                                                384
                                                
                                                
                                                
                                                2,069
                                                
                                                
                                                
                                                4,303Interest
      expense
                                                
                                                
                                                (327,948
                                                )
                                                
                                                
                                                (42,956
                                                )
                                                
                                                
                                                (985,749
                                                )
                                                
                                                
                                                (132,278
                                                )Income
      before income taxes
                                                
                                                
                                                1,669,925
                                                
                                                
                                                
                                                2,196,679
                                                
                                                
                                                
                                                5,119,552
                                                
                                                
                                                
                                                4,188,185Income
      tax expense
                                                
                                                
                                                547,428
                                                
                                                
                                                
                                                669,142
                                                
                                                
                                                
                                                1,611,183
                                                
                                                
                                                
                                                1,450,737NET
      INCOME
                                                
                                                $
                                                1,122,497
                                                
                                                
                                                $
                                                1,527,537
                                                
                                                
                                                $
                                                3,508,369
                                                
                                                
                                                $
                                                2,737,448Other
      comprehensive income:-
      Foreign currency translation gain
                                                
                                                
                                                634,219
                                                
                                                
                                                
                                                29,712
                                                
                                                
                                                
                                                790,227
                                                
                                                
                                                
                                                62,783COMPREHENSIVE
      INCOME
                                                
                                                $
                                                1,756,716
                                                
                                                
                                                $
                                                1,557,249
                                                
                                                
                                                $
                                                4,298,596
                                                
                                                
                                                $
                                                2,800,231Net
      income per share – Basic
                                                
                                                $
                                                0.16
                                                
                                                
                                                $
                                                0.23
                                                
                                                
                                                $
                                                0.51
                                                
                                                
                                                $
                                                0.41Net
      income per share – Diluted
                                                
                                                $
                                                0.14
                                                
                                                
                                                $
                                                0.23
                                                
                                                
                                                $
                                                0.44
                                                
                                                
                                                $
                                                0.41Weighted
      average common stock outstanding – Basic
                                                
                                                
                                                6,866,122
                                                
                                                
                                                
                                                6,666,667
                                                
                                                
                                                
                                                6,866,122
                                                
                                                
                                                
                                                6,666,667Weighted
      average common stock outstanding – Diluted
                                                
                                                
                                                7,914,435
                                                
                                                
                                                
                                                6,666,667
                                                
                                                
                                                
                                                7,914,435
                                                
                                                
                                                
                                                6,666,667






See
accompanying notes to
condensed consolidated financial statements.




2




DÉCOR
PRODUCTS INTERNATIONAL, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009


(Currency
expressed in United States Dollars (“US$”))


(Unaudited)





Nine
      months ended September30,2010
                                          
                                          
                                          2009Cash
      flows from operating activities:Net
      income
                                          
                                          $
                                          3,508,369
                                          
                                          
                                          $
                                          2,737,448Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
                                          
                                          
                                          1,106,773
                                          
                                          
                                          
                                          462,118Write-off
      of uncollectible receivables
                                          
                                          
                                          -
                                          
                                          
                                          
                                          186,194Loss
      on disposal of plant and equipment
                                          
                                          
                                          254
                                          
                                          
                                          
                                          3,214Stock
      based compensation
                                          
                                          
                                          -
                                          
                                          
                                          
                                          339,096Interest
      expenses, non-cash
                                          
                                          
                                          747,962
                                          
                                          
                                          
                                          -Changes
      in operating assets and liabilities:Accounts
      receivable, trade
                                          
                                          
                                          (286,375
                                          )
                                          
                                          
                                          (2,430,154
                                          )Inventories
                                          
                                          
                                          (550,539
                                          )
                                          
                                          
                                          (227,535
                                          )Advances
      to suppliers
                                          
                                          
                                          (369,192
                                          )
                                          
                                          
                                          (473,335
                                          )Deposits
      and prepayments
                                          
                                          
                                          138,866
                                          
                                          
                                          
                                          9,229Accounts
      payable, trade
                                          
                                          
                                          (97,715
                                          )
                                          
                                          
                                          204,857Promissory
      notes payable
                                          
                                          
                                          -
                                          
                                          
                                          
                                          705,000Income
      tax payable
                                          
                                          
                                          22,505
                                          
                                          
                                          
                                          220,657Accrued
      liabilities and other payable
                                          
                                          
                                          613,058
                                          
                                          
                                          
                                          212,022Net
      cash provided by operating activities
                                          
                                          
                                          4,833,966
                                          
                                          
                                          
                                          1,948,811Cash
      flows from investing activities:Payments
      on plant and equipment
                                          
                                          
                                          (1,107,061
                                          )
                                          
                                          
                                          -Proceeds
      from disposal of plant and equipment
                                          
                                          
                                          968
                                          
                                          
                                          
                                          -Payments
      on construction in progress
                                          
                                          
                                          (3,142,581
                                          )
                                          
                                          
                                          (2,649,189
                                          )Net
      cash used in investing activities
                                          
                                          
                                          (4,248,674
                                          )
                                          
                                          
                                          (2,649,189
                                          )Cash
      flows from financing activities:(Repayment
      to) advances from a related party
                                          
                                          
                                          (461,873
                                          )
                                          
                                          
                                          1,349,528Proceeds
      from private placement, net of expense
                                          
                                          
                                          -
                                          
                                          
                                          
                                          180,000Proceeds
      from short-term bank borrowings
                                          
                                          
                                          -
                                          
                                          
                                          
                                          774,570Proceeds
      from long-term bank borrowings
                                          
                                          
                                          1,026,935
                                          
                                          
                                          
                                          -Payments
      on short-term bank borrowings
                                          
                                          
                                          (572,149
                                          )
                                          
                                          
                                          (131,531
                                          )Payments
      on long-term bank borrowings
                                          
                                          
                                          (918,723
                                          )
                                          
                                          
                                          (1,131,005
                                          )Net
      cash (used in) provided by financing activities
                                          
                                          
                                          (925,810
                                          )
                                          
                                          
                                          1,041,562Effect
      of exchange rate changes on cash and cash equivalents
                                          
                                          
                                          9,944
                                          
                                          
                                          
                                          1,787NET
      CHANGE IN CASH AND CASH EQUIVALENTS
                                          
                                          
                                          (330,574
                                          )
                                          
                                          
                                          342,971CASH
      AND CASH EQUIVALENTS, BEGINNING OF PERIOD
                                          
                                          
                                          777,332
                                          
                                          
                                          
                                          268,698CASH
      AND CASH EQUIVALENTS, END OF PERIOD
                                          
                                          $
                                          446,758
                                          
                                          
                                          $
                                          611,669SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Cash
      paid for income taxes
                                          
                                          $
                                          1,588,678
                                          
                                          
                                          $
                                          1,230,080Cash
      paid for interest
                                          
                                          $
                                          237,787
                                          
                                          
                                          $
                                          132,278NON-CASH
      INVESTING AND FINANCING TRANSACTIONS:Transfer
      of construction in progress to plant and equipment
                                          
                                          $
                                          2,310,265
                                          
                                          
                                          $
                                          927,335Transfer
      of advances to suppliers to plant and equipment
                                          
                                          $
                                          243,102
                                          
                                          
                                          $
                                          -






See
accompanying notes to condensed consolidated financial statements.




3




DÉCOR
PRODUCTS INTERNATIONAL, INC.


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2010


(Currency
expressed in United States Dollars (“US$”), except for number of
shares)


(Unaudited)




Common
      stock
                                                    
                                                    
                                                    Additional
                                                      paid-in
                                                    
                                                    
                                                    Statutory
                                                    
                                                    
                                                    Accumulated
                                                      other
                                                      comprehensive
                                                    
                                                    
                                                    Retained
                                                    
                                                    
                                                    Total
                                                      stockholders’No.
      of shares
                                                    
                                                    
                                                    Amount
                                                    
                                                    
                                                    capital
                                                    
                                                    
                                                    reserve
                                                    
                                                    
                                                    income
                                                    
                                                    
                                                    earnings
                                                    
                                                    
                                                    equityBalance
      as of January 1, 2010, as restated
                                                    
                                                    
                                                    6,866,122
                                                    
                                                    
                                                    $
                                                    6,866
                                                    
                                                    
                                                    $
                                                    2,126,130
                                                    
                                                    
                                                    $
                                                    795,215
                                                    
                                                    
                                                    $
                                                    2,586,657
                                                    
                                                    
                                                    $
                                                    17,938,766
                                                    
                                                    
                                                    $
                                                    23,453,634Net
      income for the period
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    3,508,369
                                                    
                                                    
                                                    
                                                    3,508,369Foreign
      currency translation adjustment
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    790,227
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    790,227Balance
      as of September 30, 2010
                                                    
                                                    
                                                    6,866,122
                                                    
                                                    
                                                    $
                                                    6,866
                                                    
                                                    
                                                    $
                                                    2,126,130
                                                    
                                                    
                                                    $
                                                    795,215
                                                    
                                                    
                                                    $
                                                    3,376,884
                                                    
                                                    
                                                    $
                                                    21,447,135
                                                    
                                                    
                                                    $
                                                    27,752,230






See
accompanying notes to condensed consolidated financial statements.




4




NOTE
1 – BASIS OF PRESENTATION





The
accompanying unaudited condensed consolidated financial statements have been
prepared by management in accordance with both accounting principles generally
accepted in the United States of America (“GAAP”) and the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures
normally included in audited financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to those rules and regulations, although the Company believes that the
disclosures made are adequate to make the information not
misleading.





In the
opinion of management, the consolidated balance sheet as of December 31, 2009
which has been derived from audited financial statements and these unaudited
condensed financial statements reflect all normal and recurring adjustments
considered necessary to state fairly the results for the periods presented. The
results for the period ended September 30, 2010 are not necessarily indicative
of the results to be expected for the entire fiscal year ending December 31,
2010 or for any future period.





These
unaudited condensed consolidated financial statements and notes thereto should
be read in conjunction with the Management’s Discussion and the audited
financial statements and notes thereto included in the Annual Report on Form
10-K for the year ended December 31, 2009.





NOTE
2 – ORGANIZATION AND BUSINESS BACKGROUND





Décor
Products International, Inc. (“DCRD” or the “Company”) was organized under the
laws of the State of Florida on January 11, 2007 as Murals by Maurice, Inc. On
July 1, 2009, the Company changed to its current name.





On April
8, 2010, the Company approved the Plan of Merger for the purpose of re-domiciling the Company to the State of Nevada. Concurrently, the
Company approved a 1 for 3 reverse split of its common stock.





The
Company, through its subsidiaries, is mainly engaged in the manufacture and
sales of furniture decorative paper and related products in the People’s
Republic of China (the “PRC”). All the customers are located in the
PRC.





The
Company and its subsidiaries are hereinafter referred to as (the
“Company”).





NOTE
3 – GOING CONCERN UNCERTAINTIES





The
accompanying condensed consolidated financial statements have been prepared
using the going concern basis of accounting, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of
business.





At the
filing date, the Company has defaulted on repayment of two convertible notes
payable with a principal amount of $2,340,000, which matured and became due on
November 10, 2010.  The continuation of the Company as a going concern
through September 30, 2011 is dependent upon the continuing financial support
from its stockholders or negotiation of repayment term. Management believes the
existing stockholders will provide the additional cash to meet the Company’s
obligations as they become due.





These
factors raise substantial doubt about the Company’s ability to continue as a
going concern. These condensed consolidated financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets and liabilities that may result in the Company not
being able to continue as a going concern.





NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





The
accompanying condensed consolidated financial statements reflect the application
of certain significant accounting policies as described in this note and
elsewhere in the accompanying condensed consolidated financial statements and
notes.




5




l
            Use
      of estimates





In
preparing these condensed consolidated financial statements, management makes
estimates and assumptions that affect the reported amount of assets and
liabilities in the balance sheets and revenues and expenses during the periods
reported. Actual results may differ from these estimates.





l
            Basis
      of consolidation





The
condensed consolidated financial statements include the financial statement of
DCRD and its subsidiaries. All significant inter-company balances and
transactions within the Company have been eliminated upon
consolidation.





l
            Cash
      and cash equivalents





Cash and
cash equivalents are carried at cost and represent cash on hand, demand deposits
placed with banks or other financial institutions and all highly liquid
investments with an original maturity of three months or less as of the purchase
date of such investments.





l
            Accounts
      receivable





Accounts
receivable are recorded at the invoiced amount and do not bear interest, which
are due within contractual payment terms, generally 90 to 180 days. Credit is
extended based on evaluation of a customer’s financial condition. Accounts
receivable outstanding longer than the contractual payment terms are considered
past due. Past due balances over 180 days and over a specified amount are
reviewed individually for collectibility. Management reviews the adequacy of the
allowance for doubtful accounts on an ongoing basis, using historical collection
trends and aging of receivables. Management also periodically evaluates
individual customer’s financial condition, credit history and the current
economic conditions to make adjustments in the allowance when it is considered
necessary. When receivable balances are determined to be uncollectible, these
balances are written off. The Company does not have any off-balance-sheet credit
exposure related to its customers.





As of
September 30, 2010, the Company did not record an allowance for doubtful
accounts.





l
            Inventories





Inventories
consist of raw papers, painting materials and components used in the manufacture
of the Company’s products and the related parts and supplies. Inventories are
stated at the lower of cost or net realizable value, with cost being determined
on a weighted average basis. Costs include purchased cost of papers and painting
inks, direct labor and manufacturing overhead costs. The Company periodically
reviews historical sales activity to determine excess, slow moving items and
potentially obsolete items and also evaluates the impact of any anticipated
changes in future demand. The Company provides inventory allowances based on
excess and obsolete inventories determined principally by customer
demand.





As of
September 30, 2010, the Company did not record an allowance for obsolete
inventories, nor have there been any write-offs.





l
            Advances
      to suppliers





The
Company makes advances to certain vendors for purchase of its inventory items or
material. The advances to suppliers are interest free and unsecured. Advances to
suppliers are recorded when payment is made by the Company and relieved against
inventory when goods are received. All inventory items or raw materials relating
to these advances are subsequently made delivery to the Company.





l
            Plant
      and equipment





Plant and
equipment are stated at cost less accumulated depreciation and accumulated
impairment losses, if any. Depreciation is calculated on the straight-line basis
over the following expected useful lives from the date on which they become
fully operational and after taking into account their estimated residual
values:




6




Depreciable
      life
              
              Residual
      valuePlant
      and machinery
              3-10
      years
              
              3%Leasehold
      improvement
              10
      years
              
              0%Motor
      vehicles
              3-5
      years
              
              3%Office
      equipment
              3-5
      years
              
              3%





Expenditure
for repairs and maintenance is expensed as incurred. When assets have retired or
sold, the cost and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is recognized in the results of
operations.





Depreciation
expense for the three months ended September 30, 2010 and 2009 were $481,281 and
$154,096, which included $478,452 and $151,402 in cost of revenue,
respectively.





Depreciation
expense for the nine months ended September 30, 2010 and 2009 were $1,106,773
and $462,118, which included $1,098,268 and $453,892 in cost of revenue,
respectively.





As of
September 30, 2010, certain plant and machinery with the aggregate net book
value of $945,507 were pledged as collateral for long-term bank borrowings (see
Note 11).




Approximately
$699,153 (equivalent to RMB 4,682,996) of plant and machinery became fully
depreciated as of September 30, 2010.





l
            Construction
      in progress





Construction
in progress is stated at cost and represents the cost of acquiring contracts to
build the additional assembly lines and prepayments paid to equipment vendors
during the construction of the new manufacturing facility (until it is
substantially complete and ready for its intended use). No provision for
depreciation is made on construction in progress until such time as the relevant
assets are completed and put into operational use. No capitalized interest was
incurred during the period of construction.





l
            Valuation
      of long-lived assets





In
accordance with the provisions of Accounting Standards Codification (“ASC”)
Topic 360-10-5, “Impairment or
Disposal of Long-Lived Assets”, all long-lived assets such as plant and
equipment and construction in progress held and used by the Company are reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is evaluated by a comparison of the carrying amount of assets
to estimated discounted net cash flows expected to be generated by the assets.
If such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amounts of the assets exceed the
fair value of the assets. There has been no impairment as of September 30,
2010.





l
            Revenue
      recognition





In
accordance with ASC Topic 605, “Revenue Recognition”, the
Company recognizes revenue when persuasive evidence of an arrangement exists,
transfer of title has occurred or services have been rendered, the selling price
is fixed or determinable and collectibility is reasonably assured.





The
Company derives revenues from the sales of furniture decorative paper and
related products. The Company recognizes its revenues net of value-added taxes
(“VAT”). The Company is subject to VAT which is levied on the majority of the
products at the standard rate of 17% on the invoiced value of sales. Output VAT
is borne by customers in addition to the invoiced value of sales and input VAT
is borne by the Company in addition to the invoiced value of purchases to the
extent not refunded for export sales. The Company experienced no material
product returns and recorded no reserve for sales returns for the three and
nine months ended September 30, 2010 and 2009.




7




Interest
income is recognized on a time apportionment basis, taking into account the
principal amounts outstanding and the interest rates applicable.





l
            Comprehensive
      income





ASC Topic
220,“Comprehensive Income”, establishes standards for
reporting and display of comprehensive income, its components and accumulated
balances. Comprehensive income as defined includes all changes in equity during
a period from non-owner sources. Accumulated other comprehensive income, as
presented in the accompanying condensed consolidated statement of stockholders’
equity, consists of changes in unrealized gains and losses on foreign currency
translation. This comprehensive income is not included in the computation of
income tax expense or benefit.





l
            Income
      taxes





Income
taxes are determined in accordance with ASC Topic 740, “Income Taxes” (“ASC 740”).
Under this method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured using
enacted income tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Any
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.





ASC 740
prescribes a comprehensive model for how companies should recognize, measure,
present, and disclose in their financial statements uncertain tax positions
taken or expected to be taken on a tax return. Under ASC 740, tax positions must
initially be recognized in the financial statements when it is more likely than
not the position will be sustained upon examination by the tax authorities. Such
tax positions must initially and subsequently be measured as the largest amount
of tax benefit that has a greater than 50% likelihood of being realized upon
ultimate settlement with the tax authority assuming full knowledge of the
position and relevant facts.





For the
three and nine months ended September 30, 2010 and 2009, the Company did not
have any interest and penalties associated with tax positions. As of September
30, 2010, the Company did not have any significant unrecognized uncertain tax
positions.





The
Company conducts major businesses in the PRC and is subject to tax in this
jurisdiction. As a result of its business activities, the Company files tax
returns that are subject to examination by the foreign tax
authority.





l
            Net
      income per share





The
Company calculates net income per share in accordance with ASC Topic 260,“Earnings per Share.” Basic
income per share is computed by dividing the net income by the weighted-average
number of common shares outstanding during the period. Diluted income per share
is computed similar to basic income per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common stock equivalents had been issued and if the
additional common shares were dilutive.





l
            Foreign
      currencies translation





Transactions
denominated in currencies other than the functional currency are translated into
the functional currency at the exchange rates prevailing at the dates of the
transaction. Monetary assets and liabilities denominated in currencies other
than the functional currency are translated into the functional currency using
the applicable exchange rates at the balance sheet dates. The resulting exchange
differences are recorded in the statement of operations.





The
reporting currency of the Company is the United States Dollars (“US$”). The
Company’s subsidiary in the PRC maintain its books and records in its local
currency, Renminbi Yuan (“RMB”), which is functional currency as being the
primary currency of the economic environment in which the entity
operates.




8




In
general, for consolidation purposes, assets and liabilities of its subsidiaries
whose functional currency is not US$ are translated into US$, in accordance with
ASC Topic 830-30, “Translation
of Financial Statement”, using the exchange rate on the balance sheet
date. Revenues and expenses are translated at average rates prevailing during
the period. The gains and losses resulting from translation of financial
statements of foreign subsidiaries are recorded as a separate component of
accumulated other comprehensive income within the condensed statement of
stockholders’ equity.





Translation
of amounts from RMB into US$1 has been made at the following exchange rates for
the respective period:




September
      30, 2010
                  
                  
                  September
      30, 2009Period-end
      rate RMB:US$1 exchange rate
                  
                  
                  6.6981
                  
                  
                  
                  6.8376Average
      rate RMB:US$1 exchange rate
                  
                  
                  6.8164
                  
                  
                  
                  6.8425





l
            Related
      parties





Parties,
which can be a corporation or individual, are considered to be related if the
Company has the ability, directly or indirectly, to control the other party or
exercise significant influence over the other party in making financial and
operational decisions. Companies are also considered to be related if they are
subject to common control or common significant influence.





l
            Segment
      reporting





ASC Topic
280, “Segment
Reporting” establishes standards for reporting information about
operating segments on a basis consistent with the Company’s internal
organization structure as well as information about geographical areas, business
segments and major customers in financial statements. The Company operates in
one reportable operating segment in the PRC.





l
            Fair
      value measurement





ASC Topic
820-10, “Fair Value
Measurements and Disclosures” (“ASC 820-10”) establishes a new framework
for measuring fair value and expands related disclosures. Broadly, ASC 820-10
framework requires fair value to be determined based on the exchange price that
would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an
orderly transaction between market participants. ASC 820-10 establishes a
three-level valuation hierarchy based upon observable and non-observable inputs.
These tiers include: Level 1, defined as observable inputs such as quoted prices
in active markets; Level 2, defined as inputs other than quoted prices in active
markets that are either directly or indirectly observable; and Level 3, defined
as unobservable inputs in which little or no market data exists, therefore
requiring an entity to develop its own assumptions.





For
financial assets and liabilities, fair value is the price the Company would
receive to sell an asset or pay to transfer a liability in an orderly
transaction with a market participant at the measurement date. In the absence of
active markets for the identical assets or liabilities, such measurements
involve developing assumptions based on market observable data and, in the
absence of such data, internal information that is consistent with what market
participants would use in a hypothetical transaction that occurs at the
measurement date.





l
            Financial
      instruments





Cash and
cash equivalents, accounts receivable, advances to suppliers, deposits and
prepayments, accounts payable, amount due to a related party, income tax
payable, accrued liabilities and other payable are carried at cost which
approximates fair value. The estimated fair value of bank borrowings,
convertible notes payable and promissory notes payable was approximately $3.7
million as of September 30, 2010, based on current market prices or interest
rates. Any changes in fair value of assets or liabilities carried at fair value
are recognized in other comprehensive income for each period.




9




l
            Recent
      accounting pronouncements





The
Company has reviewed all recently issued, but not yet effective, accounting
pronouncements and does not believe the future adoption of any such
pronouncements may be expected to cause a material impact on its financial
condition or the results of its operations.





In
September 2009, the Financial Accounting Standard Board (“FASB”) issued certain
amendments as codified in ASC Topic 605-25, “Revenue Recognition;
Multiple-Element Arrangements.” These amendments provide clarification on
whether multiple deliverables exist, how the arrangement should be separated,
and the consideration allocated. An entity is required to allocate revenue in an
arrangement using estimated selling prices of deliverables in the absence of
vendor-specific objective evidence or third-party evidence of selling price.
These amendments also eliminate the use of the residual method and require an
entity to allocate revenue using the relative selling price method. The
amendments significantly expand the disclosure requirements for
multiple-deliverable revenue arrangements. These provisions are to be applied on
a prospective basis for revenue arrangements entered into or materially modified
in fiscal years beginning on or after June 15, 2010, with earlier application
permitted. The Company will adopt the provisions of these amendments in its
fiscal year 2011 and is currently evaluating the impact of these amendments to
its consolidated financial statements.





In
April 2010, the FASB issued ASU 2010-13, “Compensation–Stock Compensation (Topic 718):
Effect of Denominating the Exercise Price of a Share-Based Payment Award
in the Currency of the Market in Which the Underlying Equity Security
Trades”.” ASU 2010-13 provides guidance on the classification of a
share-based payment award as either equity or a liability. A share-based payment
that contains a condition that is not a market, performance, or service
condition is required to be classified as a liability. ASU 2010-13 is effective
for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2010 and is not expected to have a significant impact on the
Company’s financial statements.





In July
2010, the FASB issued new accounting guidance that will require additional
disclosures about the credit quality of loans, lease receivables and other
long-term receivables and the related allowance for credit losses. Certain
additional disclosures in this new accounting guidance will be effective for the
Company on December 31, 2010 with certain other additional disclosures that will
be effective on March 31, 2011. The Company does not expect the adoption of this
new accounting guidance to have a material impact on its consolidated financial
statements.




NOTE 5 – ACCOUNTS RECEIVABLE





The
majority of the Company’s sales are on open credit terms and in accordance with
terms specified in the contracts governing the relevant transactions. Management
periodically evaluates individual customer receivables and considers a
customer’s financial condition, credit history and the current economic
conditions. For the nine months ended September 30, 2010 and 2009, the Company
recorded no allowance for doubtful accounts.





Up to
October 31, 2010, the Company has subsequently recovered from approximately 17%
of the accounts receivable as of September 30, 2010.





NOTE
6 – CONVERTIBLE NOTES PAYABLE





On
November 10, 2009, the Company, through its subsidiary, CHDITN and Zhuang,
Jinghua (“Mr. Zhuang”) entered into a Subsidiary Loan Agreement (the “Loan
Agreement”). Pursuant to the terms of the Loan Agreement, Mr. Zhuang advanced
$340,000 (equal to RMB 2,321,350) to CHDITN and the fund was used to set up new
printing production lines. The Company agreed to convert the loan amount into
common stock of the Company at a fixed conversion price of $3 per share, equal
to 113,334 shares (post reverse split) of its common stock, any time before the
maturity day upon the written notice from Mr. Zhuang. Interest was carried at
the rate of 8% per annum, quarterly payable, with a maturity date of November
10, 2010.





Concurrently,
on November 10, 2009, the Company, through its subsidiary, CHDITN and Shi Quan
Ling (“Mr. Shi”) entered into a Subsidiary Loan Agreement (the “Loan
Agreement”). Pursuant to the terms of the Loan Agreement, Mr. Shi advanced
$2,000,000 (equal to RMB 6,827,500) to CHDITN and the fund was used to set up
new printing production lines. The Company agreed to convert the loan amount
into common stock of the Company at a fixed conversion price of $3 per share,
equal to 666,667 shares (post reverse split) of its common stock, any time
before the maturity day upon the written notice of Mr. Shi. Interest was carried
at a rate of 8% per annum, quarterly payable, with a maturity date of November
10, 2010.




10




In
connection with the Loan Agreements, the Company also agreed to issue warrants
to Mr. Zhuang and Mr. Shi, for consideration of $10, respectively, as incentive
for Mr. Zhuang and Mr. Shi to lend money to the Company. The warrants entitled
Mr. Zhuang and Mr. Shi to purchase 113,334 and 666,667 shares (post reverse
split) of its common stock from the Company respectively at any time or times on
or after November 10, 2009 with the expiry of November 10, 2014 at the exercise
price per share of $3 or as subsequently adjusted under the warrant
agreements.





In
addition, the President of the Company, Mr. Liu Rui Sheng (“Mr. Liu”), entered
into a Pledge Agreement with Mr. Zhuang, Mr. Shi and Greentree Financial Group,
Inc. as Escrow Agent. Pursuant to the Pledge Agreement, Mr. Liu agreed to
irrevocably pledge to Mr. Zhuang and Mr. Shi with 4,510,667 shares (post reverse
split) of his own common stock as collateral for the Loan Agreements between
CHDITN and Mr. Zhuang and Mr. Shi.





On
December 17, 2009, the Company received net aggregate proceeds of $2,081,000,
net of expenses and deductions of prepaid interests, from Mr. Shi and Mr.
Zhuang.





The
Company has engaged an independent valuer to perform the valuation of the
convertible notes and has determined that the convertible notes are recorded in
accordance with ASC Topic 470-20, “Debt with conversion and other
options”, the warrants and related convertible notes should be accounted
for as two separate instruments (equity and debt instruments). The accounting
for these instruments reflects the notion that the consideration received upon
issuance must be allocated between equity and debt components. Proceeds from the
sale of a debt instrument with stock purchase warrants are allocated to the two
elements, based on the relative fair values of the debt instrument without the
warrants and of the warrants themselves at time of issuance. The portion of the
proceeds allocated to the warrants is accounted for as paid-in capital. The
remainder of the proceeds is allocated to the debt instrument portion of the
transaction as debt discount.





September
      30, 2010
                      
                      
                      December
      31, 2009(Unaudited)
                      
                      
                      (Audited)Notional
      amount of the convertible notes payable to Mr. Zhuang and Mr. Shi, net of
      expenses
                      
                      $
                      2,081,000
                      
                      
                      $
                      2,081,000Less:
      debt discount, unamortized
                      
                      
                      (112,330
                      )
                      
                      
                      (860,292
                      )$
                      1,968,670
                      
                      
                      $
                      1,220,708





The
convertible notes are discounted for the fair value of warrants on the grant
date using Black-Scholes Option Pricing Model under ASC Topic 718, with the
following assumptions. The discount is being amortized over the life of the debt
using the effective interest method. For the nine months ended September 30,
2010, the Company recognized $747,962 as amortization of debt discount and
recorded as interest expense in the statement of operations.





Expected
      life (in years)
                
                
                5Volatility
                
                
                159
                %Risk
      free interest rate
                
                
                0.31
                %Dividend
      yield
                
                
                0
                %Weighted
      average fair value per share
                
                
                0.93





NOTE
7 – AMOUNT DUE TO A RELATED PARTY





As of
September 30, 2010, amount due to a related party of $696,160 represented
temporary advances made by Mr. Liu, the director of the Company, which was
unsecured, inte rest-free
with no fixed repayment term.




11




NOTE
8 – ACCRUED LIABILITIES AND OTHER PAYABLE





Accrued
liabilities and other payable consist of the following:





September
      30, 2010
                
                December
      31, 2009(Unaudited)
                
                (Audited)VAT
      payable
                
                $
                191,414
                
                
                $
                -Accrued
      payroll and benefit costs
                
                
                550,646
                
                
                
                453,629Accrued
      professional and consulting fees
                
                
                396,573
                
                
                
                239,132Other
      payables
                
                
                2,251
                
                
                
                2,950$
                1,140,884
                
                
                $
                695,711





NOTE
9 – LONG-TERM BANK BORROWINGS





Long-term
bank borrowings were as follows:





September
      30, 2010
                                
                                
                                December
      31, 2009(Unaudited)
                                
                                
                                (Audited)Bank
      loans, payable to financial institutions in the PRC:Equivalent
      to RMB0 (2009: RMB2,240,000) with effective interest rate ranging from
      5.67% to 7.84% per annum, payable monthly, due September 20,
      2010
                                
                                (a)
                                
                                $
                                -
                                
                                
                                $
                                327,620Equivalent
      to RMB7,000,000 with effective interest rate of 4.8% per annum, payable
      monthly, due March 8, 2015
                                
                                (a)
                                
                                
                                1,045,072
                                
                                
                                
                                -Equivalent
      to RMB1,174,485 (2009: RMB3,696,756) with effective interest rate ranging
      from 7.02% to 9.83% per annum, with monthly principal and interest
      payments of $43,231, due January 16, 2011
                                
                                (b)
                                
                                
                                175,346
                                
                                
                                
                                540,683Equivalent
      to RMB698,283 (2009: RMB2,198,393) with effective interest rate ranging
      from 7.02% to 9.83% per annum, with monthly principal and interest
      payments of $25,712, due January 17, 2011
                                
                                (c)
                                
                                
                                104,251
                                
                                
                                
                                321,534Total
      bank borrowings
                                
                                
                                
                                
                                1,324,669
                                
                                
                                
                                1,189,837Less:
      current portion
                                
                                
                                
                                
                                (279,597
                                )
                                
                                
                                (1,118,791
                                )Long-term
      bank borrowings, net of current portion
                                
                                
                                
                                $
                                1,045,072
                                
                                
                                $
                                71,046





As of
September 30, 2010, the minimum future payments of the aggregate bank borrowings
in the next five years are as follows:





Year
      ending September 30:2011
                  
                  $
                  279,5972012
                  
                  
                  163,9172013
                  
                  
                  339,8532014
                  
                  
                  356,5292015
                  
                  
                  184,773Total
      borrowings
                  
                  $
                  1,324,669




12




(a)
            These
      borrowings were guaranteed by Mr. Liu, the director of the Company and
      collateralized by the real properties held by the director of the Company
      situated in the PRC.





(b)
            These
      borrowings were collateralized by certain plant and machinery with an
      aggregate carrying value of $945,507 as of September 30,
    2010.





NOTE
10 – WARRANTS





As of
September 30, 2010, the Company has 1,048,334 shares (post reverse split) of
outstanding warrants at the weighted average exercise price of $3.15. There was
no movement during the period ended September 30, 2010. The Company adopted ASC
718 using the Black-Scholes Option Pricing Model to measure the fair value of
warrants on the grant date, with the following assumptions:





Expected
      life (in years)
                
                
                5Volatility
                
                
                159
                %Risk
      free interest rate
                
                
                0.31%-0.37
                %Dividend
      yield
                
                
                0
                %Weighted
      average fair value per share
                
                
                2.76





NOTE
11 – INCOME TAXES





For the
nine months ended September 30, 2010 and 2009, the local (United States) and
foreign components of income before income taxes were comprised of the
following:





Nine
      months ended September 30,2010
                      
                      
                      2009Tax
      jurisdictions from:-
      Local
                      
                      $
                      (817,893
                      )
                      
                      $
                      (360,521
                      )-
      Foreign
                      
                      
                      5,937,445
                      
                      
                      
                      4,548,706Income
      before income taxes
                      
                      $
                      5,119,552
                      
                      
                      $
                      4,188,185





The
effective tax rate in the periods presented is the result of the mix of income
earned in various tax jurisdictions that apply a broad range of income tax
rates. The Company has subsidiaries that operate in various countries: United
States, BVI and the PRC that are subject to taxes in the jurisdictions in which
they operate, as follows:





United
States of America





The
Company is registered in the State of Nevada and is subject to the tax laws of
the United States of America.





British
Virgin Island





Under the
current BVI law, Wide Broad is not subject to tax on its income or profits. For
the nine months ended September 30, 2010 and 2009, Wide Broad suffered from an
operating loss of $248,253 and $1,290,520, respectively.




13




The
PRC





The
Company generated its income from a subsidiary operating in the PRC for the nine
months ended September 30, 2010 and 2009. CHDITN is subject to the Corporate
Income Tax Law of the People’s Republic of China (the “New CIT Law”) at a
unified income tax rate of 25%.





A
reconciliation of income tax rate to the effective income tax rate for the nine
months ended September 30, 2010 and 2009 is as follows:





Nine
      months ended September 30,2010
                      
                      
                      2009Income
      before income taxes
                      
                      $
                      6,185,698
                      
                      
                      $
                      5,839,226Statutory
      income tax rate
                      
                      
                      25
                      %
                      
                      
                      25
                      %Income
      tax expense at statutory tax rate
                      
                      
                      1,546,425
                      
                      
                      
                      1,459,807Tax
      effect of capitalized items
                      
                      
                      -
                      
                      
                      
                      (9,070
                      )Tax
      effect of non-deductible items
                      
                      
                      64,758
                      
                      
                      
                      -Income
      tax expense
                      
                      $
                      1,611,183
                      
                      
                      $
                      1,450,737





No
provision for deferred tax assets or liabilities has been made, since the
Company has no material temporary difference between the tax bases of assets and
liabilities and their carrying amounts.





NOTE
12 – CONCENTRATIONS OF RISK





The
Company is exposed to the following concentrations of risk:





(a)         Major
customers





For the
three and nine months ended September 30, 2010 and 2009, there is no customer
who accounts for 10% or more of the Company’s revenues.





(b)         Major
vendors





For the
three and nine months ended September 30, 2010 and 2009, the vendor who accounts
for 10% or more of the Company’s purchases and its outstanding balance at
period-end date, are presented as follows:





Three
      months ended September 30, 2010
                            
                            
                            September
      30, 2010Vendor
                            
                            Purchases
                            
                            
                            Percentage
                              of
      purchases
                            
                            
                            Accounts
                              payable,
      tradeVendor
      A
                            
                            $
                            1,078,059
                            
                            
                            
                            32
                            %
                            
                            $
                            -Vendor
      B
                            
                            
                            428,414
                            
                            
                            
                            13
                            %
                            
                            
                            -Vendor
      C
                            
                            
                            376,609
                            
                            
                            
                            11
                            %
                            
                            
                            -Vendor
      D
                            
                            
                            368,069
                            
                            
                            
                            11
                            %
                            
                            
                            135,918Total:
                            
                            $
                            2,251,151
                            
                            
                            
                            67
                            %
                            
                            $
                            135,918





Nine
      months ended September 30, 2010
                            
                            
                            September
      30, 2010Vendor
                            
                            Purchases
                            
                            
                            Percentage
                              of
      purchases
                            
                            
                            Accounts
                              payable,
      tradeVendor
      A
                            
                            $
                            2,581,848
                            
                            
                            
                            25
                            %
                            
                            $
                            -Vendor
      B
                            
                            
                            1,521,761
                            
                            
                            
                            15
                            %
                            
                            
                            -Vendor
      E
                            
                            
                            1,159,810
                            
                            
                            
                            11
                            %
                            
                            
                            132,414Total:
                            
                            $
                            5,263,419
                            
                            
                            
                            51
                            %
                            
                            $
                            132,414




14




Three
      months ended September 30, 2009
                            
                            
                            September
      30, 2009Vendor
                            
                            Purchases
                            
                            
                            Percentage
                              of
      purchases
                            
                            
                            Accounts
                              payable,
      tradeVendor
      B
                            
                            $
                            643,624
                            
                            
                            
                            18
                            %
                            
                            $
                            -Vendor
      F
                            
                            
                            584,581
                            
                            
                            
                            13
                            %
                            
                            
                            -Vendor
      A
                            
                            
                            484,110
                            
                            
                            
                            11
                            %
                            
                            
                            -Vendor
      G
                            
                            
                            389,792
                            
                            
                            
                            11
                            %
                            
                            
                            163,495Total:
                            
                            $
                            2,102,107
                            
                            
                            
                            53
                            %
                            
                            $
                            163,495





Nine
      months ended September 30, 2009
                            
                            
                            September
      30, 2009Vendor
                            
                            Purchases
                            
                            
                            Percentage
                              of
      purchases
                            
                            
                            Accounts
                              payable,
      tradeVendor
      B
                            
                            $
                            1,757,003
                            
                            
                            
                            21
                            %
                            
                            $
                            -Vendor
      A
                            
                            
                            1,271,310
                            
                            
                            
                            15
                            %
                            
                            
                            -Vendor
      G
                            
                            
                            1,069,629
                            
                            
                            
                            13
                            %
                            
                            
                            163,495Total:
                            
                            $
                            4,097,942
                            
                            
                            
                            49
                            %
                            
                            $
                            163,495





(c)         Credit
risk





Financial
instruments that are potentially subject to credit risk consist principally of
accounts receivable. The Company believes the concentration of credit risk in
its accounts and retention receivables is substantially mitigated by its ongoing
credit evaluation process and relatively short collection terms. The Company
does not generally require collateral from customers. Credit is extended based
on evaluation of a customer’s financial condition. The Company evaluates the
need for an allowance for doubtful accounts based upon factors surrounding the
credit risk of specific customers, historical trends and other
information.





(d)         Exchange
rate risk





The
reporting currency of the Company is US$, to date the majority of the revenues
and costs are denominated in RMB and a significant portion of the assets and
liabilities are denominated in RMB. As a result, the Company is exposed to
foreign exchange risk as its revenues and results of operations may be affected
by fluctuations in the exchange rate between US$ and RMB. If RMB depreciates
against US$, the value of RMB revenues and assets as expressed in US$ financial
statements will decline. The Company does not hold any derivative or other
financial instruments that expose to substantial market risk.





(e)         Interest
rate risk





As the
Company has no significant interest-bearing assets, the Company’s income and
operating cash flows are substantially independent of changes in market interest
rates.





The
Company’s interest-rate risk arises from bank borrowings. Borrowings issued at
variable rates expose the Company to cash flow interest-rate risk. Borrowings
issued at fixed rates expose the Company to fair value interest-rate risk.
Company policy is to maintain approximately all of its borrowings in fixed rate
instruments. At the period-end, the bank borrowings were both at fixed and
floating rates.




15




(f)         Economic
and political risks





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





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





NOTE
13 – COMMITMENTS AND CONTINGENCIES





(a)
            Operating
      lease commitments





The
Company’s subsidiary in the PRC is committed under several non-cancelable
operating leases of office premises and manufacturing facility with a term of 10
years with fixed monthly rentals, due through December 31, 2020. Total rent
expenses for the period ended September 30, 2010 and 2009 was $155,717 and
$147,669, respectively.





As of
September 30, 2010, future minimum rental payments due under non-cancelable
operating leases in the next five years and thereafter are as
follows:





Year
      September 30:2011
                
                $
                210,5072012
                
                
                214,9862013
                
                
                214,9862014
                
                
                235,1412015
                
                
                241,860Thereafter
                
                
                879,205Total
                
                $
                1,996,685





(b)
            Capital
      commitment





The
Company is committed under a number of agreements with an independent
contractors or suppliers in relation to the construction of the new
manufacturing facility for business expansion. The construction is expected to
be completed in the first quarter of 2011. Total estimated construction costs
are approximately $30 million (equivalent to RMB 205 million). As of September
30, 2010, the Company paid $7,013,996 to the third party equipment vendors and
contractors and was recorded as construction in progress. The aggregate
contingent payments related to the third party contractors and the addition of
new plants and equipments are approximately $3.5 million.





16




ITEM
2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION





FORWARD LOOKING
STATEMENTS





This
Quarterly Report on Form 10-Q contains forward-looking statements regarding
future events and our future results within the meaning of the Private
Securities Litigation Reform Act of 1995.  Forward-looking statements
are based on current expectations, estimates, forecasts and projections about
us, our future performance and the industries in which we operate as well as our
management’s assumptions and beliefs.  Statements that contain words
like “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “will”, or
variations of such words and similar expressions are forward-looking
statements.  In addition, any statements that refer to trends in our
businesses, future financial results, and our liquidity and business plans are
forward-looking statements.  Readers are cautioned not to place undue
reliance on these forward-looking statements.  There can be no
assurance that forward-looking statements will be achieved, and actual results
could differ materially from those expressed or implied by forward-looking
statements.  Important factors that could cause actual results to
differ materially include those discussed under “Risk Factors” in our Annual
Report on From 10-K filed on April 15, 2010.  We undertake no
obligation to update forward-looking statements to reflect events or
circumstances occurring after the date of this Form 10-Q.





OVERVIEW





We
develop and manufacture décor paper through our wholly owned subsidiary, Wide
Broad Group Limited (“Wide Broad”), which is a holding company that wholly owns
Dongguan CHDITN Printing Company Limited (“CHDITN”), a producer of furniture
decorative paper in Dongguan Province in the central region of the People’s
Republic of China (“PRC” or “China”).  Our focus is to develop,
manufacture and sell décor paper products, including polyurethane paper,
polyester paper and melamine paper.  Our business is based in China
and CHDITN has an estimated 7% market share of the décor paper market in
China.  As used herein, the terms “our”, “us”, “we”, the “Company” and
“DCRD” refer to Décor Products International, Inc., its subsidiaries and
predecessors, unless indicated otherwise.





We
believe that we can diversify and introduce laminated boards to our existing
customers.  We have commenced development of a production line for
laminated boards, which we anticipate will be completed in the first quarter of
2011.





In July
2009, we executed a Plan of Exchange (the “POE”) among the shareholders of DCRD,
Wide Broad, the shareholders of Wide Broad and CHDITN. Pursuant to the POE, DCRD
acquired 100% of the issued and outstanding share capital of Wide Broad from the
Wide Broad Shareholders in exchange for a new issuance of 20,000,000 shares of
common stock of DCRD and the simultaneous retirement to treasury of 7,450,000
shares of common stock (the “Control Shares”) held in the name of Maurice Katz
(our former President). Also pursuant to the POE, DCRD effected a 1-for-4
reverse split of the Common Stock of DCRD.  CHDITN is currently a
wholly-owned subsidiary of Wide Broad and after the post share exchange, CHDITN
became a wholly-owned indirect subsidiary of DCRD.





On April
8, 2010, our Board of Directors and consenting shareholders holding a majority
of issued and outstanding shares of common stock approved our reincorporation
from Florida to Nevada by means of a merger between us and a newly formed
wholly-owned Nevada subsidiary, in which the subsidiary was the surviving
entity.  Our reincorporation became effective on May 25, 2010.
Additionally, a reverse stock split occurred simultaneously with the
Reincorporation, which featured an exchange ratio in which every three (3)
shares of the Florida corporation’s common stock were converted into one (1)
share of the Nevada corporation’s common stock.  Unless otherwise
indicated, all information in this Form 10-Q has been adjusted to reflect this
1-for-3 reverse split of our common stock.




17




CRITICAL
ACCOUNTING POLICIES AND ESTIMATES





Management’s
Discussion and Analysis of Financial Condition and Results of Operations is
based upon our Condensed Consolidated Financial Statements, which we have
prepared in accordance with U.S. generally accepted accounting principles. The
preparation of these financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. Estimates are based on historical experience, knowledge of economic
and market factors and various other assumptions that management believes to be
reasonable under the circumstances. Actual results may differ from those
estimates.





On a
regular basis we evaluate our estimates, assumptions and judgments and make
changes accordingly. An accounting policy is deemed to be critical if it
requires an accounting estimate to be made based on assumptions about matters
that are highly uncertain at the time the estimate is made, if different
estimates reasonably could have been used, or if changes in the estimate that
are reasonably likely to occur could materially impact the financial statements.
We believe that the estimates, assumptions and judgments involved in revenue
recognition, receivables and allowances for doubtful accounts, accruals,
stock-based compensation, , inventories, deferred costs, income taxes,
impairment of long-lived assets, and valuation and impairment of investments
have the greatest potential impact on our condensed consolidated financial
statements, so we consider these to be our critical accounting
policies.





RECENT
ACCOUNTING PRONOUNCEMENTS





For a
description of the new accounting standards that affect us, see Note 3 of notes
to our condensed consolidated financial statements included under Part I, Item 1
of this Quarterly Report on Form 10-Q.





RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND
2009





For
      the three months ended September 30,
                      
                      
                      For
      the nine months ended September 30,2010
                      
                      
                      2009
                      
                      
                      2010
                      
                      
                      2009Revenues,
      net
                      
                      $
                      6,824,543
                      
                      
                      $
                      7,442,839
                      
                      
                      $
                      19,704,867
                      
                      
                      $
                      17,116,465Cost
      of Revenues:
                      
                      $
                      4,219,836
                      
                      
                      $
                      4,280,341
                      
                      
                      $
                      11,843,787
                      
                      
                      $
                      9,494,871Operating
      Expenses:
                      
                      $
                      607,498
                      
                      
                      $
                      923,247
                      
                      
                      $
                      1,757,848
                      
                      
                      $
                      3,305,434Income
      from Operations:
                      
                      $
                      1,997,209
                      
                      
                      $
                      2,239,251
                      
                      
                      $
                      6,103,232
                      
                      
                      $
                      4,316,160Interest
      Expenses:
                      
                      $
                      327,948
                      
                      
                      $
                      42,956
                      
                      
                      $
                      985,749
                      
                      
                      $
                      132,278Income
      Taxes:
                      
                      $
                      547,428
                      
                      
                      $
                      669,142
                      
                      
                      $
                      1,611,183
                      
                      
                      $
                      1,450,737Net
      Income:
                      
                      $
                      1,122,497
                      
                      
                      $
                      1,527,537
                      
                      
                      $
                      3,508,369
                      
                      
                      $
                      2,737,448Other
      Comprehensive Income:
                      
                      $
                      634,219
                      
                      
                      $
                      29,712
                      
                      
                      $
                      790,227
                      
                      
                      $
                      62,783Total
      Comprehensive Income:
                      
                      $
                      1,756,716
                      
                      
                      $
                      1,557,249
                      
                      
                      $
                      4,298,596
                      
                      
                      $
                      2,800,231





Revenues





We
generated revenues of $6,824,543 and $19,704,867 for the three and nine months
ended September 30, 2010, respectively, compared to revenues of $7,442,839 and
$17,116,465 for the three and nine months ended September 30, 2009. The decrease
in revenues of $618,296 in the third quarter of 2010 compared to the same period
in 2009 was due primarily to a decline in sales of décor paper.  The
increase in revenues of $2,588,402 in the first nine months of 2010
compared to the same period in 2009 was due primarily to the recovery
in 2010 from the global financial crisis, which had a significant negative
impact on our 2009 revenues.  We also commenced production in a third
décor paper printing line in 2010.




18




We have
commenced development of a production line for laminated boards, which we
anticipate will be completed in the first quarter of 2011.  After the
commencement of this new production line, we expect that our core production
will switch from décor paper to laminated board, and our net revenues and
profitability will grow since we believe that laminated boards are considerably
more profitable.





Cost
of Revenue





Cost of
revenue primarily includes cost of supplies to manufacture décor paper. We had
$4,219,836 and $4,280,341 in cost of sales, or 61.8% and 57.5% of sales
revenues, during the three months ended September 30, 2010 and 2009,
respectively. The cost of revenue as a percentage of sales increased during the
third quarter of 2010 mainly due to increase in purchase price of raw materials,
ink and paper.





During
the nine months ended September 30, 2010 and 2009, we had $11,843,787 and
$9,494,871 in cost of sales, or 60.1% and 55.5% of sales revenues, respectively.
The cost of revenue as a percentage of revenue increased due to due to increase
in purchase price of raw materials, ink and paper.





Operating
Expenses





The
following table summarizes our operating expenses:




Three
      months ended September 30,
                                                                                                                              
                                                                                                                              
                                                                                                                              Nine
      months ended September 30,2010
                                                                                                                              
                                                                                                                              
                                                                                                                              %
      of net
                                                                                                                                sales
                                                                                                                              
                                                                                                                              
                                                                                                                              2009
                                                                                                                              
                                                                                                                              
                                                                                                                              %
      of net
                                                                                                                                sales
                                                                                                                              
                                                                                                                              
                                                                                                                              2010
                                                                                                                              
                                                                                                                              
                                                                                                                              %
      of net
                                                                                                                                sales
                                                                                                                              
                                                                                                                              
                                                                                                                              2009
                                                                                                                              
                                                                                                                              
                                                                                                                              %
      of net
                                                                                                                                sales(in
      thousands)
                                                                                                                              
                                                                                                                              
                                                                                                                              (in
      thousands)Sales
      and marketing
                                                                                                                              
                                                                                                                              $
                                                                                                                              311.54
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              4.6
                                                                                                                              %
                                                                                                                              
                                                                                                                              $
                                                                                                                              341.04
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              4.6
                                                                                                                              %
                                                                                                                              
                                                                                                                              $
                                                                                                                              917.57
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              4.7
                                                                                                                              %
                                                                                                                              
                                                                                                                              $
                                                                                                                              1,001.33
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              5.9
                                                                                                                              %Professional,
      Consulting Fees
                                                                                                                              
                                                                                                                              
                                                                                                                              102.70
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              1.5
                                                                                                                              %
                                                                                                                              
                                                                                                                              
                                                                                                                              71.43
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              1.0
                                                                                                                              %
                                                                                                                              
                                                                                                                              
                                                                                                                              276.88
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              1.4
                                                                                                                              %
                                                                                                                              
                                                                                                                              
                                                                                                                              1,266.55
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              7.4
                                                                                                                              %Stock
      based compensation
                                                                                                                              
                                                                                                                              
                                                                                                                              -
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              0
                                                                                                                              %
                                                                                                                              
                                                                                                                              
                                                                                                                              339.10
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              4.5
                                                                                                                              %
                                                                                                                              
                                                                                                                              
                                                                                                                              -
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              0
                                                                                                                              %
                                                                                                                              
                                                                                                                              
                                                                                                                              339.10
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              2.0
                                                                                                                              %General
      and Administrative
                                                                                                                              
                                                                                                                              
                                                                                                                              193.26
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              2.8
                                                                                                                              %
                                                                                                                              
                                                                                                                              
                                                                                                                              171.68
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              2.3
                                                                                                                              %
                                                                                                                              
                                                                                                                              
                                                                                                                              563.40
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              2.8
                                                                                                                              %
                                                                                                                              
                                                                                                                              
                                                                                                                              698.45
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              4.0
                                                                                                                              %Total
      net operating expenses
                                                                                                                              
                                                                                                                              $
                                                                                                                              607.50
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              8.9
                                                                                                                              %
                                                                                                                              
                                                                                                                              $
                                                                                                                              923.25
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              12.4
                                                                                                                              %
                                                                                                                              
                                                                                                                              $
                                                                                                                              1,757.85
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              8.9
                                                                                                                              %
                                                                                                                              
                                                                                                                              $
                                                                                                                              3,305.43
                                                                                                                              
                                                                                                                              
                                                                                                                              
                                                                                                                              19.3
                                                                                                                              %





We had
operating expenses of $607,498 and $1,757,848 for the three and nine months
ended September 30, 2010, respectively, compared to operating expenses of
$923,247 and $3,305,434 for the same periods in 2009. The significant decrease
in operating expenses during the nine months ended September 30, 2010 was due
primarily to the professional and consulting fee of $1,195,127 incurred in
connection with the services rendered for the plan of exchange transaction in
2009 and non-cash consulting expenses of $339,096 during the third quarter of
2009 as a result of warrants to purchase 400,000 shares that were granted to an
investor relations firm.




19





OTHER
INCOME (EXPENSE)





Interest
Expense





We had
interest expenses of $327,948 and $985,749 for the three and nine months ended
September 30, 2010, respectively, compared to interest expenses of $42,956 and
$132,278 for the same periods ended September 30, 2009, respectively. The
significant increases in interest expenses during the three and nine months
ended September 30, 2010 was primary due to amortization of debt discount
arising from convertible notes payable.





Income
Tax Expense





We
incurred income taxes of $547,428 (32.8% of net income before taxes) and
$1,611,183 (31.5% of net income before taxes) for the three and nine months
ended September 30, 2010, respectively, compared to income taxes of
$669,142 (30.5% of net income before taxes) and $1,450,737 (34.6% of net
income before taxes) for the same periods in 2009.  The decrease in
income tax expense in the third quarter of 2010 compared with the third quarter
of 2009 was primarily due to a decrease in taxable income.  The
increase in income tax expense in the first nine months of 2010 compared with
the first nine months of 2009 was primarily due to an increase in taxable
income.





Net Income





We had
net income of $1,122,497 and $3,508,369 for the three and nine months ended
September 30, 2010, respectively, compared to net income of $1,527,537 and
$2,737,448 for the same periods in 2009.  The net income in these
periods was due primarily to sales of our décor paper. Our net income is a
function of revenues, cost of sales and other expenses as described
above.





Net
income decreased in the third quarter of 2010 by $405,040 compared to the same
period in 2009 due primarily due to a decrease in sales revenue as a result
of a decline in sales of our décor paper, and the non-cash amortization of debt
discount of $250,098 arising from convertible notes payable, offset by a
decrease in operating expenses by $1,150,350.





Our total
net income during the nine months ended September 30, 2010 increased by $770,921
compared to the same period in 2009 due primarily to an increase in sales
revenue as a result of the recovery from the global financial crisis, which
had a significant negative impact on our revenues in 2009, offset by
non-cash amortization of debt discount of $747,962 arising from convertible
notes payable, offset by a decrease in operating expenses of
$2,382,187.





Liquidity
and Capital Resources





BalanceSheet and Cash
Flows





Cash
flows provided by operating activities were $4,833,966 and $1,948,811 for the
nine months ended September 30, 2010 and 2009, respectively. Positive cash flows
from operations for the nine months ended September 30, 2010 resulted primarily
from net income of $3,508,369, an increase in advances to suppliers of
$369,192, a decrease in deposits and prepayments of $138,866, an
increase in accrued liabilities and other payables of $613,058 and an increase
in income tax payable of $22,505, partially offset by increases in accounts
receivable and inventories of $286,375 and $550,539 respectively, plus a
decrease in accounts payable of $97,715, respectively. Positive cash flows from
operations for the nine months ended September 30, 2009 resulted primarily from
net income of $2,737,448, an increase in advances to suppliers of
$473,335, a decrease in deposits and prepayments of $9,229, partially
offset by increases in accounts receivable and inventories of $2,430,154 and
$227,535, respectively, and an increase in accounts payable, promissory note
payable, income tax payable and accrued liabilities of $204,857, $705,000,
$220,657, and $212,022, respectively.




20




Cash
flows used in investing activities were $4,248,674 and $2,649,189 for the nine
months ended September 30, 2010 and 2009, respectively.  Cash flows
used in investments for the nine months ended September 30, 2010 were due to the
payments of $1,107,061 to acquire plant and equipment and $3,142,581 for
construction in progress. Cash flows used in investments for the nine months
ended September 30, 2009 were primary due to the payment of $2,649,189 for construction in
progress.





Cash
flows used in financing activities were $925,810 during the nine months ended
September 30, 2010, compared to cash flows of $1,041,562 provided by financing
activities during the nine months ended September 30, 2009. Cash outflows during
the nine months ended September 30, 2010 were due primarily to the repayment to
a related party of $461,873 and payments on bank borrowings totaling $1,490,872,
offset by the proceeds from long-term bank borrowings of $1,026,935. Cash
inflows during the nine months ended September 30, 2009 were due primarily to
proceeds from a private placement of $180,000, proceeds from short-term bank
borrowings of $774,570 and an advance from a related party of $1,349,528, offset
by the payments of $1,262,536 on bank borrowings.





Liquidity





We
project that we will need additional capital to fund operations over the next 6
months. We anticipate we will need an additional $2,000,000 per year in
2010 and 2011.





Overall,
we have funded our cash needs from inception through September 30, 2010 with a
series of debt and equity transactions, primarily with related parties. If we
are unable to receive additional cash from our related parties, we may need to
rely on financing from outside sources through debt or equity transactions. Our
related parties are under no legal obligation to provide us with capital
infusions. Failure to obtain such financing could have a material adverse effect
on operations and financial condition.





At
September 30, 2010, we had cash and cash equivalents of $446,758on hand, of which $439,762
was held by our subsidiary in China. The amount of cash available for transfer
from CHDITN will be limited both by the liquidity needs of CHDITN and the
restriction on currency exchange by Chinese-government mandated requirements
including currency exchange controls on certain transfers of funds outside of
China.





Currently,
we have enough cash to fund our operations for approximately six months,
assuming current levels of cash flows from operating activities and financing
activities, positive working capital and projected revenues, and a favorable
result from our current negotiations with note holders regarding our debt which
has matured.  If our projected revenues fall short of needed capital
or we are unable to resolve our negotiations with our note holders successfully,
we may not be able to sustain our capital needs. We will then need to obtain
additional capital through equity or debt financing to sustain operations for an
additional year. Modifications to our business plans may require additional
capital for us to operate. For example, if we are unable to raise additional
capital in the future we may need to curtail our number of product offers
or limit our marketing efforts to the most profitable geographical areas. This
may result in lower revenues and market share for us. In addition, there can be
no assurance that additional capital will be available to us when needed or
available on terms favorable to us, and if funds are raised in the future
through issuance of preferred stock or debt, these securities could have rights,
privileges or preference senior to those of our common stock and newly issued
debt could contain debt covenants that impose restrictions on our
operations.





Any sale
of newly issued debt or equity securities could result in additional dilution to
our current shareholders. In addition, there may be further substantial dilution
if the two convertible loans with total principal amount of $2,340,000, dated
November 10, 2009 and four promissory notes with total principal amount of
$405,000, dated December 4, 2009, are converted into equity pursuant to the
terms and conditions of the notes.




21




On a
long-term basis, liquidity is dependent on continuation and expansion of
operations, receipt of revenues, additional infusions of capital and debt
financing. However, there can be no assurance that we will be able to obtain
additional equity or debt financing in the future, if at all. If we are unable
to raise additional capital, our growth potential will be adversely affected.
Additionally, we will have to significantly modify our business
plan.





Demand
for our products and services will depend on, among other things, market
acceptance of our products, the décor paper and laminated board markets, and
general economic conditions, which are cyclical in nature. Inasmuch as a major
portion of our activities is the receipt of revenues from the sales of our
products, our business operations may be adversely affected by our competitors
and prolonged recessionary periods.





The
company originated a new bank loan of approximately $1,026,935 during
2010.





Off-balance sheet
arrangements





At
September 30, 2010, we had no off-balance sheet arrangements.





Contractual obligations and
other commitments





Our
obligations under contractual obligations and commercial commitments at
September 30, 2010 were as follows:





Payments
      Due by PeriodTotal
                      
                      
                      Less
      than 1 year
                      
                      
                      1-3
      years
                      
                      
                      3-5
      years
                      
                      
                      More
      Than 5 yearsOperating
      leases
                      
                      $
                      1,996,685
                      
                      
                      $
                      201,507
                      
                      
                      $
                      429,972
                      
                      
                      $
                      477,001
                      
                      
                      $
                      879,205Purchase
      commitments
                      
                      
                      3,500,000
                      
                      
                      
                      3,500,000
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Total
                      
                      $
                      5,496,685
                      
                      
                      $
                      3,701,507
                      
                      
                      $
                      429,972
                      
                      
                      $
                      477,001
                      
                      
                      $
                      879,205





Operating
leases





We lease
certain facilities under non-cancelable operating leases that expire at various
dates beyond 2015.





Purchase
commitments





The
Company is committed under a number of agreements with an independent
contractors or suppliers in relation to the construction of the new
manufacturing facility for business expansion. Construction is expected to be
completed in the first quarter of 2011. Total estimated construction costs are
approximately $30 million (equivalent to RMB 205 million). As of September 30,
2010, the Company paid $7,013,996 to third party equipment vendors and
contractors, which was recorded as construction in progress. Aggregate
contingent payments related to the third party contractors and the addition of
new plants and equipment are approximately $3.5 million.




22




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET RISK





Not
applicable.




ITEM
4. CONTROLS AND PROCEDURES.





(a)
Evaluation of disclosure controls and procedures.





Our
management, with the participation of our chief executive officer and chief
financial officer, evaluated the effectiveness of our disclosure controls and
procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as
of the end of the period covered by this Quarterly Report on Form 10-Q. In
designing and evaluating the disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives. In addition, the design of disclosure controls and procedures must
reflect the fact that there are resource constraints and that management is
required to apply its judgment in evaluating the benefits of possible controls
and procedures relative to their costs.





Based on
our evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures are designed at a
reasonable assurance level and are effective to provide reasonable assurance
that information we are required to disclose in the reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in Securities and Exchange Commission 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, as appropriate to allow timely decisions regarding required
disclosure.





(b)
Changes in internal control over financial reporting.





There
were no changes in our internal control over financial reporting identified in
connection with the evaluation that occurred during the period covered by this
Quarterly Report on Form 10-Q that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.





23





PART II. OTHER
INFORMATION





ITEM
1. LEGAL PROCEEDINGS





None.





ITEM
1A. RISK FACTORS





In
addition to the other information set forth in this report, you should carefully
consider the factors discussed under “Risk Factors” in our Annual Report on Form
10-K for our fiscal year ended December 31, 2009. The risks discussed in
our Annual Report on Form 10-K could materially affect our business, financial
condition and future results. The risks described in our Annual Report on Form
10-K are not the only risks facing us. Additional risks and uncertainties not
currently known to us or that we currently deem to be immaterial also may
materially and adversely affect our business, financial condition or operating
results.





ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





None.





ITEM
3. DEFAULTS UPON SENIOR SECURITIES





Two
convertible notes issued by the Company with a principal amount of $2,340,000
matured and became due on November 10, 2010.  We are currently
negotiating with the holders of these notes, including a possible conversion of
the notes into shares of stock or extension of the terms of the convertible
notes.





ITEM
4. REMOVED AND RESERVED





None.





ITEM
5. OTHER INFORMATION





None.





ITEM
6. EXHIBITS





31.1
            Certification
      of Chief Executive Officer31.2
            Certification
      of Chief Financial Officer32.1
            Statement
      required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of
      the Sarbanes-Oxley Act of 2002.32.2
            Statement
      required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of
      the Sarbanes-Oxley Act of 2002




24




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, there
unto duly authorized.




DÉCOR
      PRODUCTS INTERNATIONAL, INC.Date:
      November 22, 2010
                    By:
                    /s/ Rui Sheng LiuRui
      Sheng Liu
                      President
      and Chief Executive Officer




25




INDEX
TO EXHIBITS




Exhibit
      No.
                      
                      Description31.1
                      
                      Certification of Chief Executive
      Officer31.2
                      
                      Certification of Chief Financial
      Officer32.1
                      
                      Statement required by
      18 U.S.C. Section 1350, as adopted pursuant to section 906 of the
      Sarbanes-Oxley Act of 2002.32.2
                      
                      Statement required by 18 U.S.C. Section 1350, as
      adopted pursuant to section 906 of the Sarbanes-Oxley Act of
      2002