UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

|   |                                                                                     
|-- | ------------------------------------------------------------------------------------
|x  | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
  SECURITIES EXCHANGE ACT OF 1934    
|  
|   | For the
  fiscal year ended DECEMBER 31, 2008                                       
|  
|or
|  
|o  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
  SECURITIES EXCHANGE ACT OF 1934
|   |                                                                                     
|   | For the
  transition period from _______________ to _____________                   

|                                                             
|-------------------------------------------------------------
|Commission File No. 333-134073                               
|CHINA XD PLASTICS COMPANY LIMITED                            
|(Exact name of registrant as specified issuer in its charter)

|                                                                                                                  |  |                                     
|----------------------------------------------------------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                                                                            |  | 04-3836208                          
|                                                                                                                  |  |                                     
|(State or other jurisdiction of incorporation or 
  organization)                                                 |  | (I.R.S. Employer Identification No.)
|                                                                                                                  |  |                                     
|                                                                                                                  |  |                                     
|No. 9 Qinling Road, Yingbin Road Centralized Industrial Park, Harbin
  Development Zone, Heilongjiang, P.R. China |  |                                     
|                                                                                                                  |  |                                     
|                                                                                                                  |  | 150078                              
|                                                                                                                  |  |                                     
|(Address of principal executive offices)                                                                          |  | (Zip Code)                          

Registrants telephone number, including area
code: 86-451-84346600

Securities
registered under Section 12(b) of the Act: None Securities registered under
Section 12(g) of the Act:   Common Stock, par value $0.0001

Indicate by
checkmark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act of 1934. Yes o No x

Indicate by
checkmark whether the registrant is not required to file reports pursuant to
Section 13 or 15 (d) of the Exchange Act. Yes o No x

Indicate by
checkmark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No o

Indicate by
checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K (§229.405 of this chapter) is not contained herein, and will not be
contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o

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

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

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Act). Yes o No x

The number of shares outstanding of our common stock as of June 30, 2008, was 49,632,222 shares. The
aggregate market value of the common stock held by non-affiliates (10,571,663 shares), based on the
closing market price ($211,433 per share) of the common stock as of June 30, 2008 was $0.02.

As of March 23, 2009, there were 805,802 issued and
outstanding shares of the issuers common stock.

---



CHINA XD PLASTICS COMPANY LIMITED 
FORM 10-K ANNUAL REPORT 
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008

Table of Contents

|                                                          |                                                                                                                  |   
|--------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | --
|PART I                                                   
|                                                          |                                                                                                                  |   
|Item 1                                                    | Business                                                                                                         | 1 
|Item 1A                                                   | Risk Factors                                                                                                     | 8 
|Item 1B                                                   | Unresolved
  Staff Comments                                                                                      | 18
|Item 2                                                    | Properties                                                                                                       | 19
|Item 3                                                    | Legal
  Proceedings                                                                                              | 19
|Item 4                                                    | Submission
  of Matters to a Vote of Security Holders                                                            | 19
|                                                          |                                                                                                                  |   
|PART II                                                  
|                                                          |                                                                                                                  |   
|Item 5                                                    | Market For
  Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of
  Equity Securities | 20
|Item 6                                                    | Selected
  Financial Data                                                                                        | 20
|Item 7                                                    | Managements
  Discussion and Analysis of Financial Condition and Results of Operations                          | 21
|Item 7A                                                   | Quantitative
  and Qualitative Disclosures About Market Risk                                                     | 24
|Item 8                                                    | Financial
  Statements and Supplementary Data                                                                    | 24
|Item 9                                                    | Changes In
  and Disagreements with Accountants on Accounting and Financial
  Disclosure                         | 25
|Item 9A                                                   | Controls and
  Procedures                                                                                        | 26
|Item 9B                                                   | Other
  Information                                                                                              | 27
|                                                          |                                                                                                                  |   
|PART III                                                 
|                                                          |                                                                                                                  |   
|Item 10                                                   | Directors,
  Executive Officers and Corporate Governance                                                         | 28
|Item 11                                                   | Executive
  Compensation                                                                                         | 29
|Item 12                                                   | Security
  Ownership of Certain Beneficial Owners and Management and Related Stockholder
  Matters               | 31
|Item 13                                                   | Certain
  Relationships and Related Transactions and Director Independence                                       | 32
|Item 14                                                   | Principal
  Accountant Fees and Services                                                                         | 34
|Item 15                                                   | Exhibits,
  Financial Statement Schedules                                                                        | 35
|                                                          |                                                                                                                  |   
|Financial Statements                                      | F-1                                                                                                             
|Report of Independent
  Registered Public Accounting Firm | F-3                                                                                                             
|Balance
  Sheet                                           | F-4                                                                                                             
|Statement of
  Income                                     | F-5                                                                                                             
|Statement of
  Stockholders Equity                       | F-6                                                                                                             
|Statement of
  Cash Flows                                 | F-7                                                                                                             
|Notes to
  Financial Statements                           | F-8F-25                                                                                                        

As used
herein, China XD, we, us, our and the Company refers to China XD
Plastics Company Limited.

---



PART I

|        |          
|------- | ---------
|ITEM 1. | BUSINESS.

China
XD, formerly known as NB Telecom, Inc. was originally incorporated
as NB Payphones Ltd. under the laws of the state of Pennsylvania on November 16,
1999. On December 27, 2005, we migrated our state of organization to the state
of Nevada and effective March 23, 2006, our name changed to NB Telecom, Inc.

On December 24, 2008, we acquired
all of the outstanding capital stock of Favor Sea Limited, a British Virgin
Islands corporation, through China XD Plastics Company Limited, a Nevada
corporation (the Merger Sub) wholly owned by the Company. Favor Sea Limited
is a holding company whose only asset, held through a subsidiary, was 100% of
the registered capital of Harbin Xinda Macromolecule Material Co., Ltd.
(Xinda). Xinda is a manufacturer and developer of modified plastics. Xinda is
a high-tech company that was founded in September 2004 under the laws of the
Peoples Republic of China with registered capital of 20 million RMB
(USD$2,416,451). Xindas executive offices and manufacturing facility are
located at No. 9 Qinling Road, Yingbin Road Centralized Industrial Park, Harbin
Development Zone, Heilongjiang Province, in northeast China. Xinda engages in
the development, manufacture, and distribution of modified plastic, primarily
for use in automobiles. The technology that has enabled Xinda to become Chinas
leading producer of automotive modified plastics derives from our wholly-owned
research laboratory, Harbin Xinda Macromolecule Material Research Institute
(the Research Institute), a subsidiary established in 2007. The Research
Institute has developed into a leader in research and development for Chinas
macromolecular industry. The Research Institute is outfitted with more than 80
sets of testing, analytical and production equipment used to analyze the
physical and mechanical properties of the heat resistances, durability,
stability, and environmental performance exhibited by modified plastics.

In
connection with the acquisition, the Company entered into an Agreement and Plan
of Merger (the Agreement) by and among the Merger Sub, Favor Sea Limited, and
the shareholders of Favor Sea including the principal shareholder, XD.
Engineering Plastics Company Limited (XD), a British Virgin Islands
corporation. The Company acquired all of the outstanding capital stock of Favor
Sea, through the Merger Sub. In connection with the acquisition, and in
exchange for the outstanding stock of Favor Sea, the shareholders of Favor Sea
received 50,367,778 shares of the common stock of the Company and 1,000,000
shares of convertible Series A preferred stock of the Company, and XD
individually received 1,000,000 shares of Series B preferred stock of the Company
(the Merger). Subsequent to the Merger and as a direct consequence, the name
of the Company was changed to China XD Plastics Company Limited pursuant to
Chapter 92A the Revised Nevada Statutes in connection with the Merger. The
50,367,778 shares of common stock were converted into 405,802 shares post a
reverse stock split of 124.1:1 for 1 pursuant to Nevada Revised Statutes
Section 78.207 for both the total number of authorized shares of common stock
and the total number of issued and outstanding shares of common stock. The
1,000,000 shares of convertible Series A preferred stock of the Company are
convertible into approximately 1:38.2 into 38,194,072 shares of the common
stock of the Company. Assuming the conversion of the Series A preferred stock
of the Company, the shareholders of Favor Sea will own approximately 99% of the
Common Stock of the Company.

Modified
plastic is produced by changing the physical and/or chemical characteristics of
ordinary resin materials. In order for plastics to be used in the automobile
environment, they must satisfy certain physical criteria in terms of
electro-magnetic characteristics, reaction to light and heat, durability, flame
resistance, and mechanical functionality. Xindas unique formulas and processing
techniques enable us to produce low-cost high-quality modified plastic
materials, which have been accepted by many of the major automobile
manufacturers in China. In addition, we also provide specially engineered
plastics and environment-friendly plastics for use in the assembly of equipment
for oilfields, mining, ship power, power station equipment, and other
industries.

1

---



Xindas
primary market is the rapidly expanding Chinese automotive industry. In 2007,
8.88 million automobiles were sold in China, which increased by 22% than the
previous year. It is estimated that the Chinese auto market will grow by 15%
annually in the coming years. Each automobile requires 100kg to 150 kg of
modified plastic, which means that by 2010 the demand for modified plastic in
the Chinese automobile industry will be approximately 1.2 million tons
annually. Xindas existing facility has an annual production capacity of 40,000
tons. If we complete the acquisition of an additional 19 production lines,
discussed below, our annual capacity will reach 100,000 tons.

Our
specialized plastics are utilized in the exterior and interior trim and in the
functional components of more than 30 automobile brands manufactured in China,
including Audi, Red Flag, Volkswagen and Mazda. At present, Xinda manufactures
approximately 145 types of automobile-specific modified plastic products, 117
of which have been certified for use by one or more of the automobile
manufacturers in China. The automotive applications for our plastics include
exteriors (automobile bumpers, rear- and side- view mirrors, license plate),
interiors (door panels, dashboard, steering wheel, glove compartment and safety
belt components), and functional components (air conditioner casing, heating
and ventilation casing, engine covers, and air ducts).

Our
145 products are organized into seven categories, based on their physical
characteristics:

Modified
Polypropylene:

|  |                                                                                                                                                                                                                                                                                                                                                            
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | COMPNIPER: a
  form of modified polypropylene that exhibits high fluidity and impact
  resistance. These products are primarily used for the interior automobile
  parts, such as the inner panels, instrument panels, and box lids. 27 of these
  products have been certified for use in the Chinese auto industry.                                      
|  |                                                                                                                                                                                                                                                                                                                                                            
| | COMPWIPER: a
  form of modified polypropylene that exhibits low-temperature-resistance and
  impact resistance. These products are primarily used for external automobile
  parts, such as the front and back bumpers and mudguards. 23 of these products
  have been certified for use in the Chinese auto industry.                                      
|  |                                                                                                                                                                                                                                                                                                                                                            
| | COMPGOPER: a
  form of modified polypropylene that exhibits high-temperature-resistance and
  resistance to static. These products are used primarily for automobile
  functional components, such as the unit heater shells and air conditioner
  shells. 33 of these products have been certified for use in the Chinese auto
  industry.                
|  |                                                                                                                                                                                                                                                                                                                                                            
| | Modified
  ABS:                                                                                                                                                                                                                                                                                                                                            
|  |                                                                                                                                                                                                                                                                                                                                                            
| | MOALLOLY: a
  form of modified ABS (acrylonitrile butadiene styreme) plastic that exhibits
  high gloss, high rigidity, and size stability. These products are primarily
  used for automobile functional components, such as the heat dissipating grid
  and wheel covers. 6 of these products have been certified for use in the
  Chinese auto industry.
|  |                                                                                                                                                                                                                                                                                                                                                            
| | Modified
  Nylon:                                                                                                                                                                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                                                                                                            
| | POLGPAMR: a
  form of modified nylon that exhibits high wear and heat resistance. These
  products are primarily used for automotive parts requiring high flame and
  heat resistance. 10 of these products have been certified for use in the
  Chinese auto industry.                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                            
| | Engineering
  Plastic                                                                                                                                                                                                                                                                                                                                      
|  |                                                                                                                                                                                                                                                                                                                                                            
| | MOAMIOLY: a
  wear-resistant form of engineering plastic. These products are primarily used
  for the engine hood, intake manifold, and bearings. 7 of these products have
  been certified for use in the Chinese auto
industry.                                                                                                                          

2

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|  |                                                                                                                                                                                                                                                                                                                                                                       
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Alloy
  Plastic                                                                                                                                                                                                                                                                                                                                                       
|  |                                                                                                                                                                                                                                                                                                                                                                       
| | BRBSPCL: a
  form of alloy plastic. These products are used primarily for the rearview
  mirror, grille, automotive electronics and other components. The products can
  also be used in computers, plasma TVs, mobile phones and other electronic and
  electrical consumer products. 7 of these products have been certified for use
  in the Chinese auto industry.
|  |                                                                                                                                                                                                                                                                                                                                                                       
| | Environment-friendly
  Modified Plastic                                                                                                                                                                                                                                                                                                                               
|  |                                                                                                                                                                                                                                                                                                                                                                       
| | POLGBSMR: an
  environment-friendly form of modified plastic, is used in automobiles with
  environmental standard requirements. 4 of these products have been certified
  for use in the Chinese auto industry.                                                                                                                                                      
|  |                                                                                                                                                                                                                                                                                                                                                                       
| | Modified
  Plastic for Special Engineering                                                                                                                                                                                                                                                                                                                            

PEEK: a
special engineering form of modified plastics that can be used in communication
and transportation, electronic and electric appliance, machinery, medical
equipment and analytical equipment. Xinda is developing products in this field
based on the years research findings. However, none of these products has been
certified for use in the auto industry.

Asset Purchase
Agreement

With
the acceleration of the localization of China auto parts industry and the rapid
increase of sales of special modified plastics for automobiles, it is estimated
that the demand of special modified plastics for automobiles will increase from
0.728 million tons in 2006 to 1.20 million tons in 2010. Because of this,
Xindas production capacity of automotive special modified plastics cannot meet
with customers increasing order demand, and Xinda decides to achieve 0.1
million tons of special modified plastics for automobiles by 2010 through the
form of acquiring all Xinda High-techs assets which is used to produce
modified plastics for automobiles. Xinda and Xinda High-tech entered into an
Assets Purchase Agreement on September 20, 2008.

Pursuant
to the Assets Purchase Agreement, Xinda will purchase 6 buildings including
office building, 19 full automatic production lines and related lands and
subsidiary facilities. Xinda High-tech sold all facilities to Xinda at the
price of 240 million RMB (USD$35 million). Xinda will pay all funds before the
end of September, 2009.

3

---



Raw Materials

The
principal raw materials used for the production of the Companys products are
plastic resins such as polypropylene, ABS and nylon. Nearly 60% of these raw
materials come from overseas petrochemical enterprises, and 40% from domestic
petrochemical enterprises. All of our contracts for raw materials are one-year
renewable contracts.

| |   |                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Polypropylene
  is a chemical compound manufactured from petroleum.                                                                                            
| |   |                                                                                                                                                                
| |  | Acrylonitrile
  Butadiene Styrene (ABS), is a common thermoplastic used to make light, rigid,
  molded products such as automotive body parts and wheel covers.
| |   |                                                                                                                                                                
| |  | Nylon is a
  thermoplastic silky material.                                                                                                                     

Currently
we have adequate access to these raw materials by dealing with major suppliers
in the industry. Xinda has one-year renewable contracts with each of suppliers.
Because the raw materials are mostly petroleum products, the rise of oil price
will directly affect the cost for the raw materials. However, in that event, we
should be able to pass the cost to our customers by raising the price for our
products.

Because
raw materials constitute a substantial part of the cost of our products, we
seek to reduce the cost of raw materials by dealing with two major suppliers:
Dalian Free Trade Zone Mankeri International Trade Co., Ltd. (Mankeri), and
Dalian Lanhai International Trade Co., Ltd. During the year ended onDecember 31,
2008, Xinda purchased approximately 58% of its raw materials from Mankeri and
26% from Dalian Lanhai International Trade Co., Ltd. In 2007 we purchased 86%
of our raw materials from Mankeri, and 80% in 2006. By dealing with these major
suppliers, Xinda obtains reduced prices for raw materials, and thus reduces the
cost of our products. If we were unable to purchase from Mankeri, we would
still have adequate sources of raw materials from other petrochemical dealers,
but the cost would increase by 1-2%.

Intellectual
Property

Our
Research Institute, Xinda Macromolecule Material Research Institute, was
organized to provide us with ongoing additions to our technology, which
represents the key to our competitive success. Our goal is to utilize
state-of-the-art methods and equipment to produce plastics of the highest
quality that are cost-efficient for our customers. Toward this end, we have
staffed the Research Institute with 38 researcher employees, over 90% of whom
have advanced degrees or specialized undergraduate training.

To
supplement the efforts of our Research Institute, we have developed cooperative
research programs with a number of the leading technology centers in China,
including the Changchun Institute of Applied Chemistry of the Chinese Academy
of Science, the Beijing Chemical Engineering Institute, the Harbin Institute of
Technology, the Northeast Forestry University, Jilin University, and the Korea
HEP Institute. Besides providing specialized research and development skills,
these relationships help us to formulate cutting edge research programs aimed
at addressing developing issues in plastics engineering.

All
our significant research and development
activities are overseen by the members of our Scientific Advisory Board, which
we have assembled from among the leaders in Chinas chemical engineering
industry. Currently, the members of the Scientific Advisory Board are:

4

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|  |                                                                                                                                                                            
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Jin Yong:
  The member of the Chinese Academy of Engineering, director of the Research
  Institute of Chemical Engineering Science and Technology at Tsinghua
  University.
| 
| | Wu Zhongwen:
  Director of the Research Institute of Special Plastics Engineering of Jilin
  University.                                                                   
| 
| | Zheng Kai:
  Secretary General of Chinas Plastics Engineering Industry Association.                                                                                       
| 
| | Huang
  Yudong: Dean of the Chemical Engineering Department at Harbin Industrial
  University                                                                              
| 
| | Li Bin: Dean
  of the Science Department at Eastern Forest Industry University.                                                                                            
| 
| | Xing Yuqing:
  Director of the Teaching and Research Section of the Chemical Engineering
  Department at Harbin Industrial University                                      
| 
| | Jiang
  Zhenhua: Director of the Engineering Research Center of the Special Plastics
  Engineering Education Department of Jilin University                                

As
a result of our collection of academic and technological expertise, we have a
portfolio of 10 patents for which we have applications pending in China.

5

---



|    |                                           |                                             |                        |                 |            |                     
|--- | ----------------------------------------- | ------------------------------------------- | ---------------------- | --------------- | ---------- | --------------------
|    |                                           |                                             |                        |                 |            | Application Date and
|No. | Patent Name                               |                                             | Patent Application No. | Status         
|   
|    |                                           | Measures for
  efficient recycling and      |                        |                 |            |                     
|1   |                                           | circulating
  usage of waste and old        |                        |                 |            | 2005.11.15          
|    |                                           | plastics                                    |                        | 200510010540.90 |            | Pending             
|   
|2   |                                           | Special
  engineering plastics dedicated to |                        |                 |            | 2005.11.15          
|    | military
  industry products              |                                             | 200510010543.20        |                 | Pending   
|   
|    |                                           | Special
  materials for wall tubes of       |                        |                 |            |                     
|3   |                                           | polyethylene
  winding structure of tube    |                        |                 |            |                     
|    | inbuilt
  technology without opening tank |                                             |                        |                 | 2005.11.15
|    |                                           | lid                                         |                        | 200510010541.30 |            | Pending             
|   
|4   |                                           | Stuffing
  master batch material dedicated  |                        |                 |            | 2005.11.15          
|    | to
  polypropylene resin                  |                                             | 200510010542.80        |                 | Pending   
|   
|5   |                                           | Special
  materials for air inflow manifold |                        |                 |            | 2007.7.25           
|    | of
  automobile engine                    |                                             | 200710072563.10        |                 | Pending   
|    | High-lustre
  low shrinkage ratio nano    |                                             |                        |                 |           
|   
|6   |                                           | polypropylene
  modified compound and       |                        |                 |            | 2005.11.15          
|    | its
  manufacturing methods               |                                             | 200510010539.60        |                 | Pending   
|   
|7   |                                           | Strengthened
  toughened aging resistant    |                        |                 |            |                     
|    | polypropylene/nano
  calcium carbonate    |                                             |                        |                 |           
|    | compound
  material and its               |                                             |                        |                 | 2005.11.15
|    | manufacturing
  methods                   |                                             | 200510010538.10        |                 | Pending   
|   
|8   |                                           | Green
  inflaming-retardant ABS alloy       |                        | 200610009836.30 |            | 2006.03.21          
|   
|9   |                                           | Compound
  nano special materials           |                        |                 |            | 2005.06.06          
|    | dedicated to
  automobile bumper          |                                             | 200510010066.x         |                 | Pending   
|   
|10  |                                           | High-performance
  special                  |                        |                 |            |                     
|    | polypropylene
  materials dedicated to    |                                             |                        |                 | 2006.3.21 
|    | automobile                                |                                             | 200610009837.80        |                 | Pending   

Trademark

We
own the trademarks for our graphic logo and Chinese characters of (Xinda),
which we use in packaging our products and marketing ourselves. Currently the
two trademarks are under the application for Companys name change due to the
change of our name from Harbin Xinda Macromolecule Material Inc. to Harbin
Xinda Macromolecule Material Co., Ltd.

Marketing

Currently
Xindas sales network covers the northeastern and eastern regions of China.
Xinda has two sales branches: one in Changchun City where the largest portion
of the automobile manufacturing industry in China is located, and the other in
Ningbo City in the eastern part of China where the second largest portion of
such industry known as Shanghai Region is located. Xinda has a sales team of 18
persons, each with more than three years of sales experiences. In 2008, 91% of
our sales were derived from the northeastern market, with continuing expansion
into the northern and eastern regions of China.

6

---



Xinda
sells directly to its customers or indirectly through sales agents. Xinda rates
potential customers based on its Customer Estimation Management System. For
those customers who can make payment within our collection period, Xinda sells
products directly to them, and provides full after-sale services. These
customers are usually the major automobile manufacturers who have certified our
products. For potential customers who may not be able to make payment within
our collection period, we assign a local sales agent to market to them.

We
enter into Sales Agency Agreements with local agents in areas where large
automobile manufacturers are located. The sales agents are responsible for
developing the markets for our products and collecting payments from our
customers. In distributing our products during the agency period, the agents
are required to use Xindas product certificate, brand and package standards
set by us. They must also reimburse us the amount of payment that the customers
fail to make within our collection period. After the termination of the agency
relationship, the customers developed by the agents are proprietary to Xinda.

During
the past three years, the Company has sold most of its products in the three
northeastern provinces of China: Heilongjiang, Jilin, and Liaoning. We expect
to develop more customers in the cities and provinces located in the Eastern
part of China, such as Shanghai and Zhejiang Province.

No
single customer accounted for more than 10% of our sales during the nine months
ended on December 31, 2008, or during 2007 or 2006.

Competition

Currently
Xindas primary Chinese competitor in the automobile industry is a large
industrial company named Guangzhou Kingfa Science & Technology Co., Ltd.
(Guangzhou Kingfa). Guangzhou Kingfa entered the market in 2006 and its
facilities with a manufacturing capacity of 100,000 tons are under
construction. Guangzhou Kingfa has much larger financial resources than Xinda.
Currently, however, it has fewer certified products and sells less modified
plastic to the automobile industry than Xinda.

The
Chinese auto market is dominated, however, by modified plastic manufactured
overseas or in factories controlled by foreign companies. Almost 60% of the
modified plastic used in Chinese automobiles is manufactured by non-Chinese
fabricators, primarily manufacturers from Germany, the Netherlands and Japan.
Although Xinda and its Chinese competitors compare very favorably with these
foreign competitors in terms of price, service and delivery times, the lack of
production capacity in the Chinese modified plastics industry has allowed the
foreign competition to remain dominant in that industry.

Employees

Xindas
operations are organized into seven operational departments such as
technologies, sales, supply, R&D and finance. There are currently 296
full-time employees, including 94 in manufacturing, 38 in R&D, 32 in
management, 13 in financial department, 18 in sales, purchasing and marketing
and 132 in other departments.

7

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|         |             
|-------- | ------------
|Item 1A. | Risk Factors

You
should carefully consider the risks described below before buying our common
stock. If any of the risks described below were realized, that event could
cause the trading price of our common stock to decline, and you could lose all
or part of your investment.

Risks related to doing business in
China

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

China
is a developing nation governed by a one-party government and may be more
susceptible to political, economic, and social upheaval than other nations.

China
is a developing country governed by a one-party government. China is also a
country with an extremely large population, widening income gaps between rich
and poor and between urban and rural residents, minority ethnic and religious
populations, and growing access to information about the different social,
economic, and political systems to be found in other countries. China has also
experienced extremely rapid economic growth over the last decade, and its legal
and regulatory systems have changed rapidly to accommodate this growth. These
conditions make China unique and may make it susceptible to major structural
changes. Such changes could include a reversal of Chinas movement to encourage
private economic activity, labor disruptions or other organized protests,
nationalization of private businesses, internal conflicts between the police or
military and the citizenry, and international political or military conflict.
If any of these events were to occur, it could shut down Chinas economy and
cause us to temporarily or permanently cease operations.

The PRCs laws, regulations and
policies, and changes to them, may limit our ability to operate profitably or
prevent us from operating at all.

Our
stores and distribution centers, as well as our suppliers and the agricultural
producers on whom they depend, are located in China. The PRC government has
exercised and continues to exercise substantial control over virtually every
sector of the Chinese economy, including the production, distribution and sale
of our merchandise. In particular, we are subject to regulation by local and
national branches of the Ministries of Commerce and Transportation, as well as
the General Administration of Quality Supervision, the State Administration of
Foreign Exchange, and other regulatory bodies. In order to operate under PRC
law, we require valid licenses, certificates and permits, which must be renewed
from time to time. If we were to fail to obtain the necessary renewals for any
reason, including sudden or unexplained changes in local regulatory practice,
we could be required to shut down all or part of our operations temporarily or
permanently.

Our
ability to operate in China may be harmed by changes in its laws and
regulations, including those relating to agriculture, taxation, land use rights
and other matters. Such changes could be made at the national or local level
and in the form of: farm subsidies; corporate tax rates; employee benefits;
leaseholder or land-use rights; enforceability of contracts; intellectual
property; or retail pricing. The effects of such changes on our business cannot
be predicted but could be significant.

8

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All of our assets are located in
China. So any dividends or proceeds from liquidation are subject to the
approval of the relevant Chinese government agencies.

Our
assets are located inside China. Under the laws governing FIEs in China,
dividend distribution and liquidation are allowed but subject to special
procedures under the relevant laws and rules. Any dividend payment will be
subject to the decision of the board of directors and subject to foreign
exchange rules governing such repatriation. Any liquidation is subject to both
the relevant government agencys approval and supervision as well the foreign
exchange control. This may generate additional risk for our investors in case
of dividend payment or liquidation.

Because our funds are held in banks
which do not provide insurance, the failure of any bank in which we deposit our
funds could affect our ability to continue in business.

Banks
and other financial institutions in the Peoples Republic of China do not
provide insurance for funds held on deposit. As a result, in the event of a
bank failure, we may not have access to funds on deposit. Depending upon the
amount of money we maintain in a bank that fails, our inability to have access
to our cash could impair our operations, and, if we are not able to access
funds to pay our suppliers, employees and other creditors, we may be unable to
continue in business.

Anti-inflation measures may be
ineffective or harm our ability to do business in China.

In
recent years, the PRC government has instituted anti-inflationary measures to
curb the risk of an overheated economy characterized by debilitating inflation.
These measures have included devaluations of the renminbi, restrictions on the
availability of domestic credit, and limited re-centralization of the approval
process for some international transactions. These austerity measures may not
succeed in slowing down the economys excessive expansion or control inflation,
or they may slow the economy below a healthy growth rate and lead to economic stagnation
or recession; in the worst-case scenario, the measures could slow the economy
without curbing inflation. The PRC government could adopt additional measures
to further combat inflation, including the establishment of price freezes or
moratoriums certain projects or transactions. Such measures could harm the
economy generally and hurt our business by limiting the income of our customers
available to purchase our merchandise, by forcing us to lower our profit
margins, and by limiting our ability to obtain credit or other financing to
pursue our expansion plans or maintain our business.

Governmental control of currency
conversions may affect the value of your investment.

All
of our revenue is earned in renminbi, and any future restrictions on currency
conversions may limit our ability to use revenue generated in renminbi to make
dividend or other payments in U.S. dollars. Although the PRC government
introduced regulations in 1996 to allow greater convertibility of the renminbi
for current account transactions, significant restrictions still remain,
including primarily the restriction that foreign-invested enterprises like us
may buy, sell or remit foreign currencies only after providing valid commercial
documents at a PRC banks specifically authorized to conduct foreign-exchange
business.

In
addition, conversion of renminbi for capital account items, including direct
investment and loans, is subject to governmental approval in the PRC, and
companies are required to open and maintain separate foreign-exchange accounts
for capital account items. There is no guarantee that PRC regulatory
authorities will not impose additional restrictions on the convertibility of
the renminbi. Such restrictions could prevent us from distributing dividends
and thereby reduce the value of our stock.

9

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The fluctuation of the exchange rate
of the renminbi against the dollar could reduce the value of your investment.

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

On
July 21, 2005, the PRC government changed its decade-old policy of pegging the
value of the renminbi to the U.S. Dollar. Under the new policy, the renminbi is
permitted to fluctuate within a narrow and managed band against a basket of
certain foreign currencies. This change in policy has resulted in an
appreciation of the renminbi against the U.S. dollar of approximately 12% as of
the date of this report. While the international reaction to the renminbi
revaluation has generally been positive, there remains significant
international pressure on the PRC government to adopt an even more flexible
currency policy, which could result in a further and more significant
appreciation of the renminbi against the U.S. Dollar.

We
receive all of our revenues in renminbi. The PRC government imposes controls on
the convertibility of renminbi into foreign currencies and, in certain cases,
the remittance of currency out of the China. Shortages in the availability of
foreign currency may restrict our ability to remit sufficient foreign currency
to pay dividends, or otherwise satisfy foreign currency denominated
obligations. Under existing PRC foreign exchange regulations, payments of
current account items, including profit distributions, interest payments and
expenditures from the transaction, can be made in foreign currencies without
prior approval from the PRC State Administration of Foreign Exchange (SAFE)
by complying with certain procedural requirements. However, approval from appropriate
governmental authorities is required where renminbi are to be converted into
foreign currency and remitted out of the PRC to pay capital expenses, such as
the repayment of bank loans denominated in foreign currencies.

The
PRC government could also restrict access in the future to foreign currencies
for current account transactions. If the foreign exchange control system
prevents us from obtaining sufficient foreign currency to satisfy our currency
demands, we may not be able to pay certain expenses as they come due.

Recently-modified SAFE regulations
may restrict our ability to remit profits out of China as dividends.

SAFE
Regulations regarding offshore financing activities by PRC residents have
recently undergone a number of changes which may increase the administrative
burdens we face. The failure of our stockholders who are PRC residents to make
any required applications and filings pursuant to these regulations may prevent
us from being able to distribute profits and could expose us and our
PRC-resident stockholders to liability under PRC law.

SAFE
issued a public notice (the October Notice), effective as of November 1,
2005, and implementation rules in May 2007, which require registration with
SAFE by the PRC-resident stockholders of any foreign holding company of a PRC
entity. These regulations apply to our stockholders who are PRC residents. In
the absence of such registration, the PRC entity cannot remit any of its
profits out of the PRC as dividends or otherwise.

10

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In
the event that our PRC-resident stockholders have not followed the procedures
required under the October Notice and its implementation rules, we could lose
the ability to remit monies outside of the PRC and would therefore be unable to
pay dividends or make other distributions, and we could face liability for
evasion of foreign-exchange regulations. Such consequences could affect our
good standing under PRC regulations and our ability to operate in the PRC, and
could therefore diminish the value of your investment.

Chinas legal and judicial system
may not adequately protect our business and operations and the rights of
foreign investors.

Chinas
legal and judicial system may negatively impact foreign investors. In 1982, the
National Peoples Congress amended the Constitution of China to authorize
foreign investment and guarantee the lawful rights and interests of foreign
investors in the China. However, the Chinas system of laws is not yet comprehensive.
The legal and judicial systems in the China are still rudimentary, and
enforcement of existing laws is inconsistent. Many judges in the China lack the
depth of legal training and experience that would be expected of a judge in a
more developed country. Because the China judiciary is relatively inexperienced
in enforcing the laws that do exist, anticipation of judicial decision-making
is more uncertain than would be expected in a more developed country. It may be
impossible to obtain swift and equitable enforcement of laws that do exist, or
to obtain enforcement of the judgment of one court by a court of another
jurisdiction. The Chinas legal system is based on civil law, or written
statutes; a decision by one judge does not set a legal precedent that must be
followed by judges in other cases. In addition, the interpretation of Chinese
laws may vary to reflect domestic political changes.

As
a matter of substantive law, the foreign-invested enterprise laws provide
significant protection from government interference. In addition, these laws
guarantee the full enjoyment of the benefits of corporate articles and
contracts to foreign-invested enterprise participants. These laws, however, do
impose standards concerning corporate formation and governance, which are
qualitatively different from the general corporation laws of the United States.
Similarly, the PRC accounting laws mandate accounting practices that are not
consistent with U.S. generally accepted accounting principles. PRC accounting
laws require that an annual statutory audit be performed in accordance with
PRC accounting standards and that the books of account of foreign-invested
enterprises are maintained in accordance with Chinese accounting laws. Article
14 of the PRC Wholly Foreign-Owned Enterprise Law requires a wholly
foreign-owned enterprise to submit certain periodic fiscal reports and
statements to designated financial and tax authorities, at the risk of business
license revocation. Our subsidiary, Harbin Xinda Macromolecule Material Co,
Ltd., is a wholly foreign-owned enterprise and is subject to these regulations.

As
a matter of enforcement, although the enforcement of substantive rights may
appear less clear than in the U.S., foreign-invested enterprises and wholly foreign-owned
enterprises are PRC-registered companies, which enjoy the same status as other
PRC-registered companies in business-to-business dispute resolution. Because
the Articles of Association of the Company do not specify a method for the
resolution of business disputes, the Company and other parties involved in any
business dispute are free to proceed either in the Chinese courts or, if they
are in agreement, through arbitration. Under PRC law, any award rendered by an
arbitration tribunal is enforceable in accordance with the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Therefore, PRC laws relating to business-to-business dispute resolution should
not work to the disadvantage of foreign-invested enterprises such as the
Company.

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However,
the PRC laws and regulations governing our current business operations are
sometimes vague and uncertain. There are substantial uncertainties regarding
the interpretation and application of PRC laws and regulations, including but
not limited to the laws and regulations governing our business and the
enforcement and performance of our arrangements with suppliers in the event of
the imposition of statutory liens, death, bankruptcy and criminal proceedings.
We and any future subsidiaries are considered foreign persons or
foreign-invested enterprises under PRC laws, and as a result, we are required
to comply with PRC laws and regulations. These laws and regulations are
sometimes vague and may be subject to future changes, and their official
interpretation and enforcement may involve substantial uncertainty. The
effectiveness of newly enacted laws, regulations or amendments may be delayed,
resulting in detrimental reliance by foreign investors. New laws and regulations
that affect existing and proposed future businesses may also be applied
retroactively. We cannot predict what effect the interpretation of existing or
new PRC laws or regulations may have on our business.

In
addition, some of our present and future executive officers and directors, most
notably Mr. Jie Han, may be residents of the PRC and not of the United States,
and substantially all the assets of these persons are located outside the
United States. As a result, it could be difficult for investors to effect
service of process in the United States, or to enforce a judgment obtained in
the United States against us or any of these persons.

Risks related to our business

Our limited operating history makes
it difficult to evaluate our future prospects and results of operations.

We
have a limited operating history. Accordingly, you should consider our future
prospects in light of the risks and uncertainties experienced by early-stage
companies in evolving markets such as China. Some of these risks and
uncertainties relate to our ability to:

| |   |                                                                            
| | - | ---------------------------------------------------------------------------
| |  | offer new
  products to attract and retain a larger customer base;         
| |   |                                                                            
| |  | increase
  awareness of our brand and continue to develop customer loyalty;
| |   |                                                                            
| |  | respond to
  competitive market conditions;                                
| |   |                                                                            
| |  | respond to
  changes in our regulatory environment;                        
| |   |                                                                            
| |  | manage risks
  associated with intellectual property rights;               
| |   |                                                                            
| |  | maintain
  effective control of our costs and expenses;                    
| |   |                                                                            
| |  | raise
  sufficient capital to sustain and expand our business; and         
| |   |                                                                            
| |  | attract,
  retain and motivate qualified personnel                         
| |   |                                                                            
| |  | offer new
  products to attract and retain a larger customer base;         
| |   |                                                                            
| |  | increase
  awareness of our brand and continue to develop customer loyalty;
| |   |                                                                            
| |  | respond to
  competitive market conditions;                                
| |   |                                                                            
| |  | respond to
  changes in our regulatory environment;                        
| |   |                                                                            
| |  | manage risks
  associated with intellectual property rights;               
| |   |                                                                            
| |  | maintain
  effective control of our costs and expenses;                    

| |   |                                                                   
| | - | ------------------------------------------------------------------
| |  | raise sufficient
  capital to sustain and expand our business; and
| |   |                                                                   
| |  | attract,
  retain and motivate qualified personnel                

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Because we are
a relatively new company, we may not be experienced enough to address all the
risks in our business or in our expansion. If we are unsuccessful in addressing
any of these risks and uncertainties, our business may be materially and
adversely affected.

We expect to incur costs related to
our planned expansion and growth into new plants and ventures which may not
prove to be profitable. Moreover, any delays in our expansion plans could cause
our profits to decline and jeopardize our business.

We
anticipate that our proposed expansion of our plants may include the
construction of new or additional facilities. Our cost estimates and projected
completion dates for construction of new production facilities may change
significantly as the projects progress. In addition, our projects will entail
significant construction risks, including shortages of materials or skilled
labor, unforeseen environmental or engineering problems, weather interferences
and unanticipated cost increases, any of which could have a material adverse
effect on the projects and could delay their scheduled openings. A delay in
scheduled openings will delay our receipt of increased sales revenues, which,
when coupled with the increased costs and expenses of our expansion, could
cause a decline in our profits.

Our
plans to finance, develop, and expand our facilities will be subject to the many
risks inherent in the rapid expansion of a high growth business enterprise,
including unanticipated design, construction, regulatory and operating
problems, and the significant risks commonly associated with implementing a
marketing strategy in changing and expanding markets. These projects may not
become operational within their estimated time frames and budgets as projected
at the time the Company enters into a particular agreement, or at all. In
addition, the Company may develop projects as joint ventures in an effort to
reduce its financial commitment to individual projects. The significant
expenditures required to expand our production plants may not ultimately result
in increased profits.

Our business and operations are
growing rapid. If we fail to effectively manage our operation, our business and
operating results could be harmed.

To
date we have experienced, and continue to experience, rapid growth in our
operations. This has placed, and will continue to place, significant demands on
our management, and on our operational and financial infrastructure. If we do
not effectively manage our operations, the quality of our products and services
will suffer, which would negatively affect our operating results. If the
necessary funding can be obtained, we will be able to improve our operational,
financial and management controls and our reporting systems and procedures. The
complexity of this undertaking means that we are likely to face many
challenges, some of which are not yet foreseeable. Problems may occur with our
raw material acquisition, with the roll-out of efficient manufacturing
processes, and with our ability to sell our products to our customers. If we
are not able to obtain the necessary funding and operate efficiently, our business
plan may fall short of its goals, and our ability to manage our growth could be
hurt.

The capital investments that we plan
may result in dilution of the equity of our present shareholders.

We
have entered into an Asset Purchase Agreement that contemplates that we will
pay approximately $35 million to acquire additional production assets, in order
to increase our production capacity from 40,000 tons to 100,000 tons. We intend
to raise a large portion of the necessary funds by selling equity in our
company. At present we have no commitment from any source for those funds. We
cannot determine, therefore, the terms on which we will be able to raise the
necessary funds. It is possible that we will be required to dilute the value of
our current shareholders equity in order to obtain the funds. If, however, we
are unable to raise the necessary funds, our growth will be limited, as will
our ability to compete effectively.

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We operate in a highly competitive
marketplace, which could adversely affect our sales and financial condition.

We
compete on the basis of quality, price, product availability and security of
supply, product development and customer service. Some competitors are larger
than us in certain markets and may have greater financial resources that allow
them to be in a better position to withstand changes in the industry. Our
competitors may introduce new products based on more competitive alternative
technologies that may be causing us to lose customers which would result in a
decline in our sales volume and earnings. Our customers demand high quality and
low cost products and services. The cost and availability of energy and
strategic raw materials may continue to deteriorate domestically while improving
in the international market, thus advantaging our foreign competition. Any such
change in the global market could adversely impact the demand for our products.
Competition could cause us to lose market share and certain lines of business,
or increase expenditures or reduce pricing, each of which would have an adverse
effect on our results of operations, cash flows and financial condition.

Related party transactions may pose
risks to our inventory.

Currently
the Company has an Asset Purchase Agreement with Mr. Hans, the Companys
Chairman and Chief Executive Officer, wife to acquire certain production assets
at below historical cost value. There may be occasions in which additional
related party transactions may take place. Even the Company will do its utmost
to minimize such transactions and conduct such transactions in the best
interest of its public shareholders, there may exist serious conflict of
interest and damage to the public shareholders. Such conflict of interest and potential
harm to public shareholders and investors interest may negatively impact on
the value of the Company.

An inability to protect our
intellectual property rights could reduce the value of our products, services
and brand.

Our
unique technologies and techniques are important assets for us. We have applied
to the Chinese government for intellectual property right protection for some
of the technologies that we own. However, this legal effort may sometimes not
be sufficient or effective, due to the lack of effective legal enforcement in
China. Any significant impairment of our intellectual property rights could
harm our business or our ability to compete. In addition, since protection of
our intellectual property rights is costly and time consuming, any unauthorized
use of our to-be-patented technologies could increase our cost of business and
eventually harm our operating results. Moreover, since we only registered
intellectual property rights for our technologies in China, our technologies
may not be well protected in other countries in which our products may be sold
in the future.

An increase in raw material prices
could increase Xindas costs and decrease its profits.

Changes
in the cost of raw materials could significantly affect Xindas business. Since
cost for raw materials constitute a substantial part of our product price,
increase in the cost of raw materials will decrease our profit margin. Although
we may offset such deduction of our profit by increasing the price for our
products, unforeseeable events in the market may occur to prevent the
effectiveness of this method. We also rely on one major supplier to provide
such raw materials. Failure to maintain business relationship with this one
major supplier may make the raw materials inaccessible, and thus hurt our
operation result.

Our
performance and planned growth depend on raw material supply and related costs.

14

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We rely on Mr. Jie Han, Our Chairman
and Chief Executive Officer, for the management of our business, and the loss
of his services could significantly harm our business and prospects.

We
depend, to a large extent, on the abilities and participation of our current
management team, but have a particular reliance upon Mr. Jie Han, our Chairman
and Chief Executive Officer and President, for the direction of our business.
The loss of the services of Mr. Han for any reason could have a material
adverse effect on our business and prospects. We cannot assure you that the
services of Mr. Han will continue to be available to us, or that we will be
able to find a suitable replacement for Mr. Han. We have entered into an
employment contract with Mr. Han, but that agreement does not guarantee Mr.
Hans continuing to manage the Company. We do not have key man insurance on Mr.
Han, and if he were to die and we were unable to replace him for a prolonged
period of time, we could be unable to carry out our long-term business plan,
and our future prospects for growth, and our business, could be harmed.

Difficulties with hiring, employee
training and other labor issues could disrupt our operations.

We
may not be able to successfully hire and train new team members or integrate
those team members into the programs and policies of the Company. Any such
difficulties would reduce our operating efficiency and increase our costs of
operations.

Increased environmental regulation
in China could increase our costs of operation.

Certain
processes utilized in the production of modified plastics result in toxic
by-products. To date, the Chinese government has imposed only limited
regulation on the production of these by-products, and enforcement of the
regulations has been sparse. Recently, however, there is a substantial increase
in focus on the Chinese environment, which has inspired considerable new
regulation. Because Xinda plans to export plastics to the U.S. and Europe in
coming years, Xinda has developed sufficient safeguards in its manufacturing
processes to assure compliance with the environmental regulations imposed by
European and U.S regulators. This compliance regimen brings us into compliance
with all Chinese environmental regulations. Additional regulation, however,
could increase our cost of doing business, which would impair our
profitability.

We may have difficulty establishing
adequate management and financial controls in China.

The
Peoples Republic of China has only recently begun to adopt the management and
financial reporting concepts and practices that investors in the United States
are familiar with. We may have difficulty in hiring and retaining employees in
China who have the experience necessary to implement the kind of management and
financial controls that are expected of a United States public company. If we
cannot establish such controls, we may experience difficulty in collecting
financial data and preparing financial statements, books of account and
corporate records and instituting business practices that meet U.S. standards.

15

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We may incur significant costs to
ensure compliance with U.S. corporate governance and accounting requirements.

We
may incur significant costs associated with our public company reporting
requirements, costs associated with newly applicable corporate governance
requirements, including requirements under the Sarbanes-Oxley Act of 2002, or
Sarbanes-Oxley, and other rules implemented by the Securities and Exchange
Commission. We expect all of these applicable rules and regulations to increase
our legal and financial compliance costs and to make some activities more
time-consuming and costly. We also expect that these applicable rules and
regulations may make it more difficult and more expensive for us to obtain
director and officer liability insurance and we may be required to accept
reduced policy limits and coverage or incur substantially higher costs to
obtain the same or similar coverage. As a result, it may be more difficult for
us to attract and retain qualified individuals to serve on our board of
directors, on committees of our board of directors or as executive officers.

As
a public company, we are required to comply with rules and regulations of the
SEC, including expanded disclosure, accelerated reporting requirements and more
complex accounting rules. This will continue to require additional cost
management resources. We will need to continue to implement additional finance
and accounting systems, procedures and controls as we grow to satisfy these reporting
requirements. In addition, we may need to hire additional legal and accounting
staff with appropriate experience and technical knowledge, and we cannot assure
you that if additional staffing is necessary that we will be able to do so in a
timely fashion. If we are unable to complete the required annual assessment as
to the adequacy of our internal reporting or if our independent registered
public accounting firm is unable to provide us with a qualified report as to
the effectiveness of our internal controls over financial reporting in the
future, we could incur significant costs to become compliant.

We rely on highly skilled personnel
and, if we are unable to retain or motivate key personnel or hire qualified
personnel, we may not be able to grow effectively.

Our
performance largely depends on the talents and efforts of highly skilled
individuals. Our future success depends on our continuing ability to identify,
hire, develop, motivate and retain highly skilled personnel for all areas of
our organization. Our continued ability to compete effectively depends on our
ability to attract new technology developers and to retain and motivate our
existing contractors.

We have limited business insurance
coverage.

The
insurance industry in China is still at an early stage of development.
Insurance companies in China offer limited business insurance products, and do
not, to our knowledge, offer business liability insurance. As a result, we do
not have any business liability insurance coverage for our operations.
Moreover, while business disruption insurance is available, we have determined
that the risks of disruption and cost of the insurance are such that we do not
require it at this time. Any business disruption, litigation or natural
disaster might result in substantial costs and diversion of resources.

The Company is not likely to hold
annual shareholder meetings in the next few years.

Management
does not expect to hold annual meetings of shareholders in the next few years,
due to the expense involved. The current members of the Board of Directors were
appointed to that position by the previous directors. If other directors are
added to the Board in the future, it is likely that the current directors will
appoint them. As a result, the shareholders of the Company will have no
effective means of exercising control over the operations of the Company.

16

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Risks related to an investment in our common stock

Our Chief Executive Officer has a
large degree of control on us through his position and stock ownership and his
interests may differ from other stockholders.

Our
Chief Executive Officer, Mr. Jie Han has option on XDs shares. As a result,
Mr. Han will be able to influence the outcome of stockholder votes on various
matters, including the election of directors and extraordinary corporate
transactions such as business combinations. Mr. Hans interests may differ from
that of other stockholders.

Risks related to Series B Preferred
Stock.

There
are now 1,000,000 Series B Preferred Stock issued to XD with 40% of the total
voting power of the Companys common stock put together and other consent
rights on mergers and acquisitions, significant acquisition or disposition of
assets and change of control, among others. This gives XD significant voting
power. Such voting power may enable XD to block actions that may benefit the
common stockholders thus reduce the value of their holdings.

We do not intend to pay cash
dividends in the foreseeable future.

We
currently intend to retain all future earnings for use in the operation and
expansion of our business. We do not intend to pay any cash dividends in the
foreseeable future but will review this policy as circumstances dictate. Should
we decide in the future to do so, as a holding company, our ability to pay
dividends and meet other obligations depends upon the receipt of dividends or
other payments from our operating subsidiaries based in the PRC. Our operating
subsidiaries, from time to time, may be subject to restrictions on its ability
to make distributions to us, including restrictions on the conversion of local
currency into U.S. dollars or other hard currency and other regulatory restrictions.
See Risks related to doing business in the Peoples Republic of China above.

There is currently a very limited
trading market for our common stock.

Because
we were formerly a shell company, our bid and ask quotations have not regularly
appeared on the OTC Bulletin Board for any extended period of time. There is a
limited trading market for our common stock and our common stock may never be
included for trading on any stock exchange or through any other quotation
system, including the NASDAQ Stock Market. You may not be able to sell your
shares due to the absence of an established trading market.

Our common stock is subject to the
Penny Stock Regulations.

Our
common stock is, and will continue to be subject to the SECs penny stock
rules to the extent that the price remains less than $5.00. Those rules, which
require delivery of a schedule explaining the penny stock market and the
associated risks before any sale, may further limit your ability to sell your
shares.

The
SEC has adopted regulations which generally define penny stock to be an
equity security that has a market price of less than $5.00 per share. Our
common stock, when and if a trading market develops, may fall within the
definition of penny stock and subject to rules that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000, or annual incomes exceeding $200,000 or
$300,000, together with their spouse).

17

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For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchasers prior written consent to the transaction. Additionally, for any
transaction, other than exempt transactions, involving a penny stock, the rules
require the delivery, prior to the transaction, of a risk disclosure document
mandated by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealers presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on
the limited market in penny stocks. Consequently, the penny stock rules may
restrict the ability of broker-dealers to sell our common stock and may affect
the ability of investors to sell their common stock in the secondary market.

Our common stock is illiquid and subject
to price volatility unrelated to our operations.

The
market price of our common stock could fluctuate substantially due to a variety
of factors, including market perception of our ability to achieve our planned
growth, quarterly operating results of other companies in the same industry,
trading volume in our common stock, changes in general conditions in the
economy and the financial markets or other developments affecting our
competitors or us. In addition, the stock market is subject to extreme price
and volume fluctuations. This volatility has had a significant effect on the
market price of securities issued by many companies for reasons unrelated to
their operating performance and could have the same effect on our common stock.

A
large number of shares of common stock will be issuable for future sale which
will dilute the ownership percentage of our current holders of common stock.
The availability for public resale of those shares may depress our stock price.

Also
as a result, there will be a significant number of new shares of common stock
on the market in addition to the current public float. Sales of substantial
amounts of common stock, or the perception that such sales could occur, and the
existence of warrants to purchase shares of common stock at prices that may be
below the then current market price of the common stock, could adversely affect
the market price of our common stock and could impair our ability to raise
capital through the sale of our equity securities.

Enforcement against us or our
directors and officers may be difficult.

Because
our principal assets are located outside of the U.S. and some or all our
directors and officers, both present and future, reside outside of the U.S., it
may be difficult for you to enforce your rights based on U.S. federal
securities laws against us and our officers and some directors or to enforce a
U.S. court judgment against us or them in the PRC.

In
addition, our operating company is located in the PRC and substantially all of
its assets are located outside of the U.S. It may therefore be difficult for
investors in the U.S. to enforce their legal rights based on the civil
liability provisions of the U.S. Federal securities laws against us in the
courts of either the U.S. or the PRC and, even if civil judgments are obtained
in U.S. courts, to enforce such judgments in PRC courts. Further, it is unclear
if extradition treaties now in effect between the U.S. and the PRC would permit
effective enforcement against us or our officers and directors of criminal
penalties under the U.S. Federal securities laws or otherwise.

|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments

Not
applicable.

18

---



|        |           
|------- | ----------
|Item 2. | Properties

Physical Plant and
Production

Our
executive offices and production facilities are located in the Harbin
Development Zone in the City of Harbin, which is the provincial capital of
Heilongjiang Province in northeast China. Our facility has a total usable area
of 7,359 square meters (79,212 square feet). The facility includes six
buildings with one office building attached by one workshop, one workshop, one
storage room, one transformer station, and two guard rooms. All the companys
properties are insured by China Pacific Property Insurances Co., Ltd.

The
land on which our facility is located measures 14,715 square meters (158,391
square feet). The land use right was issued to Xinda by the City of Harbin. The
right will expire in 2053. Compliance with Chinese environmental regulations
currently cost us 30,000 RMB (USD$4,392) annually. However during 2008 we are
engaged in a ground remediation project to comply with new regulations. The
cost of the project in 2008 will be 10,180,000 RMB (USD$1.5 million). As a
result of the new regulations, our annual environmental compliance cost is
expected to increase to 1,018,000 RMB (USD$150,000).

The
process of manufacturing modified plastic consists of modifying a standard
plastic (polypropylene, ABS, PA6, PA66, etc.) by adding various agents and
additives that will alter the physical and/or functional characteristics of the
plastic. Catalysts are added that facilitate the desired chemical reactions,
all of which occurs in a specially designed equipment. The resulting plastics
are then extracted from the equipment by an extraction technique that is
proprietary to Xinda. Further processing may involve additional blending,
extrusion, cooling and cutting, homogenizing and packing, as needed to meet the
customers requirements.

In
addition to its unique extraction technology, Xinda has developed its own
techniques and equipment for many of the steps in the production process. Among
the aspects of production for which Xinda has proprietary technology are
product formulae, a technique for combining extruder screws, and certain
stuffing techniques.With these
unique formulas and techniques, our products can satisfy often clients
standard requirements at a lower cost than competitive products.

Our
facilities have been certified under the following international qualifications
criteria: ISO9001: 2000 quality management system certification and
ISO/TS16949: 2002 international auto parts industry quality systems
certification. The government of China has designated Xinda as a National Torch
Project and a National Spark Plan Project, and has given Xinda the Most
Valuable High Tech in China award. Xinda is an executive member of the Council
of the Chinese Automobile Parts Association, a member of the Chinese Modified
Plastics Professional Committee, and a member of the Chinese Plastics
Engineering Committee.

|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

None.

|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders

None.

19

---



PART II

|        |                                                                                                               
|------- | --------------------------------------------------------------------------------------------------------------
|Item 5. | Market For Registrants Common Equity, Related Stockholder Matters
  and Issuer Purchases of Equity Securities

Our
shares of common stock, $0.0001, have been listed and principally quoted on the
Nasdaq OTC Bulletin Board under the trading symbol CXDC since February 6,
2009 and prior to that on the Nasdaq OTC Bulletin Board under the trading
symbol NBTE. The following table sets forth the high and low bid prices for
our common stock as reported on the Nasdaq OTC Bulletin Board. These prices
reflect inter-dealer prices, without retail markup, markdown or commissions,
and may not represent actual transactions.

|                 |  |     |                              |      |                              |                              |  |      |      |  |   |     
|---------------- |  | --- | ---------------------------- | ---- | ---------------------------- | ---------------------------- |  | ---- | ---- |  | - | ----
|                 |  |     |                              |      |                              |                              |  |      |      |  |   |     
|                 |  |     | Year Ended December 31, 2008 |      | Year Ended December 31, 2007
|                 |  |     |                              |     
|                 |  | Low |                              | High |                              | Low                          |  | High
|                 |  |     |                              |      |                              |                              |  |     
|First
  Quarter  |  | $   | 0.05                         |      | $                            | 0.06                         |  |      | N/A  |  |   | N/A 
|Second
  Quarter |  | $   | 0.02                         |      | $                            | 0.05                         |  |      | N/A  |  |   | N/A 
|Third
  Quarter  |  | $   | 0.01                         |      | $                            | 0.02                         |  |      | N/A  |  |   | N/A 
|Fourth
  Quarter |  | $   | 0.01                         |      | $                            | 0.01                         |  | $    | 0.01 |  | $ | 0.25
|                 |  |     | Year Ended December 31, 2008 |      |                              | Year Ended December 31, 2007
|                 |  |     |                              |      |                              |                             

On
March 12, 2009, the closing price for our common stock, as reported by the
Nasdaq OTC Bulletin Board, was $4 per share and there were approximately 260
shareholders of record

Fidelity
Transfer Company is the registrar and transfer agent for our common shares.
Their address is 8915 S. 700 E., Sandy, Utah 84070 USA, telephone: (801)
562-1300.

Dividend Policy

We
have not paid any cash dividends since our inception and do not anticipate
paying any cash dividends on our common stock in the foreseeable future. We
expect to retain our earnings, if any, to provide funds for the expansion of
our business. Future dividend policy will be determined periodically by the
Board of Directors based upon conditions then existing, including our earnings
and financial condition, capital requirements and other relevant factors.

Securities Authorized for Issuance Under Equity
Compensation Plans

We
have not authorized the issuance of any of our securities in connection with
any form of equity compensation plan.

Recent Sales of Unregistered Securities

Other
than as disclosed in our Current Report on Form 8-K dated December 31, 2008, no
securities were sold by the Company during the fiscal year ended December 31,
2008 that were not registered under the Securities Act.

|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

Not
applicable.

20

---



|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial Condition and
  Result of Operations

We
make forward-looking statements in this report, in other materials we file with
the Securities and Exchange Commission (the SEC) or otherwise release to the
public, and on our website. In addition, our senior management might make
forward-looking statements orally to analysts, investors, the media and others.
Statements concerning our future operations, prospects, strategies, financial
condition, future economic performance (including growth and earnings) and
demand for our products and services, and other statements of our plans,
beliefs, or expectations, including the statements contained in this Item 7,
Managements Discussion and Analysis or Plan of Operation, regarding our
future plans, strategies and expectations are forward-looking statements. In some
cases these statements are identifiable through the use of words such as
anticipate, believe, estimate, expect, intend, plan, project,
target, can, could, may, should, will, would and similar
expressions. We intend such forward-looking statements to be covered by the
safe harbor provisions contained in Section 27A of the Securities Act of 1933,
as amended (the Securities Act) and in Section 21E of the Securities Exchange
Act of 1934, as amended (the Exchange Act). You are cautioned not to place
undue reliance on these forward-looking statements because these
forward-looking statements we make are not guarantees of future performance and
are subject to various assumptions, risks, and other factors that could cause
actual results to differ materially from those suggested by these
forward-looking statements. Thus, our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which
could have a material adverse effect on our operations and future prospects
include, but are not limited to, changes in: economic conditions generally and
the medical instruments market specifically, legislative or regulatory changes
that affect our business, including changes in healthcare regulation, the
availability of working capital, the introduction of competing products, and
other risk factors described herein. These risks and uncertainties, together
with the other risks described from time -to -time in reports and documents
that we filed with the SEC should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. Indeed,
it is likely that some of our assumptions will prove to be incorrect. Our
actual results and financial position will vary from those projected or implied
in the forward-looking statements and the variances may be material. We
expressly disclaim any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as required by law.

General

We
were originally incorporated as NB Payphones Ltd. under the laws of the state
of Pennsylvania on November 16, 1999. On December 27, 2005, we migrated our
state of organization to the state of Nevada and effective March 23, 2006, our
name changed to NB Telecom, Inc.

On December
24, 2008, we acquired all of the outstanding capital stock of Favor Sea
Limited, a British Virgin Islands corporation, through China XD Plastics
Company Limited, a Nevada corporation (the Merger Sub) wholly owned by the
Company. Favor Sea Limited is a holding company whose only asset, held through
a subsidiary, is 100% of the registered capital of Harbin Xinda Macromolecule
Material Co., Ltd. (Xinda).

Xinda is a
manufacturer and developer of modified plastics. We believe that Xinda is one
of the primary modified plastics manufacturers for automotive applications in
the PRC, developing and producing made-to-order modified plastics and providing
after-sales services to such automotive brands as Audi, Red Flag, VW Golf, and
Mazda6.

21

---



Results of Operations

The following
table sets forth information from our statements of operations for the years
ended December 31, 2008 and 2007, in dollars:

|                       |  |                             |            |      |   |            |   |  |  | 
|---------------------- |  | --------------------------- | ---------- | ---- | - | ---------- | - |  |  | 
|                       |  | The Year Ended December 31, |            |      |   |           
|                       |  |                             |            |      |   |           
|                       |  | 2008                        |            | 2007 |   |            |   | 
|                       |  |                             |            |      |   |            |   | 
|Net sales              |  | $                           | 75,765,428 |      | $ | 34,177,415 |   |  |  | 
|Cost of
  sales        |  | $                           | 58,431,799 |      | $ | 27,829,973 |   |  |  | 
|Gross profit           |  | $                           | 17,333,629 |      | $ | 6,347,440  |   |  |  | 
|Operating
  expenses   |  | $                           | 2,849,292  |      | $ | 724,935    |   |  |  | 
|Operating
  income     |  | $                           | 14,484,337 |      | $ | 5,622,507  |   |  |  | 
|Other income           |  | $                           | 73,856     |      | $ | 197,253    |   |  |  | 
|Interest
  expense     |  | $                           | (687,659   | )    | $ | (152,684   | ) |  |  | 
|Net income             |  | $                           | 13,687,490 |      | $ | 5,272,570  |   |  |  | 
|Comprehensive
  income |  | $                           | 14,595,559 |      | $ | 5,755,501  |   |  |  | 

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

Net sales

During the
year ended December 31, 2008, we had net sales of $75.8 million, as compared
with net sales of $34.2 million during the year ended December 31, 2007, an
increase of approximately $41.6 million, or 122% due to our increased and
expanded sales both in volume and of new variety of products to our existing
and new customers

Cost of sales & gross margin

During the
year ended December 31, 2008, we had cost of sales of $58.4 million, as
compared with cost of sales of $27.8 million during the same period in 2007, an
increase of approximately $30.6 million, or 110%, reflecting the increase in
net sales. The gross profit rose to $17.3million 2007, or a 173% increase
during the year ended December 31, 2008 compared with $6.3 million during the
year ended December 31, 2007. Our gross margin increased from 18.6% during the
year ended December 31, 2007 to 22.9% during the year ended December 31, 2008.
The increase was mainly attributed to the significant increase of revenue
generated from higher margin products for automotive application.

Operating Expenses

Our operating
expenses were $2,849,292  during the
year ended December 31, 2008, compared with $724,935 during the year ended
December 31, 2007, an increase of $2,124,357 or approximately 293%. The
increase in operating expenses was principally due to the increased
depreciation expenses and payroll expenses. Selling expenses increased from
$131,772 during the year ended December 31, 2007 to $322,650 during the year
ended December 31, 2008 as we increased our efforts to obtain more customers.
General and administrative expenses increased from $403,834 during the year
ended December 31, 2007 to $1,747,648
the year ended December 31, 2008, reflecting the increased salary
expense, depreciation expense and other expenses pertinent to the reverse
merger and listing in the US. Research and development expenses were increased
during the year ended December 31, 2007 to the year ended December 31, 2008
reflecting our increased efforts in new product development by adding more  researchers and increasing raw material
usage. As a result, our operating income increased to $14,484,337 during the
year ended December 31, 2008 from $5,622,507 during the year ended December 31,
2007.

22

---



Interest Expense

Interest
expense increased $534,975 from $152,684 during the year ended December 31,
2007 to $687,659 for the year ended December 31, 2008. The increase interest
expense resulted from the increase in our loans and notes payable during 2008,
as we borrowed to fund the rapid growth in our sales and the development of our
manufacturing facility.

Net Income

As a result of
the factors described above, we had net income of $13,687,490  during the year ended December 31, 2008,
compared with $5,272,570 during the year ended December 31, 2007.

Comprehensive Income

As a result of
a currency translation adjustment, our comprehensive income was $14,595,559
during the year ended December 31, 2008, compared with $5,755,501 during the
year ended December 31, 2007. The change is due to the significant currency
exchange fluctuation.

Liquidity and Capital Resources

As of December
31, 2008, we had $3,869,035 in cash and cash equivalents, compared to only
$87,455 on December 31, 2007. There was a net increase in cash and cash
equivalent of $3,781,580 for the year ended December 31, 2008. The net increase
in cash and cash equivalents for the period was mainly due to the increase in
our loans and notes payables.

Operations

For the year
ended December 31, 2008, cash used in operations was $4,874,185  as opposed to $1,914,643 generated in
operating activities for the year ended December 31, 2007. Decrease in our cash
liquidity is mainly due to our significant increased amounts in advance to
suppliers, inventory, account receivable and other receivables and decrease in
tax payable and account payable.

Investments

Cash used in
investing activities was $11,926,327 for the year ended December 31, 2008 as
compared to only $4,249,292 for the year ended December 31, 2007. We have
invested heavily in purchases of new production equipments, which accounted for
majority of the cash used in investing activities in 2008.

Financing

For the year
ended December 31, 2008, we have financed a total amount of $ 20,509,249 as
compared to $1,890,656 provided by financing activities for the year ended
December 31, 2007. Increase in cash provided by financing activities is due to
the increased funding from short term loans and related party loan in order to
fulfill increased sales orders from our customers.

The primary
sources of cash in 2008 were from financing activities. For the year ended
December 31, 2008, we have financed a total amount of $ 20,509,249. The Company
expects to complete an assets acquisition with an affiliated company by the end
of 2009. The company expects the funds for this investing activity will come
from outside financing.

23

---



Based on past
performance and current expectations, we believe our cash and cash equivalents
and cash generated from operations will satisfy our working capital needs,
capital expenditures (other than the Xinda High-Tech arrangement) and other
liquidity requirements associated with our operations for at least the next 12
months.

The majority
of the Companys revenues and expenses were denominated primarily in Renminbi
(RMB), the currency of the Peoples Republic of China. There is no assurance
that exchange rates between the RMB and the U.S. Dollar will remain stable. The
Company does not engage in currency hedging. Inflation has not had a material
impact on the Companys business.

Off-Balance
Sheet Arrangements

Neither us,
nor any of our subsidiaries has any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on their financial
condition or results of operations.

|         |                                                             
|-------- | ------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures
  About Market Risk

Not applicable.

|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

Our
consolidated financial statements for the year ended December 31, 2008 and 2007
are attached hereto.

24

---



CHINA XD PLASTICS COMPANY LTD

(FORMERLY NB TELECOM, INC)

FINANCIAL STATEMENTS

DECEMBER 31, 2008 & 2007

F-1

---



CHINA XD PLASTICS COMPANY LTD

(FORMERLY NB TELECOM, INC)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                    |  |         
|------------------------------------------------------------------------------------------------------------------- |  | --------
|Report of
  Independent Registered Public Accounting Firm                                                           |  | F-3     
|                                                                                                                    |  |         
|Consolidated
  Balance Sheets at December 31, 2008 and 2007                                                         |  | F-4     
|                                                                                                                    |  |         
|Consolidated
  Statements of income and other comprehensive income for the years ended
  December 31, 2008 and 2007 |  | F-5     
|                                                                                                                    |  |         
|Consolidated
  Statements of Changes in Stockholders Equity for the years ended December
  31, 2008 and 2007       |  | F-6     
|                                                                                                                    |  |         
|Consolidated
  Statements of Cash Flows for the years ended December 31, 2008 and 2007                              |  | F-7     
|                                                                                                                    |  |         
|Notes to
  Consolidated Financial Statements                                                                        |  | F-8F-25

F-2

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

The Board of
Directors and Shareholders of
China XD Plastics Company Ltd
(Formerly NB Telecom, Inc)

We have
audited the accompanying consolidated balance sheets of China XD Plastics
Company Ltd (formerly NB Telecom, Inc) as of December 31, 2008 and 2007 and the
related consolidated statements of income and other comprehensive income,
changes in stockholders equity, and cash flows for the years ended December 31, 2008 and 2007. China XD
Plastics Company Ltds management is responsible for these consolidated
financial statements. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted
our audits in accordance with standards established by the Public Company
Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Companys internal control over financial reporting. Accordingly, we express no
such opinion. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of China XD Plastics Company
Ltd as of December 31, 2008 and 2007 and the results of its operations, changes
in stockholders equity, and cash flows for the years ended December 31,
2008 and 2007 in conformity with accounting principles generally accepted in the
United States of America.

|                                         | 
|---------------------------------------- | 
|/s/Bagell Josephs, Levine & Company, LLC | 
|                                         | 
|Bagell
  Josephs, Levine & Company, LLC 
|Marlton, New
  Jersey                   
|March 9, 2009                           

F-3

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2008 AND 2007

|                                                                                                                                                                                |  |      |            |      |   |            | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | 
|                                                                                                                                                                                |  | 2008 |            | 2007 |  
|                                                                                                                                                                                |  |      |            |      |  
|ASSETS                                                                                                                                                                          |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|Current assets:                                                                                                                                                                 |  |      |            |      |   |            | 
|Cash and cash equivalents                                                                                                                                                       |  | $    | 3,869,035  |      | $ | 87,455     | 
|Restricted Cash                                                                                                                                                                 |  |      | 3,664,346  |      |   | 5,428,673  | 
|Notes Receivable                                                                                                                                                                |  |      | 303,437    |      |   |           | 
|Accounts receivable - net of allowance for
  bad debts of $99,669 and $93,219, respectively                                                                                     |  |      | 11,234,507 |      |   | 5,117,840  | 
|Other receivables                                                                                                                                                               |  |      | 21,917     |      |   | 6,360      | 
|Inventories                                                                                                                                                                     |  |      | 12,438,782 |      |   | 5,587,862  | 
|Prepaid expenses                                                                                                                                                                |  |      |           |      |   | 21,393     | 
|Due from related parties                                                                                                                                                        |  |      |           |      |   | 105,537    | 
|Advance to employees                                                                                                                                                            |  |      | 92,329     |      |   | 122,298    | 
|Advances to suppliers                                                                                                                                                           |  |      | 13,131,074 |      |   | 1,746,063  | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|Total current assets                                                                                                                                                            |  |      | 44,755,427 |      |   | 18,223,481 | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|Property, plant and equipment, net                                                                                                                                              |  |      | 19,332,712 |      |   | 7,533,619  | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|Other assets:                                                                                                                                                                   |  |      |            |      |   |            | 
|Deferred charges                                                                                                                                                                |  |      | 378,073    |      |   |           | 
|Intangible assets, net                                                                                                                                                          |  |      | 247,681    |      |   | 236,867    | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|Total other assets                                                                                                                                                              |  |      | 625,754    |      |   | 236,867    | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|Total Assets                                                                                                                                                                    |  | $    | 64,713,893 |      | $ | 25,993,967 | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|LIABILITIES AND STOCKHOLDERS
EQUITY                                                                                                                                            |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|Current liabilities:                                                                                                                                                            |  |      |            |      |   |            | 
|Short term loan                                                                                                                                                                 |  | $    | 20,520,337 |      | $ | 1,370,877  | 
|Bank acceptance note payable                                                                                                                                                    |  |      | 8,061,561  |      |   | 12,886,245 | 
|Accounts payable                                                                                                                                                                |  |      | 113,232    |      |   | 647,436    | 
|Other payable                                                                                                                                                                   |  |      | 106,232    |      |   | 31,860     | 
|Accrued expenses                                                                                                                                                                |  |      | 820,625    |      |   | 43,940     | 
|Tax payable                                                                                                                                                                     |  |      | 17,777     |      |   | 1,454,745  | 
|Due to related party                                                                                                                                                            |  |      | 7,542,950  |      |   |           | 
|Deferred revenue                                                                                                                                                                |  |      | 3,469,796  |      |   | 93,040     | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|Total current liabilities                                                                                                                                                       |  |      | 40,652,510 |      |   | 16,528,143 | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|Stockholders equity                                                                                                                                                            |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|Series A Preferred Stock, $0.0001 par
  value, 10,000,000 shares authorized, 1,000,000 shares issued and outstanding
  as of December 31, 2008 and 2007, respectively           |  |      | 100        |      |   | 100        | 
|Series B Preferred Stock, $0.0001 par
  value, 10,000,000 shares authorized, 1,000,000 shares issued and outstanding
  as of December 31, 2008 and 2007, respectively           |  |      | 100        |      |   | 100        | 
|Common Stock, $0.0001 par value,
  100,000,000 shares authorized, 805,802 and 405,402 shares issued and
  outstanding as of December 31, 2008 & December 31, 2007, respectively |  |      | 81         |      |   | 41         | 
|Additional Paid-in-Capital                                                                                                                                                      |  |      | 2,482,786  |      |   | 2,482,826  | 
|Retained earnings                                                                                                                                                               |  |      | 20,051,142 |      |   | 6,363,652  | 
|Accumulated other comprehensive income                                                                                                                                          |  |      | 1,527,174  |      |   | 619,105    | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|Total Stockholders equity                                                                                                                                                      |  |      | 24,061,383 |      |   | 9,465,824  | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|                                                                                                                                                                                |  |      |            |      |   |            | 
|Total Liabilities And Stockholders
Equity                                                                                                                                      |  | $    | 64,713,893 |      | $ | 25,993,967 | 
|                                                                                                                                                                                |  |      |            |      |   |            | 

The accompanying notes are an integral part
of these  consolidated financial
statements

F-4

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

|                                          |  |      |             |      |   |             |  
|----------------------------------------- |  | ---- | ----------- | ---- | - | ----------- | -
|                                          |  | 2008 |             | 2007 |  
|                                          |  |      |             |      |  
|                                          |  |      |             |      |  
|Sales                                     |  | $    | 75,765,428  |      | $ | 34,177,415  |  
|                                          |  |      |             |      |   |             |  
|Cost of sales                             |  |      | (58,431,799 | )    |   | (27,829,973 | )
|                                          |  |      |             |      |   |             |  
|                                          |  |      |             |      |   |             |  
|Gross profit                              |  |      | 17,333,629  |      |   | 6,347,442   |  
|                                          |  |      |             |      |   |             |  
|                                          |  |      |             |      |   |             |  
|                                          |  |      |             |      |   |             |  
|Operating Expenses                        |  |      |             |      |   |             |  
|Reseach and development expenses          |  |      | 778,994     |      |   | 189,329     |  
|Selling expenses                          |  |      | 322,650     |      |   | 131,772     |  
|General and Administrative expenses       |  |      | 1,747,648   |      |   | 403,834     |  
|                                          |  |      |             |      |   |             |  
|Total Operating Expenses                  |  |      | 2,849,292   |      |   | 724,935     |  
|                                          |  |      |             |      |   |             |  
|                                          |  |      |             |      |   |             |  
|Operating Income                          |  |      | 14,484,337  |      |   | 5,622,507   |  
|                                          |  |      |             |      |   |             |  
|                                          |  |      |             |      |   |             |  
|Other Income (expenses)                   |  |      |             |      |   |             |  
|Interest Income (expenses)                |  |      | (687,659    | )    |   | (152,684    | )
|Other Income                              |  |      | 28,283      |      |   | 10,434      |  
|Other expense                             |  |      | (102,139    | )    |   | (207,687    | )
|                                          |  |      |             |      |   |             |  
|Total Other expense                       |  |      | (761,515    | )    |   | (349,937    | )
|                                          |  |      |             |      |   |             |  
|                                          |  |      |             |      |   |             |  
|Income before income taxes                |  |      | 13,722,822  |      |   | 5,272,570   |  
|                                          |  |      |             |      |   |             |  
|Provision for income taxes                |  |      | 35,332      |      |   |            |  
|                                          |  |      |             |      |   |             |  
|                                          |  |      |             |      |   |             |  
|Net Income                                |  | $    | 13,687,490  |      | $ | 5,272,570   |  
|                                          |  |      |             |      |   |             |  
|Other Comprehensive Income                |  |      |             |      |   |             |  
|Foreign Currency Translation Adjustment   |  |      | 908,069     |      |   | 482,931     |  
|                                          |  |      |             |      |   |             |  
|                                          |  |      |             |      |   |             |  
|Comprehensive Income                      |  | $    | 14,595,559  |      | $ | 5,755,501   |  
|                                          |  |      |             |      |   |             |  
|                                          |  |      |             |      |   |             |  
|Basic and Diluted Income per common share |  |      |             |      |   |             |  
|Basic                                     |  | $    | 33.02       |      | $ | 12.99       |  
|                                          |  |      |             |      |   |             |  
|Diluted                                   |  | $    | 0.35        |      | $ | 0.14        |  
|                                          |  |      |             |      |   |             |  
|                                          |  |      |             |      |   |             |  
|Weighted average common share outstanding |  |      |             |      |   |             |  
|Basic                                     |  |      | 414,569     |      |   | 405,802     |  
|                                          |  |      |             |      |   |             |  
|Diluted                                   |  |      | 38,608,641  |      |   | 38,599,874  |  
|                                          |  |      |             |      |   |             |  

The accompanying notes are an integral part
of these consolidated financial statements

F-5

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |           |   |   |            |  |   |           |  |   |            | 
|---------------------------------------- |  | --------------------------------------- | --------- | --------------------------------------- | - | ---------------------------------- |  | ------------------------------- | --------- | -------- | - | -------------------------------------------- |  |  | -------- |  | - | ----- |  | - | --------- | - | - | ---------- |  | - | --------- |  | - | ---------- | 
|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   | Accumulated
  Other
  Comprehensive
  Income |  |  |         
|                                         |  | Preferred
  Stock A, Par value $ 0.0001 |           | Preferred
  Stock B, Par value $ 0.0001 |   | Commen
  Stock, Par value $ 0.0001 |  | Additional
  
  Paid-in-Capital |           | Retained |   |                                              |  | 
|                                         |  | Shares                                  |           | Amount                                  |   | Shares                             |  | Amount                          |           | Shares   |   | Amount                                       |  |  | Earnings |  |   | Total | 
|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |          
|Balance at December 31, 2006             |  |                                         | 1,000,000 |                                         |   | 100                                |  |                                 | 1,000,000 |          |   | 100                                          |  |  | 405,802  |  |   | 41    |  |   | 2,482,826 |   |   | 1,091,082  |  |   | 136,174   |  | $ | 3,710,323  | 
|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |           |   |   |            |  |   |           |  |   |            | 
|Net income for the year                  |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |          |   |   | 5,272,570  |  |   |          |  |   | 5,272,570  | 
|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |           |   |   |            |  |   |           |  |   |            | 
|Foreign currency translation adjustments |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |          |   |   |           |  |   | 482,931   |  | $ | 482,932    | 
|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |           |   |   |            |  |   |           |  |   |            | 
|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |           |   |   |            |  |   |           |  |   |           | 
|Balance at December 31, 2007             |  |                                         | 1,000,000 |                                         | $ | 100                                |  |                                 | 1,000,000 |          | $ | 100                                          |  |  | 405,802  |  | $ | 41    |  | $ | 2,482,826 |   | $ | 6,363,652  |  | $ | 619,105   |  | $ | 9,465,824  | 
|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |           |   |   |            |  |   |           |  |   |            | 
|Acquisition of net asset of NB Telecom   |  |                                         |           |                                         |   |                                    |  |                                 |          |          |   |                                              |  |  | 400,000  |  |   | 40    |  |   | (40       | ) |   |            |  |   |          |  |   |           | 
|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |          |   |   | 13,687,490 |  |   |          |  |   | 13,687,490 | 
|Net income for the year                  |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |           |   |   |            |  |   |           |  |   |            | 
|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |           |   |   |            |  |   |           |  |   |            | 
|Foreign currency translation adjustments |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |          |   |   |           |  |   | 908,069   |  | $ | 908,069    | 
|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |           |   |   |            |  |   |           |  |   |            | 
|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |           |   |   |            |  |   |           |  |   |            | 
|Balance at December 31, 2008             |  |                                         | 1,000,000 |                                         | $ | 100                                |  |                                 | 1,000,000 |          | $ | 100                                          |  |  | 805,802  |  | $ | 81    |  | $ | 2,482,786 |   | $ | 20,051,142 |  | $ | 1,527,174 |  | $ | 24,061,383 | 
|                                         |  |                                         |           |                                         |   |                                    |  |                                 |           |          |   |                                              |  |  |          |  |   |       |  |   |           |   |   |            |  |   |           |  |   |            | 

The accompanying notes are an integral part
of these consolidated financial statements

F-6

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

|                                                                                              |  |      |             |      |   |            |  
|--------------------------------------------------------------------------------------------- |  | ---- | ----------- | ---- | - | ---------- | -
|                                                                                              |  | 2008 |             | 2007 |  
|                                                                                              |  |      |             |      |  
|Cash flows from operating activities                                                          |  |      |             |      |   |            |  
|Net income                                                                                    |  | $    | 13,687,490  |      | $ | 5,272,570  |  
|Adjustments to reconcile net income to net
  cash provided by (used in) operating activities: |  |      |             |      |   |            |  
|Depreciation & amortization                                                                   |  |      | 967,105     |      |   | 280,925    |  
|Bad debt expense                                                                              |  |      |            |      |   | 89,424     |  
|Gain on disposal of fixed assets                                                              |  |      |            |      |   | (3,774     | )
|Changes in assets and liabilities:                                                            |  |      |             |      |   |            |  
|(Increase) decrease in -Restricted cash                                                       |  |      | 2,101,449   |      |   | (559,438   | )
|Accounts receivable and other receivables                                                     |  |      | (5,677,947  | )    |   | (183,301   | )
|Tax Receivable                                                                                |  |      |            |      |   | 4,255      |  
|Inventories                                                                                   |  |      | (6,347,868  | )    |   | (987,411   | )
|Prepaid expenses                                                                              |  |      | 22,462      |      |   |           |  
|Notes receivables                                                                             |  |      | (293,656    | )    |   |           |  
|Advance to employees                                                                          |  |      | 37,740      |      |   | 297,060    |  
|Advances to suppliers                                                                         |  |      | (11,061,383 | )    |   | (1,577,433 | )
|Deferred charge                                                                               |  |      | (371,266    | )    |   |            |  
|Increase (decrease) in -                                                                      |  |      |             |      |   |            |  
|Accounts payable and other payable                                                            |  |      | (497,713    | )    |   | (2,187,580 | )
|Accrued expenses                                                                              |  |      | 759,716     |      |   | 21,778     |  
|Tax payable                                                                                   |  |      | (1,509,948  | )    |   | 1,454,745  |  
|Deferred revenue                                                                              |  |      | 3,309,634   |      |   | (7,176     | )
|                                                                                              |  |      |             |      |   |            |  
|                                                                                              |  |      |             |      |   |            |  
|Net cash provided by (used in) operating
  activities                                         |  |      | (4,874,185  | )    |   | 1,914,643  |  
|                                                                                              |  |      |             |      |   |            |  
|                                                                                              |  |      |             |      |   |            |  
|Cash flows from investing activities                                                          |  |      |             |      |   |            |  
|Purchase of fixed assets                                                                      |  |      | (12,037,135 | )    |   | (4,393,949 | )
|Proceeds from sale of fixed assets                                                            |  |      |            |      |   | 144,657    |  
|Collection on due from related party                                                          |  |      | 110,808     |      |   |           |  
|                                                                                              |  |      |             |      |   |            |  
|                                                                                              |  |      |             |      |   |            |  
|Net cash used in investing activities                                                         |  |      | (11,926,327 | )    |   | (4,249,292 | )
|                                                                                              |  |      |             |      |   |            |  
|                                                                                              |  |      |             |      |   |            |  
|Cash flows from financing activities                                                          |  |      |             |      |   |            |  
|Proceeds (Repayment) from Short Term Loan                                                     |  |      | 18,711,534  |      |   | (1,315,063 | )
|Proceeds from bank acceptance notes
payable                                                   |  |      | 20,582,687  |      |   | 1,354,858  |  
|Repayment of bank acceptance notes
payable                                                    |  |      | (26,196,147 | )    |   |            |  
|Proceeds from related party Loan                                                              |  |      | 7,411,175   |      |   | 1,850,861  |  
|                                                                                              |  |      |             |      |   |            |  
|                                                                                              |  |      |             |      |   |            |  
|Net cash provided by financing
activities                                                     |  |      | 20,509,249  |      |   | 1,890,656  |  
|                                                                                              |  |      |             |      |   |            |  
|                                                                                              |  |      |             |      |   |            |  
|Effect of exchange rate changes on cash and
  cash equivalents                                |  |      | 72,843      |      |   | 202,956    |  
|                                                                                              |  |      |             |      |   |            |  
|                                                                                              |  |      |             |      |   |            |  
|Net increase(decrease) in cash and cash
  equivalents                                         |  |      | 3,781,580   |      |   | (241,037   | )
|                                                                                              |  |      |             |      |   |            |  
|Cash and cash equivalents, beginning of year                                                  |  |      | 87,455      |      |   | 328,492    |  
|                                                                                              |  |      |             |      |   |            |  
|                                                                                              |  |      |             |      |   |            |  
|Cash and cash equivalents, end of year                                                        |  | $    | 3,869,035   |      | $ | 87,455     |  
|                                                                                              |  |      |             |      |   |            |  
|                                                                                              |  |      |             |      |   |            |  
|Supplemental disclosures of cash flow
  information:                                          |  |      |             |      |   |            |  
|                                                                                              |  |      |             |      |   |            |  
|Interest paid                                                                                 |  | $    | 700,260     |      | $ | 212,926    |  
|                                                                                              |  |      |             |      |   |            |  
|Income taxes paid                                                                             |  | $    | 7,600       |      | $ |           |  
|                                                                                              |  |      |             |      |   |            |  

The accompanying notes are an integral part
of these consolidated financial statements

F-7

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 1. ORGANIZATION ANDBASIS OF PRESENTATION

China XD
Plastics Company Ltd. (China XD Plastics or the Company), formerly known as
NB Telecom, Inc., was originally incorporated as NB Payphones Ltd. under the
laws of the state of Pennsylvania on November 16, 1999. On December 27, 2005,
we migrated our state of organization to the state of Nevada and effective
March 23, 2006, the name changed to NB Telecom, Inc.

On December 24, 2008, the Company acquired all of the outstanding
capital stock of Favor Sea Limited, a British Virgin Islands corporation,
through China XD Plastics Company Limited, a Nevada corporation (the Merger
Sub) wholly owned by the Company. Favor Sea Limited is a holding company whose
only asset, held through a subsidiary, is 100% of the registered capital of
Harbin Xinda Macromolecule Material Co., Ltd. (Xinda), a limited liability
company organized under the laws of the Peoples Republic of China (China or
PRC). Xinda is engaged in the development, manufacture and marketing of
modified plastics, primarily for use in the automotive industry. Xindas
offices and manufacturing facilities are located in China.

In connection with the acquisition, the following transactions took
place:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Merger Sub issued 10 shares of the common stock of the Merger Sub
  which constituted no more than 10% ownership interest in the Merger Sub and
  1,000,000 shares of convertible Series A preferred stock of the Company to
  the shareholders of Favor Sea Limited, and also 1,000,000 shares of Series B
  preferred stock to XD Engineering Plastics Company Limited, a British Virgin
  Islands corporation, the principal shareholder of Favor Sea Limited (XD),
  in exchange for all of the outstanding stock of Favor Sea Limited (the Share
  Exchange or Merger). The 10 shares of the common stock of the Merger Sub
  were converted into approximately 50,367,778 shares of the common stock of
  the Company prior to and approximately 405,802 post a reverse stock split of
  124.1 for 1 pursuant to Nevada Revised Statutes Section 78.207 for both the
  total number of authorized shares of common stock and the total number of
  issued and outstanding shares of common stock (Reverse Split), and the
  1,000,000 shares of convertible Series A preferred stock of the Company shall
  convert approximately at a rate of 1:38.2 into 38,194,072 shares of the
  common stock of the Company after the completion of the Merger so that
  eventually the shareholders of Favor Sea Limited own approximately 99% of the
  common stock of the Company.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | The record date for the Reverse Split is set for December 31, 2008.
  The record holders of the Companys common stock on the date of December 31,
  2008 shall be subject to a 124.1:1 reverse split with fractional shares to be
  rounded up to one hundred round lot, with the round-up shares to be deducted
  from certain designated shareholders by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

F-8

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 1. ORGANIZATION ANDBASIS OF PRESENTATION
(Continued)

| |   |                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In connection with the acquisition of Favor Sea, former officers and
  directors of the Company resigned and executive officers of Favor Sea were
  appointed as the Companys new officers and directors.
| |   |                                                                                                                                                                                                           
| |  | As part of the Merger, the Companys name is changed from NB
  Telecom, Inc. to the Merger Subs name China XD Plastics Company Limited.                                                              

As a result of these transactions, the shareholders of Favor Sea now
own majority of the equity in the Company. In addition, persons affiliated with
Xinda will control the Board of Directors of the Company ten days after the
notice pursuant to Rule 14f-1 is mailed to the shareholders of record.

The acquisition has been accounted for as a reverse merger under the
purchase method of accounting since there has been a change of control.
Accordingly, Favor Sea and its subsidiaries are treated as the continuing
entities for accounting purposes.

Favor Sea
Limited was incorporated under the laws of the British Virgin Islands on May 2,
2008.

On August 11,
2008, Favor Sea acquired 100% interest of Hong Kong Engineering Plastics
Company Limited (HK Engineering Plastics), a Limited Liability Company
organized under the laws of the Hong Kong Special Administration Region on May
27, 2008.

HK Engineering
Plastics, in turn, owns 100% interest of Harbin Xinda Macromolecule Material
Co., Ltd (Harbin Xinda), a company incorporated in the Peoples Republic of
China on September 23, 2004.

The Company,
now through its indirectly owned subsidiary, Harbin Xinda is primarily engaged
in the business of research development, manufacture, distribution of modified
and engineering plastic pellets used in automotive parts through its
manufacturing facility and its wholly owned research laboratory, Harbin Xinda
Macromolecule Research Institute (the Research Institute), a separate entity
established in 2007.

The Companys
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of America (US
GAAP).

F-9

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The
consolidated financial statements of the Company include the accounts of the
Company, Favor Sea, HK Plastics Engineering, Harbin Xinda and the Research
Institute. All significant inter-company balances and transactions are
eliminated in consolidation.

Use of estimates

In preparing
the financial statements in conformity with accounting principles generally
accepted in the United States of America, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting year. Significant estimates, required by management, include the
recoverability of long-lived assets and the valuation of inventories. Actual
results could differ from those estimates.

Cash and cash equivalents

For purposes
of the statement of cash flow, the Company considers all highly liquid
investments with an original maturity of three months or less to be cash
equivalents.

Accountsreceivable

Accounts receivables
consist primarily of receivables resulting from sales of products, and are
stated at net realizable value. This value includes an appropriate allowance
for estimated uncollectible accounts. The allowance is calculated based upon
the evaluation and the level of past due accounts and the relationship with and
the economic status of the customers.

Inventory

Inventory is
composed of raw materials, packing materials, work in process and finished
goods. Inventory is valued at the lower of cost or market with cost determined
by the weighted average method. Management periodically compares the cost of
inventory with the market value and an allowance is made for writing down the
inventory to its market value, if lower than cost. No allowance for inventory is
considered necessary for the years ended December 31, 2008 and 2007.

F-10

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and equipment

Property and
equipment are stated at cost. The cost of an asset comprises its purchase price
and any directly attributable costs of bringing the asset to its present
working condition and locations for its intended use. Depreciation is
calculated using the straight-line method over the following useful lives:

| |                                        |  |           
| | -------------------------------------- |  | ----------
| | Buildings
  and improvements           |  | 39 years  
| | Machinery,
  equipment and automobiles |  | 5-10 years

Expenditures
for maintenance and repairs are charged to expense as incurred. Additions,
renewals and betterments are capitalized.

Advance to suppliers

Advance to
suppliers represent the payments made and recorded in advance for goods and
services received. The Company makes advances to raw materials purchased from certain
agents overseas, which account for 60% of raw materials needed. In order to
maintain a long-term relationship with the vendors, the Company frequently
needs to make advances from one and half month to three months ahead.
The advances to suppliers were $13,131,074 as of December 31, 2008 and
$1,746,063 as of December 31, 2007.

Impairment of long-lived assets

Long-lived
assets, which include property, plant and equipment and intangible assets, are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
long-lived assets to be held and used is measured by a comparison of the
carrying amount of an asset to the estimated undiscounted future cash flows
expected to be generated by the assets. If the carrying amount of an asset
exceeds its estimated undiscounted future cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the assets. Fair value is generally determined using the assets
expected future discounted cash flows or market value, if readily determinable.
No impairment loss is recorded for the years ended December 31, 2008 and 2007.

F-11

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income taxes

The Company accounts
for income tax under the provisions of SFAS No.109 Accounting for Income
Taxes, which requires recognition of deferred tax assets and liabilities for
the expected
future tax consequences of the events that have been included in the financial
statements or tax returns. Deferred income taxes are recognized for all
significant temporary differences between tax and financial statements bases of
assets and liabilities. Valuation allowances are established against net
deferred tax assets when it is more likely than not that some portion or all of
the deferred tax asset will not be realized. There are no deferred tax amounts
recognized at ended December 31, 2008 and 2007.

Revenue recognition

The Companys
revenue recognition policies are in compliance with Staff Accounting Bulletin
(SAB) 104. Sales revenue is recognized at the date of shipment to customers
when a formal arrangement exists, the price is fixed or determinable, the
delivery is completed, no other significant obligations of the Company exists
and collectability is reasonably assured. Payments received before all of the
relevant criteria for revenue recognition are satisfied are recorded as
deferred revenue.

Research and developmentexpenses

Research and
development expenses are costs associated with developing the Companys
intellectual property. Research and development costs are expensed as incurred.
The costs of equipments that are acquired or constructed for research and
development activities and have alternative future uses are classified as plant
and equipment and depreciated over their estimated useful lives. The research and development expense for the
years ended December 31, 2008 and 2007 was
$778,994 and $189,329, respectively.

Earnings per share

The Company
computes earnings per share (EPS) in accordance with Statement of Financial
Accounting Standards No. 128, Earnings per Share (SFAS No. 128), and SEC
Staff Accounting Bulletin No. 98 (SAB 98). SFAS No. 128 requires
companies with complex capital structures to present basic and diluted EPS.
Basic EPS is measured as net income divided by the weighted average common
shares outstanding for the period. Diluted EPS is similar to basic EPS but
presents the dilutive effect on a per share basis of potential common shares
(e.g., convertible securities, options and warrants) as if they had been
converted at the beginning of the periods presented, or issuance date, if
later. Potential common shares that have an anti-dilutive effect (i.e., those
that increase income per share or decrease loss per share) are excluded from
the calculation of diluted EPS.

F-12

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Concentration of credit risk

Financial
instruments that potentially subject the Company to concentration of credit
risk consist primarily of accounts receivable and other receivables. The
Company does not require collateral or other security to support these
receivables. The Company conducts periodic reviews of its clients financial
condition and customer payment practices to minimize collection risk on
accounts receivable.

Risks and uncertainties

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, among other things.

Fair value of financial instruments

The carrying
amounts of certain financial instruments, including cash and cash equivalents,
accounts receivable, other receivables, accounts payable, accrued expenses,
taxes payable, notes payable and other loans payable approximate fair value due
to the short-term nature of these items. The carrying amounts of short-term
loans from bank approximate the fair value based on the Companys expected
borrowing rate for debt with similar remaining maturities and comparable risk.

Foreign currency translation

The Companys
functional currency is the Renminbi (RMB). For financial reporting purposes,
RMB has been translated into United States dollars (USD) as the reporting currency.
Assets and liabilities are translated at the exchange rate in effect at the
balance sheet date. Revenues and expenses are translated at the average rate of
exchange prevailing during the reporting period. Translation adjustments
arising from the use of different exchange rates from period to period are
included as a component of stockholders equity as Accumulated other
comprehensive income. Gains and losses resulting from foreign currency translations are included in accumulated
other comprehensive income. There is no significant fluctuation in exchange
rate for the conversion of RMB to USD after the balance sheet date.

F-13

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent accounting pronouncements

In December 2007, Statement
of Financial Accounting Standards No. 141(R), Business Combinations, was issued. SFAS No. 141R replaces SFAS No. 141,
Business Combinations.SFAS 141R retains the fundamental
requirements in SFAS 141 that the acquisition method of accounting (which SFAS
141 called the purchase method) be used for all business combinations and
for an acquirer to be identified for each business combination. SFAS 141R
requires an acquirer to recognize the assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree at the acquisition date,
measured at their fair values as of that date, with limited exceptions. This
replaces SFAS 141s cost-allocation process, which required the cost of
acquisition to be allocated to the individual assets acquired and liabilities
assumed based on their estimated fair values. SFAS 141R also requires the acquirer
in a business combination achieved in stages (sometimes referred to as a step
acquisition) to recognize the identifiable assets and liabilities, as well as
the non-controlling interest in the acquiree, at the full amounts of their fair
values (or other amounts determined in accordance with SFAS 141R). SFAS 141R
applies prospectively to business combinations for which the acquisition date
is on or after the beginning of the first annual reporting period beginning on
or after December 15, 2007 An entity may not apply it before that date. SFAS
141 (R) will significantly affect the accounting for future business
combinations and we will determine the accounting as new combinations occur.

In December
2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated
Financial Statements - an amendment of Accounting Research Bulletin No. 51
(SFAS 160), which establishes accounting and reporting standards for
ownership interests in subsidiaries held by parties other than the parent, the
amount of consolidated net income attributable to the parent and to the
non-controlling interest, changes in a parents ownership interest and the
valuation of retained non-controlling equity investments when a subsidiary is
deconsolidated. The Statement also establishes reporting requirements that
provide sufficient disclosures that clearly identify and distinguish between
the interests of the parent and the interests of the non-controlling owners.
SFAS 160 is effective for fiscal years beginning after December 15, 2007. We do not believe the adoption of
SFAS No. 160 will have a material impact on our consolidated financial
statements.

In February 2008, the FASB
issued Staff Position No. 157-2 (FSP 157-2), which delays the
effective date of FAS 157 one year for all nonfinancial assets and
nonfinancial liabilities, except those recognized or disclosed at fair value in
the financial statements on a recurring basis. FSP 157-2 is effective for
us beginning January 1, 2009. We do not believe the adoption of FSP 157-2
will have a material impact on our consolidated financial statements.

F-14

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In March 2008, the FASB
issued Statement of Financial Accounting Standards (SFAS) No. 161,
Disclosures about Derivative Instruments and Hedging Activities, an amendment
of FASB Statement No. 133, which requires additional disclosures about the
objectives of the derivative instruments and hedging activities, the method of
accounting for such instruments under SFAS No. 133 and its related
interpretations, and a tabular disclosure of the effects of such instruments
and related hedged items on our financial position, financial performance, and
cash flows. SFAS No. 161 is effective beginning January 1, 2009. We
are currently assessing the potential impact that adoption of SFAS No. 161
may have on our financial statements.

In April 2008, the FASB issued
FASB Staff Position FAS 142-3, Determination of Useful Life of Intangible
Assets (FSP 142-3). FSP 142-3 amends the factors that should be
considered in developing the renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under FAS 142, Goodwill
and Other Intangible Assets. FSP 142-3 also requires expanded disclosure
regarding the determination of intangible asset useful lives. FSP 142-3 is
effective for fiscal years beginning after December 15, 2008. Earlier
adoption is not permitted. We do not believe the adoption of FSP 142-3
will have a material impact on our consolidated financial statements.

Note 3. RESTRICTED CASH

For the year
ended December 31, 2008 and 2007, the Company had
restricted cash of $3,664,346 and
$5,428,673 respectively. The Companys lenders require the Company to maintain with the lending banks a cash
balance of a minimum 40% -50% of the balance of the bank acceptance notes
payable (see Note 12) and 10% of the short-term loan (see Note 11) as
collateral for the companys obligations to the lenders.

Note 4. ACCOUNT
RECEIVABLE

Accounts
receivables consist of trade receivables resulting from sales of products
during the normal course of business. Account receivables for the year
ended December 31, 2008 and 2007amounted to $ 11,234,507and $5,117,840,
respectively.

The Company
collaborates directly with its end users on new product development, product
certifications and post-sales support. Sales contracts are usually signed
directly between the Company and its end users. Due to nature of this industry,
the Company also regularly uses a third party agent to sell its products to
various end users. This arrangement can greatly ensure timely collections of
its accounts receivables. As of December 31, 2008, this agent accounted for
majority of the total account receivable outstanding. The Company believes that
all of the accounts receivable outstanding with this customer are collectible.

F-15

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 4. ACCOUNT
RECEIVABLE (Continued)

The allowance
for uncollectible amounts for the year ended December 31, 2008 was $99,669, and $93,219 for the year ended
December 31, 2008 and 2007, respectively.

Note. 5 INVENTORY

The inventory
consists of the following:

|                 |  |                   |            |                   |   |           | 
|---------------- |  | ----------------- | ---------- | ----------------- | - | --------- | 
|                 |  | As of             |           
|                 |  | December 31, 2008 |            | December 31, 2007 |  
|                 |  |                   |            |                   |  
|Raw materials    |  | $                 | 708,768    |                   | $ | 665,270   | 
|Packing supplies |  |                   | 5,344      |                   |   | 16,131    | 
|Work-in-process  |  |                   | 213,362    |                   |   | 53,428    | 
|Finished goods   |  |                   | 11,511,308 |                   |   | 4,853,033 | 
|                 |  |                   |            |                   |   |           | 
|                 |  |                   |            |                   |   |           | 
|Total            |  | $                 | 12,438,782 |                   | $ | 5,587,862 | 
|                 |  |                   |            |                   |   |           | 

No allowance
for inventory was made for the year ended December 31, 2008.

Note 6. PROPERTY, PLANT AND EQUIPMENT, NET

The detail of
property, plant and equipment is as follows:

|                                   |  |                     |            |                     |   |           |  
|---------------------------------- |  | ------------------- | ---------- | ------------------- | - | --------- | -
|                                   |  | As
  of             |           
|                                   |  | December
  31, 2008 |            | December
  31, 2007 |  
|                                   |  |                     |            |                     |  
|Machinery & equipment              |  | $                   | 17,007,972 |                     | $ | 5,920,295 |  
|Automobiles                        |  |                     | 142,674    |                     |   | 52,679    |  
|Plant & Buildings                  |  |                     | 2,373,619  |                     |   | 2,220,000 |  
|                                   |  |                     |            |                     |   |           |  
|Total                              |  |                     | 19,524,264 |                     |   | 8,192,974 |  
|                                   |  |                     |            |                     |   |           |  
|Less: accumulated depreciation     |  |                     | (1,684,241 | )                   |   | (659,355  | )
|                                   |  |                     |            |                     |   |           |  
|Construction in progress           |  |                     | 1,492,688  |                     |   |          |  
|                                   |  |                     |            |                     |   |           |  
|                                   |  |                     |            |                     |   |           |  
|Property, plant and equipment, net |  | $                   | 19,332,712 |                     | $ | 7,533,619 |  
|                                   |  |                     |            |                     |   |           |  

Depreciation
expense for years ended December 31, 2008 and 2007 was $961,627 and $275,922, respectively.

F-16

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 7. INTANGIBLE ASSET

Intangible
asset consists of land use right only. All land in the Peoples Republic of
China is government owned and cannot be sold to any individual or company.
Instead, the government grants the user a Land use right (the Right) to use
the land. The Company has the right to use the land for 48 years and amortized
the Right on a straight-line basis over 48 years. The land use right was
originally acquired in May 2005 for the amount of $226,281.

Net intangible assets at
December 31, 2008 and December 31, 2007 were as follows:

|                             |  |                   |         |                   |   |         |  
|---------------------------- |  | ----------------- | ------- | ----------------- | - | ------- | -
|                             |  | As of             |        
|                             |  | December 31, 2008 |         | December 31, 2007 |  
|                             |  |                   |         |                   |  
|Land use right               |  | $                 | 267,663 |                   | $ | 250,340 |  
|Less: Accumulated amortizati |  |                   | (19,982 | )                 |   | (13,473 | )
|                             |  |                   |         |                   |   |         |  
|                             |  |                   |         |                   |   |         |  
|Total                        |  | $                 | 247,681 |                   | $ | 236,867 |  
|                             |  |                   |         |                   |   |         |  

Amortization
expense for the years ended December 31, 2008 and 2007 amounted to $5,478 and $5,003, respectively.

Note 8. EMPLOYEE ADVANCE

Employee
advance represent cash advances to employees to purchase raw materials or equipment and other supplies for
normal business purposes. Employee advance for the year ended December 31, 2008
and 2007amounted to $ 92,329 and $122,298, respectively.

Note 9. DEFERRED CHARGES

Deferred
charges are related to the employee fringe for the automobiles purchased by the
company on behalf of the senior management members. The beneficiaries signed
employment contracts with the Company and they are obliged to work for the
Company for a service period of 7 to 10 years. Once they serve the full
contract term, the vehicles are for them to keep. If they leave before the
service contract expire, they are required to reimburse the full price if the
vehicle at the time of the purchase. The company amortizes the payment of the
automobile expenses based on the services performed by those employees.

F-17

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 10. RELATED PARTY TRANSACTIONS

Amounts due to
(from) directors/affiliates are as follows:

|                          |  |                     |           |                     |   |          |  
|------------------------- |  | ------------------- | --------- | ------------------- | - | -------- | -
|                          |  | As
  of             |          
|                          |  | December
  31, 2008 |           | December
  31, 2007 |  
|                          |  |                     |           |                     |  
|Xinda High-Tech Co., Ltd. |  | $                   | 6,975,195 |                     | $ |         |  
|Piao Qiuyao               |  |                     | 214,951   |                     |   |          |  
|Ma Qingwei                |  |                     | 20,520    |                     |   | (19,172  | )
|Han Jie                   |  |                     | 332,283   |                     |   | (86,365  | )
|                          |  |                     |           |                     |   |          |  
|                         
|Total                     |  | $                   | 7,542,950 |                     | $ | (105,537 | )
|                          |  |                     |           |                     |   |          |  

The Company
also has sales and purchases to and from its affiliated companies. The details
are as follows:

|                                                         |  |                       |         |                     |   |         | 
|-------------------------------------------------------- |  | --------------------- | ------- | ------------------- | - | ------- | 
|                                                         |  | For
  the years ended |        
|                                                         |  | December
  31, 2008   |         | December
  31, 2007 |  
|                                                         |  |                       |         |                     |  
|Purchase from                                            |  |                       |         |                     |   |         | 
|Harbin Xinda Hi-tech Co, Ltd                             |  | $                     | 869,491 |                     | $ |        | 
|Heilongjiang Xinda Hyundai Engineering Plastics Co, Ltd. |  | $                     | 223,455 |                     | $ | 440,554 | 
|Sales to                                                 |  |                       |         |                     |   |         | 
|Harbin Xinda Hi-tech Co., Ltd                            |  | $                     | 60,008  |                     | $ | 163,072 | 

Harbin Xinda
Hi-Tech Co. Ltd and Heilongjiang Xinda Hyundai Engineering Plastics Co. Ltd.
are affiliate companies owned by the relative of the Mr. Han Jie, who was the
major shareholder of Harbin Xinda before the ownership transferred to HK
Engineering Plastics.

Ms Piao,
Qiuyao owns 100% of Favor Sea Limited indirectly via XD Engineering Plastic
Company Ltd, the sole shareholder of Favor Sea Limited which was incorporated
in British Virgin Island. Harbin Xinda Hi-Tech Co. Ltd and Heilongjiang Xinda
Hyundai Engineering Plastics Co. Ltd. are affiliate companies owned by the
relative of the Mr. Han Jie, who was the major shareholder of Harbin Xinda
before the ownership transferred to HK Engineering Plastics.

After the
reverse acquisition, Mr. Ma Qingwei is the Chief Operating Officer of China XD
Plastics Company and Mr. Han Jie is the Chief Executive Officer and Chief
Financial Officer of the Company.

F-18

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 10. RELATED PARTY TRANSACTIONS
(Continued)

On September
20, 2008, Harbin Xinda Macromolecule Material Co., Ltd ( Harbin Xinda,
Buyer) signed an agreement (Agreement) with Harbin Xinda High-Tech Co.,
Ltd. (Xinda High-Tech, Seller), an affiliated company owned by the relative
of Mr. Han Jie to acquire all of the assets of Xinda High-Tech, including plant
buildings, land use rights, machinery and equipment for a total amount of
RMB240,000,000 (approximately US$35,136,006 at date of signing),. Harbin Xinda
was required to make two installment payments of the full purchase price,
RMB50, 000,000 by the end of December 31, 2008 and remaining RMB190, 000,000 by
the end of September 30, 2009 if all assets purchased are transferred to the
Company. Through this purchase, Harbin Xinda is expected to significantly
increase its production ability.

Before the
above purchase agreement was signed, the Company rented the buildings and
equipment for its operation. The total rent expense was $119,945 for the year
ended December 31, 2008.

F-19

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 11. SHORT TERM LOANS

The short-term
loans include the following:

|                                                                                                                                                                                                               |  |                      |            |                     |   |           | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ---------- | ------------------- | - | --------- | 
|                                                                                                                                                                                                               |  | As
  of              |           
|                                                                                                                                                                                                               |  | Decem
  ber 31, 2008 |            | December
  31, 2007 |  
|                                                                                                                                                                                                               |  |                      |            |                     |  
|a) Loan payable to Harbin Commerical Bank one year term from 12/04/07
  to 12/03/08, a fixed interest rate of 0.79% per month,                                                                                 |  | $                    |           |                     | $ | 1,370,877 | 
|                                                                                                                                                                                                               |  |                      |            |                     |   |           | 
|b) Loan payable to Harbin Bank Five-month term from 12/02/08 to
  04/28/09, a fixed interest rate of 0.546% per month                                                                                          |  |                      | 4,397,215  |                     |   |           | 
|                                                                                                                                                                                                               |  |                      |            |                     |   |           | 
|c)Loan payable to Harbin Bank one year term from 12/09/2008 to
  12/08/2009 a fixed interest rate of 0.605% per month                                                                                          |  |                      | 1,465,738  |                     |   |          | 
|                                                                                                                                                                                                               |  |                      |            |                     |   |           | 
|d) Loan payable to Harbin Bank one year term from 2/25/2008 to
  2/21/2009, a fixed interest rate of 0.809% per month                                                                                          |  |                      | 4,397,215  |                     |   |          | 
|                                                                                                                                                                                                               |  |                      |            |                     |   |           | 
|e) Loan payable to Bank of Communications one year term from
12/26/2008
  to 12/21/2009 bears interest 10% above the prime rate set by Central bank of
  China                                                 |  |                      | 4,397,215  |                     |   |          | 
|                                                                                                                                                                                                               |  |                      |            |                     |   |           | 
|f) Loan payable to Anhui Yiyang Metal Materials Co.,Ltd. one year
  term from 11/1/2008 to 10/31/2009 interest to be accrued starting from 1/1/2009
  at 30% above the prime rate set by Central bank of China |  |                      | 5,862,953  |                     |   |          | 
|                                                                                                                                                                                                               |  |                      |            |                     |   |           | 
|                                                                                                                                                                                                               |  |                      |            |                     |   |           | 
|Total                                                                                                                                                                                                          |  | $                    | 20,520,337 |                     | $ | 1,370,877 | 
|                                                                                                                                                                                                               |  |                      |            |                     |   |           | 

F-20

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 11. SHORT TERM LOANS (Continued)

The
five-month-term short loan of $4,397,215 between Harbin Xinda and Harbin Bank
for the period of December 2, 2008 to April 28, 2009 is guaranteed by Harbin
Xinda as well as two individuals and two other companies. Harbin Xinda pledged
its accounts receivable in the amount of $6,397,655 due from Changchun Jinheng
Auto Engineering &Plastics Company Limited as the collateral. The loan will be
primarily used to purchase raw materials for production. Also, cash in the
amount of $439,722 was restricted in the bank to secure the loan.

The
one-year-term short loan of $1,465,738 between Harbin Hi-Tech and Harbin Bank
for the period of December 9, 2008 to December 8, 2009 was guaranteed by Harbin
Xinda Hi-tech by pledging its assets in the amount of $3,899,480 as the
collateral to secure the loan.

The
one-year-term short loan of $4,397,215 between Harbin Xinda and Harbin Bank for
the period of February 25, 2008 to February 21, 2009 was guaranteed by Harbin
Xinda and Harbin Xinda Hi-tech. Harbin Xinda and Harbin Xinda Hi-Tech pledged
its equipments and machinery in the amount of $10,077,801 and $1,993,404,
respectively, as the collateral to secure the loan.

The one-year-term
short loan of $4,397,215 between Harbin Xinda Hi-tech and Bank of
Communications for the period of December 26, 2008 to December 21, 2009 was
guaranteed by Harbin Hi-tech. Harbin Hi-tech pledged the land and buildings as
the collateral.

Interest expense
for the above short term loans totaled $687,695 and $212,936 for years ended
December 31, 2008 and 2007, respectively.

Note12. BANK ACCEPTANCE NOTES PAYABLE

As of December
31, 2008, the Company has bank acceptance notes payable in the amount of $8,061,561.
The notes are guaranteed to be paid by the banks and usually for a short-term
period of 3 to 6 months. The Company is required to maintain cash deposits at a
minimum 40%-50% of the total balance of the notes payable with the banks, in
order to ensure future credit availability.

F-21

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 13. INCOME TAXES

(a)
Corporation income tax (CIT)

The Company is
governed by the Income Tax Law of the Peoples Republic of China concerning the
private-run enterprises, which are generally subject to tax at a new statutory
rate of 25% on income reported in the statutory financial statements after
appropriate tax adjustments.

On March 16, 2007, the National Peoples Congress of China approved the
Corporate Income Tax Law of the Peoples Republic of China (the New CIT Law),
which is effective from January 1, 2008. Under the new law, the corporate
income tax rate applicable to all Companies, including both domestic and
foreign-invested companies, will be 25%, replacing the old tax rate of 33%.
However, pending the detailed implementation rulings from the tax authorities,
we believe that some of the tax concession granted to eligible companies prior
to the new CIT laws will be grand fathered.

The Company is
located in a special economic development zone and is recognized as a high
technology company by the Chinese government. Therefore, it is entitled to a
full exemption of special 15% CIT for two years from January 1, 2006 through
December 31, 2007 and 50% reduction in CIT for three years at a favorable tax
rate of 7.5% from January 1, 2008 to December 31, 2010. The income tax expense
of $35,332 for year ended December 31, 2008 is attributed to the net income of
$271,571 derived from Harbin Xinda. The majority of the net income for the
period was from the Research Institute, which is a separate entity and whose
income is exempt from the income tax under the current law of China.

The following
table reconciles the statutory rates to the Companys effective tax rate for
the years ended December 31, 2008 and 2007:

|                               |  |      |        |      |  |       |   
|------------------------------ |  | ---- | ------ | ---- |  | ----- | --
|                               |  | 2008 |        | 2007 | 
|                               |  |      |        |      | 
|China Income Tax               |  |      | 25.00  | %    |  | 33.00 | % 
|Tax exemption                  |  |      | (24.74 | )%   |  | (33   | )%
|                               |  |      |        |      |  |       |   
|                               |  |      |        |      |  |       |   
|Total provision for income tax |  |      | 0.26   | %    |  | 0.00  | % 

F-22

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 13. INCOME TAXES (Continued)

(b) Value added tax (VAT)

Enterprises or
individuals who sell commodities, engage in repair and maintenance or import or
export goods in the PRC are subject to a value added tax in accordance with the
PRC laws. The value added tax standard rate is 17% of the gross sales price. A
credit is available whereby VAT paid on the purchases of semi-finished products
or raw materials used in the production of the Companys finished products can
be used to offset the VAT due on the sales of the finished products.

Note 14. STOCKHOLDERS EQUITY

Prior to the
reverse merger, the Company had 49,632,222 shares of common stock issued and
outstanding at $.0001 per share. In connection with the reverse merger
consummated on December 24, 2008, all of these outstanding shares were subject
to a 124.1 to 1 reverse split for all record holders of the Companys
common stock on the date of December 31, 2008. The number of the post
reverse-split of the original common stock outstanding was rounded up to
400,000 shares.

In
consideration for the Merger, the Company, through the Merger Sub,
issued 10 shares of the common stock of the Merger Sub and 1,000,000
shares of convertible Series A preferred stock of the Company to the
shareholders of Favor Sea Limited, and also 1,000,000 shares of Series B
preferred stock to XD Engineering Plastics Company Limited, the principal
shareholder of Favor Sea. The 10 shares of the common stock of the Merger Sub
were converted into approximately 50,367,778 shares of the common stock of the Company
prior to and approximately 405,802 post a reverse stock split of 124.1 for 1.
The equity account of Favor Sea, prior to the merger date, has been
retroactively restated so that the ending outstanding share balance as of the
merger date is equal to the number of post reverse-split shares received in the
merger.

Thus, as of
December 31, 2008 and 2007, there were 805,802 and 405,802 post reverse-split
shares of common stock issued and outstanding, respectively. There were
also 1,000,000 share of Series A preferred stock (convertible into 38,194,702
share of post reverse-split common stock) and 1,000,000 share of Series B
preferred stock issued and outstanding.

F-23

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 15. MAJOR CUSTOMERS
AND SUPPLIERS

Two major
customers accounted for approximately 9.5% of the net revenue for the year
ended December 31, 2008, with each customer individually accounting for 5.28%,
and 4.23%, respectively.

Four major
customers accounted for 25.33% of the net revenue for the year ended December
31, 2007, with each customer individually accounted for 8.68%, 6.31%, 5.66%,
and 4.68%, respectively. At December 31, 2007, the total receivable balance due
from these four customers was $821,616, representing 15.77% of total accounts
receivable.

Two major
vendors provided approximately 84% of the Companys purchases of raw materials
for the period ended December 31, 2008, with each vendor individually
accounting

for 58% and
26%, respectively. The advance to one of the vendors was in the amount of
$12,060,537 at December 31, 2008.

One vendor
provided 86.23% of the Companys purchase of raw materials for the year ended
December 31, 2007. The Companys advance to this vendor was $1,735,924 at
December 31, 2007, accounting for 99.42% of total advances to suppliers.

Note 16. WEIGHTED AVERAGE NUMBER OF SHARES

In December 2008, the Company entered into a reverse merger
transaction. The Company computes the weighted-average number of common shares
outstanding in accordance with FAS 141(R). FAS 141(R) states that in
calculating the weighted average shares when a reverse merger takes place in
the middle of the year, the number of common shares outstanding from the
beginning of that period to the acquisition date shall be computed on the basis
of the weighted-average number of common shares of the legal acquiree
(accounting acquirer) outstanding during the period multiplied by the exchange
ratio established in the merger agreement. The number of common shares
outstanding from the acquisition date to the end of that period shall be the
actual number of common shares of the legal acquirer (the accounting acquiree)
outstanding during that period.

F-24

---



CHINA XD PLASTICS COMPANY LTD
(FORMERLY NB TELECOM, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

Note 17. COMMITMENTS AND
CONTINGENCY

a) Renewal of
short term loan with Anhui Yiyang Metal Materials Co., Ltd.

On October 31,
2008, the Company renewed the contract with Anhui Yiyang Metal Materials Co.,
Ltd., an unaffiliated partner for the amount of RMB70,000,000 (equivalent to
US$10,232,721 at date of signing). The term is from November 1, 2008 to October
31, 2009, with interest rate at 30% above the prime rate for one year loan
published by the Central bank of China. The Company is required to pay interest
expenses starting from January 1, 2009. As of December 31, 2008, the Company
repaid RMB30,000,000 (equivalent to US$4,397,215).

b) Asset
Acquisition Agreement with High-Tech

According to
the agreement signed between Harbin Xinda and Xinda High-Tech (see note 10),
Xinda is obligated to pay the second installment payment for RMB 190,000,000 by
the end of September 30, 2009 if all the assets are transferred to the Company.

Note 18. SUBSEQUENT EVENTS

On
February 23, 2009, the Company amended the agreement with Xinda Hi-tech and
extends the deadline for the second payment for the asset acquisition to
December 31, 2009.

F-25

---



|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|Item 9. | Changes In and Disagreements With
  Accountants On Accounting and Financial Disclosure.

On
December 31, 2008, the Company changed its principal independent accountants.
On such date, Robison, Hill & Co. was dismissed from serving as the
Companys principal independent accountants and the Company retained Bagell
Josephs Levine & Company, LLC as its principal independent accountants. The
decision to change accountants was approved by the Companys Board of Directors
on December 31, 2008.

The dismissal
of Robison, Hill & Co.

Robison, Hill & Co. was the independent registered public accounting firm
for the Company from December 31, 2004 to December 31, 2008. None of Robinson,
Hill & Co.s reports on the Companys financial statements from December
31, 2004 to December 31, 2008, (a) contained an adverse opinion or disclaimer
of opinion, (b) was modified as to uncertainty other than mentioned below,
audit scope, or accounting principles, or (c) contained any disagreements on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements, if not
resolved to the satisfaction of Robison, Hill & Co., would have caused it
to make reference to the subject matter of the disagreements in connection with
its reports. None of the reportable events set forth in Item 304(a)(1)(ii) of
Regulation S-K occurred during the period in which Robison, Hill & Co.
served as the Companys principal independent accountants.

In
accordance with Item 304(a)(3), the Company has provided Robison, Hill &
Co. with a copy of this disclosure and has requested that Robison, Hill &
Co. furnish it with a letter addressed to the U.S. Securities and Exchange
Commission stating whether it agrees with the above statements, and if not,
stating the respects in which it does not agree. A copy of the letter from
Robison, Hill & Co. addressed to the Securities and Exchange Commission
dated December 31, 2008 is filed as Exhibit 16.1 to this 8-K Report.

The Engagement
of Bagell Josephs Levine & Company, LLC

Prior to
December 31, 2008, the date that Bagell Josephs Levine & Company, LLC was
retained as the principal independent accountants of the Company:

(1) The
Company did not consult Bagell Josephs Levine & Company, LLC regarding
either the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered on Companys financial statements;

(2) Neither a
written report nor oral advice was provided to the Company by Bagell Josephs
Levine & Company, LLC that they concluded was an important factor
considered by the Company in reaching a decision as to the accounting, auditing
or financial reporting issue; and

(3) The Company
did not consult Bagell Josephs Levine & Company, LLC regarding any matter
that was either the subject of a disagreement (as defined in Item
304(a)(1)(iv) of Regulation S-K and the related instructions) or any of the
reportable events set forth in Item 304(a)(1)(iv) of Regulation S-K.

25

---



ITEM
9A. CONTROLS AND PROCEDURES

(a)
Evaluation of Disclosure Controls and Procedures

The Companys management has
evaluated, under the supervision and with the participation of the Companys Chief
Executive Officer and Chief Financial Officer, the effectiveness of the design and
operations of the Companys disclosure controls and procedures (as defined in
Securities Exchange Act Rule 13a-15(e)), as of the end of the period covered by this
annual report. Based on that evaluation, the Companys Chief Executive Officer and
Chief Financial Officer have concluded that the evaluation of the effectiveness of our
disclosure controls and procedures was completed; our disclosure controls and procedures
were not effective.

(b)
Managements Annual Report on Internal Control over Financial Reporting

The
Companys management is responsible for establishing and maintaining an adequate
system of internal control over financial reporting. Internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. A companys internal
control over financial reporting includes those policies and procedures that (i) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the financial statements.

Because
of its inherent limitations, a system of internal control over financial reporting can
provide only reasonable assurance and may not prevent or detect misstatements. Therefore,
even those systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Further, because of changes
in conditions, effectiveness of internal control over financial reporting may vary over
time.

A
significant deficiency is a control deficiency, or combination of control deficiencies,
that adversely affects the companys ability to initiate, authorize, record, process,
or report external financial data reliably in accordance with generally accepted
accounting principles such that there is more than a remote likelihood that a misstatement
of the companys annual or interim financial statements that is more than
inconsequential will not be prevented or detected. An internal control material weakness
is a significant deficiency, or combination of significant deficiencies, that results in
more than a remote likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected.

We
have evaluated the effectiveness of our internal control over financial reporting as of
December 31, 2008. This evaluation was performed using the Internal Control 
Evaluation Framework developed by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on such evaluation, management identified
deficiencies that were determined to be a material weakness.

A
material weakness is a deficiency, or a combination of deficiencies, in internal control
over financial reporting, such that there is a reasonable possibility that a material
misstatement of the companys annual or interim financial statements will not be
prevented or detected on a timely basis. Because of the material weakness described below,
management concluded that our internal control over financial reporting was not effective
as of December 31, 2008.

The
specific material weakness and significant deficiency identified by the Companys
management as of December 31, 2008 is described as follows:

26

---



Material
Weakness

Inadequate
US GAAP expertise  The current staff in the accounting department is inexperienced
in US GAAP and they were primarily engaged in ensuring compliance with PRC accounting and
reporting requirement for our operating subsidiaries was not required to meet or apply
U.S. GAAP requirements. They need substantial training to meet the higher demands of being
a U.S. public company. The accounting skills and understanding necessary to fulfill the
requirements of US GAAP-based reporting, including the skills of subsidiary financial
statements consolidation, are inadequate.

The
Company did not have sufficient and skilled accounting personnel with an appropriate level
of technical accounting knowledge and experience in the application of generally accepted
accounting principles accepted in the United States of America commensurate with the
Companys financial reporting requirements, which resulted in a number of internal
control deficiencies that were identified as being significant. The Companys
management believes that the number and nature of these significant deficiencies, when
aggregated, was determined to be a material weakness.

Significant
Deficiency

The
Company is lacking qualified resources to perform the internal audit functions properly.
In addition, the scope and effectiveness of the Companys internal audit function are
yet to be developed. We are committed to establishing the internal audit functions but due
to limited qualified resources in the region, we were not able to hire sufficient internal
audit resources before the end of 2008. However, internally we have started the process to
recruit more senior qualified people in order to improve our internal control procedures.
Externally, we also seek qualified consultant to assist the Company in improving the
Companys internal control system based on COSO Framework. We also will increase our
efforts to hire the qualified resources.

Remediation
Initiative

Prior
to December 31, 2008, we engaged external qualified consultant in the US to serve as our
accountant. She is mainly engaged to perform our financial statements consolidation and to
prepare our financial statements. In addition, we are seeking accountants experienced in
several key areas of accounting, including persons with experience in Chinese and U.S.
GAAP, U.S. GAAP consolidation requirements, and SEC financial reporting requirements. In
addition, we plan to allocate additional resources to train our existing accounting staff
and continue this effort in the future.

Conclusion

Despite
of the material weakness and deficiencies reported above, the Companys management
believes that its consolidated financial statements included in this report fairly present
in all material respects the Companys financial condition, results of operations and
cash flows for the periods presented and that this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report.

(c)
Changes in Internal Control over Financial Reporting

Except
as described above, there were no changes in its internal controls over financial
reporting in connection with its fourth quarter evaluation that would materially affected,
or are reasonably likely to materially affect, its internal control over financial
reporting.

|         |                  
|-------- | -----------------
|Item 9B. | Other Information

None.

27

---



PART III

|         |                                                          
|-------- | ---------------------------------------------------------
|Item 10. | Directors, Executive Officers and Corporate
  Governance.

Directors
and Executive Officers

Each
director is elected for until the next annual meeting of shareholders and their
successor is elected and qualified.

The
following is a list of the names and ages of our directors and executive
officers:

|           |  |     |  |                                                                
|---------- |  | --- |  | ---------------------------------------------------------------
|Name       |  | Age |  | Positions with the Company                                     
|           |  |     |  |                                                                
|           |  |     |  |                                                                
|Jie Han    |  | 43  |  | Chairman,
  Chief Executive Officer and Chief Financial Officer
|           |  |     |  |                                                                
|Qingwei Ma |  | 34  |  | Director,
  Chief Operating Officer                            
|           |  |     |  |                                                                
|Junjie Ma  |  | 33  |  | Director,
  Head of Research Institute                         

All directors
hold office until the next annual meeting of our shareholders and until their
successors have been elected and qualify. Officers serve at the pleasure of the
Board of Directors.

Jie Han.Mr. Han
co-founded Xinda in 2004, and has been employed by Xinda since that time. In
January 2008 Mr. Han was appointed Chairman and Chief Executive Officer of
Xinda. Prior to organizing Xinda High-tech, which was founded in 2003, Mr. Han
had been associated with the Harbin Xinda Nylon Factory, which he founded in
1985. With 24 years of experiences in the industry, Mr. Jie Han is an expert in
the management and financial works dealing with the manufacture and distribution
of modified plastic products. Mr. Han currently serves as an executive director
of China Plastic Processing Industry Association and is also a director of the
Heilongjiang Industry and Commerce Association. In addition, Mr. Han serves as
a deputy to the Harbin Municipal Peoples Congress.

Qingwei Ma.Mr. Ma
has been employed as General Manager of Xinda since it was founded in 2004. In
2008 he was promoted to Chief Operating Officer. Prior to joining Xinda, Mr. Ma
was employed for six years by Harbin Xinda Nylon Factory as Manager of Quality
Assurance, then as Manager of Research and Development, and finally as
Production Manager. In 1997 Mr. Ma was awarded a bachelors degree by the
Northern China Technology University, where he specialized in the chemical engineering
of high polymers. Mr. Ma has 11 years of experiences in the industry. He also
published two articles in Chinas key journals in the areas of modified plastic
industry. In 2001 Mr. Ma was selected as Harbin Quality Work Advanced
Enterprise and Advanced Worker; in 2004 he was awarded the Heilongjiang First
Professional Manager Qualification Certificate. One of his inventions,
compound nano modified materials dedicated to the automobile bumper won the
Science and Technology Progress Awards issued by Harbin Municipality.

Junjie Ma.Mr. Ma
graduated from Beijing University of Science and Technology, majored in Polymer
materials and engineering. He was a technician of Harbin Longjiang Electrical
Plant from 1997 to 2004 and was a supervisor and manager of Harbin Xinda
Macromolecule Material Inc. from 2004 to 2007. Since 2008, he was elected to be
Head of Research Institute of Harbin Xinda Macromolecule Material Co., Ltd. Mr.
Junjie Ma is a polymer materials engineers and has developed more than 120
plastic additives, modified plastics for automobiles and engineering plastics
among which 50 products have been approved by auto enterprises. A number of
products have been awarded as the National Torch Program projects, Spark
Projects and Harbin City Important New Products project.

28

---



The
Board of Directors has not established audit, nominating and compensation
committees. The Board is of the opinion that such committees are not necessary
since the Company only has three directors.

Code of Ethics

We do not
currently have a Code of Ethics applicable to our principal executive,
financial or accounting officer, and are in the process of adopting such a
code.

Section 16 (a) Beneficial Ownership Reporting
Compliance

Pursuant
to Section 16(a) of the Securities Exchange Act of 1934 and the rules issued
thereunder, our directors and executive officers and any persons holding more
than 10% of our common stock are required to file with the SEC reports of their
initial ownership of our common stock and any changes in ownership of such
common stock. Copies of such reports are required to be furnished to us. We are
not aware of any instances in fiscal year ended December 31, 2008 when an
executive officer, director or any owner of more than 10% of the outstanding
shares of our common stock failed to comply with the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934.

|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

The
following table is a summary of the compensation paid to our executive officers
for the two years ending December 31, 2008 and 2007.

|                                     |  |      |      |        |   |         |   |                |   |                 |   |                                         |  |                                               |   |                          |  |             |  |   |   |  |   |   |  |   |          |  
|------------------------------------ |  | ---- | ---- | ------ | - | ------- | - | -------------- | - | --------------- | - | --------------------------------------- |  | --------------------------------------------- | - | ------------------------ |  | ----------- |  | - | - |  | - | - |  | - | -------- | -
|SUMMARY COMPENSATION TABLE          
|                                    
|Name and Principal
  Position        |  | Year |      | Salary |   | Bonus   |   | Stock
  Awards |   | Option
  Awards |   | Nonequity
  Incentive Plan Compensation |  | Nonqualified
  Deferred Compensation Earnings |   | All
  Other Compensation |  | Total
  ($) | 
|                                     |  |      |      |        |   |         |   |                |   |                 |   |                                         |  |                                               |   |                          |  |             | 
|Jie Han Chief Executive
  Officer    |  |      | 2008 |        | $ | [103,63 | ] | $              | 0 |                 | $ | 0                                       |  | $                                             | 0 |                          |  | 0           |  | $ | 0 |  | $ | 0 |  | $ | [103,632 | ]
|                                     |  |      | 2007 |        | $ | 0       |   | $              | 0 |                 | $ | 0                                       |  | $                                             | 0 |                          |  | 0           |  | $ | 0 |  | $ | 0 |  | $ | 0        |  
|Qingwei Ma Chief Operating
  Officer |  |      | 2008 |        | $ | [21,578 | ] | $              | 0 |                 | $ | 0                                       |  | $                                             | 0 |                          |  | 0           |  | $ | 0 |  | $ | 0 |  | $ | [21,578  | ]
|                                     |  |      | 2007 |        | $ | 5,782   |   | $              | 0 |                 | $ | 0                                       |  | $                                             | 0 |                          |  | 0           |  | $ | 0 |  | $ | 0 |  | $ | 5782     |  

29

---



Outstanding
Equity Awards at Fiscal Year-End Table

The following
is a summary of all options, unvested stock and equity incentive plans for our
Executive Officers for the year ending December 31, 2008.

|           |  |                                                                   |  |                                                                       |  |                                                                                              |  |                       |  |                        |  |                                                           |  |                                                                 |  |                                                                                                       |  |                                                                                                                        
|---------- |  | ----------------------------------------------------------------- |  | --------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------- |  | --------------------- |  | ---------------------- |  | --------------------------------------------------------- |  | --------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------
|           |  | OUTSTANDING
  EQUITY AWARDS AT FISCAL YEAR-END                    |  |                                                                       |  |                                                                                             
|           |  |                                                                   |  |                                                                       |  |                                                                                              |  |                       |  |                        |  |                                                           |  |                                                                 |  |                                                                                                       |  |                                                                                                                        
|           |  | Option
  Awards                                                   |  |                                                                       |  |                                                                                              |  |                       |  | Stock
  Awards         |  |                                                           |  |                                                                
|           |  |                                                                   |  |                                                                       |  |                                                                                              |  |                       |  |                        |  |                                                           |  |                                                                 |  |                                                                                                       |  |                                                                                                                        
|Name       |  | Number of Securities
  Underlying Unexercised Options Exercisable |  | Number of Securities
  Underlying Un-Exercised Options Un-Exercisable |  | Equity Incentive Plan
  Awards: Number of Securities Underlying Unexercised Unearned Options |  | Option Exercise Price |  | Option Expiration Date |  | Number of Shares or Units
  of Stock That Have Not Vested |  | Market Value of Shares or
  Units of Stock That Have Not Vested |  | Equity Incentive Plan
  Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested |  | Equity Incentive Plan
  Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That
  Have Not Vested
|Jie Han    |  | 0                                                                 |  | 0                                                                     |  | 0                                                                                            |  | N/A                   |  | N/A                    |  | 0                                                         |  | 0                                                               |  | 0                                                                                                     |  | 0                                                                                                                      
|Qingwei Ma |  | 0                                                                 |  | 0                                                                     |  | 0                                                                                            |  | N/A                   |  | N/A                    |  | 0                                                         |  | 0                                                               |  | 0                                                                                                     |  | 0                                                                                                                      

Compensation
of Directors

The
following is a summary of the compensation paid to our Directors for the period
ending December 31, 2008.

|                      |  |                               |  |                |  |                 |  |                                          |  |                                               |  |                          |  |      
|--------------------- |  | ----------------------------- |  | -------------- |  | --------------- |  | ---------------------------------------- |  | --------------------------------------------- |  | ------------------------ |  | -----
|DIRECTOR COMPENSATION
|                     
|Name                  |  | Fees
  Earned or Paid in Cash |  | Stock
  Awards |  | Option
  Awards |  | Non-Equity
  Incentive Plan Compensation |  | Nonqualified
  Deferred Compensation Earnings |  | All
  Other Compensation |  | Total
|                      |  |                               |  |                |  |                 |  |                                          |  |                                               |  |                          |  |      
|Jie Han               |  | 0                             |  | 0              |  | 0               |  | 0                                        |  | 0                                             |  | 0                        |  | 0    
|Qingwei Ma            |  | 0                             |  | 0              |  | 0               |  | 0                                        |  | 0                                             |  | 0                        |  | 0    
|Junjie Ma             |  | 0                             |  | 0              |  | 0               |  | 0                                        |  | 0                                             |  | 0                        |  | 0    

Employment
Agreements

All
of our officers and directors serve on an at-will basis.

30

---



|         |                                                                                                  
|-------- | -------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
  Owners and Management and Related Stockholder Matters.

The following
table lists, as of March 23], 2009, the number of shares of common stock
beneficially owned by (i) each person or entity known to the Company to be the
beneficial owner of more than 5% of the outstanding common stock; (ii) each
officer and director of the Company, and (iii) all officers and directors as a
group. Information relating to beneficial ownership of common stock by our
principal stockholders and management is based upon information furnished by
each person using beneficial ownership concepts under the rules of the
Securities and Exchange Commission. Under these rules, a person is deemed to be
a beneficial owner of a security if that person has or shares voting power,
which includes the power to vote or direct the voting of the security, or
investment power, which includes the power to vote or direct the voting of the
security. The person is also deemed to be a beneficial owner of any security of
which that person has a right to acquire beneficial ownership within 60 days.
Under the Securities and Exchange Commission rules, more than one person may be
deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he or she may not
have any pecuniary beneficial interest. Except as noted below, each person has
sole voting and investment power.

The
Certificate of Change to effectuating the 124.1 to 1 reverse split of the
issued and outstanding shares of common stock, while correspondingly reducing
the Companys authorized capital, was filed with the Secretary of State of
Nevada on January 6, 2009. As of such date, the Company had 110,000,000 shares
of stock authorized, of which 100,000,000 shares of common stock were
authorized, issued and outstanding and 10,000,000 shares of preferred stock
were authorized, of which 1,000,000 shares of Series A Preferred Stock were
issued and outstanding and 1,000,000 shares of Series B Preferred Stock were
issued and outstanding.

There are no
options or warrants convertible into shares of Common Stock. There are
1,000,000 shares of convertible Series A preferred stock of the Company
convertible approximately 1:38.2 into 38,194,072 shares of Common Stock of the
Company.

31

---



|                                               |  |                                                  |         |                       |  |       |      
|---------------------------------------------- |  | ------------------------------------------------ | ------- | --------------------- |  | ----- | -----
|Name and Address of
  Beneficial Owner(1)      |  | Amount and Nature
  of Beneficial
  Ownership(2) |         | Percentage
  of Class | 
|                                               |  |                                                  |         |                       | 
|Jie Han                                        |  |                                                  | 0       |                       |  |       |      
|Qingwei Ma                                     |  |                                                  | 0       |                       |  |       |      
|Junjie Ma                                      |  |                                                  | 0       |                       |  |       |      
|All officers
  and directors                   |  |                                                  |         |                       |  |       |      
|as a group
  (3 persons)                       |  |                                                  | 0       |                       |  |       |      
|XD.
  Engineering Plastics Company Limited     |  |                                                  | 405,864 |                       |  | 50.36 | % (3)
|P.O. Box
  957, Offshore Incorporations Centre |  |                                                  |         |                       |  |       |      
|Road Town,
  Tortola, British Virgin Islands   |  |                                                  |         |                       |  |       |      

|    |                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Except as
  otherwise noted, each shareholders address is No. 9 Qinling Road, Yingbin
  Road Centralized Industrial Park, Harbin Development Zone, Heilongjiang,
  China 150078.                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                       
|(2) | Except as
  otherwise noted, all shares are owned of record and beneficially.                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                       
|(3) | XD is the
  holder of 1,000,000 shares of convertible Series A preferred stock of the
  Company convertible approximately 1:38.2 into 38,194,072 shares of Common
  Stock of the Company. XD also is the holder of 1,000,000 shares of Series B
  Preferred Stock which has voting power equivalent to 40% of the total voting
  power of the Company.

|         |                                                                            
|-------- | ---------------------------------------------------------------------------
|Item 13. | Certain Relationships and Related
  Transactions, and Director Independence

Related Party Transactions

Jie
Han, our Chief Executive Officer, is affiliated with two companies that have
engaged in transactions with Xinda during the past two years. Mr. Han has used
these two companies as a source of raw materials and equipment financing for
Xinda, in order to reduce Xindas working capital expenses.

Harbin
Xinda High-Tech Co., Ltd. (Xinda High-Tech) was founded by incumbent president
of Xinda, Mr. Jie Han, in July 2003. Xinda Hegh-Tech is mainly engaged in
production of electrical wire and wire harness and transactions of plastic
materials. Mr. Jie Han transferred 89.29% shares he held in Xinda High-Tech to
his wife Mrs. Limei Sun. However, High-Tech does not manufacture modified
plastics in competition with Xinda. Xinda has engaged in transactions with
Xinda High-Tech since 2007. The relationship has three aspects: an Asset
Purchase Agreement, a lease contract and certain raw material purchases.

On
September 20, 2008, Xinda signed the Asset Purchase Agreement with Xinda
High-Tech that was discussed in the Business section of this Report. The
Asset Purchase Agreement provides that Xinda will purchase from Xinda High-Tech
six buildings, 19 assembly lines, and the related land use right. The buildings
were recently built by Xinda High-Tech; the assembly lines were recently
purchased by Xinda High-Tech, and have never been used.

32

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Xinda
High-Tech made the purchase for the benefit of Xinda because Xinda High-Tech is
eligible to receive low-cost government financing that is not available to
Xinda.

At
the beginning of 2008, Mr. Han decided that Xinda should lease the plant and
facilities of Xinda High-Techs newly-built automotive modified plastics
production base. The parties entered into a lease contract for premises located
at No. 9, Dalian North Road, Haping Road Centralized Industrial Park, Harbin
Development Zone, Heilongjiang Province, China, with an area of 23,893.53
square meters. The lease term was from May 1, 2008 to April 30, 2011. The lease
payment was 2 million RMB per year.

In
September 2008, as a result of the adjustment of Chinese industrial policy, the
influence of international financial situation and the credit squeeze policy of
the financial institutions, Xinda High-Techs lending bank requires Xinda
High-Tech to pay all the due loans by the end of 2009. If Xinda High-Tech
defaults, the bank will consider foreclosure based on the negotiation results
of the parties. Considering Xindas overall business interest, Mr. Han decided
that Xinda should purchase from Xinda High-Tech all assets related to the
production of automotive modified plastics.

The
purchase price paid by Xinda to Xinda High-Tech will be 240 million RMB
(currently, USD$35,139,092). Payment of 50 million RMB by Xinda is due at the
end of December 2008; the remaining 190 million is due at the end of September
2009. If Xinda is unable to make the payment scheduled for the end of 2008, the
parties expect that the due date will be extended. However, Xinda will be
responsible for any accumulated interests related to such past due payments.
Xina High-Tech also agreed not to engage in the relevant production and sales
in competition of Xindas major business.

Xinda
High-Tech paid 265 million RMB (USD$38 million) to purchase the equipments and
facilities for the production of automotive modified plastics. The purchase
price of Xinda is RMB 240 million, which is 10% lower that the assets original
history cost. By using acquisition to expand production capacity, Xinda has
realized its sales plan two years earlier than constructing the plant itself.
The acquisition also saves the costs increased by price inflation. Due to the
increased value of Chinas property and land usage, the assets have great
potential of increasing in value.

During
the year ended December 31, 2008, Xinda purchased raw materials from Xinda
High-Tech for a purchase price of $869,491. Such raw materials are used to test
the new equipments Xinda High-Tech recently purchased. The purchase price
represents the cost incurred by Xinda High-Tech for the goods.

On
February 21, 2009, Xinda entered into an amendment to that certain Asset
Purchase Agreement (Purchase Agreement) by and between Xinda and Xinda
High-Tech., dated September 20, 2008. The amendment provides that the payment
date under the Purchase Agreement has been extended to on or before December
31, 2009.

33

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Heilongjiang
Xinda Hyundai Engineering Plastics Co, Ltd (Heilongjiang Xinda Hyundai.
Heilongjiang Xinda Hyundai Engineering Plastics Co, Ltd. is a company owned 25%
by Hyundai Engineering Plastics Co, Ltd, and 75% by Xinda High-Tech. Since its
organization, Heilongjiang Xinda Hyundai has no operations other than the sale
of small amounts of raw materials for the plastics. In October of 2008, the
Board approved the resolution to liquidate the company. Under this
circumstance, Heilongjiang Xinda Hyundai agreed to sell its raw materials to
Xinda at their purchase prices. During 2007 Xinda paid $440,554 to Hyundai
Engineering Plastics Co, Ltd. for these raw materials, $ 223,455 in the year
2008 to the same company. The purchase prices represent the cost incurred by
Hyundai Engineering Plastics Co, Ltd. for the raw materials.

As of December
31, 2008, the Company has borrowed a total amount of $332,283 from Mr. Jie Han
and $214,951 from Ms. Qiuyao Piao.. The loans are intended to be interest free
and due upon demand .Other than the aforesaid relationships and transactions,
none of our officers or directors has engaged in any transaction during the
past fiscal year or the current fiscal year that had a transaction value in
excess of $60,000.

|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services

For
the fiscal years ended December 31, 2008 and December 31, 2007, Bagell Josephs,
Levine & Company, LLC and Robison, Hill & Co., respectively, have
billed us the following fees for services rendered in connection with the audit
and other services in respect to these years:

|                   |  |      |        |      |   |        |  
|------------------ |  | ---- | ------ | ---- | - | ------ | -
|                   |  | 2008 |        | 2007 |  
|                   |  |      |        |      |  
|Audit Fees (1)     |  | $    | 95,000 |      | $ | 13,855 |  
|                   |  |      |        |      |   |        |  
|Tax Fees (2)       |  | $    |       |      | $ | 145    |  
|                   |  |      |        |      |   |        |  
|All Other Fees (3) |  | $    | 2,500  |      | $ | 0      |  
|                   |  |      |        |      |   |        |  
|Total              |  | $    | 97,500 |      | $ | 14,000 | ]

|    |                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Services rendered for the
  audit of our annual financial statements included in our report on Form 10-K
  and the reviews of the financial statements included in our reports on Form
  10-Q filed with the SEC.
|    |                                                                                                                                                                                                                  
|(2) | Services in connection
  with the preparation of tax returns and the provision of tax advice.                                                                                                                    
|    |                                                                                                                                                                                                                  
|(3) | Services related to other
  miscellaneous securities filings                                                                                                                                                     

All
(100%) of the fees described above were approved by our Board of Directors.

34

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|         |                                         
|-------- | ----------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules.

|                  |  |                                                                                                                                                |  |                      
|----------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------
|Exhibit
   Number |  | Description
   of Exhibit                                                                                                                      |  | Footnote
   Reference
|                  |  |                                                                                                                                                |  |                      
|3.1               |  | Certificate of
  Incorporation                                                                                                                 |  | (1)                  
|                  |  |                                                                                                                                                |  |                      
|3.2               |  | Amended and Restated
  Certificate of Incorporation                                                                                            |  | (1)                  
|                  |  |                                                                                                                                                |  |                      
|3.3               |  | By-laws                                                                                                                                        |  | (1)                  
|                  |  |                                                                                                                                                |  |                      
|4.0               |  | Stock Certificate                                                                                                                              |  | (1)                  
|                  |  |                                                                                                                                                |  |                      
|10.1              |  | Agreement and Plan of Merger
  dated December 24, 2008 among the Company and the shareholders of Favor Sea
  Limited.                          |  | (2)                  
|                  |  |                                                                                                                                                |  |                      
|10.2              |  | Designation Certificate of Series A Preferred Stock                                                                                            |  | (2)                  
|                  |  |                                                                                                                                                |  |                      
|10.3              |  | Designation Certificate of Series B Preferred Stock                                                                                            |  | (2)                  
|                  |  |                                                                                                                                                |  |                      
|10.4              |  | Asset Purchase Agreement dated September 20, 2008 between Harbin
  Xinda Macromolecule Material Co., Ltd. and Harbin Xinda High-Tech Co., Ltd. |  | (2)                  
|                  |  |                                                                                                                                                |  |                      
|16.1              |  | Letter, dated December 31, 2008, from Robison, Hill & Co. to the
  Securities and Exchange Commission.                                         |  | (2)                  
|                  |  |                                                                                                                                                |  |                      
|21.1              |  | Subsidiaries of Registrant                                                                                                                     |  | *                    
|                  |  |                                                                                                                                                |  |                      
|31.1              |  | Certification of Principal Executive Officer Required Under Section
  302 of Sarbanes-Oxley Act of 2002                                        |  | *                    
|                  |  |                                                                                                                                                |  |                      
|31.2              |  | Certification of Principal Financial Officer Required Under Section
  302 of Sarbanes-Oxley Act of 2002                                        |  | *                    
|                  |  |                                                                                                                                                |  |                      
|32.1              |  | Certification of Principal Executive Officer and Principal Financial
  Officer Required Under Section 906 of Sarbanes-Oxley Act of 2002        |  | *                    
|                  |  |                                                                                                                                                |  |                      
|32.2              |  | Certification of Principal Financial Officer and Principal Financial
  Officer Required Under Section 906 of Sarbanes-Oxley Act of 2002        |  | *                    

|    |                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|*   | Filed herewith.                                                                                                                                                                                 
|    |                                                                                                                                                                                                 
|+   | Management contract or
  compensatory plan or arrangement.                                                                                                                                      
|    |                                                                                                                                                                                                 
|(1) | Filed as an exhibit to the
  Companys registration statement on Form SB-2, as filed with the Securities
  and Exchange Commission on May 12, 2006, and incorporated herein by this
  reference.
|    |                                                                                                                                                                                                 
|(2) | Filed as an exhibit to the
  Companys current report on Form 8-K, as filed with the Securities and
  Exchange Commission on December 31, 2008, and incorporated herein by this
  reference.    

35

---



|                  |  |                                                                                                                                                  |                       |    
|----------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------- | ---
|Exhibit 
  Number |  | Description of Exhibit                                                                                                                           | Footnote 
  Reference
|                  |  |                                                                                                                                                  |                       |    
|3.1               |  | Certificate
  of Incorporation                                                                                                                   |                       | (1)
|                  |  |                                                                                                                                                  |                       |    
|3.2               |  | Amended and
  Restated Certificate of Incorporation                                                                                              |                       | (1)
|                  |  |                                                                                                                                                  |                       |    
|3.3               |  | By-laws                                                                                                                                          |                       | (1)
|                  |  |                                                                                                                                                  |                       |    
|4.0               |  | Stock
  Certificate                                                                                                                              |                       | (1)
|                  |  |                                                                                                                                                  |                       |    
|10.1              |  | Agreement
  and Plan of Merger dated December 24, 2008 among the Company and the
  shareholders of Favor Sea Limited.                            |                       | (2)
|                  |  |                                                                                                                                                  |                       |    
|10.2              |  | Designation
  Certificate of Series A Preferred Stock                                                                                            |                       | (2)
|                  |  |                                                                                                                                                  |                       |    
|10.3              |  | Designation
  Certificate of Series B Preferred Stock                                                                                            |                       | (2)
|                  |  |                                                                                                                                                  |                       |    
|10.4              |  | Asset
  Purchase Agreement dated September 20, 2008 between Harbin Xinda
  Macromolecule Material Co., Ltd. and Harbin Xinda High-Tech Co., Ltd. |                       | (2)
|                  |  |                                                                                                                                                  |                       |    
|16.1              |  | Letter,
  dated December 31, 2008, from Robison, Hill & Co. to the Securities and
  Exchange Commission.                                         |                       | (2)
|                  |  |                                                                                                                                                  |                       |    
|21.1              |  | Subsidiaries of Registrant                                                                                                                       |                       | *  
|                  |  |                                                                                                                                                  |                       |    
|31.1              |  | Certification of Principal Executive Officer Required Under Section
  302 of Sarbanes-Oxley Act of 2002                                          |                       | *  
|                  |  |                                                                                                                                                  |                       |    
|31.2              |  | Certification of Principal Financial Officer Required Under Section
  302 of Sarbanes-Oxley Act of 2002                                          |                       | *  
|                  |  |                                                                                                                                                  |                       |    
|32.1              |  | Certification of Principal Executive Officer and Principal Financial
  Officer Required Under Section 906 of Sarbanes-Oxley Act of 2002          |                       | *  
|                  |  |                                                                                                                                                  |                       |    
|32.2              |  | Certification of Principal Financial Officer and Principal Financial
  Officer Required Under Section 906 of Sarbanes-Oxley Act of 2002          |                       | *  

36

---



|    |                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Filed herewith.                                                                                                                                                                                 
|    |                                                                                                                                                                                                 
|+   | Management contract or compensatory plan or arrangement.                                                                                                                                        
|    |                                                                                                                                                                                                 
|(1) | Filed as an
  exhibit to the Companys registration statement on Form SB-2, as filed with
  the Securities and Exchange Commission on May 12, 2006, and incorporated
  herein by this reference.
|    |                                                                                                                                                                                                 
|(2) | Filed as an
  exhibit to the Companys current report on Form 8-K, as filed with the Securities
  and Exchange Commission on December 31, 2008, and incorporated herein by this
  reference.    
|    |                                                                                                                                                                                                 

37

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Signatures

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

|                        |                             |                                               
|----------------------- | --------------------------- | ----------------------------------------------
|                        | XD PLASTICS COMPANY LIMITED
|                        |                             |                                               
|Dated: March
  23, 2009 | By:                         | /s/ Jie Han                                   
|                        |                             |                                               
|                        | Name:                       | Jie Han                                       
|                        | Title:                      | Chief Executive Officer                       
|                        |                             | (Principal Executive Officer)                 
|                        |                             |                                               
|                        | By:                         | /s/ Jie Han                                   
|                        |                             |                                               
|                        | Name:                       | Jie Han                                       
|                        | Title:                      | Chief Financial Officer                       
|                        |                             | (Principal Accounting and Financial
  Officer)

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

|               |                                 |               
|-------------- | ------------------------------- | --------------
|               |                                 |               
|/s/ Jie Han    |                                 |               
|               |                                 |               
|Jie Han        | Director, Chairman of the Board | March 23, 2009
|               |                                 |               
|/s/ Qingwei Ma |                                 |               
|               |                                 |               
|Qingwei Ma     | Director                        | March 23, 2009
|               |                                 |               
|/s/ Junjie Ma  |                                 |               
|               |                                 |               
|Junjie Ma      | Director                        | March 23, 2009

---