10-K
2011-09-30
false
American Nano Silicon Technologies, Inc.
0001415917
--09-30
36210558
24106832
Smaller Reporting Company
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<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold">Note 1 – <font style="DISPLAY:inline; TEXT-DECORATION:underline">ORGANIZATION AND BASIS OF PRESENTATION</font></font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">American Nano-Silicon Technologies, Inc. (the “Company” or “ANNO”) was originally incorporated in the State of California on September 6, 1996 as CorpHQ, Inc. (“CorpHQ”). The Company has been primarily engaged in the business of manufacturing and distributing refined consumer chemical products through its subsidiaries, Nanchong Chunfei Nano-Silicon Technologies Co., Ltd. (“Nanchong Chunfei”), Sichuan Chunfei Refined Chemicals Co., Ltd. (“Chunfei Chemicals”), and Sichuan Hedi Veterinary Medicines Co., Ltd. (“Hedi Medicines”).</font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">On August 26, 2006, ANNO, through its wholly owned subsidiary American Nano Silicon Technologies, Inc., a Delaware corporation (“ANST”), acquired a 95% interest in Nanchong Chunfei, a company incorporated in the People’s Republic of China (the “PRC” or “China”) in August 2006. Nanchong Chunfei directly owns 90% of Chunfei Chemicals, a Chinese corporation established under the laws of PRC on January 6, 2006. Chunfei Chemicals itself owns 92% of Hedi Medicines, also a Chinese company incorporated under the law of PRC on June 27, 2002.</font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">On September 6, 2011, the Company acquired all minority interests in its subsidiaries by agreeing to issue 1,650,636 shares of common stock to the minority interest holders. Thereafter, Nanchong Chunfei, Chunfei Chemicals, and Hedi Medicines became wholly owned subsidiaries of ANNO.<font style="DISPLAY:inline"> The shares were issued to the minority interest holders on November 28, 2011.</font></font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The accompanying consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America.</font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold">Note 2 – <font style="DISPLAY:inline; TEXT-DECORATION:underline">SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Principles of consolidation</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The consolidated financial statements represent the consolidated accounts of the Company and its subsidiaries, Nanchong Chunfei, Chunfei Chemicals and Hedi Medicines. All significant intercompany balances and transactions have been eliminated in the consolidation.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Non-controlling interests</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">Prior to the acquisition on September 6, 2011, non-controlling interests result from the consolidation of  our 95% directly owned subsidiary, Nanchong Chunfei, 85.5% indirectly owned subsidiary, Chunfei Chemicals, and 78.66% indirectly owned subsidiary, Hedi Medicines.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> <br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Use of estimates</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, the management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements, as well as </font><font style="DISPLAY:inline">the reported amounts of revenues and expenses during the reporting periods. Significant estimates required to be made by the management include, but are not limited to, the recoverability of long-lived assets and the valuation of accounts receivable and inventories, valuation of warrant liabilities, and fair value of other financial instruments. Actual results could differ from these estimates.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Risks and uncertainties</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The operations of the Company are located in the PRC. Accordingly, the Company's business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, in addition to the general state of the PRC economy. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Fair value of financial instruments</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The Company adopted the provisions of Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes <font style="DISPLAY:inline">methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> <br></br></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Level 2- Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Level 3- Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">The carrying amounts reported in the balance sheets for cash, accounts receivable, prepaid expenses, other receivables, advance to suppliers, short-term loan, accounts payable, advance from customers, other payables and accrued expenses approximate their fair market value based on the short-term maturity of these instruments. The carrying value of the long-term debt approximates fair value based on market rates and terms currently available to the Company. The Company uses Level 2 method to measure fair value of its warrant liability (see note 12c). The Company did not identify any other assets or liabilities that are required to be presented on the consolidated balance sheets at fair value in accordance with ASC 820.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"> </div></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Cash and cash equivalents</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Cash and cash equivalents include cash on hand and cash on deposit and all highly liquid debt instruments with an original maturity of three months or less.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Accounts receivable</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"> </div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">The Company's policy is to maintain reserves for potential credit losses on accounts receivable. Provisions are made against accounts receivable to the extent which they are considered to be doubtful. Accounts receivable on the balance sheet are stated net of such provisions. These provisions are based on management’s analysis of customers’ credit history and current relationships with those customers. Based on this assessment, it has been concluded that realization losses on balances outstanding at year-end will be immaterial.</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="justify"> </div></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Allowances for doubtful accounts receivable balances are recorded when circumstances indicate that collection is doubtful for particular accounts receivable. Management estimates such allowances based on historical evidence such as amounts that are subject to risk.</font></div></div><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Inventory</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">Inventories consist of  raw materials and packing supplies. Inventories are valued at the lower of cost or market with cost determined on a weighted average basis. Market value represents the estimated selling price in the ordinary course of business less the estimated costs necessary to complete the sale.</font></div><div> </div><div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Property, plant & equipment</font></font></div></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">   </font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Property, plant and equipment are stated at cost. The cost of an asset is comprised of its purchase price and any directly attributable costs of bringing the asset to its present working condition and location for its intended use. Depreciation and amortization are calculated using the straight-line method over the following useful lives:</font></div><div> </div><div align="center"><table width="100%" bgcolor="white" cellpadding="0" cellspacing="0"><tr><td width="6%"> </td><td width="26%">Buildings and improvements   </td><td width="68%">39 years</td></tr><tr><td width="6%"> </td><td width="26%">Machinery, equipment and automobiles  </td><td width="68%">5-10 years</td></tr></table></div><div><font style="DISPLAY:inline">    </font></div><div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Construction in progress represents direct costs of construction or acquisition and design fees incurred for the Company’s new plant and equipment. Capitalization of these costs ceases and the construction in progress is transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until it is completed and ready for its intended use. </font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">      </font></div></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">Expenditures for maintenance and repairs are charged to expense as incurred. Additions, renewals and betterments are capitalized.</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Impairment of long-lived assets</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline"></font> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">In accordance with ASC 360, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company periodically reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. In fiscal year 2010, we demolished a portion of landscaping and pavement in order to continue construction of our new manufacturing facilities. Also, we demolished one floor of a building under construction in order to<font style="DISPLAY:inline; FONT-WEIGHT:bold"> </font>continue the construction of the new manufacturing facility. Therefore, we recognized an impairment loss from fixed assets of $366,642 during the fiscal year ended September 30, 2010. In December 2011, we fully completed our relocation to our new manufacturing facilities and abandoned operations at the old manufacturing site. We recognized an impairment loss from fixed assets of $2,149,611 for the fiscal year ended September 30, 2011.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Advance to suppliers</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">Advance to suppliers represents the payments made and recorded in advance for goods and services.  Advances were also made for the purchase of the materials and equipment of the Company’s construction in progress. As of September 30, 2011, the final phase of construction had not been completed. </font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Revenue recognition</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">The Company recognizes revenue under the FASB Codification Topic 605 (“ASC Topic 605”). Revenue is recognized when all the following have occurred: persuasive evidence of arrangement with customers, products are delivered, fees are fixed and determinable and collection is reasonably assured.  Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advance from customers.</font></font></div></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"> </font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Shipping and handling</font></font></div><br></br><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Shipping and handling costs incurred for shipping of finished products to customers are included in selling expense and totaled $ 3,961 and $8,613 for the year ended September 30, 2011, and 2010, respectively.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Taxation</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold">Income taxes</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The Company accounts for income tax under the provisions of FASB ASC 740-10-25, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statements bases of assets and liabilities. Valuation allowances will also be established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; BACKGROUND-COLOR:#ffffff">Uncertain tax positions</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline; BACKGROUND-COLOR:#ffffff">During the course of business, there are certain transactions and calculations for which the ultimate tax determination is uncertain.  We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due.  These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable.  We adjust these reserves in light of changing facts and circumstances, such as the outcome of a tax audit or changes in the tax law.  The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. </font>As of September 30, 2011, we had zero unrecognized tax benefits or provisions.</font></div></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><br></br><font style="DISPLAY:inline; FONT-WEIGHT:bold">Value added tax</font></div></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">Value added tax is imposed on goods sold in or imported in the PRC. Value added tax payable in the People’s Republic of China is charged on an aggregated basis at a rate of 13% or 17% (depending on the type of goods involved) on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of 17% on the charges for the taxable services<font style="DISPLAY:inline; FONT-WEIGHT:bold; TEXT-DECORATION:underline"> </font>provided, but excluding, in respect of both goods and services, any amount paid in respect of value added tax included in the price or charges, and less any deductible value added tax already paid by the taxpayer on purchases of goods and services in the same financial year. The value added tax payable for the Company as of September 30, 2010 was $ 98,435 and the Company had value added tax recoverable for $ 15,038 as of September 30, 2011.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Earnings (Loss) per share</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">Earnings per share are calculated in accordance with the ASC 260, “Earnings per share.” Basic net earnings per share are based upon the weighted average number of common shares outstanding, but excluding shares issued as compensation that have not yet vested. Diluted net earnings per share are based on the assumption that all dilutive convertible shares and stock options were converted or exercised, and that all unvested shares have vested. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price <font style="DISPLAY:inline">during the period. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Statement of cash flows</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">In accordance with FASB ASC 230, cash flows from the Company’s operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Concentration of credit risk</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of advances to suppliers and other receivables arising from its normal business activities. The Company does not require collateral or other security to support these receivables.  The Company routinely assesses the financial strength of its debtors and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Foreign currency translation</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">The Company’s principal country of operations is the PRC. The financial position and results of operations of the Company are determined using the local currency, Renminbi (“RMB”), as the functional currency. Foreign currency transactions are translated at the applicable rates of exchange<font style="DISPLAY:inline; FONT-WEIGHT:bold"> </font>in effect at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. Revenues and expenses are translated at the average exchange rates in effect during the reporting period. Equity accounts are translated in the historical exchange rate when the transactions took place.</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation of amounts from RMB into US dollar has been made at the following exchange rates for the respective years:</font></div></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><br></br></div><div align="center"><table width="60%" cellpadding="0" cellspacing="0"><tr><td width="1%" align="left" valign="top"><font style="DISPLAY:inline">  </font></td><td width="30%" align="left" valign="top"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">September 30, 2011</font></div></td><td width="29%" align="right" valign="top"><font style="DISPLAY:inline">  </font></td></tr><tr><td width="1%" align="left" valign="top"><font style="DISPLAY:inline">  </font></td><td width="30%" align="left" valign="top"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Balance sheet</font></div></td><td width="29%" align="right" valign="top"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="right"><font style="DISPLAY:inline">RMB 6.3843 to US$1.00</font></div></td></tr><tr><td width="1%" align="left" valign="top"><font style="DISPLAY:inline">  </font></td><td width="30%" align="left" valign="top"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Statement of operations and comprehensive loss</font></div></td><td width="29%" align="right" valign="top"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="right"><font style="DISPLAY:inline">RMB 6.5372 to US$1.00</font></div></td></tr><tr><td width="1%" align="left" valign="middle"><font style="DISPLAY:inline">  </font></td><td width="30%" align="left" valign="middle"><font style="DISPLAY:inline">  </font></td><td width="29%" align="right" valign="middle"><font style="DISPLAY:inline">  </font></td></tr><tr><td width="1%" align="left" valign="top"><font style="DISPLAY:inline">  </font></td><td width="30%" align="left" valign="top"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">September 30, 2010</font></div></td><td width="29%" align="right" valign="top"><font style="DISPLAY:inline">  </font></td></tr><tr><td width="1%" align="left" valign="top"><font style="DISPLAY:inline">  </font></td><td width="30%" align="left" valign="top"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Balance sheet</font></div></td><td width="29%" align="right" valign="top"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="right"><font style="DISPLAY:inline">RMB 6.6912 to US$1.00</font></div></td></tr><tr><td width="1%" align="left" valign="top"><font style="DISPLAY:inline">  </font></td><td width="30%" align="left" valign="top"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Statement of operations and comprehensive loss</font></div></td><td width="29%" align="right" valign="top"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="right"><font style="DISPLAY:inline">RMB 6.8120 to US$1.00</font></div></td></tr></table></div><div align="center"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders' equity as "Accumulated Other Comprehensive Income".  Gains and losses resulting from foreign currency translations are included in Accumulated Other Comprehensive Income (loss).</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> </div><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">Recent accounting pronouncements</font></font></div></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">In May 2011, the FASB issued Accounting Standards Update No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,” (“ASU 2011-04”). ASU 2011-04 expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This new guidance is to be applied prospectively. This guidance will be <font style="DISPLAY:inline">effective for the Company beginning January 1, 2012.  The Company anticipates that the adoption of this standard will not materially affect its consolidated financial statements.</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> <br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">In June 2011, the FASB issued Accounting Standards Update No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” (“ASU 2011-05”). ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in equity. ASU 2011-05 requires that all non-owner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. This new guidance is to be applied retrospectively. This guidance will be effective for the Company beginning January 1, 2012. The Company anticipates that the adoption of this standard will not change the presentation of its consolidated financial statements.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold">Note 3 – <font style="DISPLAY:inline; TEXT-DECORATION:underline">INVENTORY</font></font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"> <div align="center"> </div></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25">The inventory consists of the following:<br></br></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25" align="center"> <table width="60%" cellpadding="0" cellspacing="0"> <tr> <td width="36%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">As of </font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">September 30, 2011</font></div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">As of </font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">September 30, 2010</font></div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr> <td width="36%" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="10%" colspan="2" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="10%" colspan="2" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="36%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Raw materials</font></div></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">63,840</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">62,678</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="36%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Packing supplies</font></div></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">18,522</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">33,325</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="36%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Work-in-process</font></div></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">22,940</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="36%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Finished goods</font></div></td> <td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">6,037</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">97,630</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="36%" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="36%" style="PADDING-BOTTOM:4px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Total</font></div></td> <td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">111,339</font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">193,633</font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr></table></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25" align="center"> </div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">Inventories are stated at the lower of cost or market. Management compares the cost of inventory with the market value and an allowance is made for writing down the inventory to its market value, if lower. No allowance for inventories was made for the years ended September 30, 2011 and 2010.</font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline; FONT-WEIGHT:bold">Note 4–</font> <font style="DISPLAY:inline; FONT-WEIGHT:bold; TEXT-DECORATION:underline">PROPERTY, PLANT AND EQUIPMENT</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">The property, plant and equipment consist of the following:</font></div><div> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt; TEXT-ALIGN:left"><div align="center"><table width="60%" cellpadding="0" cellspacing="0"><tr><td width="36%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline">  </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">As of</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline"> September 30, 2011</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">As of </font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">September 30, 2010</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr><td width="36%" valign="bottom"><font style="DISPLAY:inline">  </font></td><td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="10%" colspan="2" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="10%" colspan="2" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="36%" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Machinery & equipment</font></div></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">9,140,703</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">4,759,665</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="white"><td width="36%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Plant & Buildings</font></div></td><td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">12,624,123</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">4,846,581</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="36%" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">     Sub total</font></div></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">21,764,826</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">9,606,246</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="white"><td width="36%" valign="bottom"><font style="DISPLAY:inline">  </font></td><td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="36%" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Less: accumulated depreciation</font></div></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">(1,436,420</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">)</font></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">(1,349,642</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">)</font></td></tr><tr bgcolor="white"><td width="36%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Add: construction in process</font></div></td><td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1,339,223</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">8,773,538</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="36%" valign="bottom"><font style="DISPLAY:inline">  </font></td><td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="white"><td width="36%" style="PADDING-BOTTOM:4px" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Property, plant and equipment</font></div></td><td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">21,667,629</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">17,030,142</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr></table></div><div align="center"> </div></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">Depreciation expense for the years ended September 30, 2011 and 2010 was $656,772 and $685,024, respectively. In December 2011, we fully completed our relocation to our new manufacturing facilities and abandoned operations at the old manufacturing site. In fiscal year 2010, we demolished a portion of landscaping and pavement in order to continue construction of our new manufacturing facilities. Also, we demolished one floor of a building under construction in order to continue the construction of the new manufacturing facility.  Therefore, we recognized an impairment loss from fixed assets of $2,149,611 and $366,642 during the year ended September 30, 2011 and 2010 respectively.</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><br></br></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">The Company has completed construction and began limited production as of January 2, 2012. For the year ended September 30, 2011 and September 30, 2010, the Company has spent a total of $1,339,223 and $8,773,538 on the project, respectively. No interest was capitalized since the Company has financed the entire project on its own and no external loans were used.</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> </div></div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline; FONT-WEIGHT:bold">NOTE 5 - <font style="DISPLAY:inline; TEXT-DECORATION:underline">RELATED PARTY TRANSACTIONS</font></font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The Company periodically has receivables from its affiliates, owned by Mr. Pu Fachun, the single largest shareholder and president of the Company. The Company expects all outstanding amounts due from its affiliates will be repaid and no allowance is considered necessary. The Company also periodically borrows money from its shareholders to finance the operations.</font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">The details of loans to/from related parties are as follows:</font></div> <div> </div> <div> <div align="center"> <table width="60%" cellpadding="0" cellspacing="0"> <tr> <td width="36%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:center" valign="bottom"> <div><font style="DISPLAY:inline; FONT-WEIGHT:bold">As of</font></div> <div><font style="DISPLAY:inline; FONT-WEIGHT:bold"> September 30, 2011</font></div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:center" valign="bottom"> <div><font style="DISPLAY:inline; FONT-WEIGHT:bold">As of </font></div> <div><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="FONT-WEIGHT:bold">September</font> 30, 2010</font></div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr> <td width="36%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="10%" colspan="2" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline; FONT-WEIGHT:bold"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="10%" colspan="2" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline; FONT-WEIGHT:bold"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="36%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">Receivable from Chunfei Daily Chemical</font></font></div></div></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="36%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">Loan to/Receivable from Chunfei Real Estate</font></font></div></div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">337,759</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="36%" style="PADDING-BOTTOM:4px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; FONT-WEIGHT:bold">Total loan to Related Parties</font></font></div></div></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">337,759</font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="36%" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="36%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">Short term loan From Chunfei Real Estate and Zhang Lizi</font></font></div></div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">1,399,255</font></font></div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td></tr> <tr bgcolor="white"> <td width="36%" style="PADDING-BOTTOM:4px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; FONT-WEIGHT:bold">Total Due to Related Parties-short term</font></font></div></div></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">1,399,255</font></font></div></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="36%" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="36%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">Loan From Chunfei Real Estate (long term)</font></font></div></div></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">55,486</font></font></div></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">52,942</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="36%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">Loan From Chunfei Daily Chemical</font></font></div></div></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">275,270</font></font></div></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">281,893</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="36%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">Loan From Pu, Fachun (shareholder)</font></font></div></div></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">1,442,237</font></font></div></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">437,891</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="36%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">Loan From other officer and employee</font></font></div></div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">8,616</font></font></div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">8,220</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="36%" style="PADDING-BOTTOM:4px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; FONT-WEIGHT:bold">Total Due to Related Parties-Long term</font></font></div></div></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"></font> <div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">1,781,609</font></font></div></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">780,946</font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr></table></div> <div align="center"> </div></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">Sichuan Chunfei Daily Chemicals Co. Ltd (“Daily Chemical”) and Sichuan Chunfei Real Estate are owned by Mr. Pu Fachun, the single largest shareholder and president of the Company. The loans from Mr. Pu and Daily Chemical bear no interest and are due in 2014 and December 2013, respectively. Zhang Lizi is the wife of Pu Fachun, the single largest shareholder and president of the Company.</font></font></div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold">NOTE 6 - <font style="DISPLAY:inline; TEXT-DECORATION:underline">LAND USE RIGHT</font></font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">All land in the People’s Republic of China is government owned and cannot be sold to any individual or company. However, the government grants the user a “land use right” (the Right) to use the land. The land use right was originally acquired by one of the Company’s shareholders in September 2000 for the amount of $833,686 and later was transferred to the Company as a capital investment. In the fiscal year 2008, the Company paid the stamp tax amounted to $69,539 to get the certificate of the land use right, which was capitalized as part of the asset. The Company has the right to use the land for 50 years and amortized the Right on a straight-line basis over the period of 50 years. As of September 30, 2011 and 2010, intangible assets consist of the following: </font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div align="center"> <table width="60%" cellpadding="0" cellspacing="0"> <tr> <td width="36%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">2011</font></div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">2010</font></div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="36%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Land use rights</font></div></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1,158,082</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1,104,973</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="36%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Less: accumulated amortization</font></div></td> <td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">(129,607</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">)</font></td> <td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">(98,908</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">)</font></td></tr> <tr bgcolor="#cceeff"> <td width="36%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="36%" style="PADDING-BOTTOM:4px" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1,028,475</font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1,006,065</font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr></table></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The amortization expense from the years ended September 30, 2011 and 2010 was $25,338 and $24,317, respectively.</font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline; FONT-WEIGHT:bold">NOTE 7– <font style="TEXT-DECORATION:underline">TAXES PAYABLE</font></font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">The taxes payable includes the following:</font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div> </div> <div align="center"> <table width="60%" bgcolor="white" cellpadding="0" cellspacing="0"> <tr> <td width="36%" style="PADDING-BOTTOM:2px" valign="bottom"> </td> <td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td> <td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:center" valign="bottom"> <div>As of </div> <div>September 30, 2011</div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td> <td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td> <td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:center" valign="bottom"> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; TEXT-ALIGN:center"><font style="DISPLAY:inline">As of </font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; TEXT-ALIGN:center"><font style="DISPLAY:inline">September 30, 2010</font></div></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"> <td width="36%" valign="bottom">Corporate income tax payable</td> <td width="1%" valign="bottom"> </td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom">112,310</td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td> <td width="1%" valign="bottom"> </td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom">367,172</td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr> <tr bgcolor="white"> <td width="36%" valign="bottom"> <div>Value-added tax payable (recoverable)</div></td> <td width="1%" valign="bottom"> </td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom">(15,038</td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom">)</td> <td width="1%" valign="bottom"> </td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom">98,435</td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"> <td width="36%" style="PADDING-BOTTOM:2px" valign="bottom">others</td> <td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"> </td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom">86</td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td> <td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"> </td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom">4,714</td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td></tr> <tr bgcolor="white"> <td width="36%" valign="bottom"> </td> <td width="1%" valign="bottom"> </td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"> </td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td> <td width="1%" valign="bottom"> </td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"> </td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"> <td width="36%" style="PADDING-BOTTOM:4px" valign="bottom">Total tax payable</td> <td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"> </td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"> </td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom">97,358</td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"> </td> <td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"> </td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"> </td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom">470,321</td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"> </td></tr></table></div> <div> </div> <div> </div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold">NOTE 8 <font style="DISPLAY:inline">–</font><font style="DISPLAY:inline"> <font style="TEXT-DECORATION:underline">SHORT TERM AND LONG-TERM LOANS</font></font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">The short term and long-term loans include the following:</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><div align="center"><table width="80%" cellpadding="0" cellspacing="0"><tr><td width="56%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline">  </font></td><td width="2%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:center" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt; TEXT-ALIGN:center"><font style="DISPLAY:inline">As of </font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt; TEXT-ALIGN:center"><font style="DISPLAY:inline">September 30, 2011</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:center" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt; TEXT-ALIGN:center"><font style="DISPLAY:inline">As of </font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt; TEXT-ALIGN:center"><font style="DISPLAY:inline">September 30, 2010</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr><td width="56%" valign="bottom"><font style="DISPLAY:inline">  </font></td><td width="2%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="56%" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">a) Loan payable to Nanchong City Bureau of Finance </font>due on demand, a  fixed interest rate of 0.465% per month</font></div></div></td><td width="2%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">626,537</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">597,804</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="white"><td width="56%" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">b) Loan payable to Bank of Nanchong </font>due on December 22, 2011, at fixed interest rate of 0.463% per month</font></div></div></td><td width="2%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">783,171</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="56%" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">c) Individual loans from various investors (see note 12-B)</font></div></td><td width="2%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">100,000</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="white"><td width="56%" align="left" valign="bottom"><font style="DISPLAY:inline">d) <font style="DISPLAY:inline">Individual loans from unrelated parties, which were converted into equity in November 2011 (see Note 16)</font></font></td><td width="2%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1,253,917</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="56%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">e) Individual loans from unrelated parties </font>bearing no interest, maturing in 2012</font></div></div></td><td width="2%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">469,903</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="white"><td width="56%" style="PADDING-BOTTOM:4px" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">            Total short term loan</font></div></td><td width="2%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">3,233,528</font></font></div></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">597,804</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="56%" valign="bottom"><font style="DISPLAY:inline">  </font></td><td width="2%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="white"><td width="56%" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">a) Individual loans from unrelated parties</font> bearing no interest, maturing in 2012</font></div></div></td><td width="2%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">410,289</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="56%" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">b) Individual loans from unrelated parties </font>bearing no interest, maturing in 2013 and 2014</font></div></div></td><td width="2%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">430,009</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1,560,267</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="white"><td width="56%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">c) Individual loans from unrelated parties </font>annual interest of 3%, due in August 2013</font></div></div></td><td width="2%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">117,476</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="56%" style="PADDING-BOTTOM:4px" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">            Total long term loan</font></div></td><td width="2%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">547,485</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="2%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1,970,556</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr></table></div><div align="center"> </div></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">The Company accrued interest expense of $107,001 and $32,766 for years ended September 30, 2011 and 2010, respectively.  The loan from the Bank of Nanchong was secured by the land use right and guaranteed by the Company’s CEO and his wife.</font></font></div></div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline; FONT-WEIGHT:bold">NOTE 9 – <font style="DISPLAY:inline; TEXT-DECORATION:underline">CONSTRUCTION SECURITY DEPOSITS</font></font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The Company requires security deposits from its plant and building contractors prior to start of the construction. The deposits are to be refunded upon officially certified completion of the works within the specified time. The purpose of the security deposits is to protect the Company from unexpected delays and poor construction quality.</font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The Company offers no interest on the security deposits. As of September 30, 2011 and 2010, the balance of the construction security deposits was $88,547 and $1,241,935, respectively.</font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"> </div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">The remaining balance of $88,547 as of September 30, 2011 will be returned in fiscal year 2012 when construction is expected to be fully completed.</font></div></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline; FONT-WEIGHT:bold">NOTE 10 – <font style="DISPLAY:inline; TEXT-DECORATION:underline">INCOME TAXES</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The Company’s subsidiaries are governed by the Income Tax Law of the People’s Republic of China. Chunfei Chemical is a foreign invested entity located in western China, which enjoyed a tax holiday of 10% deduction from 2007 to 2011. Nanchong Chunfei was taxed at 12.5% from 2009 to 2011, which was approved by the local tax authority. Hedi Medicines was taxed at the 25% statutory rate.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the years ended September 30, 2011 and 2010:</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"> </div><div align="center"><table width="60%" cellpadding="0" cellspacing="0"><tr><td width="37%" colspan="2" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="22%" colspan="6" style="TEXT-ALIGN:center" valign="bottom"><font style="DISPLAY:inline"> For the year ended September 30</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr><td width="36%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">2011</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">2010</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="36%" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">US statutory income tax rate</font></div></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">35.00</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">%</font></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">35.00</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">%</font></td></tr><tr bgcolor="white"><td width="36%" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Foreign income not taxed in US</font></div></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-35.00</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">%</font></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-35.00</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">%</font></td></tr><tr bgcolor="#cceeff"><td width="36%" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">China Income tax statutory rate</font></div></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">25.00</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">%</font></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">25.00</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">%</font></td></tr><tr bgcolor="white"><td width="36%" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Income tax exemption</font></div></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-10.7</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">%</font></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-18.20</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">%</font></td></tr><tr bgcolor="#cceeff"><td width="36%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">Permanent differences</font></font></div></div></td><td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">-1.0</font></font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">%</font></td><td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><font style="DISPLAY:inline">-27.95</font></font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">%</font></td></tr><tr bgcolor="white"><td width="36%" style="PADDING-BOTTOM:4px" align="left" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Effective rate</font></div></td><td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">13.4</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">%</font></td><td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-21.14</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">%</font></td></tr></table></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Permanent differences represent fixed assets impairment losses and other losses that are not recognized by local tax authorities and the U.S. parent company's unrealized gain that is not subject to U.S. income tax and could not be offset by loss incurred by other subsidiaries.</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"> </div></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The Company incurred a net operating loss for U.S. income tax purposes for the years ended September 30, 2011 and 2010. The net operating loss carry forwards, including share-based compensation, for United States income tax purposes amounted to $1,881,776 and $ 1,192,866 for the years ended September 30, 2011 and 2010, respectively, which may be available to reduce future years' taxable income. These carry forwards will expire, if not utilized, beginning in 2029 through 2031. Management believes that the realization of the benefits arising from these losses appear to be uncertain due to the Company's business operations being primarily conducted in China and foreign income not recognized in the US for United States income tax purposes. Accordingly, the Company has provided a 100% valuation allowance at September 30, 2011 and 2010, respectively for the temporary difference related to the loss carry-forwards. The valuation allowances for the years ended September 30, 2011 and 2010 were $658,621 and $417,503, respectively.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The following table reconciles the changes of deferred tax assets for the years ended September 30, 2011 and 2010:</font></div><div> </div><div align="center"><table width="60%" bgcolor="white" cellpadding="0" cellspacing="0"><tr><td width="36%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:center" valign="bottom"><div>As of </div><div>September 30, 2011</div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:center" valign="bottom"><div>As of </div><div>September 30, 2010</div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="#cceeff"><td width="36%" valign="bottom">Deferred tax assets beginning</td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">417,503</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">178,007</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="white"><td width="36%" valign="bottom">Addition: loss carry forward</td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">241,119</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">239,496</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="#cceeff"><td width="36%" valign="bottom">Valuation allowance-beginning</td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">417,503</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">178,007</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="white"><td width="36%" style="PADDING-BOTTOM:2px" valign="bottom">Additions valuation allowance.</td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom">241,119</td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom">239,496</td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="#cceeff"><td width="36%" valign="bottom"> </td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="white"><td width="36%" style="PADDING-BOTTOM:4px" valign="bottom"> Deferred tax assets - net</td><td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom">- </td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom">- </td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"> </td></tr></table></div><div align="center"> </div><div align="center"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline; BACKGROUND-COLOR:#ffffff"><font style="DISPLAY:inline"><font style="DISPLAY:inline; BACKGROUND-COLOR:#ffffff">The Company’s open tax years for its federal and state income tax returns are for the tax years after 2008. These tax returns are subject to examination by the tax authorities.</font></font></font></font></div></div></div></div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold">NOTE 11 </font><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline">– <font style="TEXT-DECORATION:underline">CONCENTRATION OF RISKS</font></font></font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Two major customers accounted for approximately 76% of the net revenue for the year ended September 30, 2011, with each customer individually accounting for 44% and 32%, respectively. Two major customers accounted for approximately 77% of the net revenue for the year ended September 30, 2010, with each customer individually accounting for 35% and 42%, respectively.</font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline"></font> </div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">One major vendor provided approximately 99% and 98% of the Company’s purchases of raw materials for the year ended September 30, 2011 and 2010, respectively.</font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="justify"> </div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">None of the vendors or customers mentioned above is a related party to the Company.</font></div></div>
<!--egx--><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; FONT-STYLE:normal">NOTE 12 – <font style="TEXT-DECORATION:underline">STOCKHOLDERS’ EQUITY</font></font></font></div></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">A. Stock issued for consulting services</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">FY 2010:</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><br></br></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">On March 4, 2010, 47,786 shares of restricted common stock were issued as partial compensation to one director and one officer for certain consulting services provided to the Company.  A total of $57,343, which represents the aggregate fair value of the shares issued in excess of par value, was included in additional paid-in capital. The full amount was expensed and included in the Statement of Operations as a part of general and administrative expenses.</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><br></br></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">On April 8, 2010, 60,000 shares of restricted common stock were issued to an investor relations company as compensation for the service rendered to the Company. A total of $90,000, which represents the aggregate fair value of the shares issued in excess of par value, was included in additional paid-in capital. The full amount was expensed and included in the Statement of Operations as a part of general and administrative expenses.</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><br></br></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">On April 29, 2010, 13,514 shares of restricted common stock were issued to the Company’s independent director and audit committee chairman as compensation for service rendered to the Company from April to October 2010. A total of $22,298, which represents the aggregate fair value of the shares issued in excess of par value, was included in additional paid-in capital. The full amount was expensed and included in the Statements of Operations as a part of general and administrative expenses.</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><br></br></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">FY 2011:</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><br></br></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">In October, 2010, 10,256 shares of restricted common stock were issued to the Company’s independent director and audit committee chairman as compensation for service rendered to the Company from October 2010 to April 2011. A total of $20,000, which represents the fair value of the service, was included in common stock and additional paid-in capital. $20,000 was expensed and included in the Statements of Operations as a part of general and administrative expenses.</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"> </div></div></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">In October, 2010, 15,000 shares of restricted common stock were issued as partial compensation to a consultant for services provided to the Company for the year ended September 30 2010.  The service was valued at $30,900, which was included in common stock and additional paid-in capital. Accrued expense was reduced by the same amount.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">In October 2010, 60,000 shares were issued to the Company’s investor relation agent for the service from October 2010 to March 2011. A total of $120,000, which represents the fair value of the shares issued, was included in common stock and additional paid-in capital. $120,000 was expensed and included in the Statements of Operations as a part of general and administrative expenses.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">In October 2010, 20,000 shares were issued to a law firm for the service performed for the drafting of a registration statements filing. A total of $40,000 was included in common stock and additional paid-in capital and accrued expense was reduced by the same amount.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">In March 2011, 150,000 shares were issued to a Company’s investor relations agent for service from March 2011 to March 2012. A total of $187,500, which represents the fair value of the shares issued, was included in common stock and additional paid-in capital. $109,375 was expensed and included in the Statements of Operations as a part of general and administrative expenses and $78,125 was recorded in prepaid expense</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">In July 2011, 16,807 shares of restricted common stock were issued to the Company’s independent director and audit committee chairman as compensation for service rendered to the Company from April to October 2011. A total of $20,000, which represents the fair value of the service, was included in common stock and additional paid-in capital. $20,000 was expensed and included in the Statements of Operations as a part of general and administrative expenses.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">B. Stock Purchase Agreement</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">On March 26, 2010, the Company issued 2,100,000 shares of common stock and 2,000,000 Warrants to purchase Common Stock (Series B Warrants) to three accredited institutional funds and an accredited investor for $1,000,000 (the “Investors”). Net proceeds were approximately $870,000, net of issuance costs of approximately $130,000 in cash.  The Stock Purchase Agreement provided the Investors the right, which they exercised on June 10, 2010, to purchase an additional 2,100,000 shares of common stock and 2,000,000 Series B Warrants for an additional $1,000,000. The Series B Warrants allow the holders, prior to March 2013, to purchase up to 4,000,000 shares of common stock from ANNO.  The Series B Warrants may not be exercised if it would result in the holder beneficially owning more than 4.99% of the Company’s outstanding common shares.  Cashless exercise is permitted only if there is no <font style="DISPLAY:inline">effective registration statement permitting resale of the common shares underlying the Series B Warrants.</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">The initial exercise price of the Class B Warrants was $1.50 per share.  However, the Stock Purchase Agreement provided that if the net income (before non-cash items) of ANNO for the year ended September 30, 2010 was less than $4 million or if the net income (before non-cash items) of ANNO for the year ended September 30, 2011 was less than $5 million, then ANNO will issue additional common stock to the Investors in order to reduce their per share purchase price in proportion to the shortfall in net income.    Because the Company’s net income for fiscal year 2010, calculated according to the terms of the Stock Purchase Agreement, was $3,737,593, the Company had an obligation to issue to the investors 259,197 additional shares.  In July 2011 the Company and the investors reached an agreement to settle the obligation by (a) issuing an additional 220,000 shares to the investors and (b) reducing the exercise price of 2,000,000 of the Class B Warrants to $.70 per share and of the other 2,000,000 to $1.00, provided that payment is made in cash (cashless exercise may still occur at an exercise price of $1.50). At the same time the investors made a one year, interest-free loan of $100,000 to the Company (See:  Note 8).  The issuance of the common stock was treated as reallocation of the proceeds from the private placement and had no impact on the Company’s net income.</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline"></font></font> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">The issuance of the common stock was treated as reallocation of the proceeds from the private placement and had no impact on the Company’s net income. 190,000 shares were issued as of September 30, 2011 and 30,000 shares were issued on November 28, 2011. For fiscal year 2011, the Company did not meet the net income target as defined in the private placement agreement.  If the formula in the private placement agreement were strictly adhered to, the Company would be obliged to issue approximately 4 million shares to the investors.  However, since the shortfall in income was a result of the extraordinary circumstance of relocating the manufacturing facilities and temporarily suspending production, the Company believes that strict adherence to that formula is not appropriate. Therefore, the Company will seek to reach a compromise with the investors on the number of common stock to be issued as compensation.</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><font style="DISPLAY:inline"><br></br></font></div></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">C. Loss on Private Placement</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">The exercise price of the Series B Warrants is subject to adjustments in certain circumstances for stock splits, combinations, dividends and distributions, reclassification, exchange or substitution, reorganization, merger, consolidation or sales of assets, issuance of additional shares of common stock or equivalents.   As a result of its interpretation, the Company concluded  that the Series B Warrants and Option to purchase additional common stock and Series B Warrants should be treated as derivative liabilities because the warrants are entitled to a price adjustment provision to allow the exercise price to be reduced in the event the Company issues or sells any additional shares of common stock at a price per share less than the then-applicable exercise price or without consideration, which is typically referred to as a “down-round protection” or “anti-dilution” provision.  The Company uses Level 2 method to measure fair value of its warrant liability .</font></font></div><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The Company calculated the fair value of the Series B Warrants and Option at March 26, 2010 (date of grant) to be $1,830,565 and $3,566,572, respectively, using the Black-Scholes option-pricing model using the following assumptions: risk free rate of return of 1.64%, volatility of 127.39%, dividend yield of 0%, and expected term of 3 years for the warrants and 4 months for the option. The excess of the fair values of the warrants and option over the net proceeds received of $870,000 was charged to loss on private placement in the Statement of Operations.</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline"> </font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">On June 10, 2010, the investors exercised the option granted and purchased an additional 2,100,000 shares of common stock and 2,000,000 Series B Warrants for additional $1,000,000.  </font><font style="DISPLAY:inline">The option was revalued and the change of value compared to that of March 31, 2010 was charged to other expense for the three months ended June 30, 2010. The Company calculated the fair value of the warrants issued at June 10, 2010 (date of grant) to be $3,349,307, using the Black-Scholes option-pricing model using the following assumptions: risk free rate of return of 1.27%, volatility of 129.57%, dividend yield of 0%, and expected term of 3 years for the warrants. The excess of the fair values of the Series B Warrants over the net proceeds received of $919,975 was charged to loss on private placement in the Statement of Operations.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">As of September 30, 2011 and 2010, the fair value of outstanding warrants was $1,545,098 and $5,097,483, respectively. The change in fair value of warrants in the amount of $3,552,385 and $82,389 was recorded as a change of fair value of derivative liabilities in the Statement of Operations.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">During the year ended September 30, 2011 and 2010 the Company’s warrant liability accounts changed as followed: </font></div><div> </div><div align="center"><table width="60%" bgcolor="white" cellpadding="0" cellspacing="0"><tr><td width="88%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="FONT-WEIGHT:bold"> </font></td><td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:center" valign="bottom"><font style="FONT-WEIGHT:bold">Warrant</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="FONT-WEIGHT:bold"> </font></td></tr><tr><td width="88%" valign="bottom">Opening balance</td><td width="1%" valign="bottom"> </td><td width="10%" colspan="2" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="#cceeff"><td width="88%" valign="bottom">Issued in 2010</td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom">$</td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">5,179,872</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="white"><td width="88%" valign="bottom">(Income) Loss included in earnings</td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">(82,389</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom">)</td></tr><tr bgcolor="#cceeff"><td width="88%" style="PADDING-BOTTOM:2px" valign="bottom">Exercised in 2010</td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom">-</td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="white"><td width="88%" valign="bottom">Closing balance 2010</td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">5,097,483</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="#cceeff"><td width="88%" valign="bottom"> </td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="white"><td width="88%" valign="bottom">(Income) Loss included in earnings</td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">(3,551,425</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom">)</td></tr><tr bgcolor="#cceeff"><td width="88%" style="PADDING-BOTTOM:2px" valign="bottom">Exercised in 2011</td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom">-</td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="white"><td width="88%" style="PADDING-BOTTOM:4px" valign="bottom">Closing balance 2011</td><td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom">$</td><td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom">1,546,058</td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"> </td></tr></table></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">The following table summarizes the shares of the Company’s common stock issuable upon exercise of warrants outstanding at September 30, 2010:</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div align="center"><table width="60%" cellpadding="0" cellspacing="0"><tr><td width="42%" colspan="14" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Warrants Outstanding</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="20%" colspan="6" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline"><font style="DISPLAY:inline">Warrants Exercisable</font></font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Range of</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Exercise</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Price</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Number</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Outstanding at</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">September 30,</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">2010</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Weighted</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Average</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Remaining</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Contractual</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Life (Years)</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Weighted</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Average</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Exercise</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Price</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Number</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Exercisable at</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">September 30,</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">2010</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Weighted</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Average</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Exercise</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Price</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.50</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2,000,000</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2.48</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.50</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2,000,000</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.50</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="white"><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.50</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2,000,000</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2.69</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.50</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2,000,000</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.50</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">4,000,000</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2.58</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.50</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">4,000,000</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.50</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr></table></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><font style="DISPLAY:inline">The following table summarizes the shares of the Company’s common stock issuable upon exercise of warrants outstanding at September 30, 2011:</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div align="center"><table width="60%" cellpadding="0" cellspacing="0"><tr><td width="42%" colspan="14" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Warrants Outstanding</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="20%" colspan="6" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Warrants Exercisable</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Range of</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Exercise</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Price</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Number</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Outstanding at</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">September 30,</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">2011</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Weighted</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Average</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Remaining</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Contractual</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Life (Years)</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Weighted</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Average</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Exercise</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Price</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Number</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Exercisable at</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">September 30,</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">2011</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="9%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Weighted</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Average</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Exercise</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">Price</font></div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">0.70</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2,000,000</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.51</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">0.70</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2,000,000</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">0.70</font></td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="white"><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.00</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2,000,000</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.72</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.00</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2,000,000</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.00</font></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr><tr bgcolor="#cceeff"><td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">4,000,000</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.62</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">1.50</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">4,000,000</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"><font style="DISPLAY:inline"> </font></td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td><td width="8%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">0.85</font></td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr></table></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline; TEXT-DECORATION:underline">D.  Stock Options</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">In September 2011, the Company’s board approved the issuance of options to purchase a total of 800,000 shares of common stock to 67 employees. The options have a term of five years and an exercise price of $ 0.10 per share. There is no vesting period for the options. The options are</font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">valued by using the Black-Scholes options-pricing model and the full amount of $319,999 was expensed as general and administrative expense in 2011.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">The following table summarizes the status of options activities as of September 30, 2011:</font></div><div> </div><div align="center"><table width="60%" bgcolor="white" cellpadding="0" cellspacing="0"><tr><td width="24%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"><div style="TEXT-ALIGN:center">Options </div><div style="TEXT-ALIGN:center">Outstanding and</div><div style="TEXT-ALIGN:center"> Exercisable</div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:center" valign="bottom"><div style="TEXT-ALIGN:center">Weighted Average</div><div style="TEXT-ALIGN:center">Exercise Price</div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="10%" colspan="2" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:center" valign="bottom"><div style="TEXT-ALIGN:center">Average </div><div style="TEXT-ALIGN:center">Remaining Life</div><div style="TEXT-ALIGN:center">in Years</div></td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td></tr><tr><td width="24%" valign="bottom">Outstanding October 1, 2010</td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">-</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" valign="bottom"> </td><td width="10%" colspan="2" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" valign="bottom"> </td><td width="10%" colspan="2" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="#cceeff"><td width="24%" valign="bottom">Granted</td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">800,000</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom">$</td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">0.10</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom">5</td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="white"><td width="24%" valign="bottom">Forfeited</td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="TEXT-ALIGN:right" valign="bottom"> </td><td width="1%" style="TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="#cceeff"><td width="24%" style="PADDING-BOTTOM:2px" valign="bottom">Exercised</td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"> </td></tr><tr bgcolor="white"><td width="24%" style="PADDING-BOTTOM:4px" valign="bottom">Outstanding, September 30, 2011</td><td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom">800,00</td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom">$</td><td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom">0.10</td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"> </td><td width="1%" style="PADDING-BOTTOM:4px" valign="bottom"> </td><td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"> </td><td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom">5</td><td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"> </td></tr></table></div><div align="center"> </div><div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold"><font style="DISPLAY:inline">NOTE 13– <font style="TEXT-DECORATION:underline">Earnings (loss) Per Share</font></font></font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">The following is a reconciliation of the basic and diluted earnings (loss) per share computations for the years ended September 30, 2011 and 2010:</font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div align="left"> <table width="100%" cellpadding="0" cellspacing="0"> <tr> <td style="PADDING-BOTTOM:2px" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">2011</font></div></td> <td style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td colspan="2" style="BORDER-BOTTOM:black 2px solid" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="center"><font style="DISPLAY:inline">2010</font></div></td> <td style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="76%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Net income (loss) for basic earnings (loss) per share</font></div></td> <td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">3,376,251</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">(4,582,983</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">)</font></td></tr> <tr bgcolor="white"> <td width="76%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Weighted average shares used in basic computation</font></div></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">31,087,648</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">28,373,412</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="76%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Earnings (loss) per share:</font></div></td> <td width="1%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="76%" style="PADDING-BOTTOM:4px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Basic</font></div></td> <td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">0.11</font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">(0.16</font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">)</font></td></tr> <tr bgcolor="#cceeff"> <td width="76%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="76%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Diluted earnings per share</font></div></td> <td width="1%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="76%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2011</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">2010</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="76%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Net income (loss) for diluted earnings (loss) per share</font></div></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">3,376,251</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">(4,582,983</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">)</font></td></tr> <tr bgcolor="#cceeff"> <td width="76%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Weighted average shares used in basic computation</font></div></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">31,087,648</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">28,373,412</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="76%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Diluted effect of warrants</font></div></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="76%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Diluted effect of Options</font></div></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">38,760</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">-</font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="76%" style="PADDING-BOTTOM:2px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Weighted average shares used in diluted computation</font></div></td> <td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">31,126,408</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:2px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="BORDER-BOTTOM:black 2px solid; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">28,373,412</font></td> <td width="1%" style="PADDING-BOTTOM:2px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="76%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="white"> <td width="76%" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Earnings(loss) per share:</font></div></td> <td width="1%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" align="left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="9%" style="TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td></tr> <tr bgcolor="#cceeff"> <td width="76%" style="PADDING-BOTTOM:4px" align="left" valign="bottom"> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">Diluted</font></div></td> <td width="1%" style="PADDING-BOTTOM:4px" align="right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">0.11</font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline"> </font></td> <td width="1%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">$</font></td> <td width="9%" style="BORDER-BOTTOM:black 4px double; TEXT-ALIGN:right" valign="bottom"><font style="DISPLAY:inline">(0.16</font></td> <td width="1%" style="PADDING-BOTTOM:4px; TEXT-ALIGN:left" valign="bottom"><font style="DISPLAY:inline">)</font></td></tr></table></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"><br></br></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; LINE-HEIGHT:1.25; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline">For the year ended September 30, 2011 and 2010, a total of 4,000,000 warrants have not been included in the calculation of diluted earnings per share because they would have an anti-dilutive effect.</font></div> <div style="DISPLAY:block; TEXT-INDENT:0pt; LINE-HEIGHT:1.25"> </div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline; FONT-WEIGHT:bold">NOTE 16– <font style="DISPLAY:inline; TEXT-DECORATION:underline">Subsequent Events</font></font></font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><br></br></font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">On September 6, 2011, the Company acquired all minority interests in its subsidiaries by agreeing to issue 1,650,636 shares of common stock to the minority interest holders. Thereafter, Nanchong Chunfei, Chunfei Chemicals, and Hedi Medicines became wholly owned subsidiaries of ANNO. These shares were issued to the minority interest holders on November 28, 2011.</font></font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><br></br></font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline"><font style="DISPLAY:inline; BACKGROUND-COLOR:#ffffff">On September 6, 2011, the Company entered into an agreement with Pu Fachun and four other individuals who had loaned a total of $1,869,906 to the Registrant at various times between July 2008 and July 2011. Pursuant to the agreement, the Company satisfied the debts in full by issuing shares of its common stock valued at $.60 per share. A total of 3,116,510 shares were issued related to this debt conversion on November 28, 2011.</font></font></font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline"> </font></font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">On December 8, 2011, the Company announced that it had successfully relocated to its new facility in Nanchong, Sichuan, China. In addition to housing existing equipment and machinery from its previous facility, ANNO’s latest facility also contains new equipment that enables the Company to increase its <font style="DISPLAY:inline; BACKGROUND-COLOR:#ffffff">product diversification capabilities </font>as well as manufacture its new flame retardant additive product. The Company began limited production of its flame retardant additive product on January 2, 2012.</font></font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><br></br></font></div>
<!--egx--><div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-WEIGHT:bold">NOTE 14– <font style="DISPLAY:inline; TEXT-DECORATION:underline">Commitments</font></font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline; FONT-STYLE:italic">Employment Agreements</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">As of May 1, 2008, we entered into indefinite employment agreements with Pu Fachun and Zhang Changlong.  The agreements provide for an annual salary of $10,000 for each year for the term of the agreement with Mr. Pu and an annual salary of $7,500 to Mr. Zhang for the term of the agreement.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline">The agreement provides that the directors’ compensation will be reviewed by the Board of Directors not less frequently than annually, and may be adjusted upward at any time in the sole discretion of the Board of Directors. The directors will be eligible for bonus compensation to be awarded at such times and in such amounts as determined by the board in its sole discretion. The term of each agreement commenced on the effective date of May 1, 2008 and will continue until an event of termination under the agreement, including the following (i) the disability of director, (ii) upon the death of any director, or (ii) upon thirty days’ written notice from either party.</font></div><div style="DISPLAY:block; TEXT-INDENT:0pt"><br></br></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"> <font style="DISPLAY:inline; FONT-STYLE:italic">Remuneration of Directors</font></font></div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"></font> </div><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">The Board of Directors has agreed that it will compensate to Mr. Robert Fanella upon commencement of his service and on each anniversary of his commencement date, with $10,000 cash plus $40,000 in the form of restricted shares of the Company’s common stock, calculated on the average closing price per share for the five (5) trading days preceding and including the date stock is issued. The Board will also compensate to Mr. He Ping, Mr. Lü Shuming, and Mr. Liu Dechun upon commencement of their service and on each anniversary of his commencement date, with $5,000 in cash.</font></font></div></div></div>
<!--egx--><div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline; FONT-WEIGHT:bold">NOTE 15– <font style="DISPLAY:inline; TEXT-DECORATION:underline">Going Concern</font></font></font></div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt" align="justify"><font style="DISPLAY:inline"></font> </div> <div style="DISPLAY:block; MARGIN-LEFT:0pt; TEXT-INDENT:0pt; MARGIN-RIGHT:0pt; TEXT-ALIGN:left" align="left"><font style="DISPLAY:inline"><font style="DISPLAY:inline">As shown in the accompanying financial statements, the Company has negative cash flow for the year ended September 30, 2011 and the Company’s current liabilities exceed its current assets by $5.1 million. In addition, approximately $3.2 million of the Company’s loans will be due in fiscal year 2012. T<font style="DISPLAY:inline">he Company suspended manufacturing operations in May 2011 as part of an effort to relocate the production facilities.</font> The Company resumed limited production on January 2, 2012. The current cash and inventory level will not be sufficient to support the Company’s resumption of its normal operations and repayments of the loans. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company will need additional funds to meet its operating and financing obligations until sufficient cash flows are generated from anticipated production to sustain operations and to fund future development and financing obligations. The Company’s largest shareholder and President, Mr. Pu Fachun has the intention to continue providing necessary funding for the Company’s normal operations. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.</font></font></div> <div><font style="DISPLAY:inline"></font> </div>
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