Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

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

This Registration Statement includes two forms of prospectus as set forth below:

None of the underwriters named or referenced in the prospectus is participating or acting as underwriter, dealer or broker in connection with the sale of the shares to be sold pursuant to the resale prospectus.

The resale prospectus and the prospectus are substantively identical, except for the following principal differences:

This is our initial public offering. We are offering 4,166,667 shares of our common stock. No public market currently exists for our common stock.

We currently anticipate the public offering price of our common stock will be between $   and $   per share.

We have applied to have our common stock listed on the NASDAQ Capital Market under the symbol “SLPC”.

We have granted the underwriters a 45-day option to purchase up to 625,000 additional shares of common stock from us at the initial public offering price less the underwriting discount and commission.

In connection with this offering, we have agreed to issue to the underwriters a warrant to purchase up to 5% of the shares sold pursuant to the offering (excluding the over-allotment) at $  per share (125% of the price of the shares sold in the offering), which may be exercised on the first anniversary of the date of this prospectus and expiring four years after such anniversary.

Under the terms of a consulting agreement between us and United Best Investment Limited, a Hong Kong company controlled by Li Jun, one of our directors, on the closing of this offering United Best shall receive a fee of $     , which represents 3% of the gross proceeds of this offering.

Delivery of our shares will be made on or about    , 2010.

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with additional or different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted.

This prospectus includes market size, market share and industry data that we have obtained from market research, publicly available information and various industry publications. The third party sources from which we have obtained information generally state that the information contained therein has been obtained from sources believed to be reliable. We have not independently verified any of the data from third party sources nor have we verified the underlying economic assumptions relied upon by those third parties. Similarly, industry forecasts and market research, which we believe to be reliable based upon management’s knowledge of the industry, have not been verified by any independent sources.

We are a leading manufacturer of nonwoven fabrics in China. In 2009, we ranked No. 1 in sales revenue in the PRC for polyester, or PET, nonwoven fabrics according to a report issued by the China Nonwovens & Industrial Textiles Association, or CNITA.  Nonwoven fabrics, or nonwovens, are synthetic fabrics, such as felt and polyester, which are neither woven nor knitted, but instead are made from long fibers, bonded together by chemical, mechanical, heat or solvent treatment.

We currently manufacture two types of PET nonwoven fabrics which are used in a wide range of products, including filtration products, road construction materials, home furnishings, automobile interior insulation and industrial packaging.  Our current PET products are sold primarily to PRC-based manufacturers which use our products as raw material components for end-products they sell to their customers operating in the heavy industrial, automotive, construction and home furnishing industries.

We recently developed a process to manufacture polyphenylene-sulfide fiber, or PPS nonwoven fabric, which is the key product line around which our long-term growth strategy is centered. We believe that this manufacturing process is proprietary and have applied for a process patent in the PRC and intend to apply for a process patent in the U.S. and Europe.  PPS nonwoven fabric is a heat resistant, corrosion-proof and flame retardant fabric, and can be used to manufacture dust filter bags for pollutant dust removal and emissions controls in coal-fired power plants, garbage incinerators and cement factories.

Bag filters can be used as a cost effective way of meeting the new emission and dust pollutant standards in the PRC because the installation of bag filters is significantly cheaper than installing costly pollutant dust removal equipment, such as engineered scrubbing systems, which we believe could be cost prohibitive for smaller plant operators.

Based on lab tests which we conducted internally, we believe that our PPS nonwoven fabric is superior to other currently available high temperature filtration material because it is lighter, thicker, stronger, has higher air permeability and filtration efficiency and is significantly cheaper to produce.  Due to the superior characteristics of our PPS product coupled with the demand created by these new regulations, we believe that our PPS material will become a market leader for high temperature filtration applications.

We intend to continue to manufacture PET nonwovens, but we expect the sales of our PPS nonwoven fabrics to ultimately eclipse the sales of our existing PET nonwoven products and become our main product offering.

Our growth strategy is as follows:

We believe our competitive strengths are as follows:

The implementation of our growth strategy and our ability to grow based on our competitive strengths remain subject to a variety of external and internal challenges. Accordingly, investing in our common stock involves significant risks. Some of the challenges and risks we face are listed below:

You should carefully consider the risks described in “Risk Factors” beginning on page 6 before making a decision to invest in our common stock. If any of these risks actually occurs, our business, financial condition or results of operations would likely be materially adversely affected. In such case, the trading price of our common stock would likely decline, and you may lose all or part of your investment.

Our executive offices are located at Shishan Industrial Park, Nanhai District, Foshan City, Guangdong Province, People’s Republic of China, or PRC, and our telephone number is +86-757-86683197. Our website address is www.silepu.com and the information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which it forms a part.

In the table below we provide you with historical consolidated financial data for the fiscal years ended September 30, 2009 and 2008 and the nine month periods ended June 30, 2010 and 2009, derived from our audited and unaudited consolidated financial statements included elsewhere in this prospectus.  Historical results are not necessarily indicative of the results that may be expected for any future period. When you read this historical summary consolidated financial data, it is important that you read it along with the appropriate historical consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

(1) Pro forma information assumes conversion of the convertible notes into common stock on June 30, 2010.

(2)  Pro forma as adjusted amounts represent June 30, 2010 amounts adjusted to reflect the conversion of our outstanding convertible notes into 1,971,4291,971,428 shares of common  stock (at a conversion price of $2.10 (based on an assumed offering price of $6.00)), and receipt of net proceeds from the offering estimated to be approximately $22,000,000 (based on the assumed initial public offering price of $6.00 per share), not including any proceeds from the shares that may be offered pursuant to the underwriters’ over-allotment option.

We recently developed a manufacturing process to manufacture PPS nonwoven fabric. We intend to commence commercial production of PPS material in the latter part of 2010.

PPS nonwoven fabric has many applications including high temperature filtration of pollutant emissions and can be used as the material to manufacture high temperature bag filters for coal-fired power plant emissions, garbage incinerators and cement factories.

The PPS material that we plan to produce is lighter, thicker, and stronger, has higher air permeability and filtration efficiency and is significantly cheaper to produce than other types of high temperature filtration materials currently available in the market place.

Although prototype bag filters made of our PPS product have been tested in laboratories, they have not been tested on site by any potential end user and we do not expect to develop prototype products for testing by any potential end user prior to commence commercial production of PPS products. Our new PPS nonwoven fabric may never achieve broad market acceptance, due to any number of factors, including that the product may not be as effective as our initial testing indicates and competitive material may be introduced which renders our PPS product too expensive or obsolete.

If our PPS material is not broadly accepted in the marketplace for its intended uses, we may not achieve a competitive position in the market, anticipated profits will not materialize and our business will suffer.

Our operating history is limited.  We currently make two types of PET nonwoven fabrics and we commenced production of one type of PET fabric in 2006 and a second type of PET fabric in 2009. We have not yet begun to commercially manufacture PPS nonwoven fabric. We plan to do so in the latter part of 2010. Accordingly, you should consider our future prospects and historical results in light of the risks and uncertainties experienced by early-stage companies in evolving markets such as our ability to:

If we are unsuccessful in addressing any of these risks and uncertainties, our business may be materially and adversely affected.

In January 2010, the Chinese government took steps to tighten the availability of credit including ordering banks to increase the amount of reserves they hold and to reduce or limit their lending. In addition, our convertible notes mature on February 11, 2011. Our notes to banks for short-term loans as of June 30, 2010 totaled approximately RMB 26 million which are due and payable in December, 2010.  Although these short-term bank loans contain no specific renewal terms, in China, it is customary practice for banks and borrowers to negotiate roll-overs or renewals of short-term loans on an on-going basis shortly before they mature. Although we have renewed our short-term loans in the past, we cannot assure you that we will be able to renew these loans in the future as they mature. If we cannot renew them we will have to repay them with cash from operations. We cannot assure you that our business will generate sufficient cash to do so.

We expect that the convertible notes will be converted into our common stock at the closing of this offering. If, however, the convertible notes are not converted before their maturity date, we believe we will be able to obtain a line of credit to pay off the principal and interest due on the notes. We cannot assure you, however, that this will be the case and if we are unable to do so and if our business fails to generate sufficient cash flow from operations to repay these notes, we will be in default.

We intend to use the net proceeds of this offering primarily to install three new production lines to manufacture PPS nonwovens.  This will increase our total annual manufacturing capacity from 8,000 tons to 11,600 tons of nonwoven material. The scope and timing of our expansion plans are based on our internal projections and estimated demand for our PPS products. If our projections are incorrect and the actual demand for our PPS products is less than projected, we may expend a significant amount of capital on equipment which ultimately may not have been needed.

We hold a number of authorized process patents and have a patent application pending in the PRC for our PPS manufacturing process.  We believe that among our competitive strengths are the proprietary manufacturing processes which we have developed and believe act as a barrier to entry for our potential competitors. Our success depends, in part, on our ability to protect these unique processes against competitors and to defend our intellectual property rights when they are violated.  If our pending patent application for our PPS manufacturing process is not granted or if we fail to adequately protect our existing process patents, competitors could use our processes, and manufacture and market similar products using similar processes, which could harm our market share and results of operations. Our competitors may challenge, invalidate or avoid the application of any existing or future patents, trademarks, or other intellectual property rights that we receive or license. In addition, patent rights may not prevent our competitors from developing their own processes that produce products that are similar or functionally equivalent to our products. If we lose the protection of our intellectual property our business would suffer.

If a competitor successfully introduces a product which is superior to our PPS products, and that product achieved wide market acceptance, our PPS product could become obsolete and the demand for them would decrease significantly.

Our existing PET nonwoven products are sold, and we expect our PPS products will be sold, principally to customers that manufacture a wide range of end-use products, including filtration products, road construction materials, home furnishings, automobile interior insulation, and industrial packaging. Therefore, we are subject to the general changes in economic conditions affecting those industry sectors. If customers that operate in these industry sectors experience a downturn in their business or if they utilize substitutes for our products in their products, demand for our products and our business results will suffer.

We use a significant amount of electricity, gasoline and other energy sources to manufacture and transport our nonwoven products. We do not hedge our exposure to higher prices via energy futures contracts. A substantial increase in the price of fuel and other energy sources would increase our operating costs and could negatively impact our profitability and cash flows if we cannot pass the increases on to our customers.

We manufacture all of our existing products and plan to manufacture our new PPS products at our existing facility. We currently have three lines of production in operation and plan to install three additional lines. Any breakdown or disruption of our machinery, or interruption of business due to fires, explosion, adverse weather conditions or other catastrophic event, would result in us being incapable of manufacturing nonwovens to meet our production requirements. This may cause us to lose revenue and impair our relationships with our customers. Without our existing production facilities, we would have no other means of manufacturing products until we were able to restore the manufacturing capability at the facility or identify an acceptable contract manufacturer. We do not carry business interruption insurance to cover lost revenue and profits. Furthermore, any interruption in production capability may require us to make large capital expenditures to remedy the situation, which could have a negative effect on our profitability and cash flows.

We do not maintain product liability insurance and our property and equipment insurance does not cover the full value of our property and equipment, so we could be exposed to significant losses if any of our products cause personal injury or illness or if our property is damaged. Any such loss could harm our business.

Although we have not been subject to material environmental claims in the past, if we fail to comply with any present or future environmental regulations, damages, fines and criminal sanctions could be assessed against us and production could be suspended and our operations could cease. New regulations could also require us to acquire costly equipment or to incur other significant expenses which would lower our profits.

We depend, to a large extent, on the abilities and participation of our current management team, but have a particular reliance upon Mr. Jie Li, our chief executive officer, for the direction of our business. The loss of the services of Mr. Li for any reason could harm our business and prospects. We cannot assure you that Mr. Li will continue to be available to us, or that we will be able to find a suitable replacement for Mr. Li. We have entered into an employment contract with Mr. Li, but that agreement does not guarantee that Mr. Li will continue to manage the company. Although we plan to do so following the closing of this offering, we do not currently have key man insurance on Mr. Li, and if he were unable to continue as our chief executive officer due to death or disability 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.

The PRC historically has not adopted a western style of management and financial reporting concepts and practices, or modern banking, computer and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. We may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards. These deficiencies could impair our results of operations.

Section 13(k) of the Exchange Act provides that it is unlawful for a company such as ours, which has a class of securities registered under Section 12(g) of the Exchange Act, to directly or indirectly, including through any subsidiary, extend or maintain credit in the form of a personal loan to or for any director or executive officer of the company. Issuers violating Section 13(k) of the Exchange Act may be subject to civil sanctions, including injunctive remedies and monetary penalties, as well as criminal sanctions. The imposition of any of such sanctions on the Company may have a material adverse effect on our financial position, results of operations or cash flows.

The existence of indebtedness of Mr. Jie Li at the time the Company acquired Foshan and the continuation of such indebtedness thereafter may constitute a violation of Section 13(k) of the Exchange Act (Section 402(a) of Sarbanes-Oxley). As of June 30, 2010 all loans had been repaid.

Our Board of Directors comprises of six members, three of whom are “independent” within the NASDAQ rules. Accordingy,Accordingly, we do not currently have, and following the closing of this offering we will not have, a Board of Directors the majority of whom are “independent” within the meaning of the NASDAQ rules and we will lack the oversight of an independent board.

We fall within the definition of a “controlled company” under the NASDAQ Marketplace Rules which provide that a company is considered a "controlled company" if greater than 50% of its voting power is held by an individual, a group or another company.  In order for a group to exist for purposes of this rule, the stockholders forming the group are required to publicly file a notice that they are acting as a group (e.g., Schedule 13D). Bestyield Group Limited, Proudlead Limited, Pilot Link International Limited, High Swift Limited, China Investment Management Inc. and Li Jun intend to file a Schedule 13D disclosing the existence of a group with respect to their holdings in the Company. As a “controlled company” we are not subject to the NASDAQ requirements (i) to have a majority of independent board members; (ii) for independent director oversight of executive officer compensation (as set forth in Section 5605(d) of the NASDAQ Marketplace Rule); and (iii) for independent director oversight of director nomination (as set forth in Section 5605(e) of the NASDAQ Marketplace Rule).

Our business operations are conducted entirely in the PRC. 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 has experienced unprecedented growth economically in the past three decades. Although the country has relaxed some restrictions on individual liberties, the rule of law is still a relatively new concept. Thus the legal system may not be equipped to handle complicated social and political problems accompanying the country’s fast economic growth. China has an extremely large population, significant levels of poverty,widening income gaps between rich and poor and between urban and rural residents, large minority ethnic and religious populations, and growing access to information about the different social, economic, and political systems to be found in other countries. 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 damage China’s economy and impair our business.

We cannot assure you that we will be able to obtain suchthe construction commencement approval or the pollution emission permit in a timely manner or at all.  Failure to obtain such approvalsthis approval and permit may subject us to fines or disrupt our operations and construction, which may materially and adversely affect our business, results of operations and financial condition.

Foshan, our operating company, is incorporated under and is governed by the laws of the PRC, where all of our operations are conducted. The PRC government exercises substantial control over virtually every sector of the PRC economy, including the production, distribution and sale of nonwovens. In particular, we are subject to regulations and administration by local and national branches of the Ministry of Environmental Protection, the Ministry of Commerce, as well as the General Administration of Quality Supervision, Inspection and Quarantine, the State Administration of Foreign Exchange, General Administration of Customs, the State Administration of Taxation and other regulatory bodies. In order to operate under PRC law, we must have 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.

Foshan is subject to PRC accounting laws, which require that an annual audit be performed in accordance with PRC accounting standards. The PRC foreign-invested enterprise laws require that our subsidiary, Foshan, submit periodic fiscal reports and statements to financial and tax authorities and maintain its books of account in accordance with Chinese accounting laws. If PRC authorities were to determine that we were in violation of these requirements, we could lose our business license and be unable to continue operations temporarily or permanently.

The legal and judicial systems in the PRC are still rudimentary. The laws governing our business operations are sometimes vague and uncertain and enforcement of existing laws is inconsistent. Thus, we can offer no assurance that we are, or will remain, in compliance with PRC laws and regulations. Because of the vagaries of implementation, interpretation and enforcement of PRC laws, our ability to enforce commercial claims or to resolve commercial disputes is unpredictable.

We are required to comply with the United States Foreign Corrupt Practices Act, or FCPA, which prohibits U.S. companies from engaging in bribery or making prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some of our competitors, are not subject to these prohibitions. The PRC also strictly prohibits bribery of government officials. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in China. If our competitors engage in these practices, they may receive preferential treatment from personnel of some companies, giving our competitors an advantage in securing business or from government officials who might give them priority in obtaining new licenses, which would put us at a disadvantage. Our employees, agents, representatives and consultants may not always be subject to our control. If any of them violates FCPA or other anti-corruption law, we might be held responsible. We could suffer severe penalties in that event. In addition, the U.S. government may seek to hold us liable for successor liability FCPA violations committed by companies in which we invest or which we acquire.

All of our revenue is earned in RMB, and current and future restrictions on currency conversions may limit our ability to use revenue generated in RMB to make dividend or other payments in U.S. dollars. The PRC government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of the PRC. Although the PRC government introduced regulations in 1996 to allow greater convertibility of the RMB  for current account transactions, significant restrictions still remain, including the restriction that foreign-invested enterprises like us may buy, sell or remit foreign currencies only after providing valid commercial documents at PRC banks specifically authorized to conduct foreign-exchange business and register foreign exchange transactions with the PRC government. This would impair our ability to pay dividends and could reduce the value of our stock.

In addition, conversion of foreign currencies 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. In addition, failure to comply with any other PRC foreign exchange regulations may result in difficulties in converting foreign currency funds raised offshore into RMB and injecting such capital into our PRC operating company. These restrictions could prevent us from distributing dividends and thereby reduce the value of our stock.

In 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the United States dollar. Under the new policy, the RMB 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 RMB against the United States dollar of approximately 17.5% from July 1, 2005 through September 1, 2009.  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 RMB against the United States dollar.

The value of our common stock will be affected by the foreign exchange rate between U.S. dollars and RMB. For example, to the extent that we need to convert U.S. dollars we receive from an offering of our securities into RMB, appreciation of the RMB against the U.S. dollar could reduce the value in RMB of the proceeds of the financing. Conversely, if we decide to convert our RMB 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 RMB, the U.S. dollar equivalent of our earnings from our business and dividends 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.

The State Administration of Foreign Exchange, or SAFE, issued a public notice in October 2005, or the SAFE No. 75 Notice, requiring PRC residents, including both legal persons and natural persons, to register with the applicable local SAFE branch before establishing or controlling any company outside China, referred to as an “offshore special purpose company” for the purpose of acquiring any assets of or equity interest in PRC companies and raising funds from overseas. In addition, any PRC resident that is the shareholder of an offshore special purpose company is required to amend its SAFE registration with the local SAFE branch with respect to that offshore special purpose company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment or creation of any security interest over any asset located in China. If any PRC shareholder of an offshore special purpose company fails to make the required SAFE registration and amendment, the PRC subsidiaries of that offshore special purpose company may be prohibited from distributing their profits and remitting the proceeds from any reduction in capital, share transfer or liquidation to the offshore special purpose company. Moreover, failure to comply with the SAFE registration and amendment requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

Mr. Jie Li, Mr. Li Jun, Mr. Li Shiyi, Ms. Wei Yang, and Ms. Song Huaying (collectively the “Individual Founders”) are PRC residents and the ultimate shareholders of Foshan. To the best of our knowledge, at the date hereof, the Individual Founders are subject to the registration requirements of SAFE No. 75 Notice. We are informed that Foshan has requested the Individual Founders to make the necessary applications and filings as required under the SAFE No. 75 Notice. We are informed by Foshan that the Individual Founders have liaised with the SAFE branch in Guangdong province and upon its confirmation, they will apply for the SAFE registration. However, we cannot assure you that the SAFE branch in Guangdong province will accept the application or the Individual Founders can obtain the SAFE registration. The failure or inability of the Individual Founders to receive any required approvals or make any required registrations may subject us and the Individual Founders to fines and legal sanctions, restrict our overseas or cross-border investment activities, limit Foshan’s ability to make distributions or pay dividends or affect the ownership structure, as a result of which our business operations and Foshan’s ability to distribute profits to us could be materially and adversely affected.

As an offshore holding company of a PRC operating Company, we may make loans or additional capital contributions to our existing or future PRC operating companies. Any loans to our PRC operating companies are subject to PRC regulations. For example, loans to our operating companies in China to finance their activities may not exceed statutory limits and must be registered with SAFE. If we decide to make capital contributions to our operating entities in the PRC, the PRC Ministry of Commerce, or MOFCOM, (or MOFCOM’s local counterpart, depending on the amount involved) must approve these capital contributions. We cannot assure you that we will be able to obtain these government approvals or registrations on a timely basis, if at all, with respect to any such capital contributions or shareholder loans. If we fail to receive such approvals or registrations, our ability to use the proceeds of this offering to capitalize our PRC operations may be negatively affected, which could adversely affect our ability to fund and expand our business.

On August 29, 2008, SAFE promulgated Circular 142, a notice regulating the conversion by a foreign-invested company of foreign currency into Renminbi by restricting how the converted Renminbi may be used. The notice requires that the registered capital of a foreign-invested company settled in Renminbi converted from the foreign currency-denominated capital may only be used for purposes within the business scope approved by the applicable governmental authority and may not be used for equity investments within the PRC unless specifically provided for in its business scope. In addition, SAFE strengthened its oversight of the flow and use of Renminbi funds converted from the foreign currency denominated capital of a foreign-invested company. The use of such Renminbi may not be changed without approval from SAFE, and may not be used to repay Renminbi loans if the proceeds of such loans have not yet been used. Violations of Circular 142 may result in severe penalties, including imposing substantial fines on us. Therefore, Circular 142 may significantly limit our ability to transfer the net proceeds from this offering to our subsidiary in the PRC, which may adversely affect the business expansion of Foshan.

The PRC Labor Contract Law, which became effective as of January 1, 2008, contains many provisions which are more favorable to employees than prior labor regulations in effect in China. This may substantially increase our labor-related costs in our future operations. According to the new law, an employee is entitled to terminate his or her employment relationship with his or her employer for certain causes, such as delay in payment of wages or social insurance contribution or dissatisfactory labor protection, and under such circumstances the employer is liable to pay compensation to the employee. The amount of such compensation payment shall be one month's salary for each year that the employee has served the employer. If the monthly wage of an employee is three times greater than the average monthly wage in the previous year for employees as announced by the people’s government at the municipal level directly under the central government or at the city-with-district level where the employer is located, the compensation paid must be three times the average monthly wage of employees up to a maximum of not more than 12 years of work. We may also be liable to compensate an employee if we decide to terminate an existing employment contract before its expiration. Under the new law, employees who either have worked for us for 10 years or more or who have had two consecutive fixed-term contracts must be given an “open-ended employment contract” that, in effect, constitutes a lifetime, permanent contract, which is terminable only in the event the employee materially breaches our rules and regulations or is in serious dereliction of his or her duties. Such non-cancelable employment contracts will substantially increase our employment related risks and limit our ability to downsize our workforce in the event of an economic downturn.  No assurance can be given that we will not in the future be subject to labor strikes or that we will not have to make other payments to resolve future labor issues caused by the new laws. Furthermore, there can be no assurance that the labor laws will not change further or that their interpretation and implementation will vary, which may substantially increase our labor-related costs in the future.

Under applicable PRC regulations, PRC enterprises are required to open housing fund accounts and contribute funds to those accounts for their employees. The monthly contributions must be at least 5% of each employee’s average monthly income in the prior year. Foshan has not opened the housing funds accounts since its establishment. As of September 20, 2010, the accumulated unpaid amount is approximately RMB 1.516 million (approximately $222,360).  The local housing funds administrative authority may require Foshan to pay the funds due within a specified time period. If Foshan fails to do so within the specified time period, the local housing authority may seek judicial enforcement against Foshan to make such payment.  Foshan could be also be subject to fines imposed by the housing funds administrative authority of a minimum of  RMB10,000 (approximately $1,471) and  maximum of RMB 50,000 (approximately $7,353). Our current and former employees are also entitled to claim their housing funds individually by arbitration or action. As of the date of this prospectus, we are not subject to any claims from our employees in connection with our failure to open or contribute to housing fund accounts. If any of our employees brings such action against us and the arbitration award or court judgment was made in their favor, we would have to pay the total amount of housing funds due to the employee. Our payment to rectify our non-compliance with employee’s housing provident funds regulations would require us to divert our financial resources and thus will negatively impact our operations and our liquidity.

The Chinese State Administration of Taxation (SAT) released Circular 698 on December 10, 2009 that addresses the transfer of shares by nonresident companies. Circular 698, which is effective retroactively to January 1, 2008, may have a significant impact on many companies that use offshore holding companies to invest in China. Circular 698, which provides parties with a short period of time to comply with its requirements, indirectly taxes foreign companies on gains derived from the indirect sale of a Chinese company. Where a foreign investor indirectly transfers equity interests in a PRC enterprise by selling the shares in an offshore holding company, and the latter is located in a country or jurisdiction where the effective tax burden is less than 12.5% or where the offshore income of his, her, or its residents is not taxable, the foreign investor is required to provide the tax authority in charge of that Chinese resident enterprise with the relevant information within 30 days of the transfers. Moreover, where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise through an abuse of form of organization and there are no reasonable commercial purposes such that the corporate income tax liability is avoided, the PRC tax authority will have the power to re-assess the nature of the equity transfer in accordance with PRC’s “substance-over-form” principle and deny the existence of the offshore holding company that is used for tax planning purposes.

There is uncertainty as to the application of Circular 698. For example, while the term "indirectly transfer" is not defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. Moreover, the relevant authority has not yet promulgated any formal provisions or formally declared or stated how to calculate and quantify the effective tax in the country or jurisdiction and the process of the disclosure to the tax authority in charge of that Chinese resident enterprise. In addition, there are no formal declarations with regard to how to interpret “abuse of form of organization” and “reasonable commercial purpose,” to determine compliance with Circular 698. As a result, we may become at risk of being taxed under Circular 698 and we may be required to expend valuable resources to comply with Circular 698 or to establish that we should not be taxed under Circular 698, which could have a material adverse effect on our financial condition and results of operations.

Our operating company, Foshan, is located in the PRC and substantially all of our assets are located in the PRC. Most of our current officers and directors are residents of the PRC, and most of their assets are located in the PRC. As a result, it could be difficult for investors to effect service of process on us or those persons in the United States, or to enforce a judgment obtained in the United States against us or any of these persons. In addition, it may be difficult to bring an original action in a PRC court to enforce liabilities based upon the U.S. federal securities laws against the above foreign persons. 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. See the section of this prospectus entitled “Service of Process and Enforcement of Judgments” below.

We do not own the land where our plant and facility is located, for in China, there is no private ownership of land, and land is owned by the state or rural collective economic organizations.  In the case of land used for industrial purposes, land use rights can be obtained from the government for a period of up to 50 years, and are typically renewable. Land use rights, however, can be revoked, and land users can be forced to vacate at any time, if redevelopment of the land is deemed to be in the public interest. The public interest rationale is interpreted quite broadly and the process of land appropriation may be less than transparent. We have incurred costs in building on the land on which our plant and machinery are located. If we lost our land use rights (including as a result of failure of the government to renew our land-use right certificate) we would be required to relocate and move our operations to a new site, which would interrupt our business and would require us to incur relocation and build out costs at the new site, all of which would have a negative effect on our financial condition and results of operations .

On August 8, 2006, six PRC regulatory agencies, including the CSRC, promulgated the “Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors,” or the M&A Rule, which took effect on September 8, 2006 and was further amended on June 22, 2009, to more effectively regulate foreign investment in PRC domestic enterprises. The M&A Rule requires offshore special purpose vehicles, or SPVs, formed for the purposes of overseas listing of equity interests in PRC companies and controlled directly or indirectly by PRC companies or individuals obtain the approval of the CSRC prior to the listing and trading of such SPV’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website a notice specifying the documents and materials that SPVs are required to submit when seeking the CSRC approval for their listings outside of China. The interpretation and application of the M&A Rule is currently unclear. However, our PRC counsel has advised us that based on its understanding of the current PRC laws, rules and regulations and the M&A Rule, the M&A Rule does not require us to obtain prior CSRC approval for this offering and was not required for our reverse acquisition of Hong Hui Holdings Limited because Foshan was established as a qualified foreign-invested enterprise before September 8, 2006, the effective date of the M&A Rule.

However, if the CSRC or another PRC regulatory agency subsequently determines that prior CSRC approval was required, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may limit our operating privileges, delay or restrict the repatriation of the proceeds from this offering into China or payment or distribution of dividends by Foshan, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our common stock. The CSRC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of our common stock. Also, if the CSRC later requires that we obtain its approval, we may be unable to meet or obtain a waiver of the CSRC approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding this CSRC approval requirement could have a material adverse effect on the trading price of our common stock.

We cannot predict when the CSRC will promulgate additional implementing rules or other guidance, if at all. If implementing rules or guidance is issued prior to the completion of this offering and consequently we conclude we are required to obtain CSRC approval, this offering will be delayed until we obtain CSRC approval, which may take several months or longer. Furthermore, any delay in the issuance of such implementing rules or guidance may create additional uncertainties with respect to this offering. Moreover, implementing rules or guidance, to the extent issued, may fail to resolve current ambiguities under the M&A Rule. Uncertainties and/or negative publicity regarding the M&A Rule could have a material adverse effect on the trading price of our common stock.

The M&A Rule establishes additional procedures and requirements that could make some acquisitions of Chinese companies by foreign investors more time-consuming and complex than in the past. After the promulgation of the M&A Rule, the PRC government can now exert more control over the acquisitions of Chinese companies, including requirements in some instances that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a Chinese domestic enterprise. We may grow our business in part by acquiring complementary businesses. Complying with the requirements of the M&A Rule to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share by share or asset acquisition of the PRC companies.

Before January 1, 2008, pursuant to the then applicable enterprise income tax laws in China, foreign-invested companies established in China were generally subject to a state and local enterprise income tax, or EIT, at statutory rates of 30% and 3%, respectively, and could often be granted various preferential tax treatments including preferential tax rates and tax holidays.  Under the PRC Enterprise Income Tax Law, or the New EIT Law, and its implementing rules, both effective on January 1, 2008, a unified EIT rate of 25% and unified tax deduction standard is applied equally to both domestic-invested enterprises and foreign-invested enterprises, or FIEs.  The New EIT Law provides a five-year transitional period starting from its effective date for those enterprises which were established before March 16, 2007, the promulgation date of the New EIT Law. Enterprises established prior to March 16, 2007 are eligible for certain prescribed preferential tax rate in accordance with the then applicable income tax laws and administrative regulations and gradually become subject to the new statutory EIT rate of 25% over a five-year transition period starting from January 1, 2008.  For enterprises granted qualified tax holidays, such tax holidays continue until their expiration in accordance with previous tax laws and regulations, but where the tax holiday has not yet started because of a cumulative loss position, such tax holiday shall be deemed to commence from 2008, the first effective year of the New EIT Law. Currently, Foshan enjoys a 12.5% income tax preferential rate, which expires December 31, 2012. Thereafter,  the expiration of Foshan’s preferential tax treatment will reduce our profitability and affect our financial results.

The New EIT Law provides that enterprises established outside of China whose “de facto management bodies” are located in China are considered PRC “tax resident enterprises” and will generally be subject to the uniform 25% PRC EIT  rate on their global income. In addition, a tax circular issued by the State Administration of Taxation on April 22, 2009 regarding the standards used to classify certain Chinese-invested enterprises established outside of China as “resident enterprises” clarified that dividends and other income paid by such “resident enterprises” will be considered to be PRC source income, subject to PRC withholding tax, currently at a rate of 10%, when recognized by non-PRC enterprise shareholders. This recent circular also subjects such “resident enterprises” to various reporting requirements with the PRC tax authorities. Under the implementation rules to the New EIT Law, a “de facto management body” is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and other assets of an enterprise. In addition, the tax circular mentioned above details that certain Chinese-invested enterprises will be classified as “resident enterprises” if the following are located or resident in China: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors having voting rights.

Currently, there are no detailed rules or precedents governing the procedures and specific criteria for determining “de facto management bodies” which are applicable to our company or our overseas subsidiary. A substantial majority of the members of our management team as well as the management team of some of our overseas subsidiary are located in China. If our company or any of our overseas subsidiaries is considered a PRC tax resident enterprise for PRC EIT purposes, a number of unfavorable PRC tax consequences could follow. First, our company or our overseas subsidiaries will be subject to the uniform 25% EIT rate as to our global income as well as PRC EIT reporting obligations. Second, dividends payable by us to our investors and gain on the sale of our shares may become subject to PRC withholding tax as described below.

Under the New EIT law and its implementation rules, if we are considered a “resident enterprise”, income tax at the rate of 10% must be withheld on dividends payable by us to investors that are “non-resident enterprises” if such investors do not have an establishment or place of business in China or if, the relevant income is not effectively connected with an establishment or place of business in China. Similarly, any gain realized on the transfer of our common stock by such investors is also subject to a 10% PRC withholding income tax if such gain is regarded as income derived from sources within China and we are considered a “resident enterprise” for PRC EIT purposes. It is possible that future guidance issued with respect to the new “resident enterprise” classification could result in a situation in which a withholding tax of 10% for our non-PRC enterprise investors or a potential withholding tax of 20% for individual investors is imposed on dividends we pay to them and with respect to gains realized by such investors upon transfer of our common stock. In addition to the uncertainty surrounding “resident enterprise” classification, it is also possible that the rules may change in the future, possibly with retroactive effect. If we are required under the New EIT law to withhold PRC income tax on our dividends payable to our foreign shareholders, or if you are required to pay PRC income tax on the transfer of our common stock under the circumstances mentioned above, the value of your investment in our common stock may be materially and adversely affected. It is unclear whether holders of our common stock would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas if we are considered a PRC “resident enterprise”.

As a holding company, we conduct substantially all of our business through our consolidated subsidiaries incorporated in China.  We rely on dividends paid by these PRC subsidiaries for our cash needs, including the funds necessary to pay any dividends and other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses.  The payment of dividends by entities established in China is subject to limitations. Regulations in China currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China.  Foshan is required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves or statutory capital reserve fund until the aggregate amount of such reserves reaches 50% of its respective registered capital. As a result, Foshan’s ability to transfer a portion of its net assets to us in the form of dividends, loans or advances is limited. In addition, if Foshan incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. Any limitations on the ability of Foshan to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

Further, according to the Circular on Issues Concerning Outward Remittance of Profit, Stock Dividends and Stock Bonuses Processed by Designated Foreign Exchange Banks, or Circular 29, issued by the SAFE on September 22, 1998, and amended on September 14, 1999, a foreign-invested enterprise whose registered capital has not been fully paid as provided by the terms of its articles is not allowed to remit its profits or dividends abroad unless a special approval by the SAFE is granted. Circular 29 limits the ability of Foshan to remit funds to us, which could materially and adversely limit our ability to expand our business, make investments or acquisitions, pay dividends and otherwise fund and conduct our business.

In September 2010 we adopted a stock incentive plan under which we may make option grants and other awards to our officers, key employees, directors and consultants. All of our officers and directors, other than Chris Bickel and Richard M. Cohen, are PRC citizens.

On March 28, 2007, SAFE issued the “Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership Plan or Stock Option Plan of An Overseas Listed Company, also known as “Circular 78.”   We believe that under Circular 78, PRC citizens and residents who are granted stock or options under our stock incentive plans are required to register with SAFE or its local counterparts and request us (or engage domestic agents) to handle various foreign exchange matters associated with their stock incentive plans. In addition, as the employer, we are (or a PRC agent is) required, on behalf of PRC recipients of stock awards, to apply annually to SAFE or its local offices for a quota for the conversion and/or payment of foreign currencies in connection with the domestic individuals’ exercise of the employee stock options. The foreign exchange proceeds received by the PRC persons from the sale of shares under our stock incentive plan are required to be remitted to bank accounts in China opened by their employers or PRC agents.

The registration and approval requirements set forth in Circular 78 will be burdensome and time consuming on us.  If we fail to comply, our PRC subsidiary (if deemed to a domestic agent as defined under Circular 78) and participants of our stock incentive plan who are PRC citizens may be subject to fines and legal sanctions and we may be prevented form granting equity compensation to our officers, key employees, directors and consultants who are PRC citizens, in which event we will have to find alternative methods (such as addition salary and bonuses) to compensate such persons which would adversely affect our cash flow and business operations.

Our chief executive officer and director Jie Li, our president of sales and director Law Wawai and our director Li Jun, beneficially own an aggregate of approximately 69.7% of our common stock.   Even assuming conversion of all of the outstanding convertible notes and the exercise of all our warrants, they will own a significant portion of our outstanding common stock.  As a result, they 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. In any such stockholder vote, their interests may differ from that of other stockholders and they could cause us to take actions that are contrary to your interests and that could reduce the value of your stock.

We have never paid any cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends by us will depend on our future earnings, financial condition and such other business and economic factors as our management may consider relevant.  In addition, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from Foshan, our PRC-based operating company, which, from time to time, may be subject to restrictions on its ability to make distributions to us, including as a result of 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 China” above.

Our shares are not currently traded on any exchange.  We have applied to have our common stock listed on the NASDAQ Capital Market. On the consummation of the public offering, we believe that we will satisfy the listing requirements and expect that our common stock will be listed. Such listing, however, is not guaranteed. The underwriters are not obligated to make a market in our securities and, even after making a market, can discontinue market making at any time without notice. Neither we nor our underwriters can provide any assurance that an active and liquid trading market in our securities will develop or, if developed, that the market will continue.

The listing standards of the NASDAQ Capital Market provide that a company, in order to qualify for continued listing, must maintain a minimum stock price, satisfy standards relative to minimum shareholders’ equity, minimum market value of publicly held shares and various additional requirements. If, after listing, we fail to comply with all listing standards applicable to issuers listed on the NASDAQ Capital Market, our common stock may be delisted.  If our common stock is delisted, it could reduce the price of our common stock and the levels of liquidity available to our shareholders. In addition, the delisting of our common stock could hinder our access to the capital markets and any limitation on liquidity or reduction in the price of our common stock could impair our ability to raise capital. Delisting from the NASDAQ Capital Market could also result in other negative consequences, including the potential loss of confidence by suppliers, customers and employees, the loss of institutional investor interest and fewer business development opportunities.

All of our executive officers and directors and certain of our shareholders have agreed not to sell shares of common stock for a period of 90 days following this offering.  In addition, all of the selling stockholders listed in the resale prospectus have agreed not to sell shares of their common stock for a period of 90 days following this offering.  See “Underwriting.” Shares subject to these lock-up agreements will become eligible for sale in the public market upon expiration of these lock-up agreements, subject to limitations imposed by Rule 144 under the Securities Act of 1933, as amended.  As we are a former “shell” company  (as that term is defined in Rule 12b-2 under the Exchange Act), none of the shares held by our current shareholders are freely tradable, however commencing on February 12, 2011 those shares will be eligible for resale under Rule 144 subject to the restrictions set forth in Rule 144.  See “Shares Eligible for Future Sale.”  If the holders of these shares were to attempt to sell a substantial amount of their holdings at once, the market price of our common stock could decline. Moreover, the perceived risk of dilution from this offering or other potential sales could cause shareholders to attempt to sell their shares and investors to short shares of our common stock, a practice in which an investor sells shares that he or she does not own at prevailing market prices, hoping to purchase shares later at a lower price to cover the sale. As each of these events would cause the number of shares of our common stock being offered for sale to increase, our common stock market price would likely further decline. All of these events could combine to make it very difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

The offering price of our common stock is substantially higher than the net tangible book value per share of our common stock, which was $1.06$1.05 as of June 30, 2010. Therefore, when you purchase our common stock in this offering at an assumed public offering price of $6.00 per share, you will incur immediate dilution of $4.94 per common share. Holders of the common stock will experience further dilution if options, warrants or other rights to purchase our common stock that are outstanding or that we may issue in the future are exercised or converted, or if we issue additional shares of our common stock, at prices lower than our net tangible book value at such time.

While we presently expect to use most of the net proceeds of this offering to acquire manufacturing equipment to commence production of PPS products, our management will retain broad discretion to allocate the net proceeds we receive from this offering. The net proceeds may be applied in ways with which you and other investors in the offering may not agree, or which do not increase the value of your investment. Our management might not be able to achieve a significant return, if any, on any investment of these net proceeds.

This prospectus contains some forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties. Forward-looking statements include statements regarding, among other things,

In some cases they are identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend” or the negative of these words or other variations on these words or comparable terminology. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” as well as in this prospectus generally. In particular, these include statements relating to future actions, future performance, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.

Any or all of our forward-looking statements in this prospectus may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur and you should not place undue reliance on these forward-looking statements.

We estimate that we will receive net proceeds of approximately $           ($          if the underwriters exercise their over-allotment option) from the sale of 4,166,667 shares of common stock offered hereby after deducting (i) $   million for underwriting discounts and commissions, (ii) estimated expenses of the offering of $   and (iii) the $    success fee payable on closing to United Best, our foreign advisor, controlled by our director, Mr. Li Jun. We intend to use the net proceeds of the offering to purchase and install three new production lines to manufacture PPS materials which will increase our annual output to 11,600 tons of nonwoven material. The estimated cost of the production lines is approximately $20 million with the balance of the net proceeds expected to be used for working capital and general corporate purposes.

We believe that the proceeds of this offering when added to our existing working capital will be sufficient to fund our operations for the foreseeable future.

The public offering price of the common stock offered by this prospectus will be determined by negotiations between us and the underwriters. Factors to be considered in determining the public offering price include:

The prices at which the common stock will sell in the public market after this offering, however, may not equal or exceed the public offering price.

We do not expect to declare or pay any cash dividends on our common stock in the foreseeable future and we currently intend to retain future earnings, if any, to finance the expansion of our business. The decision whether to pay cash dividends on our common stock will be made by our board of directors, in their discretion, and will depend on our financial condition, operating results, capital requirements and other factors that the board of directors considers significant. In addition, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from Foshan, our PRC-based operating company, which, from time to time, may be subject to restrictions on its ability to make distributions to us, including as a result of restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions.

The following table sets forth various information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated. The conversion of RMB into U.S. dollars in this prospectus is based on the noon buying rate in the city of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this prospectus or will use in the preparation of our periodic reports or any other information to be provided to you. We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, the rates stated below, or at all. The PRC government imposes controls over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. As of October 7,November 19, 2010, the noon buying rate was RMB 6.69050 to6.63650 US$1.00.

The table set forth below depicts our capitalization and cash and cash equivalents as of June 30, 2010, on an actual and pro forma basis, as follows:

(1)           A $1.00 increase (decrease) in the assumed public offering price of $6.00 per share, would increase (decrease) each of the additional paid inpaid-in capital total stockholders equity and total liabilities and stockholders equitycapitalization by $3,750,000 and ($3,750,000) respectively, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

Purchasers of shares of our common stock in the offering will suffer an immediate and substantial dilution in net tangible book value per share. Dilution is the amount by which the public offering price paid by purchasers of our common stock exceeds the net tangible book value per share of common stock after the offering.

Our net tangible book value per share as of June 30, 2010 was $1.06.$1.05. Net tangible book value per share represents consolidated tangible assets, less consolidated liabilities, divided by the aggregate number of shares of common stock outstanding.

Our pro forma consolidated net tangible book value as of June 30, 2010 was $19,501,773,$19,351,773, or $1.13$1.12 per share of common stock. Pro forma consolidated net tangible book value per share represents consolidated tangible assets, less consolidated liabilities, divided by 17,237,14317,237,142 (the aggregate number of shares of common stock outstanding, assuming conversion of the convertible notes immediately prior to the closing of this offering).

After giving effect to the sale by us of the 4,166,667 shares of common stock in this offering, at an assumed public offering price of $6.00 per share and the receipt and the application of the estimated net proceeds of $22,000,000 (after deducting the underwriting discounts and commissions, the estimated offering expenses payable by us, and fee payable to United Best), our pro forma consolidated net tangible book value at June 30, 2010, as adjusted, would have been $41,501,773$41,351,773 or $1.90$1.89 per share. This represents an immediate increase in pro forma consolidated net tangible book value to existing stockholders of $0.77 per share and an immediate dilution to new investors of $4.10 per share. Dilution per share represents the difference between the price per share to be paid by new investors for the shares of common stock sold in this offering and the pro forma consolidated net tangible book value per share immediately after this offering.

 

The following table illustrates this per share dilution:

A $1.00 increase (decrease) in the assumed public offering price of $6.00 per share would increase (decrease) our pro forma consolidated net tangible book value after this offering by $3,750,000 (in the case of $1.00 per share increase) or $(3,750,000) (in the case of a $1.00 per share decrease), and the dilution per share to new investors by $4.27$4.28 and ($3.93)3.94), respectively, in each case assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions, estimated offering expenses payable by us, and the fee payable to United Best.

The following table sets forth the number of shares of common stock purchased, the total consideration paid, or to be paid to us, and the average price per share paid, or to be paid, by existing stockholders and by the new investors, at an assumed public offering price of $6.00 per share, the midpoint of the range set forth on the cover page of this prospectus, before deducting underwriting discounts and commissions and estimated offering expenses payable by us and the fee payable to United Best.

If the underwriters’ over-allotment option to purchase common stock is exercised in full, the pro forma consolidated net tangible book value after giving effect to this offering would be $2.00$1.99 per share, and the dilution in pro forma consolidated net tangible book value per share to investors in this offering would be $4.00$4.01 per share. Furthermore, the number of shares of common stock held by existing stockholders would be 17,695,516, or 77% of the aggregate number of shares of common stock outstanding after this offering, and the number of shares of common stock held by new investors would be increased to 4,791,667, or 23% of the aggregate number of shares of common stock outstanding after this offering.

Our common stock does not trade and is not quoted on any public market. We have applied to have our common stock listed on the NASDAQ Capital Market. We expect our listing to be effective prior to the date of this prospectus. No assurance can be given that our listing application will be approved.

As of the close of business on October 7,November 19, 2010, we had approximately 212 shareholders of record of our common stock. The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stockstock.

The following table summarizes the equity compensation plans under which our securities may be issued as of September 30, 2010: 

Our Board of Directors adopted the China SLP Filtration Technologies Inc. 2010 Stock Incentive Plan, or the 2010 Plan, on September 3, 2010.  All our officers and key employees, directors and consultants, including those of our subsidiaries and affiliates, who are responsible for or contribute to the management, growth and/or profitability of our business, are eligible for participation in the 2010 Plan. Two Million  One Hundred Eighty Six Thousand Two Hundred Eighteen (2,186,218) shares of our common stock (or such number of shares as shall equal ten percent of the shares of common outstanding on a fully diluted basis after giving effect to the offering and the conversion of the note) have been authorized and reserved for the 2010 Plan. We may issue stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards and other stock-based awards under the 2010 Plan.

(1)    On September 3, 2010, as required by the terms of his agreement with the Company entered into in June 2010, the Board awarded Richard Cohen 30,000 shares of restricted two thirds of which are subject to restrictions on transfer and are subject to forfeiture with the restrictions lapsing as to one-third of the shares on the first anniversary of the date of grant and as to one-third on the second anniversary of the date of grant in the event Mr. Cohen continues to be a director on those dates.  On September 3, 2010, under the 2010 Plan and in connection with his appointment as Chief Financial Officer, the Board granted Eric Gan an option to purchase 400,000 shares at an exercise price equal to the public offering price of this offering.  The option shall vest and be exercisable as follows; 160,000 shares will vest and become exercisable on July 31, 2011; 120,000 shares will vest and become exercisable on July 31, 2012; 120,000 shares will vest and become exercisable on July 31, 2013.  In the event that the employment is terminated within 12 months from the employment agreement date by the Company without cause, 160,000 shares shall be vested immediately on the termination date.

This section discusses and analyses our results of operations and financial condition, including the results and condition of our operating company, Foshan, which have been consolidated with our own results for all periods presented. This discussion is intended to help you understand our financial results and the current facts and trends that may cause them to change, so that you may make informed judgments about our likely financial results in the future and, insofar as those results may affect our stock price and informed investment decisions.

This discussion should be read in conjunction with our audited financial statements and accompanying notes as of September 30, 2009, and for the year then ended and the unaudited consolidated interim financial statements for the nine months ended June 30, 2010.

References to 2009 and 2008 refer to the fiscal years ended September 30, 2009 and 2008, respectively.

We are a PRC based manufacturer of nonwoven fabrics. We currently manufacture two types of PET nonwoven fabrics which are used in a wide range of products, including filtration products, road construction materials, home furnishings, automobile interior insulation and industrial packaging.

Our current PET products are sold primarily to PRC-based manufacturers which use our products as raw material components for end-products they sell to their customers. We recently developed a manufacturing process to manufacture polyphenylene-sulfide fiber, or PPS nonwoven fabric, which is the key product line around which our long-term growth strategy is centered.

Based on lab tests which we conducted internally we believe that our PPS nonwoven fabric is superior to other currently available high temperature filtration material because it is lighter, thicker, stronger, has higher air permeability and filtration efficiency and  significantly cheaper to produce.  Due to the superior characteristics of our PPS product coupled with the demand created by these new regulations, we believe that our PPS material will become a market leader for high temperature filtration applications. We expect to sell our PPS nonwoven products to operators of coal fired power plants, garbage incinerators and other heavy industrial plants.

We intend to continue to manufacture PET nonwovens but we expect that the sales of our PPS nonwoven fabrics will ultimately eclipse the sales of our existing PET nonwoven products and become our main product offering.

Our manufacturing facility, which is located in Foshan City, Guangdong Province, PRC, currently has three production lines for PET nonwovens with annual product capacity of 8,000 tons. We plan to begin commercial production of our PPS nonwoven fabric in the latter part of 2010 with the addition of three high tech production lines with annual production capacity of 3,600 tons, which will bring our total overall production capacity to 11,600 tons per year.

The most significant factors that could affect our financial condition, costs and results of operations in the future are:

The following table shows, for the periods indicated, information derived from our consolidated statements of income in US dollars and as a percentage of net sales (percentages may not add due to rounding). See the financial statements of the Company and the related notes thereto and other financial information included elsewhere in this report.

Net sales consisted of sales of needle punched PET nonwoven fabric and thermal calendared products. Our net sales for the three month period ended June 30, 2010 were $5,072,791, an increase of $2,590,579, or 104%, from $2,482,212 for the same period of the prior year. The increase in net sales was largely attributable to higher sales volume after a new production line used to manufacture needle-punched nonwoven fabric was installed in February 2009. Sales of needle-punched PET products for the three month period ended June 30, 2010 were $2,054,318, an increase of $1,535,566, or 296%, over the prior year. In addition, sales of thermal calendared PET materials for the three month period ended June 30, 2010 were $3,018,473, an increase of $1,062,855, or 59%, from $1,955,618 for the same period of the prior year.

Cost of sales principally consists of the cost of raw materials, labor and manufacturing overhead expenses.

Our cost of sales for the three month period ended June 30, 2010 was $3,537,571, an increase of $1,758,243, or 99%, from $1,779,328 for the same period in the prior year. The primary reason for the increase in cost of sales was an increase in our raw materials costs, which we believe was in line with our increased sales volume.  98.7% of our raw material costs consist of polyester, the cost of which increased with the price of oil.

Our raw material cost as a percentage of net sales increased to 56% for the three month period ended June 30, 2010, compared to 51% for the same period of the prior year, due to the raw materials associated with 2010 sales being more expensive than in the prior year. As a component of the cost of sales, raw material expense increased to $2,833,820 for the three months ended June 30, 2010 from $1,261,928 for the same period in the prior year. The $1,571,892 increase was due to higher pricing and increases in raw material usage. The change in material pricing contributed approximately 22% and the higher volume contributed approximately 78% of the total increase in raw material cost.

Labor cost accounted for 1% of net sales for the three month period ended June 30, 2010, the same level for the same period of the prior year.

Overhead expenses were 13% of net sales for the three month period ended June 30, 2010, compared to 18% of net sales for the same period of the prior year due to greater capacity utilization rates with the addition of our new production line in February 2009.

Our gross profit for the three month period ended June 30, 2010 was $1,535,220, an increase of $832,336, or 118%, from $702,884 for the same period in the prior year. The increase in gross profit resulted primarily from the increase in our net sales.  As a percentage of net sales, gross profit was 30% for the three month period ended June 30, 2010, compared to 28% for the same period last year. The improved gross profit margin was primarily attributed to lowered overhead cost as a percentage of the net sales.

Selling expenses include salaries, advertising expenses, rent, cost of manufacturing and all expenses directly related to producing and selling our products. General expenses include general operating expenses that are directly related to the general operation of the company, but excluding selling and administrative expenses. Administrative expenses include executive salaries and other expenses related to the overall administration of the company.

Selling, general and administrative expenses for the three month period ended June 30, 2010 were $701,436,$706,436 an increase of $435,335,$440,335, or 164%166%, compared to $266,101 for the same period in the prior year. The increase was primarily due to increase of $47,219 in delivery charges related to overseas sales and $309,040 in legal fees and other expenses related to the Company’s planned public offering.financing transaction which closed in February 2010.

Interest expense for the three month period ended June 30, 2010 was $764,791, compared to $65,162 for the same period in the prior year. Interest expense as a percentage of sales increased to 15% for the three month period ended June 30, 2010 from 3% for the same period of the prior. The increase in interest expense was mainly attributed to our adoption of derivative accounting rules under ASC 815-40 to record $4,140,000 of convertible loan notes. These accounting rules require us to accrete interest expense, in an amount of $609,900 quarterly, based on the term of the notes and note discount. Excluding the derivative-accounting-driven interest expense, our interest expense for this three month period remained the same level as for the same period of last year. The accreted interest expense was partially offset by the fair value change of the warrants after re-measurement at this reporting period.

USA

The Company and its subsidiary and branch divisions are subject to income taxes on an entity basis on income arising in, or derived from, the tax jurisdiction in which they operate. Since the Company had no income generated in the United States, there was no tax expense or tax liability due to the Internal Revenue Service of the United States as of June 30, 2010 and September 30, 2009.

BVI

Hong Hui is incorporated under the International Business Companies Act of the British Virgin Islands and accordingly, is exempted from payment of British Virgin Island’s income taxes.

PRC

Pursuant to the PRC Income Tax Laws, the prevailing statutory rate of enterprise income tax is 25% for Foshan SLP. For 2008 and 2009 Foshan SLP enjoys tax free holidays. From January 2010 onwards, Foshan SLP is taxed at 25% of net income except for the 2010,  2011 and 2012 in which we receive a 50% discount on income tax.

The current year tax provision was $6,328 and $6,328 for the three and nine months ended June 30, 2010, respectively. The company has recorded zero deferred tax assets or liabilities as of June 30, 2010 and September 30, 2009, net of tax allowance, because all other significant difference in tax basis and financial statement amounts are permanent differences.

Net income for the three months ended June 30, 2010 was $434,768,$429,768, an increase of $77,306,$72,306, or 21%20%, from net income of $357,462 for the same period in the prior year. Excluding accretion of interest expense discussed above and the gains on change in warrant value, net income rose to $682,668,$522,668, an increase of $325,206,$165,206, or 90%46%, over the same period of the prior year. The increase was largely due to an increase in sales of our new needle-punched products.

The following table shows, for the periods indicated, information derived from our consolidated statements of income in US dollars and as a percentage of net sales (percentages may not add due to rounding). See our financial statements beginning on page F-1 and the related notes thereto and other financial information included elsewhere in this prospectus.

Net sales for the nine month period ended June 30, 2010 were $14,919,816, an increase of $7,896,771, or 112%, from $7,023,045 for the same period of the prior year. The increase is mainly attributable to sales of needle punched nonwoven fabric products which were launched during the second quarter of 2010.  Sales of needle-punched products for the nine month period ended June 30, 2010 were $6,342,001 compared to $739,097 for the same period of the prior year. In addition, sales of thermal calendared materials for the nine month period ended June 30, 2010 were $8,577,815, an increase of $2,293,867 compared to $6,283,948 for the same period of the prior year.

During the nine month period ended June 30, 2010, approximately 75% and 25% of our sales revenues were generated from sales made in the PRC and internationally, respectively, compared to approximately 83% and 17%, respectively, for the same period in prior year.

Cost of sales for the nine month period ended June 30, 2010 was $10,381,404, an increase of $5,695,674, or 122%, from $4,685,730 for the same period of the prior year. As a percentage of net sales cost of sales was 70% for the nine month period ended June 30, 2010 compared to 67% for the same period in prior year.

Raw material costs increased to 55% of net sales for the nine month period ended June 30, 2010, compared to 44% of net sales for the same period in the prior year, reflecting a mix of more expensive raw materials associated with 2010 sales. Approximately 98% of our raw materials consist of polyester, the price of which fluctuates with the price of oil.

As a component of the cost of sales, raw material expense increased to $8,201,053 for the nine months ended June 30, 2010, from $3,090,140 for the same period of prior year. The increase of $5,115,749 was caused by an increase in material purchase price and higher volume of material usage due to an increase in production output. The rise in material purchase price and volume accounted for approximately 29% and approximately 71% of the total raw material cost increase, respectively.

Labor cost was 1% of sales for the nine month period ended June 30, 2010 compared to 2% for the same period in the prior year.

Overhead expenses were 13% of net sales for the nine month period ended June 30, 2010, compared to 20% of net sales for the same period in the prior year due to greater capacity utilization rates with the addition of our new production line in February 2010.

Gross profit for the nine month period ended June 30, 2010 was $4,538,412, an increase of $2,201,097, or 94%, from $2,337,315 for the same period of the prior year. As a percentage of net sales, gross profit was 30% for the nine month period ended June 30, 2010, compared to 33% for the same period of the prior year. This decrease was primarily due to the increase in the purchase price of the raw materials associated with 2010 sales, which price increase was caused by fluctuations in the price of oil.

Selling, general and administrative expenses for the nine month period ended June 30, 2010 were $1,363,574,$1,518,574, an increase of $339,031,$494,031, or 32%48%, compared to $1,024,543 for the same period of the prior year. This is mainly due to increased legal and other expenses related to convertible note financing completed in February 2010, including fees totaling $554,000 paid or payable to Primary and United Best, and the plannedintended public offering and shipping expenses associated with overseas sales, offset by a decrease in other general expenses.

Interest expense for the nine month period ended June 30, 2010 was $1,216,685 compared to $225,668 for the same period of the prior year. Interest expense as a percentage of net sales increased to 8% for the nine month period ended June 30, 2010 from 3% for the same period of the prior year. The cause for the increase in interest expense for the nine month period was the same as for the three month period. Excluding the accretion of interest, expense, interest expense for this nine month period increased by $76,000 over the same period of last year, and, as a percentage of net sales, decreased to 2% from 3%.

Net income for the nine months ended June 30, 2010 was $2,324,448,$2,169,448, or 113%99%, an increase of $1,235,240$1,080,240 from net income of $1,089,208 for the same period in the prior year. The increase was mainly attributed to increased net sales generated from our new needle-punched products and lower selling, general and administrative expenses relative to net sales. Excluding IPO related expenses and accretion of interest expense from convertible notes sold, net income increased by approximately $2,100,000 from net income for the same period in the prior year.

The following table shows, for the periods indicated, information derived from our consolidated statements of income in US dollars and as a percentage of net sales (percentages may not add due to rounding). See the financial statements of the company beginning on page F-18 and the related notes thereto and other financial information included elsewhere in this prospectus.

Net sales increased $237,993, or 2%, to $11,849,712 from $11,611,719 in the prior year compared to 2008. In February 2009, we installed a new spun-bond needle-punched production line. The sales of new needle-punched products in the prior year were $2,842,101. The sales of products from the thermal calendaring production line in the prior year were $9,007,161, a decrease of $2,604,108 compared to $11,611,719 in 2008 due to the slowdown of the world economy.

Cost of sales was $7,906,614 in 2009, a decrease of $217,190, or 3%, from $8,123,804 in 2008. This decrease resulted from a decrease in raw material expenses from 49% of net sales in 2008 to 47% of net sales in the prior year, reflecting our use of less expensive raw materials associated with fiscal year 2009 sales. Labor expenses were 3% of sales in 2009 and were at about the same rate in 2008. Overhead expenses decreased from 16% of net sales in 2009 compared to 18% of net sales in 2008 due to lower electricity expenses and repair and maintenance expenses.

Gross profit was $3,943,098 in 2009, an increase of $455,183, or 13%, compared to $3,487,915 in 2008. The increase in gross profit resulted primarily from the year over year increase in net sales. As a percentage of net sales, gross profit was 33% in 2009 compared to 30% in 2008. This was primarily due to lower production costs in 2009 compared to 2008.

Selling, general and administrative expenses were $1,219,114 in 2009, an increase of $426,748, or 54%, from $792,366 in 2008 primarily due to: increases of $76,980 in legal and accounting fees; $175,036 in expenses incurred in our efforts to raise external financing in the United States; $120,795 in employee salaries and benefits; and $57,882 in transportation expenses due to the change in transportation company to better satisfy customers’ requirements. Additionally, we have increased our sales and marketing capacity to support the development of our new products and expansion into new geographic markets. As a result, selling, marketing and administrative expenses as a percentage of net sales increased from 6.8% in 2008 to 10.2% in 2009.

Other expenses solely consist of interest expense, which was $269,849 in 2009, an increase of $119,279, or 79%, from $150,570 in 2008. Interest expense as a percentage of net sales increased to 2.3% in 2009 from 1.3% in 2008. The increase in interest expense was principally due to a higher average amount of indebtedness outstanding in 2009.

Net income was $2,445,652 in 2009, a decrease of $253,523, or 9%, from net income of $2,699,175 in 2008. The decrease was due to the reasons set forth above.

Throughout 2009, the RMB rose steadily against the US dollar. As a result of the appreciation of the RMB, we recognized a foreign currency translation loss of $57,078. Given the uncertainty of exchange rate fluctuations, we cannot estimate the effect of these fluctuations on our future business, product pricing, results of operations or financial condition, but the fluctuation of the Renminbi may materially and adversely affect your investment if the current trend of appreciation of the RMB is reversed.

 All of our revenue and expenses in 2009 were denominated in Renminbi. Our income statement accounts were translated at the annual average exchange rate of $1 to 6.83RMB and the balance sheet items, except the equity accounts, were translated at the year-end rate of $1 to 6.83RMB. The equity accounts were stated at their historical rate when the corresponding transactions occurred.

Net foreign currency translation losses were $57,078, or 0.5% of sales, in 2009 as compared with the previous year's net foreign currency translation gain of $1,020,734, or 8.8% of sales.

The following table sets forth a summary of our net cash flow information for the periods indicated:

We finance our business with cash generated from operations and use short-term bank loans to fund capital expenditures.

Working capital consists mainly of cash and equivalents, accounts receivable, advances to suppliers and inventory. Cash and equivalents, inventory and accounts receivable account for the majority of our working capital.

Our working capital requirements may be influenced by many factors, including our cash flow, competition, relationships with suppliers, and the availability of credit facilities and financing alternatives, none of which can be predicted with certainty.

At June 30, 2010, we had several bank loans in the total amount of $3.8 million (RMB26 million) with Agriculture Bank of China, Foshan Branch. These loans are repayable in December 2010.

On February 12, 2010, we completed a financing transaction in which we raised gross proceeds of $4,140,000 through a private placement of convertible notes and warrants to certain accredited investors.

Net cash provided by operating activities for the nine months ended June 30, 2010 was approximately $2,860,129, compared to cash used of $0.25 million for the same period of prior year. The increased operating cash inflow resulted primarily from an increase in net income and favorable changes in advances to suppliers, accounts payable and accrued expenses, offset by unfavorable changes in accounts receivable, inventory and prepaid expenses.

For the fiscal year ended September 30, 2009, net cash provided by operating activities was $2,700,162, representing a decrease of $681,620, or 20%, from $3,381,782 for the fiscal year ended September 30, 2008. The decrease was due primarily to a decrease in net income, increase in receivables, advances to suppliers and inventory and a decrease in accounts payable and accrued liabilities.

Net cash used in investing activities was $2,511,303 for nine months ended June 30, 2010, compared to $108,869 for the same period of the prior year. The increased cash used in investing activities during the nine months ended June 30, 2010 was primarily attributable to capital expenditures on our new PPS production line.

For the fiscal year ended September 30, 2009, net cash used in investing activities for 2009 was $1,158,033, a decrease of $3,200,297 from $4,358,330 for 2008. The greater investment costs of 2008 were due to our purchases of equipment and expenses relating to outfitting our facilities.

Net cash provided by financing activities for the nine month period ended June 30, 2010 was approximately $2.64 million, compared to $0.20 million of net cash used in financing activities for the same period of the prior year. The increase was from the cash received from the sale of the convertible notes.

For the fiscal year ended September 30, 2009, net cash used in financing activities was approximately $600,498, an increase of $507,524 compared with net cash used in financing activities of $92,974 for 2008. Cash used in 2009 represents repayments of short term borrowings. Cash used in 2008 represents dividend payments of $1,178,220 offset by net short term borrowings of $1,085,246.

The balance of our outstanding short-term bank loans on June 30, 2010 was approximately $3,800,000, compared with approximately $4,600,000 on June 30, 2009. The balance of our outstanding short-term bank loans as of September 30, 2009 was approximately $4,600,000, as compared with $5,200,000 as of September 30, 2008. We repaid approximately $600,000 of short term bank loans in 2009.

Other than disclosed in the financial statements, we had no long term debt, capital lease obligations, operating leases or any other long term obligations as of June 30, 2010.

On February 12, 2010, we entered into a note purchase agreement with certain accredited investors for the sale of convertible notes in the aggregate principal amount of $4,140,000 and warrants (which are exercisable only in certain circumstances), with net proceeds for $3.4 million after finance costs. The notes require quarterly interest payments at a rate of 10% per annum and interest for six months in amount of $204,464 to be held in an escrow account. The notes are convertible into shares of common stock at a 65% discount to the offering price upon consummation of a “qualified financing”. The offering contemplated by this prospectus is expected to be a “qualified financing.”

The warrants become void if the notes automatically convert into common stock which is expected to occur upon consummation of this offering. The warrants are exercisable at any time during a five-year period commencing on the closing of a “financing,” which means the first sale (or series of related sales) by us of stock (or debt or equity securities convertible into stock), in a capital raising transaction, occurring after the maturity date (or the date the notes become due pursuant to a default, if earlier) with aggregate gross proceeds of at least $20,000,000. The warrants cannot be exercised if no financing is consummated within the five-year period after the issue date. Please see the section entitled “Our Corporate History - Private Placement” beginning on page 40 for a more complete discussion of the notes and warrants issued in the February 12, 2010 private placement.

Our planned expansion of our PPS manufacturing facilities in 2010 will require significant investment capital. We intend to use the net proceeds of the offering to purchase and install three new production lines to manufacture PPS materials which will increase our annual output to 11,600 tons of nonwoven material. The estimated cost of this equipment is approximately $20,000,000.  In the future, we may need to raise additional capital if the proceeds from the two financings and our operating cash flows are inadequate to continue our capital expansion plans.

Management's discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. See Note 2 to our consolidated financial statements, “Summary of Significant Accounting Policies.”  We believe that the following paragraphs reflect the more critical accounting policies that currently affect our financial condition and results of operations:

We maintain our general ledger and journals with the accrual method accounting for financial reporting purposes. Accounting policies adopted by us conform to generally accepted accounting principles in the United States and have been consistently applied in the presentation of financial statements, which are compiled on the accrual basis of accounting.

The preparation of the financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ materially from those estimates.

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

Our 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. Our results may be adversely affected by changes in 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.

Revenue represents the invoiced value of goods sold recognized upon the delivery of goods to customers. Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, and the seller’s price to the buyer is fixed or determinable and collectible.

Land use rights are stated at cost less accumulated amortization. Amortization is provided over the respective useful lives, using the straight-line method. Estimated useful lives range from 20 to 50 years.

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of plant and equipment are as follows:

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.

The long-lived assets held and used by us are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

We do not have any off-balance sheet arrangements that have or are reasonable likely to have a current or future effect on our financial condition.

Perpetual Technologies was organized as Molokai Enterprises, Inc., on November 27, 1996 under the laws of the State of Colorado. From 1996 to 2006, Molokai Enterprises had no active business operations. Molokai changed its domicile from Colorado to Delaware in April 2007 by merging with and into Perpetual Technologies, Inc., a Delaware corporation organized for that purpose on March 15, 2007. From March 15, 2007 until the February 12, 2010 share exchange transaction described below, Perpetual had no operations or substantial assets and was deemed to be a "blank check" or shell company.

On February 12, 2010, our company entered into two related and contemporaneous transactions pursuant to which the ownership of our company changed.

The first transaction involved the surrender and cancellation of 12,640,000 shares of common stock held by a number of our shareholders in exchange for $40,000 in cash paid by Joseph Nemelka, who was a director of our company at that time.

The second transaction involved a share exchange transaction between our company, Hong Hui Holdings Limited, or Hong Hui, and the shareholders of Hong Hui. At the time of the share exchange, Hong Hui owned, and currently still owns, all of the stock of Technic International Limited, or Technic, a Hong Kong holding company which, in turn, owns 100% of the stock of Foshan, the PRC operating company that conducts our current, active business operations. In the share exchange transaction, we acquired direct control of Hong Hui by issuing to the Hong Hui stockholders an aggregate of 14,510,204 shares of our common stock in exchange for all of the outstanding capital stock of Hong Hui. As a result of the share exchange transaction, we became the indirect, 100% shareholder of Technic and its wholly owned subsidiary, Foshan.

In connection with these transactions, our two former directors, Joseph Nemelka and Seth Winterton resigned and Li Jie and Chris Bickel, were appointed as our new directors. Our management also changed as Li Jie was appointed as our Chief Executive Officer, Law Wawai was appointed as our President of Sales and a director, Shijun Zeng was appointed as our Chief Technology Officer and Wei Yang was appointed as our Corporate Secretary.

On February 12, 2010, our new board of directors approved (i) a one-for-five reverse split of our issued and outstanding common stock and (ii) the change of our name from Perpetual Technologies to China SLP Filtration Technology, Inc. Stockholders holding shares representing a majority of the votes entitled to be cast at a shareholders’ meeting consented in writing to these actions. The reverse split reduced the issued and outstanding shares of common stock from 75,818,571 to 15,235,714 shares. The reverse split and name change were effective on March 24, 2010.

Our current structure, after the reverse merger, is set forth in the diagram below:

On February 12, 2010, we completed a financing transaction in which we raised gross proceeds of $4,140,000 through a private placement of convertible notes and warrants to certain accredited investors.

The material agreements through which the private placement transactions were carried out, the transactions themselves, and the notes and warrants are described below. Full copies of the transaction documents for this private placement have been filed as exhibits to our Form 8-K dated February 12, 2010 on the SEC’s EDGAR database and the summary below is qualified in full by reference to such exhibits. In connection with the private placement, we engaged a placement agent and a financial advisor which received separate cash and equity-based compensation for their services. The financial advisor and placement agent are related parties. See sections entitled “Additional Disclosure Regarding Conversion of Notes and Exercise of Warrants” beginning on page 58 and “Certain Relationships and Related Transactions” beginning on page 80 for additional information regarding compensation to the placement agent and financial advisor.

On February 12, 2010, immediately following the closing of a share exchange transaction, we entered into a note purchase agreement with certain accredited investors for the sale of convertible notes, in the aggregate principal amount of $4,140,000, and warrants (which are exercisable only in certain events and will become void if this offering is consummated). The closing of the sale of the notes and warrants occurred on February 12, 2010.  The terms of the notes and warrants are set forth below. The note purchase agreement contains representations, warranties and covenants which are customary for transactions of this nature.

The notes have the following material terms:

Set forth below are the material terms of the warrants issued at the closing:

Our obligations under the note are guaranteed by Bestyield Group Limited, a BVI company controlled by Mr. Li, our chief executive officer, and Proudlead Limited, a BVI company controlled by Mr. Law, our President of Sales and a member of our Board of Directors, or the “management shareholders,” under a limited recourse guaranty which is secured by a pledge by the management shareholders of the 8,706,122 shares of our common stock received by the management shareholders in the reverse merger.

Accordingly, we are including 1,971,429156,230 of the 1,971,428 shares underlying the notes (assuming a public offering price of $6.00 per share) in our resale prospectus, which forms a part of this registration statement, in satisfaction of that obligation.

In the event the SEC pursuant to Rule 415, does not permit us to register all of the applicable registrable securities in the registration statement, we will use our best efforts to register the registrable securities that were not registered in the initial registration statement, as soon as the SEC permits us to do so. In the case of an underwritten public offering, if the managing underwriter(s) or underwriter(s) reasonably objects to the inclusion of the registrable securities in any registration statement, then if we, after consultation with the managing underwriter, determine that the inclusion of such registrable securities would significantly harm the offering contemplated in such registration statement, and recommend inclusion in such registration statement of fewer or none of the registrable securities, then (x) the number of registrable securities included in the registration statement shall be reduced pro-rata among such holders (based upon the number of registrable securities requested to be included in the registration), or (y) none of the registrable securities shall be included in the registration statement. If securities are being offered for the account of other persons as well as us then the reduction shall not represent a greater fraction of the number of registrable securities than the fraction of similar reductions imposed on such other persons (other than the company).

If (a) we fail to file a registration statement within 30 days of a demand notice, the “demand file date” or (b) the registration statement is not effective within 180 days after filing (or, in the case of subsequent registration statements filed under Rule 415, 90 days after filing or 120 days in the event that registration statement receives a full review), we have agreed to pay the investors two percent (2%) of the aggregate principal amount of the notes for each month (or part thereof) that it is late (capped at 10%). No liquidated damages are payable with respect to any shares required to be omitted as a result of the operation of Rule 415.

We are a leading manufacturer of nonwoven fabric in the PRC.  In 2009, we ranked No. 1 in sales revenue in the PRC for polyester, or PET, nonwoven fabrics according to a report issued by CNITA.

We currently manufacture two types of PET nonwoven fabrics.  Our PET nonwoven fabrics are used in a wide range of products, including filtration products, road construction materials, home furnishings, automobile interior insulation and industrial packaging.

We sell our nonwoven fabrics primarily to PRC-based manufacturers that incorporate our fabric products into end products which are sold to customers operating in the heavy industrial, automotive, construction and home furnishing industries. Given the broad range of applications for our products, we are not dependent on any single industry sector or customer to generate revenues. We have many active customers and our two largest customers in 2009, Chengdu Sanya and Xiantao Ruixin, accounted only for approximately 18% of our revenues in 2009.  Our two largest clients for the nine month period ended June 30, 2010, Dalian Jier Linke Geotextile Material Co.Ltd. and WuJiang Jing Shan  Fabric accounted for approximately 21% of our revenues.

Although we intend to continue to generate revenues from the sale of PET nonwovens, the key component to our growth strategy is the successful commercialization and sale of polyphenylene-sulfide fiber, or PPS, nonwoven fabric. PPS nonwoven fabric is a heat resistant, corrosion-proof and flame retardant nonwoven fabric and can be used in many different applications, including as the material for dust filter bags for pollutant dust removal in smoke stacks in coal-fired power plants, garbage incinerators and cement factories. We recently developed a manufacturing process to manufacture polyphenylene-sulfide fiber, or PPS nonwoven fabric, which is the key product line around which our long-term growth strategy is centered.   We believe that this manufacturing process is proprietary and have applied for a process patent in the PRC and intend to apply for a process patent in the US and Europe.

We believe, based on an article published in China Nonwoven & Industrial Textile (CNIT) in 2010, that less than 10% of the coal-boilers in China were equipped with dust removal filtration bags.bags and less than 10% of the filtration bags in use are made from PPS fiber.

Filtration bags offer these and other plant operators a cost effective way of meeting these new emission and dust pollutant standards in the PRC because the installation of bag filters is a significantly cheaper method of achieving compliance with these regulations than installing costly pollutant dust removal equipment such as engineered scrubbing systems, the installation of which would we believe be cost prohibitive for many of these smaller coal fired power plants and other polluters.

Based on laboratory tests which we conducted internally we believe that our PPS nonwoven fabric is superior to other high temperature filtration materials currently available because it is lighter, thicker, stronger, has higher air permeability and filtration efficiency and is significantly cheaper to produce.  As nonwovens are sold by weight our product will also be cheaper as it is lighter.   Due to the superior characteristics of our PPS product coupled with the demand created by these new regulations we believe that our PPS material will ultimately replace other high temperature filtration materials currently available in the market place, such as PTFE (or Teflon), fiber glass, P84 (polyimide), PBI (polybenzimidazole fiber), PMIA and PSA and the demand for our PPS nonwovens will be significant. 

(1)  Gram weight: (g/m2) means grams per meter squared.  The higher the gram per meter squared weight, the heavier the fabric/material.

(2) Thickness (mm):   the higher the millimeter figure, the thicker the material.

(3)  Air permeability:  (L/m2/s) means liters per meter squared per second.  The more liters that pass per second, the higher the permeability of the fabric/material.

(4) Break strength: (N/5cm) is a unit of measure to demonstrate breakage strength.  1 N ≈ 0.1 KG so that N/5cm = .02.  So, a 1400 value = 28.  The higher the value, the higher the stronger the material.

(5)  Break elongate (%) refers to the amount of stretching of a fabric/material before breakage expressed as a percentage.  So, a 25% value indicates the material can be stretched 25% prior to breakage.

(6) Working temperature means  the continuous operating temperature that a fabric/material can operate in.

(7)  Price of fiber (in K USD$) = Price of the fabric/material expressed as K USD$ ($1,000) per metric ton.

(8)  Materials saved (%) = Referencing the SLP PPS Product as the denominator, the amount of material that can be saved by utilizing the more efficient PPS material as compared to the other materials.

(9)  Filtration Efficiency (mg/cbm) = milligrams per cubic meter.  The ability of the fabric/material to eliminate airborne particles.  This figure is the minimum size of particles.

We plan to begin commercial production of our PPS nonwoven fabric using our patent pending process in the latter part of 2010 with the addition of three high tech production lines with annual output capacity of 3,600 tons.  Although prototype bag filters made of our PPS product have been tested in laboratories, they have not been tested on site by any potential end user and we do not expect to develop prototypes for testing by any end user prior to beginning commercial production.

Our manufacturing facility, which uses manufacturing equipment imported from Germany, is located in Foshan City, Guangdong Province, PRC and occupies more than 10,000 square meters. We currently have three production lines for PET nonwovens with total annual capacity of 8,000 tons of nonwoven fabric.

We operate in the nonwoven segment of the technical textiles industry which is one of the fastest growing sectors of the textile industry worldwide.

  

We believe that there is a significant gap between the nonwovens industry in China and the nonwovens industry in Europe and the United States in terms of technical level, quality level, and competitiveness. China’s nonwovens market is still emerging and we believe has a large capacity to develop and expand and we believe that the following factors will contribute to growth in the nonwovens industry in China and our ability to grow as a company:

Our growth strategy centers around the following strategic initiatives:

We believe our competitive strengths are as follows:

We currently manufacture two types of polyester, or PET, nonwoven fabrics: (i) PET continuous filament spun-bond thermal calendared nonwoven fabric, which we began manufacturing in 2006; and (ii) PET filament spun-bond needle-punched geo-membrane and waterproof fabrics, which we began manufacturing in 2009.

In our operations and in this prospectus, we use a variety of technical terms to describe our products based on the manufacturing process used or raw material included in our products. Some of these terms are described below:

“Continuous filament” refers to strands of polymer (plastic) that are continuous as opposed to chopped or cut to certain length.

“Spun Bond” refers to a process of melting polymer pellets melted producing continuous filaments that are cooled and stretched. The filaments are then cut and laid on a moving belt to form a web.

“Thermal Calendered” refers to a process for using heat to bond nonwoven fabric.  A calendar is a machine consisting of cylinders or rolls that are stacked and heated to precise temperature.  The nonwoven material is passed through (pressed) the cylinders and the polymer based material is bonded using heat and the partial melting of the polymer (plastic).

“Needlepunched” refers to a process where precision cut fibers are distributed onto and across a mesh substrate that is moving. The fibers are then needled (bound together mechanically) by an oscillating needle board (the needle board consists of thousands of evenly spaced needles). The fibers are mechanically bonded by barbed needles entangling the fibers. The density of the fabric is controlled by the number of needle boards used.

“Geo-membranes��Geo-membranes” refers to types of nonwoven fabric that are permeable fabrics which are designed and applied to be permeable in one direction only.  Geo membranes provide a waterproof barrier that allows moisture to penetrate (drain) from one direction while limiting or eliminating the penetration (drainage) from the opposite direction.

Our polyester (PET) filament spun-bond thermal calendared nonwoven fabric is made from polyester and performs effectively in high temperatures.  It is anti-corrosive, has a long lifespan (between 1 to 2 years for filtration, 5 to 10 years for automotive applications, and 5 years for other applications) and maintains its shape and penetration. This nonwoven is used for filtration and water-drainage, packing and automobile interior decoration and insulation.

Geo-membranes are used in engineering, heavy construction, building and pavement construction, hydrogeology and environmental engineering. Geo-membranes are permeable fabrics which have the ability to separate, filter, reinforce, protect and/or drain. These products have a wide range of applications and are currently used in many civil engineering applications including the construction of roads, airfields, railroads, embankments, retaining structures, reservoirs, canals, dams, soil bank protection and coastal engineering.

Our geo-membrane products are made from polyester and are primarily used in the construction industry to improve soil strength and for roof waterproofing. Geo-membranes can be used as a cost-effective alternative to improve soil strength instead of the conventional manner of soil nailing which is a technique for stabilizing slopes and for constructing retaining walls from the top down. With the use of geo-membrane, steep slopes can be planted with vegetation to enhance the aesthetic value. In addition, our geo-membrane product line is used for roof waterproofing based on its excellent water resistant qualities and performance.

In February 2009, we installed a production line with annual capacity of 4,000 tons for the production of polyester (PET) filament, needle-punched, geo-membrane and waterproof materials

Our growth strategy centers around the production and commercialization of our PPS nonwoven products which are manufactured using a proprietary continuous filament, spun-bond, needle-punched manufacturing process which we recently developed.

Our proprietary PPS manufacturing process involves a PPS slice purification technique designed to get sufficiently pure raw materials to produce PPS filtration materials.  As part of this process we have developed web formation techniques so that filaments can be used to increase strength and short fibers are no longer necessary.  PPS nonwovens made from filaments are stronger than PPS nonwovens made from short fibers.

Our PPS material is produced by the filament spun-bond needle-punched method.   Our product can bear temperatures of up to 230 degrees Celsius and is resistant to degradation caused by exposure to acid, alkali or oxidization.  In comparison to other high temperature filtration materials, our product has a longer life (3 years at 190 - 230 degrees Celsius), is stronger (because we use filaments rather than short fibers), and has lower operation and production costs.

We believe, based on an article published in China Nonwoven & Industrial Textile (CNIT) in 2001, that less than 10% of the coal-boilers in China were equipped with dust removal filtration bags.bags and of the filtration bags in use less than 10% are made from PPS fiber.

Initially, we intend to market our PPS nonwovens to the coal-fired power plants in the PRC as we believe that this is the largest and most immediately accessible market for our PPS filtration materials. After we have established a foothold in that market, we intend to begin marketing our PPS nonwovens to cement factories and waste incinerators.

PTFE (or teflon), fiber glass, P84 (polyimide), PBI (polybenzimidazole fiber), PMIA and PSA are other materials that are also used to make needle-punched felt that is suitable for high temperature applications such as in bag filters for coal-fired power plants.  In comparison to these other high temperature filter materials, we believe, based on laboratory testing, that our PPS nonwoven fabric is stronger, has lower production and operating costs, and has higher filtration efficiency.

Due to the characteristics of our PPS product coupled with the demand created by these new regulations, we believe that our PPS material will ultimately replace other high temperature filtration materials currently available in the market place, such as PTFE (or teflon), fiber glass, P84 (polyimide), PBI (polybenzimidazole fiber), PMIA and PSA and become a widely used filtration material for use in high temperature environments such as coal-fired power plants, garbage incinerators and cement factories.

Although prototype bag filters made of our PPS product have been tested in laboratories, they have not been tested on site by any potential end user and we do not expect to develop prototypes for testing by any end user prior to beginning commercial production.

We have been supported by the Chinese SEPA (State Environmental Protection Agency) in the development and application of our PPS fabric for the coal fired power plants.  Our PPS fabric utilized in the bag filter application is the recommended solution to the carbon emissions standard by  SEPA. Mr. Su Lei, one of our directors, is a government official within SEPA and has direct responsibility for implementing the recently introduced carbon emission standards at coal fired power plants.  With the support of Mr. Su, we have introduced our material as the solution to the carbon emissions control problem to dozens of coal fired power plants in China.  All of these meetings resulted in interest in our PPS fabric and the majority of the coal fired power plants we have met with have given us indications of specific purchasing interests as soon as we produce the PPS fabric material in our new facility.

Our manufacturing facility is located in Foshan City, Guangdong Province, PRC and has over 10,000 square meters of operating space on 33,074 square meters of land. Our land use rights for this facility expire in October 2052. We use manufacturing equipment imported from Germany.

We currently operate three spun-bond production lines. Two of these production lines are thermal calendared lines with annual capacity of 4,000 tons of polyester filament, thermal calendared, nonwoven fabric. The third spun-bond line is a needle-punched production line which commenced operation in February 2009. This production line has an annual capacity of 4,000 tons of polyester filament, needle-punched, geo-membrane and waterproofing material. Currently we have total annual production capacity of 8,000 tons.

We received the ISO9001-9002 Quality Management System Certification in 2003 and again in 2006.2009. We adopted what we believe to be the highest quality standards in the industry and maintain quality control and product quality at high levels. We have strictly embraced the ISO9001 Management System Standards in order to integrate our quality management process and enhance the management system and manufacturing process. We closely inspect our products to guarantee quality according to Q/NHJL1-2008 Enterprise Quality Standards and strictly control the manufacturing process and quality control before any products leave our factory.

We sell our existing products to over 200 customers primarily in the PRC, and also internationally, to manufacturers and converters, which incorporate our products into their finished goods.

In 2009, approximately 81% of our net sales were to entities in the PRC and approximately 6% and approximately 7% were made to customers in North America and Europe, respectively.

Chengdu Sanya, our largest customer, accounted for approximately 9% of our 2009 net sales. Sales to our top 20 customers represented approximately 49% of our total 2009 net sales.

The following chart shows our top ten customers in 2009:

Dalian Jier Linke Geotextile Material Co.Ltd. accounted for approximately 11% of our 2009 net sales for the nine month period ended June 30, 2010.

The following chart shows our top ten customers for the nine month period ended June 30, 2010:

The primary raw material that we use to manufacture most of our products is polyester resin. The price of polyester resin fluctuates based on capacity, demand and the price of crude oil.

Our major suppliers of raw materials are Foshan Chemical Fibers Co., Ltd., Kaiping Chunhui Co., Ltd., and Zhuhai Yuhua Polyester Co., Ltd.  We believe that the loss of any one or more of our suppliers would not have a long-term material adverse effect on our business because other manufacturers with whom we conduct business would be able to fulfill our requirements. We do not have long term supply contracts with any of our suppliers of raw materials.

During 2007, 2008 and 2009, we paid approximately $4.2 million, $5.2 million and $5.6 million, respectively, for the purchase of raw materials.  During the nine month period ended June 30, 2010, we paid $8.2 million for the purchase of raw materials.

Our nonwoven products are distributed in 20 provinces in the PRC.  In 2003, we began selling our products in Europe, North America and South East Asia.

In 2009, approximately 81% and 19% of our sales revenues were generated from sales made in the PRC and internationally, respectively, compared to approximately 77% and 23%, respectively, in 2008.

During the nine month period ended June 30, 2010, approximately 75% and 25% of our sales revenues were generated from sales made in the PRC and internationally, respectively, compared to approximately 83% and 17%, respectively, for the same period in 2009.

As of June 30, 2010, we employed eleven direct sales representatives, eight of whom are engineers who have advanced technical knowledge of our products and the applications for which they are used. Seven of these sales representatives are responsible for national sales and four are responsible for international sales. We plan to double the size of our sales force for the PPS product line in the next year to take advantages of anticipated market for our products. Representatives receive a salary plus commission of the revenues they generate.

Our sales process consists of identifying potential customers through cold calls, responses to marketing efforts, and customer references. Once a potential customer is identified, our sales people aid in identifying the prospect’s technical requirements and help the customer’s engineers to produce drawings of the finished products desired. Armed with this technical information, our sales personnel then quote pricing, production quantities, and lead times. Most of our customers are repeat customers and the sales force is also responsible for after-sale support, including quality assurances, dispute resolution, and relationship-building.

We promote our products primarily through exhibitions, internet advertising and marketing, and referrals from existing customers as well as suppliers.

We intend to capitalize on China’s “green” movement.  We will focus our sales efforts for our PPS nonwoven fabric material on operators of coal- fired power plants as this is currently the most suitable and largest market for PPS filtration materials. The sales to the coal-fired power plants will be made directly using our existing sales team and sales process described above.

Our research and development department has what we believe to be one of the strongest research and development capabilities in the development of products, processes and equipment in the nonwovens industry in China.

As of June 30, 2010, our research and development staff consisted of 20 scientists, professional, engineering and technical personnel. Our research and development team is lead by Mr. Yao Mu, a senior engineer in the industry and the former president of Northwestern Polytechnical University.

Additionally, Mr. Zeng Shijun, our Chief Technology Officer is qualified as a senior engineer in the industry and one of the co-designers of five patents held by Dalian Huayang Chemical Fiber Engineering technology Co., Ltd. Three of these five patents have been transferred to the company. In addition, we believe that each of our senior managers possesses a comprehensive technical background. Mr. Li Jie, our chief executive officer and a senior engineer is a certified chemical engineer, the Associate President of the China Industrial Textile Association and is considered an expert in his field. His independent research has been funded by the Central Government. Mr. Ye Xi-Ping, Vice President of Production, is a senior engineer and certified automation engineer.

We have three utility model patents and one patent application:

The three utility model patents were applied for and were originally owned by Dalian Huayang Chemical Fiber Engineering Technology Co., Ltd., or Dalian. Dalian has taken steps to transfer the three utility patents to Foshan and the State Intellectual Property in the PRC approved the transfer of these three utility patents from Dalian to Foshan on March 29, 2010.

The duration of utility model rights in the PRC is 10 years from the application date and the duration of invention rights in the PRC is 20 years from the application date.

Our patent application for our process invention is currently pending. No significant patents are expected to expire in the next five years. We expect that additional patent applications will be filed as more processes are developed and specific applications are identified.

We have the following registered trademark in the PRC:

We have the following additional trademark applications: