UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10−QQ/A

(Mark One)

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

For the quarterly period ended: March 31, 2010

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

For the transition period from ____________ to _____________

Commission File Number: 000-53010

CHINA SLP FILTRATION TECHNOLOGY, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		90-0475058
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

Shishan Industrial Park

Nanhai District, Foshan City, Guangdong Province, PRC

(Address of principal executive offices, Zip Code)

(86 22) 757-86683197

(Registrant’s telephone number, including area code)

~~Perpetual Technologies, Inc.~~

~~1442 East Lower River Road, Kamas, Utah~~

~~December 31~~

(Former name, former address and former fiscal year, if changed since last report)

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

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

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

Large Accelerated Filer ¨	Accelerated Filer ¨
Non-Accelerated Filer ¨(Do not check if a smaller reporting company)	Smaller reporting company x

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

The number of shares outstanding of each of the issuer’s classes of common equity, as of ~~May 10,~~November17, 2010 is as follows:

Class of Securities		Shares Outstanding
Common Stock, $0.001 par value		~~15,235,714~~15,265,714

Quarterly Report on FORM 10-Q

Three Months Ended March 31, 2010

Table of Contents

	PART I
	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS.	34
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	416
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	16
ITEM 4.	CONTROLS AND PROCEDURES.	1624

	PART II ~~OTHER INFORMATION~~
	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS.	19
ITEM 6.	EXHIBITS.	1925

EXPLANATORY NOTE

China SLP Filtration Technology, Inc. (the “Company”) is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q (“Form 10-Q/A”) to restate its consolidated financial statements for the three and six months ended March 31, 2010. Subsequent to the issuance of the Company’s consolidated unaudited interim financial statements for the three and six months ended March 31, 2010, included in its Quarterly Report on Form 10-Q for the period ended March 31, 2010, filed with the United States Securities and Exchange Commission (the “SEC”) on May 24, 2010, as amended on May 26, 2010 (collectively, the “Original Form 10-Q”), and in connection with the SEC’s review of the Company’s registration statement on Form S-1 (File No. 333-168028), originally filed on July 8, 2010, as amended on September 7, 2010 and October 15, 2010, it was identified that the Company failed to record a liability of $75,000 owed to each of United Best and Primary Capital (totaling $150,000) for advisory services rendered in connection with its private placement of convertible notes which closed on February 12, 2010. Accordingly, the Company is restating its unaudited interim financial statements for the three month and six month periods ended March 31, 2010 and 2009, as set forth in the Original Form 10-Q.

See Item 1 of Part I, “Financial Statements — Note 18 — Restatements of Previously Issued Financial Statements” for a detailed discussion of the effects of the restatement of the Company’s unaudited interim financial statements for the three and six months ended March 31, 2010.

For purposes of this Form 10-Q/A, and in accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, each item of the Original Form 10-Q that was affected by the restatement has been amended and restated in its entirety. No material changes have been made in this Form 10-Q/A to update other disclosures presented in the Original Form 10-Q, except as required to reflect the effects of the restatement. This Form 10-Q/A does not reflect events occurring after the filing of the Original Form 10-Q or modify or update those disclosures, including the exhibits to the Original Form 10-Q affected by subsequent events. The following sections of this Form 10-Q/A have been amended to reflect the restatement:

Part I—Item 1—Financial Statements (Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows),

Part I—Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations (Liquidity and Capital Resources), and

Part I—Item 4—Controls and Procedures

This Form 10-Q/A is dated as of a current date and includes as exhibits 31.1, 31.2 and 32 new certifications by the Company’s Chief Executive Officer and Chief Financial Officer as required by Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended. Accordingly, this Form 10-Q/A should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original Form 10-Q for the fiscal quarter ended March 31, 2010.

PART I

FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

China SLP Filtration Technology, Inc.

Condensed Consolidated Financial Statements

Three ~~months ended~~and Six Months Ended March 31, 2010 and 2009

Index to Condensed Consolidated Financial Statements

	Page

Unaudited Condensed Consolidated Balance Sheets (Restated)	45

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss (Restated)	56

Unaudited Condensed Consolidated Statements of Cash Flows (Restated)	67

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity (Restated)	78

Notes to Unaudited Consolidated Financial Statements (Restated)	89

CHINA SLP FILTRATION TECHNOLOGY,INC.

CONSOLIDATED BALANCE SHEETS

	March 31,				Restated March 31,
	2010		September 30,		2010		September 30,
	(Unaudited)		2009		(Unaudited)		2009
ASSETS

Current Assets
Cash and cash equivalents	$	6,092,334	$	3,297,648	$	6,092,334	$	3,297,648
Accounts receivable - Net		1,914,786		1,424,835		1,914,786		1,424,835
Advance to suppliers		1,341,121		685,551		1,341,121		685,551
Inventory		1,022,404		1,197,289		1,022,404		1,197,289
Prepaid expenses and other current assets		189,535		45,656		189,535		45,656
Total Current Assets		10,560,180		6,650,979		10,560,180		6,650,979

Deposits		1,946,280		-		1,946,280		-
Property and equipment - Net		10,130,508		10,711,865		10,130,508		10,711,865
Receivable from related party		213,035		773,672		213,035		773,672
Land use rights - Net		530,364		537,350		530,364		537,350
Total Assets	$	23,380,367	$	18,673,866	$	23,380,367	$	18,673,866

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short term loan	$	3,803,327	$	4,578,409	$	3,803,327	$	4,578,409
Accounts payable and accrued liabilities		371,247		410,114		521,247		410,114
Client's deposits		-		75,176		-		75,176
Taxes payable		17,154		726		17,154		726
Warrants liabilities		1,052,000				1,052,000
Convertible notes payable $4,140,000, net of discount -$2,134,793		2,005,207		-		2,005,207		-

Total Current Liabilities		7,248,935		5,064,425		7,398,935		5,064,425

Total Liabilities		7,248,935		5,064,425		7,398,935		5,064,425
Stockholder's Equity

Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding						-		-

Common stock, $0.001 par value, 40,000,000 shares authorized, 15,235,714 and 14,510,214 shares issued and outstanding at March 31, 2010 and September 30, 2009		15,236		14,510		15,236		14,510
Additional paid-in Capital		8,205,582		7,548,752		8,205,582		7,548,752
Retained earnings		6,390,212		4,500,532		6,240,,212		4,500,532
Accumulated other comprehensive income		1,520,402		1,545,647		1,520,402		1,545,647
Total Stockholder's Equity		16,131,432		13,609,441		15,981,432		13,609,441

Total Liabilities and Stockholder's Equity	$	23,380,367	$	18,673,866	$	23,380,367	$	18,673,866

See accompanying notes to financial statements

CHINA SLP FILTRATION TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	March 31						March 31						March 31						March 31
	2010			2009			2010			2009			Restated 2010			2009			Restated 2010			2009
Net Sales	$	4,628,671		$	2,214,940		$	9,847,025		$	4,540,833		$	4,628,671		$	2,214,940		$	9,847,025		$	4,540,833
Cost of Sales		3,237,311			1,373,921			6,843,833			2,906,402			3,237,311			1,373,921			6,843,833			2,906,402
Gross Profit		1,391,360			841,019			3,003,192			1,634,431			1,391,360			841,019			3,003,192			1,634,431
Selling, General and Administration expenses		407,461			275,526			662,138			758,442			557,461			275,526			812,138			758,442
Income from Operations		983,899			565,493			2,341,054			875,989			833,899			565,493			2,191,054			875,989

Other income (expense)
Interest Income		292			-			517			-			292			-			517			-
Interest Expense		(390,355	)		(76,286	)		(452,387	)		(160,506	)		(390,355	)		(76,286	)		(452,387	)		(160,506	)
Gain on disposal of fixed assets		496			-			496			16,263			496			-			496			16,263
Total other income (expenses)		(389,567	)		(76,286	)		(451,374	)		(144,243	)		(389,567	)		(76,286	)		(451,374	)		(144,243	)
Income before IncomeTaxes		594,332			489,207			1,889,680			731,746
Income before Income Taxes														444,332			489,207			1,739,680			731,746
Income tax provision		-			-			-			-			-			-			-			-
Net Income	$	594,332		$	489,207		$	1,889,680		$	731,746		$	444,332		$	489,207		$	1,739,680		$	731,746

Other Comprehensive Income
Foreign Currency Translation Adjustments		(23,939	)		14,446			(25,245	)		(90,836	)		(23,939	)		14,446			(25,245	)		(90,836	)
Total Comphrensive Income	$	570,393		$	503,653		$	1,864,435		$	640,910
Total Comprehensive Income													$	420,393		$	503,653		$	1,714,435		$	640,910

Net Income Per Common Share:
Basic and diluted	$	0.04		$	0.03		$	0.13		$	0.05		$	0.03		$	0.03		$	0.12		$	0.05
Weighted-Average Common Shares Outstanding:
Basic		14,897,143			14,510,204			14,701,547			14,510,204			14,897,143			14,510,204			14,701,547			14,510,204
Diluted		15,798,367			14,510,204			15,147,208			14,510,204			15,798,367			14,510,204			15,147,208			14,510,204

Three Months ended
March 31, 2010

Three Months ended
March 31, 2009

Numerator for basic and diluted EPS
- Net income from continuing operations 594,332 489,207
Denominator for basic and diluted EPS
Weighted average shares of common stock outstanding shares – basic 14,897,143 14,510,204
Weighted average shares of common stock outstanding shares – diluted 15,798,367 14,510,204
EPS– basic and diluted 0.04 0.03

Six Months ended
March 31, 2010

Six Months ended
March 31, 2009

Numerator for basic and diluted EPS
- Net income from continuing operations 1,889,680 731,746
Denominator for basic and diluted EPS
Weighted average shares of common stock outstanding shares – basic 14,701,547 14,510,204
Weighted average shares of common stock outstanding shares – diluted 15,147,208 14,510,204
EPS– basic and diluted 0.13 0.05

	Three Months ended		Three Months ended

	Restated March 31, 2010		March 31, 2009
Numerator for basic and diluted EPS
- Net income from continuing operations		444,332		489,207
Denominator for basic and diluted EPS
Weighted average shares of common stock outstanding shares – basic		14,897,143		14,510,204
Weighted average shares of common stock outstanding shares – diluted		15,798,367		14,510,204
EPS– basic and diluted		0.03		0.03

	Restated Six Months ended March 31, 2010		Six Months ended March 31, 2009
Numerator for basic and diluted EPS
- Net income from continuing operations		1,739,680		731,746
Denominator for basic and diluted EPS
Weighted average shares of common stock outstanding shares – basic		14,701,547		14,510,204
Weighted average shares of common stock outstanding shares – diluted		15,147,208		14,510,204
EPS– basic and diluted		0.12		0.05

China SLP Filtration Technology, Inc.

Notes to Consolidated Financial Statements for the six months ended March 31, 2010

(Unaudited - - Expressed in US dollars)

~~15.~~16.

Accounting for Warrants

The warrants issued in ~~conjuction~~conjunction with the convertible notes have the following material terms:

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 $2,000,000. The warrants cannot be exercised if no financing is consummated within five-year period after the issue date and become void if the notes automatically convert into common stock.

Number of Shares: The warrants represent the right to purchase 8% of the total shares of common stock outstanding (on a fully-diluted basis) immediately after the closing of the financing.

Exercise Price: The warrants are exercisable at the price for which the shares of common stock (or common stock equivalent if derivative securities are sold) are sold in the financing. If the financing includes more than one type of security, the exercise price shall equal the lowest price per share of common stock or common stock equivalent included in the financing.

The Company analyzed the warrants and the conversion features in the notes to assess whether they meet the definition of a derivative under the guidance set forth by ASC Topic 815 (SFAS 133, “Accounting for Derivative Instruments and Hedging Activities”) and, thereof, the applicability of the accounting rules in accordance to ASC Topic 815 to treat the warrants as derivative liabilities. Management also evaluated whether the warrants meet the scope exception set forth by ASC Topic 815-40 (“Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock”), which is that contracts issued or held by the reporting entity that are both (1) indexed to its own stock and (2) classified in stockholders’ equity shall not be considered to be derivative instruments for purposes of ASC Topic 815. The provisions in ASC Topic 815-40 apply to any freestanding financial instruments or embedded features that have the characteristics of a derivative, as defined by ASC Topic 815 and to any freestanding financial instruments that are potentially settled in an entity’s own common stock.

Management concluded that the warrants issued in conjunction with the private placement of convertible notes in February 2010 to certain accredited investors should be treated as a derivative liability and the derivative accounting rules under ASC Topic 815-40 were adopted to record the warrants. Fair market value of the warrants were measured using the Black-Scholes pricing model at the issuance date and recorded as warrants liabilities. Change in the fair value of the warrants is recorded in other income or loss in the statement of operations in the future reporting periods. Change in warrant value from February 2010 to March 31, 2010 were not material.

As a result of adopting accounting treatment of ASC Topic 815-40, $1,052,000 was recorded as warrants liabilities based on 1,218,857 shares entitled under the warrants and the valuation inputs as provided in the table as follows.

February 2010 Financing Warrants - Valuation Inputs
	February 12 and March 31,
Attribute	2010
Stock Price	$	2.45
Risk Free Interest Rate		2.25	%
Volatility		90.00	%
Exercise Price	$	2.45
Dividend Yield		0	%
Contractual Life (Years)		1

1314

China Filtration Technology, Inc.

Notes to Consolidated Financial Statements for the six months ended March 31, 2010

(Unaudited - - Expressed in US dollars)

~~16.~~17.

Recent accounting pronouncements

In June 2009 the FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.

Statement of Financial Accounting Standards (“SFAS”) SFAS No. 165 (ASC Topic 855), “Subsequent Events”, SFAS No. 166 (ASC Topic 810), “Accounting for Transfers of Financial Assets – an Amendment of FASB Statement No. 140”, SFAS No. 167 (ASC Topic 810), “Amendments to FASB Interpretation No. 46(R)”, and SFAS No. 168 (ASC Topic 105), “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162” were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.

Accounting Standards Update (“ASU”) ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures – Overall, ASU No. 2009-13 (ASC Topic 605), Multiple Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and Various other ASU’s No. 2009-2 through ASU No. 2010-19 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

18. Restatements of Previously Issued Financial Statements

Subsequent to the issuance of our consolidated financial statements for the three and six months ended March 31, 2010, included in our Quarterly Report on Form 10-Q for the period ended March 31, 2010, filed with the United States Securities and Exchange Commission on May 24, 2010, as amended on May 26, 2010, and in connection with the SEC’s review of our registration statement on Form S-1 (File No. 333-168028), originally filed on July 8, 2010, as amended on September 7, 2010 and October 15, 2010, it was identified that we failed to record a liability of $75,000 owed to each of United Best and Primary Capital (totaling $150,000) for advisory services rendered in connection with our private placement of convertible notes which closed on February 12, 2010. We have revised the previously issued consolidated financial statements to include the liability in our consolidated balance sheet, consolidated statements of operations, and consolidated statements of cash flows for the periods affected. The following tables highlight changes to specific accounts affected:

	As reported		As restated
	March 31, 2010		March 31, 2010

Accounts payable and accrued liabilities	$	371,247	$	521,247
Total Current Liabilities	$	7,248,935	$	7,398,935
Retained earnings	$	6,390,212	$	6,240,212
Total Stockholders’ equity	$	16,131,432	$	15,981,432

A restatement of the consolidated statements of operations and comprehensive income affected the three month and six month periods ended March 31, 2010 in general and administrative expenses as follows:

	Three months ended				Six months ended
	March 31, 2010				March 31, 2010
	As reported		As restated		As reported		As restated

Selling, General and Administrative Expenses	$	407,461	$	557,461	$	662,138	$	812,138
Income from Operations	$	983,899	$	833,899	$	2,041,054	$	2,191,054
Income before Income Taxes	$	594,332	$	444,332	$	1,889,680	$	1,739,680
Net Income	$	594,332	$	444,332	$	1,889,680	$	1,739,680
Comprehensive income	$	570,393	$	420,393	$	1,864,435	$	1,714,435
Earnings per share – basic and diluted	$	0.03	$	0.02	$	0.13	$	0.12

Statements of Cash Flows for the six months ended March 31, 2010 are restated under net income and accounts payable and accrued liabilities as follows:

	As reported			As restated
	March 31, 2010			March 31, 2010

Net income	$	1,889,680		$	1,739,680
Accounts payable and accrued liabilities	$	(38,281	)	$	111,719

The net cash provided by the operating activities, the net cash used in investing activities, and the net cash provided by financing activities are not affected by the restatements.

1415

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Special Note Regarding ~~Forward Looking~~Forward-Looking Statements

This ~~Quarterly Report~~report 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. Forward-looking statements involve risks and uncertainties. You can identify these statements by the fact that they do not relate strictly to historical or current facts. 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 ~~Form 10-Q, including the following~~these words or comparable terminology. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations,~~Operations.” ~~contains~~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 ~~that are based~~in this report 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" in our registration statement of Form S-1 (File No. 333-168028), originally filed on ~~the beliefs~~July 8, 2010, as amended on September 7, 2010 and October 15, 2010 (the “S-1”). In light of ~~our management, and involve~~these risks and uncertainties, ~~as well as assumptions,~~there can be no assurance that if they ever materialize or prove incorrect, could cause actual results to differ materially from those expressed or implied by such forward-looking statements. The words “believe,” “expect,” “anticipate,” “project,” “targets,” “optimistic,” “intend,” “aim,” “will” or similar expressions are intended to identify forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemedthe forward-looking statements including statements regarding new and existing products, technologies and opportunities; statements regarding market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; uncertainties related to conducting business in China; any statements of belief or intention; any of the factors and risks mentioned in the “Risk Factors” sections of our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 12, 2010, and any statements of assumptions underlying any of the foregoing. All forward-looking statements includedcontained in this ~~report are based~~filing will in fact occur and you should not place undue reliance on ~~information available to us on the date of this report. We assume no obligation and do not intend to update~~ these forward-looking ~~statements, except as required by law.~~statements.

~~INTRODUCTION~~Introduction

This section discusses and analyzes the results of operations and financial condition of China SLP Filtration Technology, Inc.~~, formerly known as Perpetual Technologies, Inc.,~~ (“we,” “us,” or the “Company”) which is the ultimate parent company of Foshan S.L.P. Special Materials Co., Ltd. (“Foshan”), a ~~PRC-based~~China-based operating company located in Foshan, Guangdong Province in the ~~PRC.~~

People’s Republic of China. On February 12, 2010, we acquired control of Foshan in a share exchange transaction which closed on that date.

In the share exchange or “reverse merger” we acquired control of Hong Hui Holdings Limited (“Hong Hui”), a British Virgin Islands company and the owner of all of the stock of Technic International Limited (“Technic”), a Hong Kong holding company which in turn is the owner of all of the equity of Foshan, 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.

The transaction is accounted for as a reverse acquisition, except that no goodwill or other intangible has been recorded. The recapitalization is considered to be a capital transaction in substance, rather than a business combination. ~~Beginning with the quarter ended March 31, 2010 the operating results of Foshan are consolidated in the Company’s financials results for that period.~~

~~Foshan is engaged in the manufacture, sale, and research and development of advanced spun-bond PET, or polyester, non-wovens.~~

Nonwoven fabrics are broadly defined as sheet or web structures bonded together by entangling fiber or filaments (and by perforating films) mechanically, thermally or chemically. They are flat, porous sheets that are made directly from separate fibers or from molten plastic or plastic film. They are not made by weaving or knitting and do not require converting the fibers to yarn.

~~Our major market is the Chinese market. In recent years, our products have been successfully launched in the European, North American and South East Asian markets.~~

Currently, our major products are spun-bond, thermal calendaring and needle-punched industrial non-woven PET (polyester) and PP (polypropylene) fabrics. These products are used as filtration media and infrastructure engineering material, among other uses.

We currently operate three spun-bond production lines. Two lines are spun-bond, thermal calendaring production lines with a total annual capacity of 4,000 tons of spun-bond polyester filament thermal calendaring nonwoven. In February 2009, we added the third line, spun-bond needle-punching production line with an annual capacity of 4,000 tons of spun-bond polyester filament, needle-punched nonwoven fabric.

We recently developed a continuous filament, spun-bond, needle-punched manufacturing process to manufacture polyphenylene sulfide fiber, or PPS, a specialized type of high temperature resistant nonwoven fabric and intend to begin commercial production of PPS using our proprietary manufacturing process in 2010. We have applied for a process patent in the PRC for this process (Patent No. PRC: 201010102660.2) and we intend to apply for a process patent in North America and Europe. In comparison to other filtering materials currently available, we believe that our nonwoven fabric will be stronger, have lower production and operating costs, and will have higher filtration efficiency. We have tested our PPS material nonwoven fabric internally and, although a prototype using our material has not yet been deployed by any industrial end user, we believe that our material has the potential to replace the filtration materials and products currently available and become the most popular filtration material in high temperature environments such as coal-fired power plants, garbage incinerators and cement factories.

On March 24, 2010 the Company effected a 1 for 5 reverse stock split of its outstanding common stock. The effect of the reverse split is retrospectively showed in all periods presented.

Overview

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.

On February 12, 2010, immediately following the reverse merger, the Company 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 of $3.2 million after finance costs. The notes require quarterly interest payments at a rate of 10% per annum.General

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 ~~this discussion~~PET nonwovens with annual product capacity of 8,000 tons. We plan to ~~provide~~begin commercial production of our PPS nonwoven fabric in the ~~reader~~latter part of 2010 with ~~information that~~the addition of three high tech production lines with annual production capacity of 3,600 tons, which will ~~assist in understanding~~bring our ~~financial statements, the changes in certain key items in those financial statements from year~~total overall production capacity to year, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. 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 condensed consolidated interim financial statements for the six monhts ended March 31, 2010.11,600 tons per year.

Results of Operations

Three Month Period Ended March 31, 2010 compared to Three Month Period Ended March 31, 2009

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.

	Three months ended March 31												Three months ended March 31
	2010						2009						2010 (unaudited)						2009 (unaudited)
	Amount			%			Amount			%			Amount			%			Amount			%
Sales		4,628,671			100	%		2,214,940			100	%	$	4,628,671			100	%		2,214,940			100	%
Cost of Sales		3,237,311			70	%		1,373,921			62	%		3,237,311			70	%		1,373,921			62	%
Gross Profit		1,391,360			30	%		841,019			38	%		1,391,360			30	%		841,019			38	%
SG&A expense		407,461			9	%		275,526			12	%		557,461			12	%		275,526			12	%
Operating Income		983,899			21	%		565,493			26	%		833,899			18	%		565,493			26	%
Interest Income		292			0	%		-			0	%		292			0	%		-			0	%
Interest Expenses		(390,355	)		8	%		(76,286	)		3	%		(390,355	)		8	%		(76,286	)		3	%
Gain on disposal of fixed assets		496			0	%		0			0	%		496			0	%		0			0	%
Net Income before taxes		594,332			13	%		489,207			22	%		444,332			10	%		489,207			22	%
Net Income		594,332			13	%		489,207			22	%		444,332			10	%		489,207			22	%

Net Sales

Net sales revenue ~~consists~~consisted of ~~revenue from~~ sales of needle punched non woven fabric and thermal calendared ~~product. Net~~products. Our net sales for three month period ended March 31, 2010 were $4,628,671, an increase of $2,413,731, or 109%, from $2,214,940 for the same period of prior year. ~~In February 2009, we installed~~The increase in net sales was largely attributable to higher sales volume after a new production line used to manufacture ~~needle punched non woven fabric.~~needle-punched nonwoven fabric was installed in February 2009. Sales of needle-punched products for the three month period ended March31, 2010 were $1,942,811 compared to $220,718 for the same period of the prior year. In addition, sales of thermal calendared materials for the three month period ended March 31, 2010 $2,308,801, as increase of $569,189 compared to $1,739,612 for the same period of the prior year.

Cost of ~~Goods Sold~~Sales

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

~~Cost~~Our cost of goods sold for the three month period ended March 31, 2010 was $3,237,311, an increase of $1,863,390, or 136%, from $1,373,921 for the same period in 2009. 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.

~~Raw~~Our raw material ~~expenses~~cost as a percentage of net sales increased to 52% of the sales for the three month period ended March 31, 2010, compared to 41% of sales for the same period of the prior year, reflecting a mix of more expensive raw materials associated with 2010 sales. ~~98.7~~ %

Labor cost accounted for 1% of ~~our raw materials consists of polyester the price of which fluctuates with the price of oil~~

~~Labor expenses were 6% of~~net sales for the three month period ended March 31, 2010 compared to 2% for the same period of year 2009. Beginning in February 2009, we hired 17 additional employees to work the new production line. Labor costs also increased due to increased demand for labor.

Overhead expenses were 11% of net sales for the three month period ended March 31, 2010, compared to 19% of net sales for 2009 due to the increase of manufacturing capacity of the Company with the addition of the new production line in February 2009.

Gross Profit

~~Gross profits represents net sales less cost of goods sold. Gross~~Our gross profit for the three month period ended March 31, 2010 was $1,391,360, an increase of $550,341, or 65%, from $841,019 for the same period in ~~2009.~~the prior year. As a percentage of net sales, gross profit was 30% for the three month period ended March 31, 2010, compared to 38% for the same period last year. This was primarily due to increase of purchase of price of the raw materials associated with 2010 sales, which price increase was caused by fluctuations in the price of oil.

Selling, Marketing and Administrative Expenses

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

Selling, general and administrative expenses for the three month period ended March 31, 2010 were ~~$407,461,~~$557,461, an increase of ~~$131,935~~$281,935 compared to $275,526 for the same period 1nin 2009. The increase was primarily due to increase of $25,524 in export delivery expenses, ~~and~~ ~~$83,286~~ ~~additional professional expenses~~$150,000 fees incurred in connection with the ~~company’s planned~~Company’s convertible note financing closed in February, and $ 83,286 additional professional expenses related to the Company’s proposed equity financing.

Other Expenses

Other expenses solely consist of interest expense.

Interest expense for the three month period ended March 31, 2010 was $390,355 compared to $76,286 for the same period in 2009. Interest expense as a percentage of sales increased to 8% for the three month period ended March 31, 2010 from 3% for the same period of last year. The increase in interest expense was principally due to interest on the convertible notes in the aggregate principal amount of $4,140,000. We accreted non-cash related interest expense in the amount of $304,950. Excluding the accretion of interest, our interest expense for this three-month period was the same as for the same period in 2009.

Income Tax

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 March 31, 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 six months ended March 31, 2010, respectively. The company has recorded zero deferred tax assets or liabilities as of March 31, 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

Net income for the three months ended March 31, 2010 ~~increased~~decreased by ~~$105,125,~~$44,875, from net income of $489,207 for the three month period ended March 31, 2009 to net income of ~~$594,332.~~$444,332. The ~~increase~~decrease was largely due to $150,000 fees incurred for the convertible note financing closed in February 12, 2010 offset by an increase in net ~~sales due to the~~ sales generated from new needle-punch products.

Six Month Period Ended March 31, 2010 compared to Six Month Period Ended March 31, 2009

Six months ended March 31
2010 2009
Amount % Amount %
Sales 9,847,025 100 % 4,540,833 100 %
Cost of Sales 6,843,833 70 % 2,906,402 64 %
Gross Profit 3,003,192 30 % 1,634,431 36 %
SG&A expense 662,138 7 % 758,442 17 %
Operating Income 2,341,054 24 % 875,989 19 %
Interest income 517 0 % - 0 %
Interest Expenses (452,387 ) 5 % (160,506 ) 4 %
Gain on disposal of fixed assets 496 0 % 16,263 0 %
Net Income before taxes 1,889,680 19 % 731,746 16 %
Net Income 1,889,680 19 % 731,746 16 %

	Six Months ended March 31
	2010 (unaudited)						2009 (unaudited)
	Amount			%			Amount			%
Sales	$	9,847,025			100	%		4,540,833			100	%
Cost of Sales		6,843,833			70	%		2,906,402			64	%
Gross Profit		3,003,192			30	%		1,634,431			36	%
SG&A expense		812,138			8	%		758,442			17	%
Operating Income		2,191,054			22	%		875,989			19	%
Interest income		517			0	%		-			0	%
Interest Expenses		(452,387	)		5	%		(160,506	)		4	%
Gain on disposal of fixed assets		496			0	%		16,263			0	%
Net Income before taxes		1,739,680			18	%		731,746			16	%
Net Income		1,739,680			18	%		731,746			16	%

Net Sales

~~Net sales revenue consists of revenue from sales of needle punched non woven fabric and thermal calendared product.~~ Net sales for the six month period ended March 31, 2010 were $9.85 million, an increase of $5.30 million or 116 %, from $4.55 million for the same period of prior year. In February 2009, we installed a new production line to manufacture needle punched non woven fabric. Sales of needle-punched products for the six month period ended March 31, 2010 were $~~[4,300,022]~~$4,300,022 compared to $220,718 for the same period of the prior year. In addition, sales of ~~therm~~althermal calendared materials for the six month period ended March 31, 2010 ~~were $[5,559,365],~~were $ 5,559,365, as increase of $~~[1,228,361]~~ 1,228,361 compared to $~~[4,331,204]~~ 4,331,204 for the same period of the prior year.

Cost of ~~Goods Sold~~Sales

Cost of ~~goods sold principally consists of the cost of raw materials, labor, and manufacturing overhead expenses.~~

~~Cost of goods sold~~sales for the six month period ended March 31, 2010 was $6,843,833, an ~~increased~~increase of $3,937,431, or 135%, from $2,906,402 for the same period of the prior year. As a percentage of net sales, cost of ~~good~~goods sold was ~~70 %~~70% for the six month period ended March 31, 2001 compared to 64% for the same period in 2009.

Raw material ~~expenses~~costs increased to 56% of the sales for the six month period ended March 31, 2010, compared to 40% of sales for the same period in 2009, reflecting a mix of more expensive raw materials associated with 2010 sales. 98.7% of our raw materials ~~consists~~consist of polyester the price of which fluctuates with the price of oil.

Labor expenses were 6% of sales for the six month period ended March 31, 2010 compared to 2% for the same period in 2009. Beginning in February 2009, we hired 17 additional employees to work the new production line. Labor costs also increased due to increased demand for labor.

Overhead expenses were 12% of net sales for the six month period ended March 31, 2010, compared to 19% of net sales for the same period last year due to the increase of manufacturing capacity of the Company.

Gross Profit

~~Gross profits represents net sales less cost of goods sold.~~ Gross profit for the six month period ended March 31, 2010 was $3,003,192, ~~and~~an increase of $1,368,761, or 83%, from $1,634,431 for the same period ~~last~~of the prior year. As a percentage of net sales, gross profit was 30% for the six month period ended March 31, 2010, compared to 36% for the same period last year. This decrease was primarily due to the increase in the purchase price of the raw materials associated with 2010 sales. This was primarily due to increase of purchase of price of the raw materials associated with 2010 sales, which price increase was caused by fluctuations in the price of oil.

~~Selling, Marketing and Administrative~~SG&A Expenses

Selling, general and administrative expenses for the six month period ended March 31, 2010 were ~~$662,138,~~$812,138, an ~~decrease~~increase of ~~$96,304~~$53,696, or 7% compared to $758,442 for the same period ~~last~~of the prior year. This is mainly due to ~~decreased stamp duty $18,394 from $21,301~~a $150,000 liability incurred in ~~2009 compare~~connection with our convertible note financing offset by a $77,327 decrease in office expenses compared to ~~$2,907 for~~ the same period ~~this year. Office expense also decreased $77,327 from $147,221 in 2009 compared to $69,894 for the same period 2010.~~2009.

Other Expenses

~~Other expenses consist solely of interest expenses.~~

Interest expense for the six month period ended March 31, 2010 was $452,387 compared to $160,506 for the same period ~~last~~of the prior year. Interest expense as a percentage of net sales increased to 5% for the six month period ended March 31, 2010 from 4% for the same period of ~~last~~the prior year. The cause for the increase in interest expense for the six month period was principally due to record $4,140,000 of convertible notes. We accreted non-cash related interest expense, in the amount of $304,950. Excluding accretion on non-cash interest expense, interest expense for this six month period remained the same as last year, and, as a percentage of net sales, decreased to 1% from 4%.

Net Income

Net income for the six months ended March 31, 2010 ~~increased by $1,157,934~~was $1,739,680, an increase of $1,007,934, or 138%, from net income of $731,746 for the same period in ~~2009 to net income of $1,889,680.~~the prior year. The increase was mainly due to the increase in ~~sales due to the~~ sales generated from new needle-punch products.

Liquidity and Capital Resources

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

	Six Months Ended March 31,
	2010			2009
	(Consolidated, unaudited)			(Consolidated, unaudited)
Net cash provided by operating activities	$	1,553,423		$	3,586,444
Net cash (used in) investing activities	$	(1,389,582	)	$	(4,927,447	)
Net cash provided by financing activities	$	2,636,263		$	194,967
Net cash inflow (outflow)	$	2,794,686		$	(1,166,031	)

We finance our business with cash flows from operations and short-term bank loans and we use shareholders’ equity investment and retained earnings to fund capital expenditures.

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

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

At March 31, 2010, we had several bank loans for the total amount of $3.8 million (RMB26 million) with Agriculture Bank of China, Foshan Branch and these loans are repayable in December 2010. We have the highest credit rating for that bank.

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.

~~Cash from~~ Operating Activities

~~Six month period ended March 31, 2010 compared with six month period ended March 31, 2009~~

Net cash ~~proved~~provide by operating activities for the six months ended March 31, 2010 was approximately $1.55 million, compared to a cash flow of $3.59 million for the same period of the prior year. The decrease was due primarily to increase in Non-cash interest charges, decrease in advance to suppliers.

~~Cash in~~ Investing Activities

~~Six month period ended March 31, 2010 compared with six month period ended March 31, 2009~~

Net cash provided by investing activities for six months ended March 31, 2010 was negative cash flow $1.39 million, compared to a negative cash flow of $4.93 million for the same period of the prior year. The increased cash used from investing activities because there were no large capital expenditures during the first six months of the year. Only deposits were made a new product assembly line project. The net cash used in investing activities for the same period of last year was due to the deposits for purchases of equipment and expenses relating to outfitting our facilities.

We are satisfied this cash expenditure with cash reserves and cash generated from 2009 and 2010 operations.

~~Cash in~~ Financing Activities

~~Six month period ended March 31, 2010 compared with six month period ended March 31, 2009~~

Net cash provided by financing activities for the six month period ended March 31, 2010 was approximately $2.64 million, compared to $0.19 million for the same period of the prior year. The increase was the result of cash received from the sale of the convertible notes.

Loans and Credit Facilities

The balance of our outstanding short-term bank loans on March 31, 2010 was approximately $3.8 million, compared with $4.6 million on March 31, 2009

On February 12, 2010, immediately following the reverse merger, 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 month in amount of $204,464 to be held in an escrow account.

The warrants become void if the notes automatically convert into common stock.

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.

Future Cash Commitments

We have ambitious capital investment plans for our PPS projects in 2010 and which will require significant investment capital. This demand for investment capital will be met by the proceeds from the February private placement, and by outside financing (including the public offering) that we intend to raise as needed to continue our expansion.

Critical Accounting Policies and Estimates

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:

Method of Accounting

We maintain our general ledger and journals with the accrual method of 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.

Use of estimates

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.

Economic and political risks

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 recognition

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

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.

Property, plant and equipment

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:

Buildings			15-35 years
Machinery and equipment			10 years
Office equipment			6-10 years
Motor vehicles			6-8 years
Other assets			6-10 years

Accounting for the Impairment of Long-Lived Assets

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.

Off-Balance Sheet Arrangements

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~

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.

~~Not Applicable.~~

ITEM 4.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

We maintain “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that ~~would be~~is required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, our management, including Mr. Jie Li, our ~~Chief Executive Officer~~chief executive officer and ~~Ms. Sabrina Liang,~~Mr. Eric Gan, our ~~Controller,~~chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures and internal controls as of March 31, 2010. Based on that evaluation, Mr. Lie and ~~Ms. Liang~~Mr. Gan concluded that as of March 31, 2010, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures and internal controls was completed, our disclosure controls and procedures and internal controls were not effective in that certain ~~“significant deficiencies”~~“material weaknesses” existed related to (i) the U.S. GAAP expertise of our internal accounting staff, and (ii) our internal audit function.

A material weakness is a control deficiency, or a combination of control deficiencies, that result in more than a remote likelihood that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected.

As more fully disclosed in a Current Report on Form 8-K filed on November 18, 2010, subsequent to the issuance of our consolidated financial statements for the three and six months ended March 31, 2010, included in our Quarterly Report on Form 10-Q for the period ended March 31, 2010, filed with the United States Securities and Exchange Commission on May 24, 2010, as amended on May 26, 2010, and in connection with the SEC’s review of our registration statement on Form S-1 (File No. 333-168028), originally filed on July 8, 2010, as amended on September 7, 2010 and October 15, 2010, it was identified that we failed to record a liability of $75,000 owed to each of United Best and Primary Capital (totaling $150,000) for advisory services rendered in connection with our private placement of convertible notes which closed on February 12, 2010.. This liability should have been reflected in (i) our unaudited interimfinancial statements for the three month and nine month periods ended June 30, 2010 and (ii) our unaudited interim financial statements for the three month and six month periods ended March 31, 2010.

Our chief executive officer and chief financial officer and our Audit Committee determined, after discussions with Child, Van Wagoner & Bradshaw, PLLC, our independent registered public accounting firm, that (i) our unaudited interim financial statements for the three month and nine month periods ended June 30, 2010 and 2009, as set forth in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 filed on August 16, 2010, and (ii) our unaudited interim financial statements for the three month and six month periods ended March 31, 2010 and 2009, as set forth in the Quarterly Report on Form 10-Q filed on May 24, 2010, as amended on May 26, 2010 should be restated and should not be relied on.

C~~hanges~~Changes in Internal Control over Financial Reporting.

Under the supervision and with the participation of our management, including our chief executive officer and controller, identified a number of “significant deficiencies” in the process of preparing our financial statements for the quarter ended March 31, 2010 as described above.

During the quarter ended March 31, 2010, we began to take certain remedial measures as described below that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Because our current accounting department is relatively new to U.S. GAAP and the related internal control procedures required of U.S. public companies, our management has determined that they require additional training and assistance in U.S. GAAP matters. Management has determined that our internal audit function is also significantly deficient due to insufficient qualified resources to perform internal audit functions.

In order to correct the foregoing significant deficiencies, we are taking or have taken the following remediation measures:

In August 2010, we hired Eric Gan as our new chief financial officer;

We are arranging necessary training for our accounting department staff;

We plan to engage external professional accounting or consultancy firms to assist us in the preparation of the USU.S. GAAP accounts; and

We do not currently have a chief financial officer but are currently searching for a qualified candidiate. We remain committed to the establishment of effective internal audit functions; however, due to the scarcity of qualified candidates with extensive experience in U.S. GAAP reporting and accounting in the region, we were not able to hire sufficient internal audit resources before the end of our reporting period. However, we will increase our search for qualified candidates with assistance from recruiters and through referrals;

~~In addition, we~~ have allocated ~~significant~~ financial and human resources to strengthen the internal control structure and we have been actively working with external consultants to assess our data collection, financial reporting, and control procedures and to strengthen our internal controls over financial reporting.

We believe that the foregoing steps will remediate the significant deficiencies identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate. However, there is no guarantee that these improvements will be adequate or successful or that such improvements will be carried out on a timely basis.

Other than described above, there was no change in our internal control over financial reporting during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

~~ITEM 1.~~

~~LEGAL PROCEEDINGS.~~

~~We are not aware of any legal proceedings or claims that we expect will have a material adverse affect on our business, financial condition or operating results.~~

ITEM 6.

EXHIBITS.

The following exhibits are filed as part of this report or incorporated by reference:

Exhibit No.		Description

31.1		Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of Principal Executive Officer and Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

2925

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: ~~May~~November 24, ~~2009~~2010

	CHINA SLP FILTRATION TECHNOLOGY, INC.

	By:	/s/ Jie Li
		Jie Li
		Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ ~~Sabrina Liang~~Eric Gan
		~~Sabrina Liang~~Eric Gan
		~~Controller~~Chief Financial Officer
		(Principal Financial and Accounting Officer)

3026

EXHIBIT INDEX

Exhibit No.		Description

31.1		Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certifications of Principal Executive Officer and Principal Accounting Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

3127

	Six Months Ended March 31						Six Months Ended March 31
	2010			2009			Restated 2010			2009

Cash Flow from Operating Activities:
Net income	$	1,889,680		$	731,746		$	1,739,680		$	731,746
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation		569,358			352,070			569,358			352,070
Amortization		6,217			6,204			6,217			6,204
Non-cash interest charges		304,950			-			304,950			-
Gain from disposal of fixed assets		(496	)		(16,263	)		(496	)		(16,263	)
Change in operating assets and liabilities:		-			-			-			-
Accounts receivable		(491,997	)		(122,271	)		(491,997	)		(122,271	)
Advance to suppliers		(656,586	)		3,271,122			(656,586	)		3,271,122
Inventory		173,173			(124,682	)		173,173			(124,682	)
Prepaid expenses and other current assets		(143,956	)		(337,288	)		(143,956	)		(337,288	)
Accounts payable & accrued liabilities		(38,281	)		(71,094	)		111,719			(71,094	)
Clients' deposits		(75,069	)		(93,257	)		(75,069	)		(93,257	)
Taxes payable		16,430			(9,843	)		16,430			(9,843	)
Net cash provided by (used in) operating activities		1,553,423			3,586,444			1,553,423			3,586,444

Cash Flow from Investing Activities:
Addition-property and equipment, land use right		(3,333	)		(6,010,706	)		(3,333	)		(6,010,706	)
Deposits for purchase of equipment		(1,946,280	)		-			(1,946,280	)		-
Proceeds from disposal of fixed assets		496			16,263			496			16,263
Proceeds from related party receivable		559,535			1,066,996			559,535			1,066,996
Net cash (used in) provided by investing activities		(1,389,582	)		(4,927,447	)		(1,389,582	)		(4,927,447	)

Cash Flow from Financing Activities:
Dividend paid		-			(1,070,823	)		-			(1,070,823	)
Repayment of loans		(768,535	)		(4,963,547	)		(768,535	)		(4,963,547	)
Proceeds from loans		3,404,798			6,229,337			3,404,798			6,229,337
Net cash provided by (used) in financing activities		2,636,263			194,967			2,636,263			194,967

Effects of Exchange Rates on Cash		(5,418	)		(19,995	)		(5,418	)		(19,995	)
Net increase (decrease) in cash and cash equivalents		2,794,686			(1,166,031	)		2,794,686			(1,166,031	)

Cash and cash equivalents, beginning of year		3,297,648			2,367,570			3,297,648			2,367,570

Cash and cash equivalents, end of year	$	6,092,334		$	1,201,539		$	6,092,334		$	1,201,539

Supplemental information of cash flows
Cash paid for interest	$	85,329		$	58,909		$	85,329		$	58,909
Cash paid for income taxes	$	-		$	-		$	-		$	-

	March 31, 2010
Customers:	Amount		Percentage
Wu jiang jingshan	$	338,704		17	%
Dalian Ji er		440,766		23	%
Shang hai run dong		239,591		12	%
San Ya		210,877		11	%

	September 30,2009
Customers:	Amount		Percentage
Wu jiang jingshan	$	434,556		30	%
Shen zhen Ya ming water		185,625		13	%
Xiantao ruixin		181,260		13	%

					March 31,		September 30,
As of	March 31,		September 30,		2010		2009
	2010		2009
Raw materials	$	85,239	$	40,126	$	85,239	$	40,126
Work in progress		240,386		50,443		240,386		50,443
Finished goods		696,779		1,106,720		696,779		1,106,720

	$	1,022,404	$	1,197,289	$	1,022,404	$	1,197,289

As of	March 31, 2010
			Accumulated		Net book
	Cost		depreciation		value
Building and plant	$	2,958,252	$	592,938	$	2,365,314
Machinery		11,158,514		3,585,441	$	7,573,073
Office equipment and other equipment		770,547		669,760	$	100,787
Vehicles		139,553		48,219	$	91,334
	$	15,026,866	$	4,896,358	$	10,130,508

																Accumulated																					Accumulated
											Additional					Other			Total													Additional					Other			Total
	Common Stock						Preferred Stock				Paid-in			Retained		Comprehensive			Stockholders'			Common Stock						Preferred Stock				Paid-in			Retained		Comprehensive			Stockholders'
	Shares			Amount			Shares		Amount		Capital			Earnings (Deficit)		Income			Equity			Shares			Amount			Shares		Amount		Capital			Earnings (Deficit)		Income			Equity

BALANCE, September 30, 2008		14,510,204		$	14,510			-	$	-	$	7,548,752		$	2,054,880	$	1,602,725		$	11,220,867			14,510,204		$	14,510			-	$	-	$	7,548,752		$	2,054,880	$	1,602,725		$	11,220,867

Net Income		-			-			-		-		-			2,445,652		-			2,445,652			-			-			-		-		-			2,445,652		-			2,445,652

Currency translation adjustment		-			-			-		-					-		(57,078	)		(57,078	)		-			-			-		-					-		(57,078	)		(57,078	)

BALANCE, September 30, 2009		14,510,204		$	14,510			-	$	-	$	7,548,752		$	4,500,532	$	1,545,647		$	13,609,441			14,510,204		$	14,510			-	$	-	$	7,548,752		$	4,500,532	$	1,545,647		$	13,609,441

Shares effectively issued to former shareholders - 2/12/2010		2,600,000			2,600							(2,600	)							-			2,600,000			2,600							(2,600	)							-

Cancellation of stock in recapitalization		(2,528,000	)		(2,528	)						2,528								-			(2,528,000	)		(2,528	)						2,528								-
																				-																					-
Shares issued to placement agents in conjuction with convertible note		653,510			654			-		-		656,902					-			657,556
Shares issued to placement agents in conjunction with convertible note																							653,510			654			-		-		656,902					-			657,556

Net Income		-			-			-		-		-			1,889,680		(25,245	)		1,864,435
Net Income - Restated																							-			-			-		-		-			1,739,680		(25,245	)		1,714,435

Currency translation adjustment		-			-			-		-		-			-		-			-			-			-			-		-		-			-		-			-

BALANCE, March 31, 2010		15,235,714		$	15,236			-	$	-	$	8,205,582		$	6,390,212	$	1,520,402		$	16,131,432
BALANCE, March 31, 2010 - Restated																							15,235,714		$	15,236			-	$	-	$	8,205,582		$	6, 240,212	$	1,520,402		$	15,981,432

As of					September 30, 2009		September 30, 2009
			Accumulated		Net book				Accumulated		Net book
	Cost		depreciation		value		Cost		Depreciation		value
Building and plant	$	2,958,978	$	526,654	$	2,432,324	$	2,958,978	$	526,654	$	2,432,324
Machinery		11,174,517		3,096,112	$	8,078,405		11,174,517		3,096,112	$	8,078,405
Office equipment and other equipment		771,829		668,448	$	103,381		771,829		668,448	$	103,381
Vehicles		139,753		41,998	$	97,755		139,753		41,998	$	97,755
	$	15,045,077	$	4,333,212	$	10,711,865	$	15,045,077	$	4,333,212	$	10,711,865

							March 31 ,2010			September 30 ,2009
As of	March 31 ,2010			September 30 ,2009			USD			USD
	USD			USD
Cost	$	621,817		$	622,578		$	621,817		$	622,578
Less: accumulated amortization		(91,453	)		(85,228	)		(91,453	)		(85,228	)
	$	530,364		$	537,350		$	530,364		$	537,350

February 12, 2010 convertible note finance
Gross proceeds	$	4,140,000
Less cash fee paid to placement agent		730,187
Net proceeds	$	3,409,813

Record warrant as derivative liability	$	1,052,000
Allocated remaining proceeds to :
Common stock issued to placement agents		657,556
Convertible Note		1,700,257
	$	3,409,813

Amount due from related parties	March 31,		September 30,
	2010		2009
Advance to former shareholders (a)	$	212,329	$	259,538
Advance to current shareholders (b)		706		1,413
Advance to director (c)		-		73,246
Subtotal		213,035		334,197
Receivable from related companies (d)		-		439,475
	$	213,035	$	773,672

	Three Months ended March 31, 2010		Three Months ended March 31, 2009
Numerator for basic and diluted EPS
- Net income from continuing operations		594,332		489,207
Denominator for basic and diluted EPS
Weighted average shares of common stock outstanding shares – basic		14,897,143		14,510,204
Weighted average shares of common stock outstanding shares – diluted		15,798,367		14,510,204
EPS– basic and diluted		0.04		0.03

	Six Months ended March 31, 2010		Six Months ended March 31, 2009
Numerator for basic and diluted EPS
- Net income from continuing operations		1,889,680		731,746
Denominator for basic and diluted EPS
Weighted average shares of common stock outstanding shares – basic		14,701,547		14,510,204
Weighted average shares of common stock outstanding shares – diluted		15,147,208		14,510,204
EPS– basic and diluted		0.13		0.05