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 March 31, 2010
 [ 
       ]     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)
 
 
 Florida
              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 [x] No [  ]
 
 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 [  ] No
[  ]
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large
      accelerated filer
               ̈Non-accelerated
      filer
               ̈(Do not check
      if a smaller reporting company)Accelerated
      filer
               ̈Smaller
      reporting company
              X
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [  ] No [x]
 
 Number of
shares of common stock outstanding as of May 11,
2010:       20,598,304
 
 
  TABLE OF CONTENTSPART
      I. FINANCIAL INFORMATIONPage No.ITEM
      1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              3ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS
              15ITEM
      3. QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET
    RISK
              17ITEM
      4. CONTROLS AND PROCEDURES
              17ITEM
      4T. CONTROLS AND PROCEDURES
              17PART
      II. OTHER INFORMATIONITEM
      1. LEGAL PROCEEDINGS
              18ITEM
      1A. RISK FACTORS
              18ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
    PROCEEDS
              18ITEM
      3. DEFAULTS UPON SENIOR SECURITIES
              18ITEM
      4. REMOVED AND RESERVED
              18ITEM
      5. OTHER INFORMATION
              18ITEM
      6. EXHIBITS
              19SIGNATURES
              20INDEX
      TO EXHIBITS
              21
 
 2
 
 ITEM
1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  DÉCOR
PRODUCTS INTERNATIONAL, INC.
  INDEX
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  (UNAUDITED)
  PageCondensed
      Consolidated Balance Sheets as of March 31, 2010 and December 31,
      2009
              
              4Condensed
      Consolidated Statements of Operations And Comprehensive Income for the
      Three Months ended March 31, 2010 and 2009
              
              5Condensed
      Consolidated Statements of Cash Flows for the Three Months ended March 31,
      2010 and 2009
              
              6Condensed
      Consolidated Statement of Stockholders’ Equity for the Three Months ended
      March 31, 2010
              
              7Notes
      to Condensed Consolidated Financial Statements
              
              8
 
 3
  DÉCOR
PRODUCTS INTERNATIONAL, INC.
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 AS
OF MARCH 31, 2010 AND DECEMBER 31, 2009
 (Currency
expressed in United States Dollars (“US$”), except for number of
shares)
 
 March
      31, 2010
              
              
              December
      31, 2009(Unaudited)
              
              
              (Audited)ASSETSCurrent
      assets:Cash
      and cash equivalents
              
              $
              2,694,287
              
              
              $
              777,332Accounts
      receivable, trade
              
              
              13,490,664
              
              
              
              13,203,074Inventories
              
              
              537,365
              
              
              
              276,149Advances
      to suppliers
              
              
              284,373
              
              
              
              1,320,231Deposits
      and prepayments
              
              
              33,656
              
              
              
              335,221Total
      current assets
              
              
              17,040,345
              
              
              
              15,912,007Non-current
      assets:Plant
      and equipment, net
              
              
              7,803,062
              
              
              
              8,095,917Construction
      in progress
              
              
              6,042,487
              
              
              
              6,041,515TOTAL
      ASSETS
              
              $
              30,885,894
              
              
              $
              30,049,439LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable, trade
              
              $
              562,425
              
              
              $
              665,542Short-term
      bank borrowings
              
              
              -
              
              
              
              570,408Current
      portion of long-term bank borrowings
              
              
              997,215
              
              
              
              1,118,791Convertible
      notes payable, net
              
              
              1,469,900
              
              
              
              1,220,708Promissory
      notes payable
              
              
              405,000
              
              
              
              405,000Amount
      due to a related party
              
              
              941,421
              
              
              
              1,328,126Income
      tax payable
              
              
              392,813
              
              
              
              520,473Accrued
      liabilities and other payable
              
              
              827,498
              
              
              
              695,711Total
      current liabilities
              
              
              5,596,272
              
              
              
              6,524,759Long-term
      liabilities:Long-term
      bank borrowings
              
              
              1,023,976
              
              
              
              71,046Total
      liabilities
              
              
              6,620,248
              
              
              
              6,595,805Commitments
      and contingenciesStockholders’
      equity:Preferred
      stock, $0.001 par value; 1,666,667 shares authorized; 0 shares issued and
      outstanding as of March 31, 2010 and December 31, 2009
              
              
              -
              
              
              
              -Common
      stock, $0.001 par value; 33,333,333 shares authorized; 6,866,101 and
      6,866,101 shares issued and outstanding as of March 31, 2010 and December
      31, 2009
              
              
              6,866
              
              
              
              6,866Additional
      paid-in capital
              
              
              2,126,130
              
              
              
              2,126,130Statutory
      reserve
              
              
              795,215
              
              
              
              795,215Accumulated
      other comprehensive income
              
              
              2,592,287
              
              
              
              2,586,657Retained
      earnings
              
              
              18,745,148
              
              
              
              17,938,766Total
      stockholders’ equity
              
              
              24,265,646
              
              
              
              23,453,634TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
              
              $
              30,885,894
              
              
              $
              30,049,439
 
 
 See
accompanying notes to condensed consolidated financial statements.
 
 4
 
 DÉCOR
PRODUCTS INTERNATIONAL, INC.
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (Currency
expressed in United States Dollars (“US$”), except for number of
shares)
 (Unaudited)
 
 Three
      months ended March 31,2010
              
              
              2009Revenues,
      net
              
              $
              5,267,893
              
              
              $
              4,005,994Cost of revenue(inclusive of depreciation)
              
              
              (3,181,044
              )
              
              
              (2,166,255
              )Gross
      profit
              
              
              2,086,849
              
              
              
              1,839,739Operating
      expenses:Sales
      and marketing
              
              
              (284,161
              )
              
              
              (292,623
              )Professional
      and consulting fee
              
              
              (83,816
              )
              
              
              -General
      and administrative
              
              
              (192,974
              )
              
              
              (197,463
              )Total
      operating expenses
              
              
              560,951
              
              
              
              490,086Income
      from operations
              
              
              1,525,898
              
              
              
              1,349,653Other
      income (expense):Interest
      income
              
              
              671
              
              
              
              388Interest
      expense
              
              
              (327,370
              )
              
              
              (42,066
              )Income
      before income taxes
              
              
              1,119,199
              
              
              
              1,307,975Income
      tax expense
              
              
              (392,817
              )
              
              
              (326,994
              )NET
      INCOME
              
              $
              806,382
              
              
              $
              980,981Other
      comprehensive income:-
      Foreign currency translation gain
              
              
              5,630
              
              
              
              31,944COMPREHENSIVE
      INCOME
              
              $
              812,012
              
              
              $
              1,012,925Net
      income per share – Basic
              
              $
              0.12
              
              
              $
              0.15Net
      income per share – Diluted
              
              $
              0.10
              
              
              $
              0.15Weighted
      average shares outstanding – Basic
              
              
              6,866,101
              
              
              
              6,666,667Weighted
      average shares outstanding – Diluted
              
              
              7,914,435
              
              
              
              6,666,667
  See
accompanying notes to condensed consolidated financial statements.
  5
 
 DÉCOR
PRODUCTS INTERNATIONAL, INC.
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (Currency
expressed in United States Dollars (“US$”))
 (Unaudited)
 
 Three
      months ended March 31,2010
              
              
              
              2009Cash
      flows from operating activities:Net
      income
              
              $
              806,382
              
              
              $
              980,981Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
              
              
              294,161
              
              
              
              151,662Loss
      on disposal of plan and equipment
              
              
              -
              
              
              
              619Interest
      expenses, non-cash
              
              
              249,192
              
              
              
              -Changes
      in operating assets and liabilities:Accounts
      receivable, trade
              
              
              (285,469
              )
              
              
              (542,517
              )Inventories
              
              
              (261,175
              )
              
              
              (172,197
              )Advances
      to suppliers
              
              
              1,036,081
              
              
              
              -Deposits
      and prepayments
              
              
              117,154
              
              
              
              21,909Accounts
      payable, trade
              
              
              (103,226
              )
              
              
              (6,680
              )Income
      tax payable
              
              
              (127,745
              )
              
              
              (121,141
              )Accrued
      liabilities and other payable
              
              
              316,170
              
              
              
              (33,831
              )Net
      cash provided by operating activities
              
              
              2,041,525
              
              
              
              278,805Cash
      flows from investing activities:Payments
      on construction in progress
              
              
              -
              
              
              
              (366,605
              )Net
      cash used in investing activities
              
              
              -
              
              
              
              (366,605
              )Cash
      flows from financing activities:Repayment
      to a related party
              
              
              (385,387
              )
              
              
              -Proceeds
      from short-term bank borrowings
              
              
              -
              
              
              
              774,107Proceeds
      from long-term bank borrowings
              
              
              1,023,986
              
              
              
              -Payments
      on short-term bank borrowings
              
              
              (570,505
              )
              
              
              -Payments
      on long-term bank borrowings
              
              
              (192,815
              )
              
              
              (766,672
              )Net
      cash (used in) provided by financing activities
              
              
              (124,721
              )
              
              
              7,435Effect
      of exchange rate changes on cash and cash equivalents
              
              
              151
              
              
              
              323NET
      CHANGE IN CASH AND CASH EQUIVALENTS
              
              
              1,916,955
              
              
              
              (80,042
              )CASH
      AND CASH EQUIVALENT, BEGINNING OF PERIOD
              
              
              777,332
              
              
              
              268,698CASH
      AND CASH EQUIVALENT, END OF PERIOD
              
              $
              2,694,287
              
              
              
              188,656SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Cash
      paid for income taxes
              
              $
              520,562
              
              
              $
              735,138Cash
      paid for interest
              
              $
              78,178
              
              
              $
              68,933
 See
accompanying notes to condensed consolidated financial statements.
  6
 
 DÉCOR
PRODUCTS INTERNATIONAL, INC.
 CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 FOR
THE THREE MONTHS ENDED MARCH 31, 2010
 (Currency
expressed in United States Dollars (“US$”), except for number of
shares)
 (Unaudited)
 
 Common
      stock
              
              Additional
      paid-in capital
              
              Statutory
                reserve
              
              Accumulated
                other
                comprehensive
                income
              
              Retained
                earnings
              
              Total
                stockholders’
                equityNo.
      of shares
              
              AmountBalance
      as of January 1, 2010, as restated
              
              6,866,101
              
              $
              6,866
              
              $
              2,126,130
              
              $
              795,215
              
              $
              2,586,657
              
              $
              17,938,766
              
              $
              23,453,634Net
      income for the period
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              806,382
              
              
              806,382Foreign
      currency translation adjustment
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              5,630
              
              
              -
              
              
              5,630Balance
      as of March 31, 2010
              
              6,866,101
              
              $
              6,866
              
              $
              2,126,130
              
              $
              795,215
              
              $
              2,592,287
              
              $
              18,745,148
              
              $
              24,265,646
   
 7
 
 DÉCOR
PRODUCTS INTERNATIONAL, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (Currency
expressed in United States Dollars (“US$”), except for number of
shares)
 (Unaudited)
 
 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 March 31, 2010 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 March 31, 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.
 
 The
Company, through its subsidiaries, 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.
 
 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. All common stock and per share data for all periods presented in these
condensed consolidated financial statements have been restated to give effect to
the reverse stock split.
 
 Description of
subsidiaries
 
 Name
              
              Place
      of incorporation
                and
      kind of
                legal
      entity
              
              Principal
      activities
                and
      place of operation
              
              Particulars
      of issued/
                registered
      share
                capital
              
              Effective
      interest
                heldWide
      Broad Group Limited (“Wide Broad”)
              
              British
      Virgin Islands, a limited liability company
              
              Investment
      holding
              
              1,000
      issued shares of US$1 each
              
              100%Dongguan
      CHDITN Printing Co., Ltd. (“CHDITN”)
              
              The
      PRC, a limited liability company
              
              Sales
      and manufacture of furniture decorative paper and related products in the
      PRC
              
              RMB
      13,876,092
              
              100%
 The
Company and its subsidiaries are hereinafter referred to as (the
"Company").
  NOTE
3 – 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.
 
 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 statements of
DCRD and its subsidiaries. All significant inter-company balances and
transactions within the Company have been eliminated upon
consolidation.
 
 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
March 31, 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
March 31, 2010, the Company did not record an allowance for obsolete
inventories, nor have there been any write-offs.
 
 8
  DÉCOR
PRODUCTS INTERNATIONAL, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (Currency
expressed in United States Dollars (“US$”), except for number of
shares)
 (Unaudited)
  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:
 
 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 March 31, 2010 and 2009 were $294,161 and
$151,662, which included $250,322 and $148,539 in cost of revenue,
respectively.
 
 As of
March 31, 2010, certain plant and machinery with the aggregate net book value of
$1,072,472 were pledged as securities in connection with long-term bank
borrowings (see Note 11).
 
 Approximately
$715,540 (equivalent to RMB4,891,504) of plant and machinery became fully
depreciated as of March 31, 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 the provision of 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 March 31,
2010.
 
 l
              Revenue
      recognition
 
 In
accordance with the 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 months
ended March 31, 2010 and 2009.
 
 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
 
 The
Company adopts the ASC Topic 740, “Income Taxes” regarding
accounting for uncertainty in income taxes which prescribes the recognition
threshold and measurement attributes for financial statement recognition and
measurement of tax positions taken or expected to be taken on a tax return. In
addition, the guidance requires the determination of whether the benefits of tax
positions will be more likely than not sustained upon audit based upon the
technical merits of the tax position. For tax positions that are determined to
be more likely than not sustained upon audit, a company recognizes the largest
amount of benefit that is greater than 50% likely of being realized upon
ultimate settlement in the financial statements. For tax positions that are not
determined to be more likely than not sustained upon audit, a company does not
recognize any portion of the benefit in the financial statements. The guidance
provides for de-recognition, classification, penalties and interest, accounting
in interim periods and disclosure.
 
 For the
three months ended March 31, 2010 and 2009, the Company did not have any
interest and penalties associated with tax positions. As of March 31, 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 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.
 
 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:
  March
      31, 2010
              
              
              March
      31, 2009Period-end
      rate RMB:US$1 exchange rate
              
              
              6.8361
              
              
              
              6.8456Average
      rate RMB:US$1 exchange rate
              
              
              6.8360
              
              
              
              6.8466
  9
  DÉCOR
PRODUCTS INTERNATIONAL, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (Currency
expressed in United States Dollars (“US$”), except for number of
shares)
 (Unaudited)
 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 $4
million as of March 31, 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.
 
 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 June
2009, the Financial Accounting Standards Board (“FASB”) expanded ASC 810-10, to
provide guidance for variable interest entities (VIEs). The change modifies our
approach for determining the primary beneficiary of a VIE by assessing whether
we have control over such entities. This change is effective for us on July 1,
2010. The Company is currently evaluating the requirements of the VIE provisions
of ASC 810-10, but does not expect a material impact on its condensed
consolidated financial statements.
 
 In
October 2009, the FASB issued Accounting Standard Update (ASU) No. 2009-13,
“Revenue Recognition”
(Topic 605). The accounting standard update addresses the accounting for
multiple-deliverable arrangements to enable vendors to account for products or
services separately rather than as a combined unit. Specifically, this subtopic
addresses how to separate deliverables and how to measure and allocate
arrangement consideration to one or more units of accounting. ASU 2009-13 will
be effective for us on July 1, 2010. The Company is currently evaluating the
requirements of ASU 2009-13, but do not expect a material impact on its
condensed consolidated financial statements.
 
 FASB ASC
810, “Consolidation”
(“ASC 810”), establishes accounting and reporting standards for minority
interests, which are recharacterized as noncontrolling interests. ASC 810 was
revised so that noncontrolling interests are classified as a component of equity
separate from the parent’s equity; purchases or sales of equity interests that
do not result in a change in control are accounted for as equity transactions;
net income attributable to the noncontrolling interest are included in
consolidated net income in the statement of operations; and upon a loss of
control, the interest sold, as well as any interest retained, is recorded at
fair value, with any gain or loss recognized in earnings. This revision was
effective for the Company as of January 1, 2009. It applies prospectively,
except for the presentation and disclosure requirements, for which it applies
retroactively. In addition, ASC 810, amends the consolidation guidance
applicable to variable interest entities. The amendments will significantly
affect the overall consolidation analysis under ASC 810. This phase of ASC 810
became effective for the Company on January 1, 2010 and did not impact the
Company’s consolidation conclusions for its variable interest
entities.
 
 In
January 2010, the FASB issued an amendment to the fair value measurement and
disclosure standard improving disclosures about fair value measurements. This
amended guidance requires separate disclosure of significant transfers in and
out of Levels 1 and 2 and the reasons for the transfers. The amended guidance
also requires that in the Level 3 reconciliation, the information about
purchases, sales, issuances and settlements be disclosed separately on a gross
basis rather than as one net number. The guidance for the Level 1 and 2
disclosures was adopted on January 1, 2010, and did not have an impact on our
consolidated financial position, results of operations or cash flows. The
guidance for the activity in Level 3 disclosures is effective January 1, 2011,
and will not have an impact on our consolidated financial position, results of
operations or cash flows as the amended guidance provides only disclosure
requirements. The Company had no significant transfers between Level 1, 2 or 3
inputs during the quarter ended March 31, 2010.
 
 In
February 2010, the FASB issued amended guidance on subsequent events. Under this
amended guidance, SEC filers are no longer required to disclose the date through
which subsequent events have been evaluated in originally issued and revised
financial statements. This guidance was effective immediately and the Company
adopted these new requirements for the quarter ended March 31,
2010.
  NOTE
4 – 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 three months ended March 31, 2010 and 2009, the Company
recorded no allowance for doubtful accounts.
 
 Up to May
10, 2010, the Company has subsequently recovered from approximately 22% of the
accounts receivable as of March 31, 2010.
  NOTE
5 – INVENTORIES
 
 Inventories
consist of the following:
 
 March
      31, 2010
              
              December
      31, 2009(Unaudited)
              
              (Audited)Raw
      materials
              
              $
              296,213
              
              
              $
              168,909Work-in-process
              
              
              15,748
              
              
              
              26,553Finished
      goods
              
              
              213,020
              
              
              
              61,082Packaging
      materials and supplies
              
              
              12,384
              
              
              
              19,605$
              537,365
              
              
              $
              276,149
 
 For the
three months ended March 31, 2010 and 2009, the Company recorded no allowance
for slow moving and obsolete inventories.
  10
 
 DÉCOR
PRODUCTS INTERNATIONAL, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (Currency
expressed in United States Dollars (“US$”), except for number of
shares)
 (Unaudited)
 NOTE
6 – CONSTRUCTION IN PROGRESS
 
 During
the 2010 fiscal year, the Company anticipated the construction of a new
manufacturing facility for laminated board with an area of 100,000 square feet,
adjacent to its existing facility. Total estimated construction costs of a
new manufacturing facility are approximately $17,140,840 (equivalent to
RMB117,176,496). The construction is scheduled to be fully completed in the
third quarter of 2010. As of March 31, 2010, the Company has incurred and
capitalized $6,042,847 as “Construction in progress”.
  NOTE
7 – 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 funds were 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, payable quarterly, 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 13,655,000) to CHDITN and the funds were 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.
 
 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, 4,510,667 shares (post reverse
split) of common stock held by him, as collateral for the Loan Agreements
between CHDITN and Mr. Zhuang and Mr. Shi.
 
 On
December 17, 2009, the Company received 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 appraiser to perform a
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
components, based on the relative fair value 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.
 
 March
      31, 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
              
              
              (611,100
              )
              
              
              (860,292
              )$
              1,469,900
              
              
              $
              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 three months ended March 31, 2010,
the Company recognized $249,192 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
              
              
              0.93
  NOTE
8 – CONVERTIBLE PROMISSORY NOTES PAYABLE
 
 On June
1, 2009, the Company’s subsidiary, CHDITN, issued four promissory notes to
Precursor Management, Inc. (“PMI”) in the aggregate principal amount of
$705,000 representing the ammount it borrowed to pay for certain transaction
fees and professional fees associated with becoming a “public company”, with an
interest rate of 6.5% per annum, fully payable on September 30, 2009. On
November 19, 2009, both parties mutually agreed to extend the payment date until
December 30, 2009.
 
 In
December 2009, the Company repaid $300,000 to the promissory note and both
parties agreed to restructure four promissory notes in exchange for new notes in
the remaining principal amount of $405,000 with an interest rate of 8% per
annum, fully payable on December 4, 2010, by issuing into the following new
promissory notes with four different parties:
 
 On
December 4, 2009, the Company, through CHDITN, issued a Promissory
Note to Greentree Financial Group Inc. (“Greentree”), providing that
CHDITN promised to pay to the order of Greentree the sum of $140,000, plus
interest of $11,200 or approximately 8% interest per annum, payable
quarterly, with a maturity date of December 4, 2010. In addition, Greentree
shall have a right to convert the principal amount, partially or in full, into
number of shares of common stock of the Company at the exercise price of $3 per
share.
 
 On
December 4, 2009, the Company, through CHDITN signed a Promissory Note with PMI,
stating that CHDITN promised to pay to the order of PMI the sum of $140,000,
plus interest of $11,200 or approximately 8% interest per annum, quarterly
payable, with a maturity date of December 4, 2010. In addition, PMI shall have a
right to convert the principal amount, partially or in full, into number of
shares of common stock of the Company at the exercise price of $3 per
share.
 
 On
December 4, 2009, the Company, through CHDITN, issued a Promissory
Note to Linear Capital Partners LLC. (“Linear”), providing that CHDITN
promised to pay to the order of Linear the sum of $40,000, plus interest of
$3,200 or approximately 8% interest per annum, payable quarterly, with a
maturity date of December 4, 2010. In addition, Linear shall have a right to
convert the principal amount, partially or in full, into number of shares of
common stock of the Company at the exercise price of $3 per share.
 
 On
December 4, 2009, the Company, through CHDITN issued a Promissory
Note to Maurice Katz (“Mr. Katz”), stating that CHDITN promised to pay to
the order of Mr. Katz the sum of $85,000, plus interest of $6,800 or
approximately 8% interest per annum, payable quarterly, with a maturity
date of December 4, 2010. In addition, Mr. Katz shall have a right to convert
the principal amount, partially or in full, into number of shares of common
stock of the Company at the exercise price of $3 per share.
 
 In
connection with these four Promissory Notes, the Company agreed to issue
warrants for the purchase of an aggregate of 135,000 shares, to the
holders of the promissory notes, for consideration in the amount of $10 as
incentive to lend money to the Company, respectively. The Warrants entitled the
promissory note holders to purchase from the Company at any time or times on or
after December 4, 2009, the aggregate of 135,000 shares (post reverse split) of
common stock of the Company an the exercise price of $3 per share.
 
 The
Company engaged an independent appraiser to perform a valuation
of the convertible promissory notes and has determined that the equity
instruments issued in relation to the promissory notes are recorded in
accordance with ASC Topic 505-50, “Equity-Based Payments to
Non-Employees”. The fair
value of the share-based payment transaction is determined at the earlier of
performance commitment date or performance completion date.
 
 The fair
value of warrants on the grant date is measured using Black-Scholes Option
Pricing Model under ASC Topic 718, with the following assumptions.
 
 Expected
      life (in years)
              
              
              5Volatility
              
              
              159
              %Risk
      free interest rate
              
              
              0.37
              %Dividend
      yield
              
              
              0
              %Weighted
      average fair value
              
              
              0.93
  11
 DÉCOR
PRODUCTS INTERNATIONAL, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (Currency
expressed in United States Dollars (“US$”), except for number of
shares)
 (Unaudited)
 
 NOTE
9 – AMOUNT DUE TO A RELATED PARTY
 
 As of
March 31, 2010, amount due to a related party of $941,421 represented temporary
advances made by Mr. Liu, the director of the Company, which was unsecured,
interest-free with no fixed repayment term.
  NOTE
10 – ACCRUED LIABILITIES AND OTHER PAYABLE
 
 Accrued
liabilities and other payable consist of the following:
 
 March
      31, 2010
              
              
              December
      31, 2009(Unaudited)
              
              
              (Audited)VAT
      payable
              
              $
              169,052
              
              
              $
              -Accrued
      payroll and benefit costs
              
              
              427,600
              
              
              
              453,629Accrued
      professional and consulting fees
              
              
              202,613
              
              
              
              239,132Accrued
      rental expenses
              
              
              26,331
              
              
              
              -Other
      payables
              
              
              1,902
              
              
              
              2,950$
              827,498
              
              
              $
              695,711
  NOTE
11 – LONG-TERM BANK BORROWINGS
 
 Long-term
bank borrowings were as follows:
 
 March
      31, 2010
              
              
              December
      31, 2009(Unaudited)
              
              
              (Audited)Bank
      loans, payable to financial institutions in the PRC:Equivalent
      to RMB2,240,000 (2009: RMB2,240,000) with effective interest rate ranging
      from 5.67% to 7.84% per annum, payable monthly, due September 20,
      2010
              (a)
              
              $
              327,672
              
              
              $
              327,620Equivalent
      to RMB7,000,000 with effective interest rate of 4.8% per annum, payable
      monthly, due March 8, 2015
              (a)
              
              
              1,023,976
              
              
              
              -Equivalent
      to RMB2,870,237 (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)
              
              
              419,865
              
              
              
              540,683Equivalent
      to RMB1,706,852 (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
              (b)
              
              
              249,678
              
              
              
              321,534Total
      bank borrowings
              
              
              
              2,021,191
              
              
              
              1,189,837Less:
      current portion
              
              
              
              (997,215
              )
              
              
              (1,118,791
              )Long-term
      bank borrowings, net of current portion
              
              
              $
              1,023,976
              
              
              $
              71,046
 
 As of
March 31, 2010, the minimum future payments of the aggregate bank borrowings in
the next five years are as follows:
 Year
      ending March 31:2011
              
              $
              997,2152012
              
              
              -2013
              
              
              325,1112014
              
              
              341,0642015
              
              
              357,801Total
      borrowings
              
              $
              2,021,191
 
 (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 net book value of $1,072,472 as of March 31,
    2010.
 
 12
 DÉCOR
PRODUCTS INTERNATIONAL, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (Currency
expressed in United States Dollars (“US$”), except for number of
shares)
 (Unaudited)
 
 NOTE
12 – STOCKHOLDERS’ EQUITY
 
 (a)         Common
stock
  On April
8, 2010, the Company approved a 1 for 3 reverse split of its common stock. All
common stock and per share data for all periods presented in these condensed
consolidated financial statements have been restated to give effect to the
reverse stock split. All the fractional shares resulting from the combination
will be rounded up to the nearest whole share.
 
 As of
March 31, 2010, the Company had a total of 6,866,101 shares of its common stock
issued and outstanding.
  (b)         Warrants
granted
  Warrants
outstanding as of March 31, 2010 are summarized as follows (warrants were not
issued to employees):
 
 Warrants
      outstandingNumber
      of warrants
              
              
              Exercise
      price range per share
              
              
              Weighted
      average exercise price per share
              
              
              Weighted
      average grant-date fair value per shareWarrants
      granted for services in September 2009
              
              
              133,334
              
              
              $
              4.20
              
              
              $
              4.20
              
              
              $
              2.55Warrants
      granted for convertible notes payable in November 2009
              
              
              780,000
              
              
              
              3.00
              
              
              
              3.00
              
              
              
              2.79Warrants
      granted for convertible promissory notes payable in December
      2009
              
              
              135,000
              
              
              
              3.00
              
              
              
              3.00
              
              
              
              2.79Balance
      as of December 31, 2009 and March 31, 2010
              
              
              1,048,334
              
              
              $
              3 –
      4.2
              
              
              $
              3.15
              
              
              $
              2.76
 
 For the
three months ended March 31, 2010, there was no movement in the warrants
outstanding.
  NOTE
13 – INCOME TAXES
 
 For the
three months ended March 31, 2010 and 2009, the local (United States) and
foreign components of income before income taxes were comprised of the
following:
 
 Three
      months ended March 31,2010
              
              
              2009Tax
      jurisdictions from:-
      Local
              
              $
              (250,242
              )
              
              $
              --
      Foreign
              
              
              1,449,441
              
              
              
              1,307,975Income
      before income taxes
              
              $
              1,199,199
              
              
              $
              1,307,975
 
 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 Florida 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 three months ended March 31, 2010 and 2009, Wide Broad suffered from an
operating loss of $96,064 and $0, respectively.
 
 The
PRC
 
 The
Company generated its income from a subsidiary operating in the PRC for the
years ended December 31, 2009 and 2008. Effective from January 1, 2008, 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 three
months ended March 31, 2010 and 2009 is as follows:
 
 Three
      months ended March 31,2010
              
              
              2009Income
      before income taxes
              
              $
              1,545,505
              
              
              $
              1,307,975Statutory
      income tax rate
              
              
              25
              %
              
              
              25
              %Income
      tax expense at statutory tax rate
              
              
              386,376
              
              
              
              326,994Tax
      effect of non-taxable items
              
              
              6,441
              
              
              
              -Income
      tax expense
              
              $
              392,817
              
              
              $
              326,994
 
 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.
  13
 DÉCOR
PRODUCTS INTERNATIONAL, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (Currency
expressed in United States Dollars (“US$”), except for number of
shares)
 (Unaudited)
 
 NOTE
14 – CONCENTRATIONS OF RISK
 
 The
Company is exposed to the following concentrations of risk:
 
 (a)         Major
customers
 
 For the
three months ended March 31, 2010 and 2009, there is no customer who accounts
for 10% or more of the Company’s revenues.
 
 (b)         Major
vendors
 
 For the
three months ended March 31, 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 March 31, 2010
              
              March
      31, 2010Vendor
              
              
              Purchases
              
              Percentage
                of
      purchases
              
              Accounts
                payable,
      tradeVendor
      A
              
              
              $
              569,401
              
              20%
              
              $
              -Vendor
      B
              
              
              
              455,847
              
              16%
              
              
              83,001Vendor
      C
              
              
              
              443,852
              
              16%
              
              
              -Vendor
      D
              
              
              
              340,942
              
              12%
              
              
              152,304Total:
              
              $
              1,810,042
              
              64%
              
              $
              235,305
 
 Three
      months ended March 31, 2009
              
              
              March
      31, 2009Vendor
              
              
              Purchases
              
              Percentage
                of
      purchases
              
              
              Accounts
                payable,
      tradeVendor
      B
              
              
              $
              511,215
              
              26%
              
              
              $
              -Vendor
      A
              
              
              
              275,922
              
              14%
              
              
              
              107,625Vendor
      F
              
              
              
              254,382
              
              13%
              
              
              
              102,531Vendor
      G
              
              
              
              216,951
              
              11%
              
              
              
              110,955Total:
              
              $
              1,258,470
              
              64%
              
              
              $
              321,111
 
 (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.
 
 (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
15 – 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 March 31, 2010 and 2009 was $57,608 and $82,673,
respectively.
 
 As of
March 31, 2010, future minimum rental payments due under non-cancelable
operating leases in the next five years and thereafter are as
follows:
 Year
      ending March 31:2011
              
              $
              197,4812012
              
              
              210,6462013
              
              
              210,6462014
              
              
              217,2292015
              
              
              236,977Thereafter
              
              
              979,945Total
              
              $
              2,052,924
 
 (b)
              Consultancy
      fee commitment
 
 The
Company is committed to pay a monthly fee to Interactive Investors, Inc. for a
one-year service of management consulting, business advisory, shareholder
information and public relations, expiring on August 31, 2010. As of March 31,
2010, the Company has future minimum contingent payment of $65,000 in the next
12 months.
 
 (c)
              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 third quarter of 2010. Total estimated construction costs
are approximately $30 million (equivalent to RMB 205 million). As of March 31,
2010, the Company paid $6,042,487 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 $4.2 million.
  NOTE
16 – SUBSEQUENT EVENTS
 
 On April
1, 2010, the Company approved to withdraw its registration statement initially
filed on Form S-1 with the Securities and Exchange Commission on February 10,
2010. The Company withdrew its registration statement so that it can have
sufficient time to review and possibly amend the registration statement prior to
its effectiveness. No securities have been sold pursuant to the registration
statement.
 
 On April
8, 2010, the Board of Directors and consenting shareholder holding a majority of
issued and outstanding Common Stock approved a change the domicile of the
Company from Florida to Nevada. The change of domicile will
be effected by means of a merger between the Company and a newly formed
wholly-owned Nevada subsidiary of the Company, in which the subsidiary will be
the surviving entity. This change of domicile is expected to
become effective on or about May 24, 2010 upon the filing of
articles of merger with the Secretary of State of the states of Florida and
Nevada in accordance with applicable state laws.
 
 On April
8, 2010, the Board of Directors approved and recommended a combination of the
shares of common stock of DCRD, such that every three (3) shares of common stock
$.001 par value would be combined into one (1) share of common stock in
connection with the Reincorporation Merger, which the Company anticipates will
be effective by May 24, 2010.  In the proposed share combination,
referred to as a reverse stock split or “Reverse Split”, the par value of Common
Stock will not change.  All the fractional shares resulting from the
combination will be rounded up to the nearest whole share. Since it was
contemplated that the reverse stock split would occur simultaneously with the
Reincorporation, management determined that the objective and substantive effect
of the reverse stock split would be accomplished under and pursuant to the
Merger Agreement, which would feature an exchange ratio in which every three (3)
shares of Florida Corporation common stock will be converted into one (1) share
of Nevada Corporation common stock.
  14
 
 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 that are subject to the safe harbors
created under the Securities Act of 1933 and the Securities Exchange Act of
1934. 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 on 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, which are only
predictions and are subject to risks and uncertainties. Therefore, actual
results may differ materially and adversely from those expressed in any
forward-looking statements. We do not guarantee future results, and actual
results, developments and business decisions may differ from those contemplated
by those forward-looking statements. We undertake no obligation to update these
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”). As used herein the terms “Our”, "We", the
"Company", "DCRD", the "Registrant," or the "Issuer" refers to Décor Products
International, Inc., its subsidiaries and predecessors, unless indicated
otherwise. 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.
 
 Additionally,
we believe 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 September 2010.
 
 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 one hundred percent (100%) of the issued and outstanding share capital
of Wide Broad from the Wide Broad Shareholders in an exchange for a new issuance
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
affected 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 shareholder holding a majority of
issued and outstanding 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 will be the surviving entity.  Our
reincorporation will become effective when the articles of merger are filed and
made effective with the offices of the Secretary of State for Florida and
Nevada, respectively.  This will occur no sooner than thirty (30) days
after the mailing of the Information Statement, or on or about May 24, 2010.
Additionally, a reverse stock split will occur simultaneously with the
Reincorporation, which will feature an exchange ratio in which every three (3)
shares of Florida Corporation common stock will be converted into one (1) share
of Nevada Corporation common stock.
 
 Unless
otherwise indicated, all information in this Form 10-Q has been adjusted
to reflect a 1-for-3 reverse split of our common stock to be completed on or
about May 24, 2010.
  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, revenue
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 MARCH 31, 2010 AND 2009
 
 For
      the three months ended March 31,2010
              
              
              2009Revenue,
      net
              
              $
              5,267,893
              
              
              $
              4,005,994Cost
      of Revenue:
              
              $
              3,181,044
              
              
              $
              2,166,255Operating
      Expenses:
              
              $
              560,951
              
              
              $
              490,086Income
      from Operations:
              
              $
              1,525,898
              
              
              $
              1,349,653Interest
      Expenses:
              
              $
              327,370
              
              
              $
              42,066Income
      Taxes:
              
              $
              392,817
              
              
              $
              326,994Net
      Income:
              
              $
              806,382
              
              
              $
              980,981Other
      Comprehensive Income:
              
              $
              5,630
              
              
              $
              31,944Total
      Comprehensive Income:
              
              $
              812,012
              
              
              $
              1,012,925
 
 Revenues
 
 We had
net sales revenues of $5,267,893 and $4,005,994 for the three months ended March
31, 2010 and 2009, respectively. The increase in sales revenues was primarily
due to the sales of our décor paper, which generated an increase of
$1,261,899 in revenue compared to the same period in 2009. Management believes
this was primarily
because of the recovery from global financial crisis, which had significant
impact on our revenues in 2009.
 
 In
2010 and beyond, after the commencement of our new production line for laminated
boards which is anticipated later in September 2010, we expectthat
our net sale revenues will grow steadily from 2010 due to our core production
switching from the decor paper to laminated board, which we believe is
considerably more profitable.
 
 The
global economic uncertainty that we are operating in today could adversely
impact our business. However, our business is based in China—a country that is
still projected to have economic growth in 2010. We currently offer and have
market acceptance of our décor paper products in China. We believe that the
décor paper market and laminated board market present a meaningful growth
opportunity in China.
 
 15
 
 Cost
of Revenue
 
 Cost of
revenue primarily includes cost of supplies to manufacture our décor paper and
the allocation of direct manufacture overhead. We had $3,181,044 and $2,166,255
in cost of sales, or 60.39% and 54.08% of net sales revenues, during the three
months ended March 31, 2010 and 2009, respectively. The cost of revenue as a
percentage of net sales revenue increased during the first quarter of 2010
mainly due to the increase in direct manufacturing overhead including
depreciation of our new printing machine.
 
 Operating
Expenses
 
 The
following table summarizes our operating expenses:
 
 Three
      months ended March 31,%
      of net
              
              
              
              %
      of net2010
              
              sales
              
              2009
              
              sales(in
      thousands)Sales
      and marketing
              
              $
              284.16
              
              5.4
              %
              $
              292.62
              
              7.3
              %Professional,
      Consulting Fees
              
              83.82
              
              1.6
              %
              -
              
              -
              %General
      and Administrative
              
              192.97
              
              3.7
              %
              197.46
              
              4.9
              %Total
      net operating expenses
              
              $
              560.95
              
              10.7
              %
              $
              490.08
              
              12.2
              %
 
 
 We had
operating expenses of $560,951 and $490,086 for the three months ended March 31,
2010 and 2009, respectively. The increase in operating expenses during the three
months ended March 31, 2010 compared to the same period in 2009 was due
primarily to professional and consulting fees of $83,816 for legal and
accounting services in connection with private
financings and public company reporting obligations.
 
 OTHER
INCOME (EXPENSE)
  Interest
Expense
 
 Interest
expense was $327,370 and $42,066 for the three months ended March 31, 2010 and
2009, respectively. The increase in interest expenses was primary due to
amortization of debt discount arising from convertible notes
payable.
 
 Income
Tax Expense
  We had
income tax expense of $392,817 and $326,994 for the three months ended March 31,
2010 and 2009, respectively. The increase in income tax expense in the first
quarter of 2010 compared with the first quarter of 2009 was primarily due to
increase an in taxable income.
 
 Net Income
 
 We had
net income of $806,382 and $980,981 for the three months ended March 31, 2010
and 2009, respectively. 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. The decrease in net income during
the first quarter of 2010 was due primarily to the increase in interest
expense by $285,304, which was incurred from convertible notes in the
amount of $2,340,000 issued and convertible promissory notes in the amount of
$405,000 issued, consisting of both cash interest expenses and amortization of
debt discount.
  Liquidity
and Capital Resources
 
 Balance
Sheet and Cash Flows
 
 Cash
flows provided by operating activities were $2,041,525 and $278,805 for the
three months ended March 31, 2010 and 2009, respectively. Positive cash flows
from operations for the three months ended March 31, 2010 resulted primarily
from our net income of $806,382, a decrease in advances to suppliers by
$1,036,081, a decrease in deposits and prepayments by $117,154 and an
increase in accrued liabilities and other payables by $316,170, partially offset
by increases in accounts receivable and inventories by $285,469 and
$261,175, respectively, plus decreases in accounts payable and income tax
payable by $103,226 and $127,745, respectively. Positive cash flows from
operations for the three months ended March 31, 2009 resulted primarily from our
net income of $980,981, partially offset by the increases in accounts receivable
and inventories by $542,517 and $172,197, respectively, and the decrease in
accounts payable, income tax payable and accrued liabilities by $6,680,
$121,141, and $33,831, respectively.
 
 We had no
cash flows from investing activities during the three months ended March 31,
2010. Cash flows of $366,605 used in investing activities during the three
months ended March 31, 2009 were due primarily to payments related to
construction in progress.
 
 Cash
flows used in financing activities were $124,721 during the three months ended
March 31, 2010, compared to cash flows of $7,435 provided by financing
activities during the three months ended March 31, 2009. Negative cash flows
during the three months ended March 31, 2010 were due primarily to the repayment
to a related party of $385,387, and the payments on bank borrowings of total
$763,320, offset by the proceeds from long-term bank borrowings of $1,023,986.
Positive cash flows during the three months ended March 31, 2009 were due
primarily to the proceeds from short-term bank borrowings of $774,107, offset by
the payments of $766,672 to long-term 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 March 31, 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 March
31, 2010, we had cash and cash equivalents of $2,694,287 on hand, of which
$2,686,877 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 about six months. This is based
on our current cash flows from operating activities and financing activities,
our positive working capital and projected revenues. However, if the projected
revenues fall short of needed capital 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. Our current level of
operations would require capital of approximately $2,000,000 per year starting
in 2010. 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. Further, any
sale of newly issued debt or equity securities could result in additional
dilution to our current shareholders.
 
 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 the products and services will be dependent on, among other things, market
acceptance of our products, décor paper market and laminated board market in
general, 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 recession periods.
 
 Our
success will be dependent upon implementing our plan of operations and the risks
associated with our business plans. We are specializing in the production and
sales of high quality decor paper such as furniture decorative paper, wood-grain
paper, and paperboard. We plan to strengthen our position in these markets. We
also plan to expand our operations through marketing our products and our
concept.
 
 16
 
 The
company had new bank loan of approximately $1,028,000 during the 2010 to improve
liquidity.
  Off-balance
sheet arrangements
 
 At March
31, 2010, we do not have any off-balance sheet arrangements.
  Contractual
obligations and other commitments
  Our
obligations under contractual obligations and commercial commitments at March
31, 2010 were as follows:
 
 Payments
      Due by PeriodTotal
              
              
              Less
      than1 year
              
              
              1-3years
              
              
              3-5years
              
              
              More
      than5 years(in thousands)Operating
      leases
              
              $
              2,053
              
              
              $
              197
              
              
              $
              639
              
              
              $
              237
              
              
              $
              980Purchase
      commitments
              
              
              4,200
              
              
              
              4,200
              
              
              
              -
              
              
              
              -
              
              
              
              -Total
              
              $
              6,253
              
              
              $
              4,397
              
              
              $
              639
              
              
              $
              237
              
              
              $
              980
 
 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 third quarter of 2010. Total estimated construction costs are
approximately $30 million (equivalent to RMB 205 million). As of March 31, 2010,
the Company paid $6,042,487 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
equipment are approximately $4.2 million.
  ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
 
 The
information to be reported under this item is not required of smaller reporting
companies.
 
 ITEM
4. CONTROLS AND PROCEDURE
 S.
 
 (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 was
no change in our internal controls 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.
  ITEM 4T. CONTROLS AND
PROCEDURES
 
 (a) Conclusions
regarding disclosure controls and procedures. Disclosure controls and
procedures are the Company’s controls and other procedures that are designed to
ensure that information required to be disclosed by the Company in the reports
that the Company files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files
under the Exchange Act is accumulated and communicated to our management,
including our chief executive officer and chief financial officer, as
appropriate to allow timely decisions regarding required disclosure. Management
is responsible for establishing and maintaining adequate internal control over
financial reporting.
 
 Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15 promulgated under the Exchange Act as of March 31, 2010, and,
based on their evaluation, as of the end of such period, our disclosure controls
and procedures were effective as of the end of the period covered by the
Quarterly Report.
 
 (b) Management’s
Report On Internal Control Over Financial Reporting. It is management’s
responsibilities to establish and maintain adequate internal controls over the
Company’s financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a
process designed by, or under the supervision of, the issuer’s principal
executive and principal financial officers and effected by the issuer’s
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of Consolidated Financial
Statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures
that:
 
 •           Pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the issuer;
and
 
 •           Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of Consolidated Financial Statements in accordance with generally
accepted accounting principles and that receipts and expenditures of the issuer
are being made only in accordance with authorizations of management of the
issuer; and
 
 •           Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the issuer’s assets that could have a
material effect on the Consolidated Financial Statements.
 
 As of the
end of the period covered by the Quarterly Report, an evaluation was carried out
under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
our internal control over financial reporting.
 
 Management
assessed the effectiveness of our internal control over financial reporting as
of March 31, 2010. In making this assessment, management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission in
Internal Control-Integrated Framework.
 
 Based on
that evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, internal controls over financial
reporting were effective as of the end of the period covered by the
Report.
 
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
 
 This
Quarterly Report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this Quarterly
Report.
 
 (c) Changes in
internal control over financial reporting. There were no changes in our
internal control over financial reporting identified in connection with the
evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that
occurred during our last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
 
 17
 
 PART II. OTHER
INFORMATION
 
 ITEM
1.      LEGAL PROCEEDINGS
 
 None.
 
 ITEM
1A. RISK FACTORS
 
 Smaller
reporting companies are not required to provide the information required by this
Item.
 
 ITEM
2.      UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS
 
 None.
 
 ITEM
3.      DEFAULTS UPON SENIOR SEC

URITIES
 
 None.
 
 ITEM
4.     REMOVED AND RESERVED
 
 None.
 
 ITEM
5.      OTHER INFOR

MATION
 
 On April
1, 2010, the Company approved to withdraw its registration statement initially
filed on Form S-1 with the Securities and Exchange Commission on February 10,
2010. The Company withdrew its registration statement so that it can have
sufficient time to review and possibly amend the registration statement prior to
its effectiveness. No securities have been sold pursuant to the registration
statement.
 
 On April
8, 2010, the Board of Directors and consenting shareholder holding a majority of
issued and outstanding Common Stock approved a change the domicile of the
Company from Florida to Nevada.  The change of domicile, or
reincorporation, will be effected by means of a merger between the Company and a
newly formed wholly-owned Nevada subsidiary of the Company, in which the
subsidiary will be the surviving entity.  This change of domicile will
become effective upon the filing of articles of merger with the Secretary of
State of the states of Florida and Nevada in accordance with applicable state
laws, which we anticipate will be May 24, 2010.
 
 On April
8, 2010, the Board of Directors approved and recommended a combination of the
shares of common stock of DCRD, such that every three (3) shares of common stock
$.001 par value would be combined into one (1) share of common stock upon
effectiveness of the Reincorporation Merger.  In the proposed share
combination, referred to as a reverse stock split or “Reverse Split”, the par
value of Common Stock will not change.  All the fractional shares
resulting from the combination will be rounded up to the nearest whole share.
Since it was contemplated that the reverse stock split would occur
simultaneously with the Reincorporation, management determined that the
objective and substantive effect of the reverse stock split would be
accomplished under and pursuant to the Merger Agreement, which would feature an
exchange ratio in which every three (3) shares of Florida Corporation common
stock will be converted into one (1) share of Nevada Corporation common
stock.
 
 18
  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
 
 19
  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:
      May 17, 2010
              By:
              /s/ Rui Sheng LiuRui
      Sheng Liu
                President
      and Chief Executive Officer
 
 20
 
 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