8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  November 5, 2009 (November 5, 2009]

MD Holdings Corp.

(Exact name of registrant as specified in its charter)

Nevada	333-149013
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Rong Qiao Economic Zone

Fuqing City

Fujian Province

People’s Republic of China

300500

(Address of principal executive offices)

Registrant’s telephone number, including area code: (86-591) 8539-2532

_________

135 Carolstowne Road

Reisterstown, Maryland

21136

(Former Name or Former Address if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act   (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act   (17 CFR 240.13e-4(c))

Item 1.01.   Entry into a Material Definitive Agreement.

See Items 2.01 and 5.01, below, regarding the discussion of the Share Exchange Agreement dated November 5, 2009 (the “Exchange Agreement”) and the Stock Purchase Agreement dated November 5, 2009 (the “Purchase Agreement”). Copies of the Exchange Agreement and the Purchase Agreement are attached hereto as Exhibits 2.1 and 10.6, respectively.

Item 2.01.   Completion of Acquisition or Disposition of Assets.

Except as otherwise indicated by the context, references in this Report to “we”, “us”, “our” or the “Company” are to the consolidated business of Hongkong Chenxin International Development Limited, a Hong Kongcompany (“Chenxin”) and Fuqing Guanwei Plastic Industry Co. Ltd. (“Guanwei”), our wholly-owned subsidiaries, except that references to “our Common Stock”, “our shares of Common Stock” or “our capital stock” or similar terms shall refer to the common stock, par value $0.001 per share, of MD Holdings Corp., a Nevada corporation (“MDHO” or the “Registrant”).  “China” or “PRC” refers to the People’s Republic of China.  References to “RMB” refer to the Chinese Renminbi, the currency of the primary economic environment in which the Company operates.

OVERVIEW

The corporate structure of the Company is illustrated as follows:

MDHO was incorporated in Nevada on December 16, 2006, and has been engaged in the business of mortgage brokerage and providing traditional mortgage services in Maryland and Georgia. MDHO has been a development stage company since its inception, and to date has been unsuccessful in developing a profitable business. Our Common Stock is currently traded on the Over-The-Counter Bulletin Board (“OTCBB”) under the symbol “MDHO”.

On November 5, 2009(the “Closing Date”), MDHO closed a share exchange transaction (the Share Exchange”), described below, pursuant to which MDHO became the 100% parent of Chenxin and assumed the operations of Chenxin and its wholly-owned subsidiary, Guanwei. Guanwei was founded in April 2005 in China and is a manufacturer of recycled plastics products. Chenxin is a holding company incorporated in Hong Kong.Prior to the Share Exchange, Chenxin was 100% owned by Fresh Generation Overseas Limited, a British Virgin Islands company (the “Stockholder”). Immediately prior to the Share Exchange, MDHO was considered a “shell” company with US$170 in assets and a net loss of US$6,898 for the three (3) months ended September 30, 2009.  On the Closing Date, MDHO had liabilities of approximately $15,000.

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Guanwei is principally engaged in the production and distribution of low density polyethylene (LDPE) and other recycled plastics products and is China’s largest manufacturer of LDPE. Based in Fuqing City, in the Fujian Province of China, Guanwei is the only plastic recycler in China to import all of its raw materials (i.e. plastic waste) from Europe (primarily Germany) where the cost of processing plastic waste is significantly higher than in China. The Company’s products are sold to customers in a wide range of industries, including food packaging, shoe manufacturing, architecture and engineering products, industrial equipment and supplies, and chemical and petrochemical manufacturing. Guanwei operates its business in compliance the highest environmental standards in order to meet the stringent requirements of both German and Chinese authorities. In fact, Guanwei is the only Chinese manufacturer to be issued a “Plastics Waste Processing License” by the German Environment Audit Association.

The Company’s corporate offices are located at Rong Qiao Economic Zone, Fuqing City, Fujian Province, People’s Republic of China, 300500.

PRINCIPAL TERMS OF THE EXCHANGE AGREEMENT

On November 5, 2009, MDHO entered into an Exchange Agreement with Chenxin and the Stockholder, pursuant to which MDHO acquired all of the issued and outstanding securities of Chenxin from the Stockholder in exchange for 12 millionnewly-issued shares of our Common Stock. As a result of the Share Exchange,Chenxin became a wholly-owned subsidiary of MDHO. Following the consummation of the Share Exchange on the Closing Date, the Stockholder beneficially owned approximately sixty percent (60%) of the voting capital stock of MDHO. The Share Exchange is intended to constitute a tax-free reorganization pursuant to the provisions of Section 368(a)(1)(B) and/or Section 351 of the Internal Revenue Code of 1986, as amended.

Simultaneously with the filing of this Current Report, we will also file with the U.S. Securities and Exchange Commission (the “SEC”) an Information Statement complying with Rule 14F-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that describes a change in a majority of MDHO’s Board of Directors (the “Board”). That change will occur no earlier than ten (10) days following the date such document is mailed to MDHO's shareholders in connection with the change of control of MDHO described in this Current Report (such date is referred to herein as the “Information Filing Date”). For further detail on the change of control, please see Item 5.02 below.

In the near future, the Company intends to change its corporate name from “MD Holdings Corp.” to “Guanwei Recycling Corp.”

PRINCIPAL TERMS OF THE PURCHASE AGREEMENT

Simultaneously with the consummation of the Share Exchange, Marshall Davis, the principal stockholder at MDHO, entered into a Stock Purchase Agreement (the “Purchase Agreement”) with MDHO, pursuant to which Mr. Davis delivered to MDHO 64,510,540 shares of our Common Stock held by him for cancellation. In consideration for those shares, MDHO transferred to Mr. Davis of all the issued and outstanding capital stock of MD Mortgage Corporation, the wholly-owned subsidiary of MDHO (“MD Mortgage”). MD Mortgage has no operations and nominal assets.

Immediately prior to the Share Exchange, Marshall Davis, the former sole officer and sole director of MDHO, owned 65,625,000 shares of our Common Stock, which constituted 90.50% of the issued and outstanding shares of our Common Stock. Following the consummation of the transactions contemplated by the Purchase Agreement, Mr. Davis owned 1,114,860 shares of our Common Stock, which constitute 5.6% of the issued and outstanding shares of our Common Stock.

DESCRIPTION OF GUANWEI’S BUSINESS

The following is disclosure regarding the Company, including its wholly-owned and sole operating subsidiary,Guanwei, the principal business activities of which consist of the manufacturing and sales of recycled plastic products.

 General Business Overview

Guanwei was founded in China in April 2005 with registered capital of RMB 10 million (approximately US$1.46 million). Since inception, it has been principally engaged in the manufacture and distribution of low density polyethylene (“LDPE”), using imported raw material in the form of plastic waste. On November 22, 2008, Guanwei was acquired by Chenxin and became a wholly-owned by foreign investment enterprise (“WOFIE”) under PRC law. Guanwei is the sole operating subsidiary of Chenxin.

The Company is committed to sourcing and developing innovative ideas and markets for recycled materials, and concentrates on transforming plastic waste into useful plastic grains. Its mission is to be an environmentally conscious, profitable manufacturer of the plastics products of the highest quality. Guanwei procures raw material in the form of unrecycled plastic waste from its suppliers and uses this material to manufacture recycled plastic grains, which are then sold to manufacturers of consumer products in various industries. The Company specializes in the production of various recycled plastics products, the most of important of which is LDPE. In the last four years, the Company has developed four distinct grades of LPDE plastic grains, which are sold to clients to be manufactured into a broad range of end products. The Company currently sells to over 200 customers in more than 10 industries, ranging from food packaging, shoe manufacturing, architecture and engineering, industrial equipment and supplies, and chemical and petrochemical manufacturing. The Company’s LDPE products in particular are widely used in the manufacturing of chemical and functional fibers, and is the main raw material for shoe soles, insulation material, fire-proofing and water-proofing material, and foam.

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Market and Industry

Since 2004, with national production capacity exceeding 20 million tons, China has become the second largest plastics products manufacturing country in the world after the United States, according to the Plastic Industry Statistics & Research Report (2008). China’s plastics industry has benefited greatly from its low production and labor costs, as the manufacturing and recycling of plastics products have been outsourced from higher-cost countries to China and other low-cost countries. The lower production costs have allowed the plastics industry worldwide to experience strong growth in sales over the last several years. In the US and Europe, plastics industries have out-performed overall manufacturing industries and are a strong force in international markets. According to the Plastic Industry Statistics & Research Report (2008), the worldwide average annual growth rate of the plastics industry from 1999 to 2005 was 5.02%, while the average GDP growth rate for the same period was 2.43%.  In China, plastic consumption growth rate from 2001 to 2005 exceeded 19% annually, while the Chinese GDP growth rate averaged 9.5% for the same period.

In particular, China’s plastics industry experienced an annual growth rate of greater than 18% from 1990 to 2001, and in 2008 the growth rate was 11%. According to the Chinese national plastic industry website, www.51pla.com, in 2007, 14,592 Chinese plastic manufacturers realized a total profit of RMB 802 billion (US $110 billion), and 16,300 manufacturers realized a total profit of RMB 964 billion (US $141 billion) in 2008. China consumed more than 50 million tons of plastics in 2008, 24% of which was produced by recycled plastics.  Industry projections from the same website show that accelerating demand for plastic products will push overall production in China to 40 million tons by 2010.

There are seven types of plastic polymers, each with specific properties, which are used worldwide for various packaging applications. Each group of plastic polymers can be identified by its Plastic Identification Code (PIC), which is usually a number or a letter abbreviation. The PIC appears inside a three-chasing arrow recycling symbol. The symbol is used to indicate whether the plastic can be recycled into new products. The PIC identification system was introduced by the Society of the Plastics Industry, Inc., which provides a uniform system for the identification of different polymer types and helps recycling companies to separate different plastics for reprocessing. Manufacturers of plastic products are required to use PIC labels in some countries/regions and can voluntarily mark their products with the PIC where there are no requirements. Consumers can identify the plastic types based on the codes usually found at the base or at the side of the plastic products, including food/chemical packaging and containers.

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The seven types of plastics polymers used in packaging are listed in the chart below, along with a brief description of the properties and common applications of each. A more detailed description of each polymer type follows the chart.

Plastic Identification Code	Type of plastic polymer	Properties	Common Packaging Applications
	Polyethylene Terephthalate (PET, PETE)	Clarity, strength, toughness, barrier to gas and moisture.	Soft drink, water and salad dressing bottles; peanut butter and jam jars
	High Density Polyethylene (HDPE)	Stiffness, strength, toughness, resistance to moisture, permeability to gas.	Milk, juice and water bottles; trash and retail bags.
	Polyvinyl Chloride (PVC)	Versatility, clarity, ease of blending, strength, toughness.	Juice bottles; cling films; PVC piping
	Low Density Polyethylene (LDPE)	Ease of processing, strength, toughness, flexibility, ease of sealing, barrier to moisture.	Frozen food bags; squeezable bottles, e.g. honey, mustard; cling films; flexible container lids.
	Polypropylene (PP)	Strength, toughness, resistance to heat, chemicals, grease and oil, versatile, barrier to moisture.	Reusable microwaveable ware; kitchenware; yogurt containers; margarine tubs; microwaveable disposable take-away containers; disposable cups and plates.

	Polystyrene (PS)	Versatility, clarity, easily formed	Egg cartons; packing peanuts; disposable cups, plates, trays and cutlery; disposable take-away containers;
	Other (often polycarbonate or ABS)	Dependent on polymers or combination of polymers	Beverage bottles; baby milk bottles; electronic casing.

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Polyethylene terephthalate (PET)

PET is among the most-recycled polymers worldwide. Its barrier properties make it the material of choice for mineral water and carbonated drink bottles, and it can be recycled a number of times. The material is also used to make food trays, and is commonly found as a laminate in films. A high proportion of mixed bottles, typically PET combined with HDPE, are exported from China.

High-density polyethylene (HDPE)

HDPE is most commonly used for milk containers.  The Chinese government has set a target that 50% of milk containers must be made of recycled materials by 2020, so the recycling rate of HDPE will likely increase. HDPE is also used for bleach and other cleaning product containers, and is also found in films and some thin-gauge carriers and fresh produce bags. As with PET, price is dictated by quality and markets offer a wide range of prices according to the level of purity of the polymer. HDPE is a versatile polymer that can be manipulated to control transparency.

Polyvinyl chloride (PVC)

PVC is a popular polymer for a range of applications, including food packaging, where it is found in some thermoformed trays. It is also used in the manufacture of plastic wrapping film. PVC can contaminate some PET products, however, which impedes the collection and thus the recycling of PET. Through the introduction of reclamation facilities that focus solely on plastics and recycling plastic products, more color and polymer separation is possible, which would help develop the rates of recycling of all polymers, including PVC.

Low-density polyethylene (LDPE)

LDPE is used in food trays, but a more common application is in wrapping films and bags because it is very flexible. It is easily cleaned, has strong impact resistance and is unreactive at room temperature in the absence of a strong oxidizing agent. LDPE can withstand moderately high temperatures, does not absorb moisture and is chemical and corrosion resistant. LDPE’s tensile force is lower than that of HDPE and its resilience is higher. The collection of LDPE is particularly challenging given the relatively low-value of its end products, which can make the recycling of LDPE less cost-efficient, so its recycling rates are lower than other polymers.

Polypropylene (PP)

PP comprises a large proportion of mixed plastics products that are recycled for collection, other than plastic bottles. PP is widely used in packaging in food containers and trays, screw tops and as a film. It can be easily recovered and recycled into a wide range of applications.  Its recycling rates are typically quite high.

 Polystyrene (PS)

PS is found in yogurt containers and food trays, and in its expanded form, in protective packaging and hot drinks cups. Research has shown that PS comprises a small part of the waste stream, but as with other rigid packaging plastics, it is likely to form part of future mixed plastics recycling trials, which focus on new ways to recycle and to enhance the collection of recyclable products.

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Recycling Awareness

There is a growing awareness in the global economy about issues surrounding waste management, and recycling processes and recycled products are being developed to address these issues. The advantages of recycling waste material, much of which consists of metal, paper, glass and plastic packaging, are being increasingly recognized by the global community.  The environmental benefits of recycled plastics products are well known, and in addition, our management experience indicates that recycled plastics can be 40% cheaper than virgin polymers. Recycling rates in China vary among the different polymer types, but the overall trend for each polymer type is increasing.

Currently, most of the recycled plastics products manufactured in China use imported raw material in the form of plastic waste.  There is great opportunity to further develop the plastics recycling market in China by relying on domestic suppliers of raw material.  According to the Plastics Industry Statistics & Research Report (2008), in 2007, only approximately 14 million tons, or 24% of the total amount of plastic being consumed in China was recycled.  The total value of the unrecycled plastic waste in Chinais currently estimated to exceed RMB 28 billion (approximately US$ 4.1 billion) per year.

Guanwei’s Recycling Process

Guanwei’s plastics recycling process begins with procuring raw material, which it sources primarily from Europe - particularly from Germany.  All the raw material the Company purchases is previously unrecycled plastic waste, making it a strong plastic that is most suitable in the manufacturing of Guanwei’s plastic grains.  The Company does not procure plastic waste from China because most of the plastic waste available domestically has already been recycled, and it therefore has a lower tensile force.

The raw material is shipped directly from the supplier to Guanwei’s 60,000 square meter raw material storage and manufacturing plant in special containers which are approved by the Chinese government. Once in Guanwei’s facility, the plastic waste is then classified and sorted by hand based on polymer type and color.  Guanwei has over 150 workshop employees who help sort raw material and who are paid per piece in order to increase productivity.  Guanwei focuses on recycling of LDPE products, so the non-LDPE materials are sorted out first, which accounts for approximately 8% of the raw material. This non-LDPE material is packed and sold to manufacturers who specialize in plastic production using the respective materials.

After the LDPE material is sorted by color, it is sent to the smashing workshop, where it is smashed and cut into pieces by one of Guanwei’s eight smashing machines. The material is then washed and cleaned at least two to three times in order to eliminate impurities. This enhances the whiteness of the material, which results in a higher grade end-product. Once washed, the material is packed into square containers and sent to the plastic grain manufacturing area of the workshop, where there are 32 plastic grain machines. The material is fed into the grain machines, which break down the material and form it into small grains of recycled plastic, which are then sold to consumers in various manufacturing industries.

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The waste water from the washing process is treated in Guanwei’s sewage treatment area, which comprises over 4,800 square meters. The water is discharged into rectangular sediment pools through a fence, which eliminates any large pieces of waste. Most of the inorganic suspended particles and insoluble organic material are separated out in the sedimentation pool.  Each sediment pool has a sewage pumps for condensing the inorganic material into sludge, which is then dried and used as compost.  The waste water is then run through a reaction pool, where the coagulant agents PAC and PAM are added. The water is then processed again in the sediment pool before it is sand filtered and run back to the workshop for re-use.

In 2008, Guanwei’s production yield, which is the amount of granular plastic end-product produced per ton of raw material, was approximately 72%. The Company expects that yield to increase to over 75% as production processes and techniques improve.

Products

Guanwei currently manufactures a number of recycled plastics products made from LDPE, and is the largest manufacturer of recycled LDPE in China. LDPE is easily processed and is defined by a density range of 0.910-0.940 g/cm3.  It is moisture resistant and can withstand continuous temperatures of 175°F, and can withstand temperatures of nearly 200° F for short periods of time. LDPE is chemical and corrosion resistant.  It has high resilience and low density, making it an extremely light weight and flexible plastic. It also meets food handling guidelines and is easily cleaned, and therefore it is ideal for food packaging, wraps and films.

LPDE can be produced in both translucent or opaque varieties, and the principal difference between virgin LPDE and recycled LPDE is that recycled LDPE cannot be completely transparent. Some manufacturers have strict color requirements, so they will not purchase recycled LPDE. However, recycled LPDE is attractive to manufacturers without color requirements, as the virgin plastic selling price in China is can be as high as RMB 4000 (US$585) per ton higher than recycled LDPE.

Guanwei produces four types of LDPE plastic grains. The grade is determined by the color of the plastic grain, with higher grade denoting that the grain is whiter. Higher grade plastic grains are more expensive.

¨	Grade A	This is a white LDPE grain and accounts for approximately 30% of Guanwei’s sales.
¨	Grade B	This is a white LDPE grain and accounts for approximately 20% of Guanwei’s sales.
¨	Grade C	This is a white LDPE grain and accounts for approximately 20% of Guanwei’s sales.
¨	Grade D	This is a black LDPE grain and accounts for approximately 30% of Guanwei’s sales.

Currently, the demand for Guanwei’s products exceeds the amount Guanwei is able to produce. Therefore, Guanwei does not currently have any plans to develop new products.  However, the Company intends to enhance its manufacturing process and increase its training of more skilled workers, and thereby increase productivity.

All of Guanwei’s products are manufactured in its 60,000 square meter warehouse and manufacturing facility located in Fuqing City. The Company has a sewage treatment area for processing the waste water used in the manufacturing process, which exceeds 4800 square meters.

Raw Materials and Major Suppliers

Because an important step in the recycling of plastic waste is sorting and classifying the raw material, Guanwei obtains all of its raw material from foreign suppliers (primarily in Europe), where it can obtain raw material which consists solely of unrecycled plastic, and where the sorting and classification techniques are superior to those used in China. Guanwei’s five primary suppliers are located in Europe and the Company has one wholesaler in Hong Kong from which it also purchases some raw material. Guanwei is one of the few plastics importer-manufacturers in China with a compliance certificate from the German Environment Auditor for meeting certain minimum emissions standards, which allows Guanwei access to German suppliers. Guanwei does not have any long-term contracts with its suppliers, but rather purchases raw materials on a purchase order basis at prevailing market prices.

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The raw materials are transported to the port of Jiangyin in China by ocean freighters. As the importer of the raw materials, Guanwei covers the cost of shipping from the supplier to Guanwei’s facility. Each imported container weighs about 20 tons, and shipping costs between US $500-$800, including insurance. The raw materials are then transported from the port in Jiangyin to the Company’s facility by truck at a cost of approximately US $87 per container. Each container is subject to an import tax imposed by the Chinese government of 6%, which is down from 7.5% in 2008, and is also subject to a value-added tax of 17%.

Importers of plastic waste into the PRC are subject to an import quota regulated by the Ministry of Environmental Protection. Guanwei has been approved for an import quota of 24,000 tons of plastic waste per year, and for a number of years, Guanwei has also been permitted to use of the 35,000 tons per year import quota granted to Fuqing Huan Li Plastics Company Limited (“Huan Li”). Huan Li has not had any significant operations since 2005, but its import quota remains valid. Chen Min, our Chief Executive Officer, is a director of Huan Li.

Although Guanwei has not previously experienced difficulties receving permission from Huan Li to use its import quota, there can be no guarantee that the import quota will be available to Guanwei in the future as Huan Li can rescind its permission at any time. The unavailability of Huan Li’s import quota could have a material and adverse effect on Guanwei’s business, financial condition and results of operations. Without the import quota Guanwei would have to purchase domestically supplied plastic waste, which would increase production costs, as domestic plastic waste is often poorly sorted. Additionally, domestic plastic waste could negatively impact the quality of Guanwei’s products because most of it has already been recycled, and it therefore has a lower tensile force.

As Huan Li has no material operations, Guanwei could apply for official transfer of Huan Li’s import quota to Guanwei. As Guanwei’s operations expand, it intends to apply for an increase in its import quota, which is subject to review by the Ministry of Environmental Protection on an annual basis.

Product Sales, Distribution and Marketing

Guanwei has a sales team of six people, led by Mr. Gao Juguang, an industry veteran with over 15 years of plastic sales experience.  The Company is focused on diversifying its client base and increasing its sales volume to the infrastructure-building industry.  Mr. Gao and the sales team work toward these goals by developing new client relationships through site visits, personal telephone calls and presentations and presenting product samples to the potential customers. Guanwei also relies on word-of-mouth to strengthen its reputation and secure sales from local customers. Due to its product quality and reputation, Guanwei has experienced a great deal of success securing regular customers after their first usage of the products.

Guanwei sells its products directly to end-users of the plastic grains, many of whom contact Guanwei directly for pricing quotes. The Company does not advertise or promote its products heavily, as the demand for the products currently exceeds supply.  The Fujian Province, where Guanwei’s manufacturing facilities are located, is one of the largest shoe-manufacturing bases in China. Guanwei sells between 30% to 50% of its product to these shoe manufacturers, many of whom are located within 200 km of Guanwei’s facilities. The cost savings resulting from importing raw materials directly from foreign suppliers and not using distributors or wholesalers means that Guanwei’s selling prices are very competitive.

 All of Guanwei’s customers pre-pay for the products they purchase and the price includes all all shipping and transportation costs. Guanwei typically sells its products on a purchase order basis, but occassionally enters into one-year supply agreements with customers. The purpose of such agreements is to set the prices at which products are to be sold to such customers during the following year. The customer base is spread across different geographic markets and different industries, such as shoe manufacturing, food packaging, construction material manufacturing (such as fire- and water-proofing material, plastic pipes), and outdoor furniture manufacturing.  No single customer represents over five percent of sales volume or net revenue. Guanwei does not foresee any difficulties in sales as it is well-insulated against fluctuating demands in any one industry.

Competition

Guanwei has several competitive advantages over its competitors, including the following:

Experienced management team

Guanwei’s senior management team has extensive business and industry experience, which has been instrumental in the development of Guanwei’s strong supplier and customer relationships and manufacturing processes. For additional information regarding Guanwei’s management team, please see the description of directors and management later in this Current Report.

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Well-established manufacturing capabilities

In China, the vast majority of plastic recycling companies are small-scale craftsmen shops lacking the capacity to properly process raw materials, deal with sewage treatment issues and meet required environmental standards.  In comparison, Guanwei has a large, 60,000 square meter warehouse and manufacturing facility in which it produces various plastics products, and also has a sewage treatment facility that is able to filter and process the waste products resulting from the manufacturing. Guanwei’s two main Chinese competitors are Fujian Huaxia Plastics Corp. and Youfeng Plastics Corp., each of which produce about 20,000 tons per year of recycled plastic products.  Comparatively, Guanwei’s production capacity is 50,000 tons annually.  In 2008, over 30,600 tons of plastic waste was processed into 23,350 tons of recycled LDPE for sale by Guanwei. Additionally, production costs for both of these companies are higher than Guanwei’s because they purchase their raw materials from wholesalers in Hong Kong, whereas Guanwei imports almost all of its raw materials directly from suppliers. Furthermore, Guanwei is the only LDPE importer in China with manufacturing capabilities, and the only plastics manufacturer in China which has obtained the “Plastics Waste Processing License,” issued by German Environment Audit Association, as discussed further below.

Steady supply of imported raw material and no middleman

Guanwei is a forerunner among imported plastic waste processors and plastic material manufacturers. It has a steady supply of raw material from suppliers located throughout Europe and elsewhere outside China. The imported raw material is of a high quality, allowing Guanwei to benefit from efficiencies in the manufacturing of its products. Additionally, Guanwei imports the raw material directly, which cuts costs that would otherwise be paid to an importer, and Guanwei is located near a major port, so freight costs are kept low.

Broad range of end-users

The Company sells its plastics products to over 200 customers in over 10 industries. Its products are used to produce a wide variety of end products, including shoe soles, food packaging containers, and construction equipment, an industry the Company is focusing on expanding into further as the Chinese government’s stimulus plan has substantially increased infrastructure construction in China.  Because the Company’s client base is so diverse, the Company is insulated from fluctuating market demands in any one industry.

Only importer-manufacturer in China with a Certificate of Approval from the German Environment Auditor

The German Environment Auditor provides certificates of approval for certain plastics manufacturers which meet the Auditor’s environmental standards.  Manufacturers are subject to inspections relating to air, water and noise discharge. German suppliers are only allowed to sell plastics waste to manufacturers who have this certificate. Guanwei is currently the only Chinese importer and manufacturer with this certificate.

Employees

Guanwei currently has 600 full-time employees working in the workshops, and 20 employees in management positions.

Costs and Effects of Compliance with Environmental Laws

Currently, Guanwei’s manufacturing processes are in compliance with all Chinese laws and environmental standards.

Research and Development

Guanwei does not currently have plans to develop new products because the demand for LDPE plastic grains already exceeds our manufacturing capabilities. Guanwei is in the process of improving its processes by testing the addition of Ethylene-Propylene-Diene Monomer (EPDM), a cleaning solvent, during the smashing and cleaning stage in order to improve the cleanliness of the end product and Guanwei’s production margins. There are nominal costs associated with the Company’s research and development.

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RISK FACTORS

The financial condition, business, operations, and prospects of the Company involve a high degree of risk. You should carefully consider the risks and uncertainties described below, which constitute the material risks relating to the Company, and the other information in this Current Report. If any of the following risks are realized, the Company’s business, operating results and financial condition could be harmed and the value of the Company’s stock could suffer. This means that investors and stockholders of the Company could lose all or a part of their investment.

RISKS RELATING TO THE PEOPLE’S REPUBLIC OF CHINA

The operations of Guanwei, our sole operating subsidiary, are wholly conducted in the People’s Republic of China (“China” or “PRC”). Accordingly, its businesses, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC and by the general state of the PRC economy.

Certain Political and Economic Considerations Relating to China Could Adversely Affect Our Company.

The PRC is transitioning from a planned economy to a market economy. While the PRC government has pursued economic reforms since its adoption of the open-door policy in 1978, a large portion of the PRC economy is still operating under five-year plans and annual state plans. Through these plans and other economic measures, such as control on foreign exchange, taxation and restrictions on foreign participation in the domestic market of various industries, the PRC government exerts considerable direct and indirect influence on the economy. Many of the economic reforms carried out by the PRC government are unprecedented or experimental, and are expected to be refined and improved.

Other political, economic and social factors can also lead to further readjustment of such reforms. This refining and readjustment process may not necessarily have a positive effect on our operations or future business development. Our operating results may be adversely affected by changes in the PRC’s economic and social conditions as well as by changes in the policies of the PRC government, such as changes in laws and regulations (or the official interpretation thereof), measures which may be introduced to control inflation, changes in the interest rate or method of taxation, and the imposition of additional restrictions on currency conversion.

The Chinese Government Exerts Substantial Influence Over The Manner In Which We Must Conduct Our Business Activities Which Could Adversely Affect Our Company.

China only recently has permitted provincial and local economic autonomy and private economic activities. The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and State ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in China.

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The Chinese Legal System Has Inherent Uncertainties That Could Limit The Legal Protections Available To You.

Guanwei’s contractual arrangements in China are governed by the laws of the PRC. China’s legal system is based upon written statutes. Prior court decisions may be cited for reference but are not binding on subsequent cases and have limited value as precedents. Since 1979, the Chinese legislative bodies have promulgated laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations involve uncertainties, and therefore you may not have legal protections for certain matters in China.

Because Our Assets Are Located In China, Any Dividends Of Proceeds From Liquidation Is Subject To The Approval Of The Relevant Chinese Government Agencies.

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

Future Inflation In China May Inhibit Our Activity To Conduct Business In China.

In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation. During the past twenty years, the rate of inflation in China has been as high as 24.1% in 1994 and as low as -1.4% in 1999 (according to National Bureau of Statistics of China). These factors have led to the adoption by Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. While inflation has been more moderate since 1995, high inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China and thereby harm our business operations.

Capital Outflow Policies In China May Hamper Our Ability To Pay Dividends To Stockholders In The United States

The People’s Republic of China has adopted currency and capital transfer regulations. These regulations require that we comply with complex regulations for the movement of capital. Although Chinese governmental policies were introduced in 1996 to allow the convertibility of RMB into foreign currency for current account items, conversion of RMB into foreign exchange for capital items, such as foreign direct investment, loans or securities, requires the approval of the State Administration of Foreign Exchange. We may be unable to obtain all of the required conversion approvals for our operations, and Chinese regulatory authorities may impose greater restrictions on the convertibility of the RMB in the future. Because all of our current revenues and most of our future revenues will be in RMB, any inability to obtain the requisite approvals or any future restrictions on currency exchanges will limit our ability to fund our business activities outside China or to pay dividends to our shareholders.

Currency Conversion And Exchange Rate Volatility Could Adversely Affect Our Financial Condition.

The PRC government imposes control over the conversion of Renminbi into foreign currencies. Under the current unified floating exchange rate system, the People’s Bank of China (PBOC) publishes an exchange rate, which we refer to as the PBOC exchange rate, based on the previous day’s dealings in the inter-bank foreign exchange market. Financial institutions authorized to deal in foreign currency may enter into foreign exchange transactions at exchange rates within an authorized range above or below the PBOC exchange rate according to market conditions.

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Pursuant to the Foreign Exchange Control Regulations of the PRC issued by the State Council which came into effect on April 1, 1996, and the Regulations on the Administration of Foreign Exchange Settlement, Sale and Payment of the PRC which came into effect on July 1, 1996, regarding foreign exchange control, conversion of Renminbi into foreign exchange by Foreign Investment Enterprises (“FIEs”), for use on current account items, including the distribution of dividends and profits to foreign investors, is permissible. FIEs are permitted to convert their after-tax dividends and profits to foreign exchange and remit such foreign exchange to their foreign exchange bank accounts in the PRC. Conversion of Renminbi into foreign currencies for capital account items, including direct investment, loans, and security investment, is still under certain restrictions. On January 14, 1997, the State Council amended the Foreign Exchange Control Regulations and added, among other things, an important provision, which provides that the PRC government shall not impose restrictions on recurring international payments and transfers under current account items.

Enterprises in the PRC (including FIEs) which require foreign exchange for transactions relating to current account items, may, without approval of the State Administration of Foreign Exchange, or SAFE, effect payment from their foreign exchange account or convert and pay at the designated foreign exchange banks by providing valid receipts and proofs.

Convertibility of foreign exchange in respect of capital account items, such as direct investment and capital contribution, is still subject to certain restrictions, and prior approval from the SAFE or its relevant branches must be sought.

Since 1994, the exchange rate for Renminbi against the United States dollars has remained relatively stable, most of the time in the region of approximately RMB8.28 to US$1.00. However, in 2005, the Chinese government announced that would begin pegging the exchange rate of the Chinese Renminbi against a number of currencies, rather than just the U.S. Dollar. As our operations are primarily in China, any significant revaluation of the Renminbi may materially and adversely affect our cash flows, revenues and financial condition. For example, to the extent that we need to convert United States dollars into Renminbi for our operations, appreciation of this currency against the United States dollar could have a material adverse effect on our business, financial condition and results of operations. Conversely, if we decide to convert Renminbi into United States dollars for other business purposes and the United States dollar appreciates against this currency, the United States dollar equivalent of the Renminbi we convert would be reduced.

The Value Of Our Securities Will Be Affected By The Foreign Exchange Rate Between U.S. Dollars And Renminbi.

The value of our Common Stock will be affected by the foreign exchange rate between U.S. dollars and Renminbi, and between those currencies and other currencies in which our sales may be denominated. For example, to the extent that we need to convert U.S. dollars into Renminbi for our operational needs and should the Renminbi appreciate against the U.S. dollar at that time, our financial position, the business of the Company, and the price of our Common Stock may be harmed. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of declaring dividends on our Common Stock or for other business purposes and the U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of our earnings from our China operations would be reduced.

You May Experience Difficulties In Effecting Service Of Legal Process, Enforcing Foreign Judgments Or Bringing Original Actions In China Based On United States Or Other Foreign Laws Against Us.

We conduct our operations in China and most of our assets are located in China. In addition, some of our directors and executive officers reside within China. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon such directors or executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Moreover, our Chinese counsel has advised us that China does not have treaties with the U.S. and many other countries that provide for the reciprocal recognition and enforcement of judgment of courts. As a result, recognition and enforcement in China of judgments of a court of the U.S. or any other jurisdiction in relation to any matter may be difficult or impossible.

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Our Significant Amount Of Deposits In Certain Banks In China May Be At Risk If These Banks Go Bankrupt During Our Deposit Period .

At June 30, 2009, we had approximately US$6,003,535 on deposit with banks in China, which constitutes approximately all of our total cash. The terms of these deposits are, in general, up to twelve (12) months. Historically, deposits in Chinese banks are secure due to the state policy on protecting depositors’ interests. However, China promulgated a new Bankruptcy Law in August 2006, which became effective on June 1, 2007, which contains a separate article expressly stating that the State Council may promulgate implementation measures for the bankruptcy of Chinese banks based on the Bankruptcy Law. Under the new Bankruptcy Law, a Chinese bank may go bankrupt. In addition, since China’s concession to WTO, foreign banks have been gradually permitted to operate in China and have been severe competitors against Chinese banks in many aspects, especially since the opening of Renminbi business to foreign banks in late 2006. Therefore, the risk of bankruptcy of those banks in which we have deposits has increased. In the event of bankruptcy of one of the banks which holds our deposits, we are unlikely to recover our deposits back in full since we are unlikely to be classified as a secured creditor based on PRC laws.

RISKS RELATING TO OUR BUSINESS

We Cannot Predict Whether We Will Meet Internal or External Expectations Of Future Performance.

We believe that our future success depends on our ability to significantly increase revenue fromprocessing recycled plastic wastes. Accordingly, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies with a limited operating history. These risks include our ability to:

¨ develop new and innovative processing methods, including processes which increase production yield;

¨ respond effectively to competitive pressures and address the effects of strategic relationships or corporate combinations;

¨ maintain our current, and develop new, strategic relationships with customers and suppliers;

¨ increase awareness of our products and continue to build customer loyalty; and

¨ attract and retain qualified management, consultants and employees.

We Cannot Assure You That Our Organic Growth Strategy Will Be Successful.

One of our growth strategies is to grow organically through increasing the sale of our products by increasing our output volume and entering new markets in China and internationally. However, many obstacles to increasing our market share and entering such new markets exist, including, but not limited to, costs associated with increasing market share and entering into such markets and attendant marketing efforts. We cannot, therefore, assure you that we will be able to successfully overcome such obstacles and establish our products in any additional markets. Our inability to implement this organic growth strategy successfully may have a negative impact on our ability to grow and on our future financial condition, results of operations or cash flows.

Our Business And Growth Could Suffer If We Are Unable To Hire And Retain Key Personnel That Are In High Demand.

We depend upon the continued contributions of our senior management and other key personnel, including external experts and advisers. The loss of the services of any of our executive officers or other key personnel could have a material adverse effect on our business, operations, revenues or prospects. We do not maintain key man insurance on the lives of these individuals at present. As we plan to expand, we will have to attract managerial staff. We may not be able to identify and retain qualified personnel due to our lack of understanding of different cultures and lack of local contacts. This may impede any potential expansion. Our future success will also depend on our ability to attract and retain highly skilled and qualified technical, engineering, managerial, finance, marketing, security and customer service personnel in China. Qualified individuals are in high demand, and we may not be able to successfully attract, assimilate or retain the personnel we need to succeed.

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We May Not Be Able To Manage Our Expanding Operations Effectively, Which Could Harm Our Business.

We anticipate expanding our business as we address growth in our customer base and market opportunities. In addition, the geographic dispersion of our operations as a result of overall internal growth requires significant management resources that our locally-based competitors do not need to devote to their operations. In order to manage the expected growth of our operations and personnel, we will be required to improve and implement operational and financial systems, procedures and controls, and expand, train and manage our growing employee base. Further, our management will be required to maintain and expand our strategic relationships necessary to our business. We cannot assure you that our current and planned personnel, systems, procedures and controls will be adequate to support our future operations. If we are not successful in establishing, maintaining and managing our personnel, systems, procedures and controls, our business will be materially and adversely affected.

If We Need Additional Capital To Fund Our Growing Operations, We May Not Be Able To Obtain Sufficient Capital And May Be Forced To Limit The Scope Of Our Operations.

We may experience increased capital needs and we may not have enough capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including (i) our profitability; (ii) the success of our competitors; (iii) the amount of our capital expenditures; and (iv) new investments. We cannot assure you that we will be able to obtain capital in the future to meet our needs. If we cannot obtain additional funding, we may be required to:

¨ reduce our investments;

¨ limit our expansion efforts; and

¨ decrease or eliminate capital expenditures.

Such reductions could materially adversely affect our business and our ability to compete. Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are acceptable to us. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing stockholders. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.

We depend on a limited number of suppliers for a majority of our supplies.  The inability to secure raw materials could affect our production output and reduce our revenues.

We primarily import plastics wastes from five suppliers located in Europe and Hong Kong. Failure to maintain good relationships with our current suppliers or to develop a new supply source of raw materials could negatively affect our ability to obtain the raw materials used in our products in a timely manner. If we are unable to obtain ample supplies of raw material from our existing suppliers or develop alternative supply sources, we may be unable to satisfy our customers’ orders which could materially and adversely affect our revenues and our relationship with our customers.  Furthermore, we are dependent on our suppliers for the timely delivery of materials that we require for our operations. Should our suppliers fail to deliver such materials on time, and if we are unable to source these materials from alternative suppliers on a timely basis, our revenue and profitability could be adversely affected.

The success of our business is heavily dependent upon our ability to secure raw plastic.

Our ability to generate revenue depends upon our ability to secure raw plastic. There is a world-wide market for these materials, and the Company faces competition from other low-cost users. To the extent that we are unable to secure enough raw plastic, our business, financial condition and results of operations will be materially adversely affected.

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The Chinese government limits the amount of plastic waste which may be imported, and as such, we may not be able to import sufficient raw materials.

The Chinese government limits the amount of plastic wastes which may be imported into China.  Although we have not experienced difficulties obtaining and renewing our import license in the past, we can not guarantee the license will be approved in the future. If we fail to obtain the import license, we may have to use domestically supplied plastics wastes for our manufacturing. Domestic plastic wastes are typically poorly sorted, so utilizing the domestic raw material increase production costs.

Our production costs and revenues are impacted by increases in the cost of labor, shipping and other expenses.

The manufacturing of recycled plastics is highly labor-intensive as all raw material classification is done by hand.  A sharp increase of in pay or a mandatory welfare/insurance contribution by employers would cause an increase in production costs and would reduce our profit margin. Additionally, as all of the raw material used in our manufacturing is imported, an increase in the freight costs of importing such material would increase our production costs and thus negatively impact our revenues.

We are dependent on use of an import quota granted to us by another company, the loss of which could materially affect our ability to secure high quality raw materials for our manufacturing processes.

In the PRC, imports of plastic waste are subject to an import quota regulated by the Ministry of Environmental Protection. We have been approved for an import quota of 24,000 tons of plastic waste per year. We have also been permitted to use of the 35,000 tons per year import quota granted to Fuqing Huan Li Plastics Company Limited (“Huan Li”). Huan Li has not had any significant operations since 2005, but its import quota remains valid. Chen Min, our Chief Executive Officer, is a director of Huan Li.

Although we have not previously experienced difficulties with regard to Huan Li permitting us to use its import quota, there can be no guarantee that the import quota will be available to us in the future. Huan Li can rescind its grant to us of the import quota at any time. If we are unable to use Huan Li’s import quota, our business, financial condition and results of operations would be materially adversely affected. Without the import quota we may have to purchase domestically supplied plastic waste for our manufacturing processes.  Domestic plastic waste is typically poorly sorted, which increases our production costs and most of the plastic waste available domestically has already been recycled, and it therefore has a lower tensile force which would negatively impact the quality of our products.

We May Be Classified As A Passive Foreign Investment Company, Which Could Result In Adverse U.S. Tax Consequences To U.S. Investors.

Based upon the nature of our income and assets, we may be classified as a passive foreign investment company, or PFIC, by the United States Internal Revenue Service for U.S. federal income tax purposes. This characterization could result in adverse U.S. tax consequences to you. For example, if we are a PFIC, our U.S. investors will become subject to increased tax liabilities under U.S. tax laws and regulations and will become subject to more burdensome reporting requirements. The determination of whether or not we are a PFIC is made on an annual basis, and those determinations depend on the composition of our income and assets, including goodwill, from time to time. We intend to operate our business so as to minimize the risk of PFIC treatment, however you should be aware that certain factors that could affect our classification as PFIC are out of our control. For example, the calculation of assets for purposes of the PFIC rules depends in large part upon the amount of our goodwill, which in turn is based, in part, on the then market value of our shares, which is subject to change. Similarly, the composition of our income and assets is affected by the extent to which we spend the cash we have raised on acquisitions and capital expenditures. In addition, the relevant authorities in this area are not clear and so we operate with less than clear guidance in our effort to minimize the risk of PFIC treatment. Therefore, we cannot be sure whether we are not and will not be a PFIC for the current or any future taxable year. In the event we are determined to be a PFIC, our stock may become less attractive to U.S. investors, thus negatively impacting the price of our stock.

Environmental Compliance And Remediation Could Result In Substantially Increased Capital Requirements And Operating Costs Which Could Adversely Affect Our Business

Guanwei is subject to numerous Chinese provincial and local laws and regulations relating to the protection of the environment. These laws continue to evolve and are becoming increasingly stringent. The ultimate impact of complying with such laws and regulations is not always clearly known or determinable because regulations under some of these laws have not yet been promulgated or are undergoing revision. Our consolidated business and operating results could be materially and adversely affected if Guanwei were required to increase expenditures to comply with any new environmental regulations affecting its operations. We could, in the future, incur a material liability resulting from the costs of complying with environmental laws, environmental permits or any claims concerning noncompliance, or liability from contamination.

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We cannot predict what environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted or what environmental conditions may be found to exist at our facilities or at third-party sites for which we are liable. Enactment of stricter laws or regulations, stricter interpretations of existing laws and regulations or the requirement to undertake the investigation or remediation of currently unknown environmental contamination at our own or third-party sites may require us to make additional expenditures, some of which could be material.

If environmental regulation enforcement is relaxed, the demand for our products may decrease.

The demand for our services is substantially dependent upon the public’s concern with, and the continuation and proliferation of, the laws and regulations governing the recycling of plastic. A decrease in the level of public concern, the repeal or modification of these laws, or any significant relaxation of regulations relating to the recycling of plastic would significantly reduce the demand for our services and could have a material adverse effect on our operations and financial condition.

We face competition from other companies, which could force us to lower our prices, thereby adversely affecting our operating margins, financial condition, cash flows and profitability.

The markets in which we operate are highly competitive, and this competition could harm our business, results of operations, cash flow and financial condition. We believe that one significant competitive factor for our products is selling price. Although we do not aspire to be the lowest cost provider but rather the highest value provider to our customers, we could be subject to adverse results caused by our competitors’ pricing decisions. If we do not compete successfully, our business, operating margins, financial condition, cash flows and profitability could be adversely affected.

Our Sales Are Dominated By Sales in China Which Could Have An Adverse Effect On Our Business

For each of the two most recent fiscal years, almost all of our sales were derived from customers in China. We expect that the domestic market in China will continue to be our major market. Our business is therefore heavily dependent on the demand for plasticsin China and the domestic market prices of LDPE. In the event that there is any material adverse change in the level of the demand of raw material for plastic productsin China or if there are a significant price fluctuations in China, our performance could be adversely affected.

RISKS RELATING TO OUR COMMON STOCK

Our Common Stock Price May Be Volatile And Could Decline In The Future.

The stock market in general and the market price for other companies based in the PRC have experienced extreme stock price fluctuations. In some cases, these fluctuations have been unrelated to the operating performance of the affected companies. Many companies in China have experienced dramatic volatility in the market prices of their common stock. We believe that a number of factors, both within and outside of our control, could cause the price of our Common Stock to fluctuate, perhaps substantially. Factors such as the following could have a significant adverse impact on the market price of our Common Stock:

¨ announcements of technological innovations by us or our competitors;

¨ our ability to obtain additional financing and, if available, the terms and conditions of the financing;

¨ our financial position and results of operations;

¨ litigation;

¨ period-to-period fluctuations in our operating results;

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¨ changes in estimates of our performance by any securities analysts;

¨ new regulatory requirements and changes in the existing regulatory environment;

¨ the issuance of new equity securities in a future offering;

¨ changes in interest rates;

¨ changes in environmental standards;

¨ market conditions of securities traded on the OTCBB;

¨ investor perceptions of us and the plastics recycling industry generally; and

¨ general economic and other national conditions.

The Trading Market In Our Common Stock Is Limited And May Cause Volatility In The Market Price.

Our Common Stock is currently traded on a limited basis on the OTCBB under the symbol “MDHO”. The OTCBB is an inter-dealer, over-the-counter market that provides significantly less liquidity than the NASD’s automated quotation system, or the NASDAQ Stock Market. Quotes for stocks included on the OTCBB are not listed in the financial sections of newspapers as are those for the NASDAQ Stock Market. Therefore, prices for securities traded solely on the OTCBB may be difficult to obtain.

The quotation of our Common Stock on the OTCBB does not assure that a meaningful, consistent and liquid trading market currently exists, and in recent years such market has experienced extreme price and volume fluctuations that have particularly affected the market prices of many smaller companies like us. Thus, the market price for our Common Stock is subject to volatility and holders of Common Stock may be unable to resell their shares at or near their original purchase price or at any price. In the absence of an active trading market:

¨ investors may have difficulty buying and selling or obtaining market quotations;

¨ market visibility for our Common Stock may be limited; and

¨ a lack of visibility for our Common Stock may have a depressive effect on the market for our Common Stock.

We May Have Difficulty Raising Necessary Capital To Fund Operations As A Result Of Market Price Volatility For Our Shares Of Common Stock.

In recent years, the securities markets in the United States have experienced a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values or prospects of such companies. For these reasons, our shares of Common Stock can also be expected to be subject to volatility resulting from purely market forces over which we will have no control. If our business development plans are successful, we may require additional financing to continue to develop and exploit existing and new technologies and to expand into new markets. The exploitation of our technologies may, therefore, be dependent upon our ability to obtain financing through debt and equity or other means.

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Our Common Stock Is Considered A “Penny Stock” And As A Result, Related Broker-Dealer Requirements Affect Its Trading And Liquidity.

Our Common Stock is considered to be a “penny stock” since it meets one or more of the definitions in Rules 15g-2 through 15g-6 promulgated under Section 15(g) of the Exchange Act. These include but are not limited to the following: (i) the common stock trades at a price less than $5.00 per share; (ii) the common stock is not traded on a “recognized” national exchange; (iii) the common stock is not quoted on the NASDAQ Stock Market, or (iv) the common stock is issued by a company with average revenues of less than US$6,000,000 for the past three (3) years. The principal result or effect of being designated a “penny stock” is that securities broker-dealers cannot recommend our Common Stock to investors, thus hampering its liquidity.

Section 15(g) and Rule 15g-2 require broker-dealers dealing in penny stocks to provide potential investors with documentation disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the documents before effecting any transaction in a penny stock for the investor’s account. Potential investors in our Common Stock are urged to obtain and read such disclosure carefully before purchasing any of our shares.

Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives.

Compliance with these requirements may make it more difficult for holders of our Common Stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

Shares Eligible For Future Sale May Adversely Affect The Market Price Of Our Common Stock.

From time to time, certain of our stockholders may be eligible to sell all or some of their shares of Common Stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act of 1933, as amended (the “Securities Act”), subject to certain limitations. Any substantial sale pursuant to Rule 144 may have an adverse effect on the market price of our Common Stock.

One Stockholder Exercises Significant Control Over Matters Requiring Stockholder Approval.

After giving effect to the issuance of shares of our Common Stock pursuant to the Share Exchange, one stockholder (Fresh Generation Overseas Limited, a British Virgin Islands corporation, hereinafter the “Stockholder”) has voting power equal to approximately 60% of our voting securities as of the date of this Current Report. As described in greater detail later in this Current Report, Chen Min, our Chief Executive Officer and a director, is the beneficial owner of the shares of our Common Stock held by the Stockholder. As a result, Chen Min, through such indirect stock ownership, can exercise control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying or preventing a change in control of us that may be otherwise viewed as beneficial by stockholders other than the Stockholder.

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We May Incur Significant Costs To Ensure Compliance With U.S. Corporate Governance And Accounting Requirements.

We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the SEC. We expect all of these applicable rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board or as executive officers. We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

We May Be Required To Raise Additional Financing By Issuing New Securities With Terms Or Rights Superior To Those Of Our Shares Of Common Stock, Which Could Adversely Affect The Market Price Of Our Shares Of Common Stock.

We may require additional financing to fund future operations, including expansion in current and new markets, development and acquisition, capital costs and the costs of any necessary implementation of technological innovations or alternative technologies. We may not be able to obtain financing on favorable terms, if at all. If we raise additional funds by issuing equity securities, the percentage ownership of our current stockholders will be reduced, and the holders of the new equity securities may have rights superior to those of the holders of shares of Common Stock, which could adversely affect the market price and the voting power of shares of our Common Stock. If we raise additional funds by issuing debt securities, the holders of these debt securities would similarly have some rights senior to those of the holders of shares of Common Stock, and the terms of these debt securities could impose restrictions on operations and create a significant interest expense for us.

We May Have Difficulty Establishing Adequate Management And Financial Controls In China And In Complying With U.S. Corporate Governance And Accounting Requirements Which Could Have An Adverse Affect On Our Business

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

Standards For Compliance With Section 404 Of The Sarbanes-Oxley Act Of 2002 Are Uncertain, And If We Fail To Comply In A Timely Manner, Our Business Could Be Harmed And Our Stock Price Could Decline.

Rules adopted by the SEC, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment of our internal control over financial reporting, and attestation of our assessment by our independent registered public accountants. The standards that must be met for management to assess the internal control over financial reporting as effective are new and complex, and require significant documentation, testing and possible remediation to meet the detailed standards and will impose significant additional expenses on us. We may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting. In addition, the attestation process by our independent registered public accountants is new and we may encounter problems or delays in completing the implementation of any requested improvements and receiving an attestation of our assessment by our independent registered public accountants. If we cannot assess our internal control over financial reporting as effective, or our independent registered public accountants are unable to provide an unqualified attestation report on such assessment, investor confidence and share value may be negatively impacted.

We Do Not Foresee Paying Cash Dividends In The Foreseeable Future.

Although Chenxin has previously paid cash dividends to its shareholders, MDHO has not paid cash dividends on its Common Stock and does not plan to pay cash dividends on its Common Stock in the foreseeable future.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The purpose of this section is to discuss the financial condition, changes in financial condition and results of operations of the company. This includes discussion of (i) liquidity (ii) capital resources (iii) results of operations and (iv) off-balance sheet arrangements, plus any other information that would be necessary to an understanding of the company’s financial condition, changes in financial condition and results of operations. References in this section to “we”, “us”, “our” or the “Company” are to the consolidated business of Hongkong Chenxin International Development Limited (“Chenxin”) and its wholly-owned subsidiary, Fuqing Guanwei Plastic Industry Co. Ltd. (“Guanwei”).

Forward Looking Statements

The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this Current Report. This report contains forward-looking statements. Generally, the words “believes,” “anticipates,” “may,” “will,” “should,” “expect,” “intend,” “estimate,” “continue” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the SEC from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

Business Overview

Prior Operations of MDHO

Since its inception on December 13, 2006, MDHOhas been engaged in the business of providing traditional mortgage services. MDHOhas been unsuccessful in developing a profitable business and ceased its operations effective December 31, 2008.

The Share Exchange

On November 5, 2009, MDHO entered into a Share Exchange Agreement with Chenxin and Fresh Generation Overseas Limited (the “Stockholder”), whereby MDHO acquired all of the issued and outstanding securities of Chenxin from the Stockholder in exchange for the issuance by MDHO to the Stockholder of12 millionnewly-issued shares of ourCommon Stock. As of the Closing Date, the Stockholder beneficially owns sixty percent (60%) of the voting capital stock of MDHO. As a result of the Share Exchange, Chenxin became a wholly-owned subsidiary of MDHO.

Current Business of the Company

Following the Share Exchange, MDHO, through its indirect wholly-owned subsidiary Guanwei, which is located in Fuqing City, Fujian Province, PRC, imports and recycles LDPE plastic scrap material into granular plastic for use in the manufacture of various consumer products. Guanwei is one of the biggest recycled LDPE manufacturers in China.

Critical Accounting Policies, Estimates and Assumptions

Accounting Principles

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of our assets, liabilities, revenues and expenditures, to disclose contingent assets and liabilities on the date of the financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting period. The most significant estimates and assumptions include revenues recognition, valuation of inventories and provisions for income taxes. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this Current Report reflect the more significant judgments and estimates used in preparation of our financial statements. We believe there have been no material changes to our critical accounting policies and estimates.

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The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our consolidated financial statements:

(a) Basis of Accounting and Principles of Consolidation

The consolidated financial statements for Chenxin and its subsidiary, Guanwei, for the years ended December 31, 2007 and 2008 are prepared in accordance with U.S. GAAP and include the accounts of both Chenxin and Guanwei (together, hereinafter referred to as the “Group”) for all periods presented.

In preparing the consolidated financial statements presented herewith, all significant intercompany balances and transactions have been eliminated on consolidation.

A single uniform set of accounting policies is adopted by the combined entity, Chenxin. Therefore, Chenxin recognized the assets, liabilities and equity of the combining entities (Chenxin and Guanwei) at the carrying amounts in the consolidated financial statements of the controlling parties (original shareholders) prior to the common control combination. These carrying amounts are referred to the existing book values from the original shareholder’s perspective.

(b) Foreign Currency Translations and Transactions

Chenxin maintains its books and accounting records in United States Dollars (“USD”). The primary currency of the economic environment in which the operations of Chenxin are conducted is Renminbi (“RMB”), the national currency of the PRC. The RMB is therefore considered as Chenxin’s “functional currency.”

Chenxin’s wholly-owned subsidiary, Guanwei, maintains its books and accounting records in RMB. RMB is the primary currency of the economic environment in which the operations of Guanwei are conducted currently or will be conducted in the future. The RMB is therefore considered to be Guanwei’s “functional currency.”

Guanwei uses the “current rate method” to translate its financial statements from RMB into USD, as required under the Statement of Financial Accounting Standards (“SFAS”) No. 52, “Foreign Currency Translation” issued by the Financial Accounting Standard Board (“FASB”). The assets and liabilities of Guanwei are translated into USD using the rate of exchange prevailing at the balance sheet date. The capital accounts are translated at the historical rate. Adjustments resulting from the translation of the balance sheets of Guanwei from RMB into USD are recorded in shareholders’ equity as part of accumulated comprehensive income. The statement of income and comprehensive income is translated at average rates during the reporting period. Gains or losses resulting from transactions in currencies other than the functional currencies are recognized in net income for the reporting periods. The statement of cash flows is translated at average rates during the reporting period, with the exception of issue of share and payment of dividends which are translated at historical rates. Due to the use of different rates for translation, the figures in the statement of changes in cash flows may not agree with the differences between the year end balances as shown in the balance sheets.

(c) Comprehensive Income

The Group has adopted SFAS No. 130, “Reporting Comprehensive Income,” issued by the FASB. SFAS No. 130 establishes standards for reporting and presentation of comprehensive income and its components in a full set of general-purpose financial statements. The Group has chosen to report comprehensive income in the statements of changes in stockholders’ equity. Comprehensive income is comprised of net income and all changes to stockholders’ equity except those due to investments by owners and distributors to owners.

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(d) Revenue Recognition.

Revenue from sales of manufactured LDPE is recognized when persuasive evidence of an arrangement exists, delivery of the goods has occurred, customer acceptance has been obtained, which means the significant risks and ownership have been transferred to the customer, the price is fixed or determinable and collectability is reasonably assured.

Sales of scrap materials are recognized on the same basis as sales of LDPE.

Interest income is recognized on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.

(e) Taxation

The Group accounts for income and deferred tax under the provision of Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes,” under which deferred taxes are recognized for all temporary differences between the applicable tax balance sheets and the balance sheet.  Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  SFAS No. 109 also requires the recognition of the future tax benefits of net operating loss carry forwards.  A valuation allowance is established when the deferred tax assets are not expected to be realized within a reasonable period of time.

Effective January 1, 2007, the Group adopted FIN No. 48, “Accounting for Uncertainty in Income Taxes.” In accordance with FIN No. 48, the Group recognizes tax benefits that satisfy a greater than 50% probability threshold and provides for the estimated impact of interest and penalties for such tax benefits. The Group did not have such uncertain tax positions in 2007 and 2008.

Deferred tax assets and liabilities are measured using the enacted tax rates expected to be applicable for taxable income in the years in which temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income for the period that includes the enactment date.

(f) Inventories

Inventories are stated at the lower of cost, using the first-in, first-out method, or market value.  Costs include purchase and related costs incurred in bringing each product to its present location and condition.  Market value is calculated based on the estimated normal selling price, less further costs expected to be incurred disposal.  Provision is made for obsolete, slow moving or defective items, where appropriate.

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(g) Property, Plant and Equipment and Land Use Right

Property, plant and equipment and land use right are stated at cost, less accumulated depreciation and amortization. Gains or losses on disposal are reflected in current operations.  Major expenditures for betterments and renewals are capitalized.  All ordinary repair and maintenance costs are expensed as incurred. Land in the PRC is owned by the PRC government.  The government in the PRC may sell the right to use the land for a specified period of time. Thus, all of the Group’s land purchases in the PRC are considered to be leasehold land and classified as a land use right. They are amortized on a straight-line basis over the respective term of the right to use the land.  Depreciation of property, plant and equipment and land use right is computed using the straight-line method over the assets’ estimated useful lives as follows:

Land use right	Over 30 years prior to the extension of lease to 50 years and 50 years thereafter
Building	20 years
Leasehold improvements	Over terms of the leases or the useful lives, whichever is shorter
Plant and machinery	5 to 10 years
Furniture, fixtures and office equipment	5 years
Motor vehicles	5 years

(h) Impairment

The Group has adopted SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets,” which requires impairment losses to be recorded for property, plant and equipment to be held and used in operations when indicators of impairment are present.  Reviews are regularly performed to determine whether the carrying value of assets is impaired.  The Group determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the carrying amount of the assets.  An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value of such assets less costs to sell.  Asset impairment charges are recorded to reduce the carrying amount of the long-lived asset that will be sold or disposed of to their estimated fair values. Charges for the asset impairment reduce the carrying amount of the long-lived assets to their estimated salvage value in connection with the decision to dispose of such assets. There were no impairment losses recorded during each of the two years ended December 31, 2008.

(i)  Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the financial statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Group may undertake in the future, actual results may be different from the estimates. The key estimates of the Group is as follow:

(j)  Impairment on trade and other receivables

The policy for impairment of trade and other receivables of the Group is based on the evaluation of collectability and aging analysis of the trade receivables and on management’s judgment for certain other receivables.  A considerable amount of judgment is required in assessing the ultimate realisation of these trade and other receivables, including the current creditworthiness and the past collection history of each customer.  If the financial conditions of customers of the Group were to deteriorate, resulting in an impairment of their ability to make payments, additional impairment may be required.

(k) Related Parties

Entities are considered to be related to the Group if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Group.  Related parties also include principal owners of the Group, its management, members of the immediate families of principal owners of the Group and its management and other parties with which the Group may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.  A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

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Results of Operations for the Fiscal Year Ended December 31, 2008 Compared To the Fiscal Year Ended December 31, 2007 

The following table sets forth a summary of certain key components of our results of operations for years indicated, in dollars and as a percentage of revenues.

	For The Years Ended December 31,
	2008				2007				Change in %
Revenue	$	25,430,714	100	%	$	15,777,997	100	%		61.18	%
Cost of revenue	$	20,292,530	79.80	%	$	11,052,199	70.05	%		83.61	%
Gross Profit	$	5,138,184	20.20	%	$	4,725,798	29.95	%		8.73	%

Revenue

Our revenues are primarily derived from the sales of recycled LDPE. We also derive a portion of our revenue from the sale of non-LDPE waste material. Guanwei manufactures only recycled LDPE, but the purchased raw material generally contains approximately 8% of non-LDPE waste, such as PE, PP or ABS. Guanwei sorts and classifies this non-LDPE material and sells it to the other recycled plastic manufacturers who use these products.

In fiscal year 2008, revenue generated from the sale of recycled LDPE increased to $24,051,803, representing a 59.84% increase from $15,047,027 generated in fiscal year 2007. The Company also increased its direct sales of non-LDPE material to $1,378,911 in fiscal year 2008, as compared to $730,970 for fiscal year 2007, representing an increase of 88.64%. For the years ended December 31, 2008 and 2007, total net revenue was $25,430,714 and $15,777,997 respectively, representing a 61.18% growth rate. The increase in total net revenue was primarily due to the increase of sales volume. In 2008, sales volume was 23,350 tons, an increase of 52.43% from 15,319 tons of final products sold in 2007.

The contribution of the Company’s top 5 customers to our sales volume and revenue generated in fiscal year 2008 is as follows:

	2008
Name of Customer	Sales Volume		% of Total			Revenue		% of Total
Ningbo Zhenhai Rida Trading Co		902		3.86	%		1,008,908		3.97	%
Zhangzhou Tiancheng Chemical Co		750		3.21	%		840,137		3.30	%
Jiangxi Tianrun New Material Co		556		2.38	%		614,575		2.42	%
Putian Xinfei Shoe Manufacture Co		520		2.23	%		572,362		2.25	%
Jiangxi Hongtai Group		437		1.87	%		502,231		1.97	%

The contribution of the Company’s top 5 customers to our sales volume and revenue generated in fiscal year 2007 is as follows:

	2007
Name of Customer	Sales Volume		% of Total			Revenue		% of Total
Ningbo Zhenhai Rida Trading Co		765		4.99	%		764,339		4.84	%
Zhangzhou Tiancheng Chemical Co		392		2.56	%		392,583		2.49	%
Fuzhou Yiben Shoe Material Co		359		2.34	%		348,090		2.21	%
Fuzhou Xinghai Shoe Manufacture Co		347		2.27	%		342,191		2.17	%
Shanghai Ruixin Rubbery & Plastics Co		338		2.21	%		339,098		2.15	%

Guanwei does not depend heavily on any key customers. In fact, Guanwei generates revenue from over 200 customers, none of whom represent more than 5% of the sales volume or total net revenue of the Company.

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Guanwei produces four types of LDPE plastic grains. The grade is determined by the color of the plastic grain, with higher grade denoting that the grain is whiter. Higher grade plastic grains are more expensive. The product margin among the four classes of recycled LDPE produced by Guanwei is not fixed, as it depends greatly on the quality of raw material input.  Sales of the Grade A plastic grains generally account for approximately 30% of our sales volume. Grade B and Grade C grains each generally account for approximately 20% of total sales, and sales of Grade D grains generally account for approximately 30% of sales.

Cost of Revenue

Our cost of revenue primarily consisted of the import costs of plastic waste.  In 2008 and 2007, the cost of revenue was $20,292,530 and $11,052,199, respectively, representing 79.80% and 70.05% of the current year revenue, respectively.  Guanwei primarily imports plastic wastes from European countries, including Germany and Spain. As our cost of revenue consists primarily of the purchase price of important plastic waste, Guanwei has limited influence on such costs. The prices of imported plastic waste are determined solely by suppliers and are dependent upon market conditions.  The price of raw material plastic waste heavily depends upon the changes in oil, which drives the price of virgin plasticand causes changes in the price of raw material plastic wastes. In 2008, cost of revenue increased 83.61% from 2007, primarily because of an increase in the volume of scrapped plastic (i.e. raw materials) purchased by Guanwei. In 2008, 50,068 tons of raw materials were purchased and imported by Guanwei, representing a 105.14% increase from 24,406.80 tons of raw material purchased and imported in 2007. Another factor behind the increase in cost of revenue is the price. In 2008, the average purchase price of raw material was $528.56 per ton, representing an increase of 21.68% from $434.40 per ton in 2007.

The Company’s top 5 suppliers’ contributions to the raw material purchase volume and cost of revenue are as follows:

	2008					2007
Supplier Name	Purchase Volume		% of Total			Purchase Volume		% of Total
Company A		15,338		30.63	%		3,193		13.08	%
Company B		5,614		11.21	%		1,079		4.42	%
Company C		11,541		23.05	%		13,401		54.91	%
Company D		16,309		32.57	%		4,452		18.24	%
Company E		1,212		5.15	%		2,281		9.35	%
Total		50,014		99.89	%		24,406		100	%

The purchase of raw material is fundamental to the recycling business. Nearly 100% of the raw material purchased by Guanwei comes from the 5 suppliers listed above. In order to cut costs and increase profit margins, Guanwei focuses heavily on developing relationships with new suppliers and increasing amount of raw material purchased directly from European recyclers, as opposed to purchasing from a wholesaler.  In 2008, the amount of raw material purchased from our wholesaler in Hong Kong decreased to 28.2% of the total raw material purchased, as compared to 64.26% in fiscal year 2007. Meanwhile, Guanwei also developed long-term strategic relationships with some of the largest raw material suppliers in Europe.

We will continue to work on obtaining more favorable terms and discounts by strengthening our relationship with suppliers and placing more bulk orders.

Gross Profit

Despite the large decrease in the price of recycled LDPE since September 2008, Guanwei achieved an 8.73% increase in gross profit of $5,138,184 in fiscal year 2008, as compared to $4,725,798 in fiscal year 2007. During the same period, our gross profit margin decreased to 20.20% in fiscal year 2008, down from 29.95% in fiscal year 2007.  This is due to the decrease in the sales price of our products, which was caused by the financial crisis. The average selling price per ton of recycled LDPE was $1,023.63 in the first quarter of 2008, $1,131,99 in the second quarter, $1,048.88 in the third quarter and $890.18 in the fourth quarter. As compared to the first nine months of 2008, the average selling price in the fourth quarter of 2008 dropped over 20%, which caused a large decrease in the overall gross profit margin.

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The selling price of recycled LDPE has been increasing since the first quarter of 2009. The average selling price per ton in the first quarter was $949.96 and $995.71 in the second quarter, although the average selling price is still lower than the same period in 2008. Due to the excess demand for recycled LDPE, we believe that the selling price will show an increasing trend and our gross margin will return back to normal levels.

Operating Expenses

	For The Years Ended December 31,
	2008				2007				Change in %
Operating expenses
-Sales & Marketing	$	357,745	36.36	%	$	414,173	51.42	%		(13.62	)%
-G&A	$	626,255	63.64	%	$	391,348	48.58	%		60.03	%
Total	$	984,000	100	%	$	805,521	100	%		22.16	%

Operating expenses increased 22.16% for the year ended December 31, 2008, from $805,521 in 2007 to $984,000 in 2008.  Sales and marketing expenses include transportation, courier, advertising costs, and sales remunerations. The decrease in sales and marketing expenses is primarily due to the enhanced control over general sales and marketing costs such as transportation costs and courier service expenses. Transportation costs are primarily incurred during the delivery of the final products to our customers. Guanwei provides two alternatives to customers: customers may either choose to pick up their products with their own vehicles, in which case Guanwei will deduct the transportation cost from the total sales price, or customers may choose to have Guanwei arrange delivery, in which case the transportation costs are categorized as operating expenses. In 2008, transportation costs decreased 54.81% to $106,589, as compared to $215,701incurred in 2007 due to the increased volume of customer arranged pick up.

General and administrative expenses primarily consist of management remuneration, depreciation and amortization, and employee welfare costs. The increase in general and administrative costs was primarily due to the increase of depreciation and amortization amounts and increased employee welfare expenses. As of February 2008, all employees entered into a pension fund plan and the mandatory social insurance benefit for each employee increased, which resulted in an increase in employee welfare expenses to $122,934.92 in 2008, as compared to $750.34 in 2007.

Depreciation and Amortization

	For The Years Ended December 31,
	2008				2007				Change in %
Depreciation expense	$	388,739	96.53	%	$	289,402	92.98	%		34.32	%
Amortization expense	$	13,972	3.47	%	$	21,840	7.02	%		(36.03	)%
Total	$	402,711	100	%	$	311,242	100	%		29.39	%

Depreciation and amortization charges increased 29.39% from $311,242 in 2007 to $402,711 in 2008, primarily due to the increase in depreciation charge. The depreciation charge increased 34.32% from $289,402 in 2007 to $388,739 in 2008. The increase in depreciation charges is due to a $293,604 increase in the value of Guanwei’s buildings to $4,669,830 as of December 31, 2008.  Guanwei also purchased new machinery, which increased the total machinery and equipment value to $687,091, an increase of $68,935 from previous year. Total net value for property, plant and equipment increased by $385,056 in fiscal year 2008.

We utilize the straight line depreciation method, and the average life for general office equipment and motor vehicles is 5 years; average life for plant and machinery is 5 to 10 years; average life for building is 20 years.  We also utilize straight line amortization method for land use right. The land use right is amortized over 50 years.

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Operating Income

	For The Years Ended December 31,
	2008				2007				Change in %
Net Revenue	$	25,430,714	100	%	$	15,777,997	100	%		61.18	%
Cost of Revenue	$	20,292,530	79.80	%	$	11,052,199	70.05	%		83.61	%
Gross Profit	$	5,138,184	20.20	%	$	4,725,798	29.95	%		8.73	%
Operating expenses	$	984,000	3.87	%	$	805,821	5.11	%		22.11	%
Operating income	$	4,154,184	16.34	%	$	3,920,277	24.85	%		5.97	%

Our operating income increased from $3,920,277 in 2007 to $4,154,185 in 2008, representing an increase of 5.97%. Meanwhile, our revenue increased 61.18% for the same period.  The difference between the net revenue increase of 61.18% and the operating income increase of 5.97% was caused by the 52.43% sales volume increase in 2008 and the 4.27% decrease of average selling price in 2008 as compared to 2007.

In order to achieve a higher gross margin, the Company intends to enhance manufacturing techniques and labor efficiencies. Meanwhile we plan to continue improving our gross margin by strengthening relationships with our major suppliers to obtain more favorable terms.

Interest Income and Expense

The Company’s interest income is generated by interest earned through bank deposits and interest expenses are amounts paid in interest by the Company with respect to its borrowings. Net interest expenses (interest expenses offset by interest income) recorded were $93,867 in 2008, representing an increase of 24.88% from $75,168 in 2007.  The slight increase is primarily due to an increase in interest expense as a result of an increase in primary interest rate.

Guanwei supports its operations with a combination of self-generated profit and limited amount of bank loans. During the year 2007, the Company had one short-term bank loan of $1.37 million with Bank of Communications, which matured and was paid on January 16, 2008. The interest rate was 6.436%.

Exchange gains (loss)

Exchange rate gains increased by 44.49% to $232,998 in 2008, as compared to $161,260 in 2007, primarily due to the appreciation of RMB against USD for the respective period.  The average exchange rate between RMB and USD appreciated 8.55% from 7.6123 in 2007 to 6.9617 in 2008.

Liquidity and Capital Resources

We generally finance our operations through operating profit and occasionally through short-term borrowings from banks. During the reporting periods, we arranged one bank loan in 2007 of $1.37 million, which has since matured, to satisfy our financing needs. As of the date of this Current Report, we have not experienced any difficulties due to a shortage of capital and we have not experienced any difficulty in raising funds through bank loans, and we have not experienced any liquidity problems in settling our payables in the normal course of business and repaying our bank loans when they come due.

We believe that the level of financial resources is a significant factor for our future development and accordingly, we may determine from time to time to raise capital through private debt or equity financing to strengthen the Company’s financial position, to expand our facilities and to provide us with additional flexibility to take advantage of business opportunities.  No assurances can be given that we will be successful in raising such additional capital on terms acceptable to us.

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The following table sets forth the summary of our cash flows, in USD, for the fiscal years ended December 31, 2008 and 2007:

	2008			2007
Net cash provided by operating activities	$	938,357		$	1,660,558
Net cash used in investing activities	$	(33,954	)	$	(1,727,052	)
Net cash (used in)/provided by financing activities	$	(1,436,435	)	$	1,186,239
Effect of exchange rate changes on cash	$	90,384		$	65,354
Cash and cash equivalents at beginning of year	$	1,471,358		$	286,259
Cash and cash equivalents at end of year	$	1,029,710		$	1,471,358

Operating Activities

During fiscal year 2008, we generated net cash from operating activities of $938,357, a decrease of 43.49% from $1,660,558 in 2007. The decrease was primarily due to a 203.75% increase in inventory from $4,271,842 in 2007 to $12,975,877 in 2008. The cash used by operating activities was offset in part by an increase in accounts payable to $12,157,940 in 2008 from $4,344,733 in 2007, representing an increase of 179.83%. This increase in payables was primarily due to bulk procurement of raw material by Guanwei at the end of 2008.

Our accounts payable increased to $7,405,560 for fiscal year 2008, as compared to $1,319,360 for fiscal year 2007, representing an increase of 461.30%. The increase is due to the increased volume of raw material purchased. For fiscal year 2008, the total amount of raw material purchased was 50.067 tons, an increase of 105.14% from the 24,407 tons purchased in 2007.

During fiscal year 2008, net cash used by inventory was $8,287,451, an increase of 272.47% from $2,224,977 in fiscal year 2007. The increase is due to the overstocking of approximately 25,000 tons of raw material by year end 2008. Because the price of crude oil dropped from $140 per barrel in July 2008 to $40 per barrel in December 2008, the selling price of recycled LDPE decreased by more than $250 per ton. In response to this market slowdown and sharp decrease in selling price, Guanwei decided to slow down the manufacture of its products until a projection of an increase in selling price.

Another factor contributing to the decrease in net cash generated from operating activities is the increase of prepayments of $1,227,356 in 2008 from $5,094 in 2007. The increase of prepayments was caused by increased in VAT recoverable due to large purchases made in last quarter of 2008.

Investing Activities

During fiscal year 2008, net cash used in investing activities was $33,954, a sharp decrease as compared to $1,727,052 net cash used in investing activities in 2007. This is primarily due to a one-time dividend paid in 2007 to ex-shareholders of the Company in the amount of $788,199. Guanwei also invested in the purchase of new machinery and equipments in 2007, which used net cash of $938,853.

Financing Activities

On January 16, 2008, at the maturity of short-term bank loan, company repaid the loan of $1,436,435, as compared to $1,186,239 of bank loan borrowed from Bank of Communications in 2007.

During fiscal year 2008, net cash used for financing activities was $1,436,435, as compared to $1,186,239 provided by financing activities in 2007. The difference is due to payments at maturity of short-term loans advanced by China Communication Bank.

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Working Capital

During the year ended December 31, 2008, our inventory increased to $12,975,877, as compared to $4,271,842 at December 31, 2007. This increase was due to the sharp decrease in the selling price of recycled LDPE, from $1,089.85 per ton in January 2008 to $879.09 per ton in September 2008, and consequently, we decided to slow the manufacture of our products until a  projection of an increase in selling price. Our management anticipated an increase in the selling price of final products in 2009.  In the first quarter of 2009, the average selling price of recycled LDPE increased to $949.95 per ton, and further increased to an average of $976.66 per ton in the second quarter of 2009. Although still lower than the prices in the same periods of 2008, management believes a further increase in the selling price of recycled plastic will occur with the increasing oil price and virgin plastic price.

During the year ended December 31, 2008, our accounts payable increased from $4,344,733 as of December 31, 2007 to $12,157,940 as of December 31, 2008, representing an increase of 179.83%.  This was primarily the result of growth in our imports of scrapped plastic.

For 2008, working capital improved to $2,206,910, as compared to working capital deficit of $1,326,942 in 2007.  The Company aims to continue to improve the level of its working capital through increasing productivity levels and increased efficiency over costs while focusing on increasing revenues.

Results of Operations for the Six Months and Three Months Ended June 30, 2009 Compared To The Six Months and Three Months Ended June 30, 2008

The following table sets forth a summary of certain key components of our results of operations for the periods indicated, in dollars and as a percentage of revenues.

	For The Six Months Ended June 30
	2009				2008				Change in %
Revenue	$	30,447,450	100	%	$	12,220,592	100	%		149.15	%
Cost of revenue	$	24,717,529	81.18	%	$	8,894,457	72.78	%		177.90	%
Gross Profit	$	5,729,921	18.82	%	$	3,326,135	27.22	%		72.27	%

	For The Three Months Ended June 30
	2009				2008				Change in %
Revenue	$	7,819,356	100	%	$	6,511,973	100	%		20.08	%
Cost of revenue	$	4,025,245	51.48	%	$	4,714,035	72.39	%		-14.61	%
Gross Profit	$	3,794,111	48.52	%	$	1,797,938	27.61	%		111.03	%

Revenue

Our revenues are derived from the sales of recycled LDPE. We also derive a portion of our revenue from selling non-LDPE material.  Guanwei only manufactures LDPE, but the purchased raw material generally contains around 8% of non-LDPE waste such as PE, PP or ABS. Guanwei sorts and classifies this non-LDPE material and sells it to the other recycled plastic manufacturers of that category.

For the six months ended June 30, 2009 and 2008, net revenue was $30,447,450 and $12,220,592, respectively, representing an increase of 149.15%. The increase was primarily due to an increase in sales volume.  The Company sold 23,471 tons of products in the six months ended June 30, 2009, an increase of 124.78% from 10,442 tons sold in the same period 2008. For the six months ended June 30, 2009, revenue generated from the sale of recycled LDPE was $22,649,780, representing an increase of 93.34% from $11,715,071 generated in the same period of 2008. Our sales of raw material to other plastic manufacturers also increased to $7,797,670 for the six months ended June 30, 2009, as compared to $505,521 sold in the same period of 2008, representing an increase of 1,542%. This increase in revenue generated from the sale of raw material is due to a direct sale of a total of 14,033 tons of raw material out of our inventory of nearly 25,000 tons during the first quarter of 2009. Due to the low selling price of recycled LDPE, the Company’s inventory was larger than normal at the end of 2008. In order to increase cash flow, the Company sold 14,033 tons of raw materials to other recycled LDPE manufacturers at average selling price of $533 per ton, which generated $7,488,370. The rest of the revenue generated from the sale of scrapped raw material was derived from the sale of classified non-LDPE raw material.

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The direct sale of raw material out of the Company’s inventory was one-time occurrence in order to allow the Company to generate cash flow during the financial crisis.  The Company does not intend to make any other sales of raw material out of inventory in the future.  

For the three month periods ended June 30, 2009 and 2008, our revenue was $7,819,356 and $6,511,973, respectively, representing an increase of 20.08%. The increase in revenue was due to the increase in sales volume to 7,694 tons in the three months ended June 30, 2009, as compared to 5,536 tons sold in the same period of 2008, representing an increase of 38.98%.  The increase in sales volume exceeded the revenue increase because of the average selling price per ton decreased by 12.17% to $996 for the three months ended June 30, 2009, as compared to $1,134 for the same period of 2008.

Cost of Revenue

Our cost of revenue consists primarily of the price of importing of plastic waste as raw material, over which the Company has limited control. In the six months ended June 30, 2009 and 2008, the cost of revenue was $24,717,529 and $8,894,457, respectively, representing 81.18% and 72.78% of the current period revenue, respectively.  The price of imported plastic waste is determined solely by suppliers and is dependent upon market conditions. It also depends heavily on the changes in oil prices. In six months ended June 30, 2009, cost of revenue increased by 177.90% as compared to the same period 2008.  This is primarily due to the increase in sales volume.

For the three months ended June 30, 2009, our cost of revenue decreased by 14.61% to $4,025,245, as compared to $4,714,035 for the same period in 2008. The volume of raw material purchased slightly increased by 4.46% to 8,362 tons for the three months ended June 30, 2009, as compared to 8,005 tons for the same period in 2008. The average purchase price of raw material dropped by 46.79% to $298 per ton in the three months ended June 30, 2009, as compared to $560 per ton for the same period in 2008.

We will continue to work on obtaining more favorable terms and discounts by strengthening our relationship with suppliers and placing more bulk orders.

Gross Profit

Our gross profit increased 72.27% to $5,729,921 in the six months ended June 30, 2009, as compared to $3,326,135 for the same period in 2008, although our gross margin decreased to 18.82% for the six months ended June 30, 2009 as compared to 27.22% for the same period in 2008 due to the lower selling price of recycled LDPE.  The financial crisis heavily impacted the sales price, resulting in a 16.35% decrease in the average selling price of recycled LPDEduring the first 2 quarters of 2009. Another factor contributing to the lower gross profit was the direct sale of 14,033 tons scrapped raw material from our inventory at a low cost, which decreased the overall average selling price.

For the three months ended June 30, 2009, our gross profit increased sharply by 111.03% to $3,794,111 as compared to $1,797,938 in the same period of 2008. The increase in the gross profit was caused by the 38.98% increase in sales volume and 14.61% decrease in the cost of revenue.

Since the first quarter of 2009, the sales price of recycled LDPE has been steadily increasing.  The average selling price in the first quarter was $949.96 per ton and $995.71 in the second quarter.  Although the average selling price during the first half of 2009 is still lower than the same period in 2008, the Company believes that high demand for recycled LDPE will continue and our gross margin will return to previous levels.

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Operating Expenses

	For The Six Months Ended June 30
	2009				2008				Change in %
Operating expenses
-G&A	$	384,352	53.38	%	$	346,682	77.60	%		10.87	%
-Sales & Marketing	$	335,705	46.62	%	$	100,062	22.40	%		235.50	%
Total	$	720,057	100	%	$	446,744	100	%		61.18	%

	For The Three Months Ended June 30
	2009				2008				Change in %
Operating expenses
-G&A	$	197,118	40.23	%	$	206,665	76.85	%		-4.62	%
-Sales & Marketing	$	292,896	59.77	%	$	62,251	23.15	%		370.51	%
Total	$	490,014	100	%	$	268,916	100	%		82.22	%

General and administration expenses mainly include management remuneration, depreciation and amortization, and employee welfare costs. Our general and administrative expenses increased slightly, by 10.87% to $384,352 in the six months ended June 30, 2009, as compared to $346,682 for the same period in 2008. In the six months ended June 30, 2009, the Company recruited four new members of the management team to enhance the efficiency and effectiveness of our accounting team, so employee welfare and management remuneration costs increased accordingly.

For the six months ended June 30, 2009, total depreciation charges were recorded at $196,746, and total amortization charges were $7,108. For the six months ended June 30, 2008, total depreciation charges were $192,145, and total amortization charges were $6,913. We utilize the straight line depreciation method, under which the average life for general office equipment and motor vehicles is 5 years, 5 to 10 years for plants and machinery, and 20 years for buildings.  We also utilize the straight line amortization method for land use rights, which are amortized over 50 years.

Sales and marketing expenses include transportation, courier, advertising and sales costs. The increasein sales and marketing expenses is primarily due to the increase of transportation cost. In the six months ended June 30, 2008, sales volume increased 124.77% as compared to the same period 2008. Consquently, transportation costs for the delivery of finished products increased from $37,925 in the six months ended June 30, 2008 to $245,954 for the same period in 2009, representing an increase of 5.49 times. Guanwei provides two delivery options: (i) customers can use their own vehicle for the pick up and the transportation cost will be deducted from the selling price, or, (ii) if the customers require Guanwei to take care of the delivery, the transportation cost will be recorded in the sales & marketing expenses. Guanwei does not charge extra for the delivery.

For the three months ended June 30, 2009, total operating expenses increased 82.22% to $490,014 in 2009, as compared to $268,916 in the same period 2008. The increase was primarily due to the 370.51% increase in sales and marketing expenses. In the three months ended June 30, 2009, total sales volume increased 38.98% to 7,694 tons, and most of the customers opted for Guanwei to deliver their purchased products, which increased the transportation cost to $245,954 during the second quarter of 2009, as compared to $29,506 for the same period in 2007, representing an increase of 7.34 times. Guanwei does not have the control over transportation cost as the customer has the choice of electing self-delivery with the associated transportation cost deduction from the purchase price or electing for Guanwei to be responsible for the transportation. Guanwei does not charge extra on the transportation.

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Operating Income

	For The Six Months Ended June 30
	2009				2008				Change in %
Net Revenue	$	30,447,450	100	%	$	12,220,592	100	%		149.15	%
Cost of Revenue	$	24,717,529	81.18	%	$	8,894,457	72.78	%		177.90	%
Gross Profit	$	5,729,921	18.82	%	$	3,326,135	27.22	%		72.27	%
Operating expenses	$	720,057	2.36	%	$	446,744	3.66	%		61.18	%
Operating income	$	5,009,864	16.45	%	$	2,879,391	23.56	%		73.99	%

	For The Three Months Ended June 30
	2009				2008				Change in %
Net Revenue	$	7,819,356	100	%	$	6,511,973	100	%		20.08	%
Cost of Revenue	$	4,025,245	51.48	%		4,714,035	72.39	%		-14.61	%
Gross Profit	$	3,794,111	48.52	%		1,797,938	27.61	%		111.03	%
Operating expenses	$	490,014	6.27	%		268,916	4.13	%		82.21	%
Operating income	$	3,304,097	42.25	%		1,529,022	23.48	%		116.09	%

Our operating income significantly increased from $2,879,391 in six months ended June 30, 2008 to $5,009,864 in six months ended June 30, 2009, representing an increase of 73.99%.  This is primarily due to the substantial increase in sales volume, leading to increased net revenue.  Beginning in 2009, particularly in the second quarter, net revenue began increasing because the market price of recycled LDPE steadily increased.  The average selling price in the second quarter was $994.66, which is approximately 5% higher than the average selling price in the first quarter. Although sales prices are still approximately 10% lower than the average selling price from the second quarter of 2008, management of the Company believes the upward trend is encouraging and will continue.

In order to maintain healthy cash flow, Guanwei sold a portion of its inventory to other recycled LDPE manufacturers.  In the six months ended June 30, 2009, the Company sold a total of 14,033 tons of direct raw material and generated $7,488,370 in revenue from the sale.  This sale of inventory was a one-time transaction taken to strengthen company’s cash position during the financial crisis.  Guanwei does not intend to increase the direct sales of raw material in the future.

In order to achieve a higher gross profit margin, the Company intends to enhance its manufacturing techniques and labor efficiencies, while continuing to strengthen our relationships with our major suppliers to obtain more favorable terms.

Interest Income and Expense

The Company’s interest income is generated from interest earned on bank deposits.  Its interest expenses are amounts paid in interest with respect to its borrowings.  Net interest expenses (interest expenses offset by interest income) were recorded at $34,074 in the six months ended June 30, 2009, representing a decrease of 21.77% from $43,558 in the same period of 2008. For the three months ended June 30, 2009, the Company paid $20,827 interest expenses, as compared to $24,087 in interest expenses incurred for the same period of 2008, representing a decrease of 13.53%. The decrease for both the six and three month periods is primarily due to the decrease in primary interest rates, which fell from 7.64% in June 2008 to 5.94% in June 2009.

Exchange Gain (Loss)

In the six months ended June 30, 2009, Guanwei did not incur any exchange gain or loss. For six months ended June 30, 2008, company recorded an exchange gain of $273,428.

In the three months ended June 30, 2009, Guanwei did not incur any exchange gain or loss. For three months ended June 30, 2008, company recorded an exchange gain of $98,098.

The RMB to US dollar exchange rate is currently around 6.84.  In the six months ended June 30, 2008, RMB appreciated 4.82% from 7.26 to 6.91. From April to June 2008, RMB appreciated 1.43% from 7.01 to 6.91. The appreciation of RMB induced the exchange gain in 2008.

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Liquidity and Capital Resources

We believe our financial resources are a significant factor in the success of our future development and accordingly, we may decide from time to time to raise capital through private debt or equity financing in order to strengthen the Company’s financial position, to expand our facilities and to provide us with additional flexibility to take advantage of business opportunities.  No assurances can be given that we will be successful in raising such additional capital on terms acceptable to us.

The following table sets forth the summary of our cash flows, in USD, for the six months ended June 30, 2009 and 2008:

	2009			2008
Net cash provided by operating activities	$	7,993,015		$	2,126,407
Net cash used in investing activities	$	(4,434,066	)	$	(39,573	)
Net cash provided by (used in) financing activities	$	1,417,615		$	(42,641	)
Effect of exchange rate changes on cash	$	(2,739	)	$	143,399
Cash and cash equivalents at beginning of year	$	1,029,710		$	1,471,358
Cash and cash equivalents at end of year	$	6,003,535		$	3,658,950

Operating activities

During the six months ended June 30, 2009, we generated net cash from operating activities of $7,993,015, a tremendous increase of 275.89% from $2,126,407 from the same period in 2008. This substantial increase is due primarily to prepayment and inventories.

In the beginning of 2009, the market began to recover from the financial crisis and the selling price of recycled LDPE started to increase. Our sales in volume increased, and prepayment for our products increased accordingly. In the six months ended June 30, 2009, the total net cash provided by prepayment received from customers was $1,153,148, which is approximately 14.93 times higher than the $72,373 in the six months ended June 30, 2008 due to the decreased in VAT recoverable for the increase in sales.

Net cash provided by inventory was $9,833,881 in six months ended June 30, 2009, as compared to net cash used of $58,490 as June 30, 2008.  The substantial increase was due to the 124.78% sales volume increase and to the direct sale of 14,033 tons of scrapped raw material out of inventory during the six months ended June 30, 2009.

Net cash used for accounts payable increased to $7,933,428 in the six months ended June 30, 2009, as compared to $628,838 used in the six months ended June 30, 2008, representing an increase of 1,161%. This was primarily due to the Company’s significant purchases of raw materials in late 2008. Taking advantage of the low raw materials prices in 2008, the Company had accumulated more than 25,000 tons of scrapped raw material by year end, resulting in historically high levels of accounts payable. During the first two quarters of 2009, the Company had been paying down this accounts payable balance, leading to the sharp increase in net cash used for accounts payable. By June 30, 2009, the Company’s raw material purchases and recycled LDPE sales returned to normal levels.

Investing Activities

At our annual shareholders meeting and board of directors meeting on March 11, 2009, a dividend payment that was announced in 2008 to the former shareholders of Guanwei was ratified. Chenxin approved the dividends payment on the same day. A total of $4,409,934 had been paid in dividends to these shareholders. As result, net cash used in investing activities increased to $4,434,066 in the six months ended June 30, 2009, as compared to net cash of $39,573 used for the purchase of equipment in the six months ended June 30, 2008.

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Financing Activities

The Company renewed a bank loan in the amount of $1,417,615 with the interest rate of 5.94%, which resulted in the net cash flow generated by financing activities increasing to $1,417,615 in the six months ended June 30, 2009, as compared to $42,641 net cash used in financing activities in the six months ended June 30, 2008.

Working Capital

During the six months ended June 30, 2009, our inventory decreased to $3,163,149, as compared to $12,975,877 as of December 31, 2008. This sharp decrease of 75.62% was due to the increase in sales price of recycled LDPE products because of the market recovery.

Our accounts payable decreased from $12,157,940 as of December 31, 2008 to $4,243,898 as of June 30, 2009, representing a decrease of 2.86 times. This large decrease in accounts payable was due to the fact that as of year end 2008, the Company had accumulated more than 25,000 tons of scrapped raw material, resulting in historically high levels of accounts payable. By June 30, 2009, the raw material purchases and recycled LDPE sales recovered to normal levels, which caused the decrease of accounts payable.

For the six months ended June 30 2009, working capital was $471,044 as compared to $2,206,910 as for December 31, 2008. The Company aims to improve its level of working capital by enhancing productivity, increasing revenue and by efficiently controlling costs.

Off-Balance Sheet Arrangements

We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions of foreign currency forward contracts. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us.

Quantitative and Qualitative Disclosures about Market Risk

Interest Rates Risk

Our exposure to interest rate risk for changes in interest rates relates primarily to the interest-bearing bank loans and interest income generated by the bank deposits. We have not used any derivative financial instruments in our investment portfolio or for cash management purposes. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. However, our future interest expense or interest income may expect to be increased due to changes in interest rates in the PRC.

Foreign Exchange Rates Risk

We do not hold any derivative instruments and do not engage in any hedging activities. Because most of our purchases and sales are made in RMB, any exchange rate change affecting the value of the RMB relative to the U.S. dollar could have an effect on our financial results as reported in U.S. dollars. If the RMB were to depreciate against the U.S. dollar, amounts reported in U.S. dollars would be correspondingly reduced. If the RMB were to appreciate against the U.S. dollar, amounts reported in U.S. dollars would be correspondingly increased.

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DESCRIPTION OF PROPERTIES

All land in China is owned by the State. Individuals and companies are permitted to acquire rights to use land or land use rights for specific purposes at no cost. In the case of land used for industrial purposes, the land use rights are granted for a period of fifty (50) years. This period may be renewed at the expiration of the initial and any subsequent terms. Granted land use rights are transferable and may be used as security for borrowings and other obligations.

The Company has land use rights to approximately 42,500 square meters of land located at Taicheng Farm in Fuqing City.  This land use right expires July 26, 2056.  Guanwei houses a large, 60,000 square meter warehouse and manufacturing facility, in which it conducts all its manufacturing processes, on this land.  The facility has a sewage treatment facility that is able to filter and process the waste products resulting from the manufacturing. The current production capacity of the manufacturing facilities is 50,000 tons per year.  With additional machinery, the production capacity could be increased to 65,000 tons annually without the need for expanding the production facility areas.  Currently, the company produces over 30,600 tons of end product annually.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

The following table sets forth each person known by us to be the beneficial owner of five percent (5%) or more of MDHO’s Common Stock, after giving effect to the Share Exchange and the change in control effective as of the Closing Date. Each person named below has sole voting and investment power with respect to the shares shown unless otherwise indicated.

Name and Address of Beneficial Owner	Amount of Direct Ownership After Share Exchange		Amount of Indirect Ownership After Share Exchange		Total Beneficial Ownership After Share Exchange		Percentage of Class (1)
Marshall Davis (2) 135 Carolstowne Road Reisterstown, MD 21136 USA		1,114,860		–		1,114,860		5.6	%
Fresh Generation Overseas Limited (3) Rong Qiao Economic Zone Fuqing City Fujian Province, 300500 People’s Republic of China		12,000,000		–		12,000,000		60	%

Security Ownership of Management

The following table sets forth the ownership interest in MDHO’s Common Stock, as of the date of this Current Report, of all directors individually and all directors and officers as a group, after giving effect to the Share Exchange and the expiration of the ten (10) day time period following the Information Filing Date. Each person named below has sole voting and investment power with respect to the shares shown unless otherwise indicated.

Name and Address of Beneficial Owner (4)	Amount of Direct Ownership After Share Exchange		Amount of Indirect Ownership After Share Exchange			Total Beneficial Ownership After Share Exchange		Percentage of Class (1)
Chen Min, Chairman and Chief Executive Officer		–		3,264,000	(3)		3,264,000		16.3	%
Chen Qijie, Director		–		2,184,000	(3)		2,184,000		10.9	%
You Jianli, Director		–		4,368,000	(3)		4,368,000		21.8	%
Gao Juguang, Director		–		2,184,000	(3)		2,184,000		10.9	%
Wang Changzhu, Director		–		–			–		–
Wang Rui, Director		–		–			–		–
Howard Barth, Director		–		–			–		–
Qin Jingshou, Director		–		–			–		–
Yang Feng, Chief Financial Officer		–		–			–		–
ALL DIRECTORS AND OFFICERS AS A GROUP:				12,000,000			12,000,000		60	%

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(1)	Applicable percentage of ownership is based on 20,000,001shares of Common Stock outstanding as of the date of this Current Report, together with securities exercisable or convertible into shares of Common Stock within sixty (60) days of the date of this Report for each stockholder. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of Common Stock are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Note that affiliates are subject to Rule 144 and insider trading regulations. The percentage computation is for form purposes only.
(2)	Immediately prior to the Share Exchange, Marshall Davis, the former sole officer and sole director of MDHO, owned 65,625,000 shares of our Common Stock, which constituted 90.50% of the issued and outstanding shares of our Common Stock. Simultaneously with the consummation of the Share Exchange, Mr. Davis entered into a Stock Purchase Agreement with MDHO pursuant to which Mr. Davis delivered 64,510,540 shares of our Common Stock held by him for cancellation in exchange for the transfer by MDHO to Mr. Davis of all the issued and outstanding capital stock of MD Mortgage Corporation, the wholly-owned subsidiary of MDHO (“MD Mortgage”). MD Mortgage has no operations and nominal assets. As part of the Share Exchange, Marshall Davis resigned from all of his positions as an officer and director of MDHO. His resignation as an officer was effective as of the Closing Date and his resignation as a Director will become effective not earlier than ten (10) days after the Information Filing Date, in accordance with Rule 14F-1 under the Exchange Act.
(3)	Chen Min, Chen Qijie, You Jianli and Gao Juguang previously owned all of the issued and outstanding shares of Fresh Generation Overseas Limited, our principal stockholder following the Share Exchange, in the following proportions: Chen Min (27.2%), You Jianli (36.4%), Chen Qijie (18.2%), Gao Juguang (18.2%). In November 2008, Chen Qijie, You Jianli and Gao Juguang transferred their interests in Fresh Generation Overseas Limited to Chen Min, as trustee, to hold such interests in trust for their benefit. Chen Qijie, You Jianli and Gao Juguang retain the power to direct Chen Min regarding how to vote or dispose of the shares held in trust. Also in November 2008, Chen Min entered into a trust agreement with  Banks Yu Po Fung, as trustee, to hold the shares of Fresh Generation Overseas Limited in trust for Chen Min. Chen Min retains investment and voting control over such shares, and accordingly he is the indirect beneficial owner of the shares of our Common Stock held by Fresh Generation Overseas Limited. However, by virtue of the first trust arrangement, Chen Qijie, You Jianli and Gao Juguang are also deemed to beneficially own the shares of our Common Stock held by Fresh Generation Overseas Limited in proportion to their respective interests in the trust assets.
(4)	Each beneficial owner has the same address as MDHO.

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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The following table sets forth information regarding the directors, nominees for director, and executive officers of MDHO, including their ages, after giving effect to the consummation of the Share Exchange and the expiration of the ten (10) day time period following the Information Mailing Date.

Directors

Name	Age	Position(s)	Experience
Chen Min	40	Chairman of the Board of Directors, Chief Executive Officer	Mr. Chen is the founder of Guanwei and has served as  its Chief Executive Officer and Chairman of the Board of Directors since inception in 2005; from 1999 to 2005, Mr. Chen served as Chief Executive Officer and Chairman of the Board of Directors of Fuqing Huanli Plastic Corp. He holds a Bachelors degree in economics from Xiamen University.  Mr. Chen studied at both Japan Arsker College and Japan University and obtained degrees in economics, and obtained a Masters degree in innovative administrationfrom Tsing Hua University in 2009. While in Japan, Mr. Chen completed a study of the advanced Japanese recycling business and upon returning to China in 1999, he established Gaoming Plastics Inc., a plastic recycling business.  Mr. Chen has been working since to expand the scale and level of recycling in China in a cost-efficient way.
Chen Qijie	42	Director	Mr. Qijie has served as Vice General Manager of Guanwei since 2005; from 2002 to 2005, he served as Vice General Manager of Fuqing Huanli Plastic Corp., and prior to that, he worked as a sales representative and then sales manager at Fuqing Gaoming Plastics.  Mr. Qijie earned a diploma in chemistry from Fuzhou University.
You Jianli	47	Director	Mr. Jianli has served as Workshop General Manager of Guanwei since 2005; prior to that, he worked with Mr. Chen at Gaoming Plastics Inc. Mr. You worked for a steel recycling company and plastic recycling and reuse companies in the 1990s.  He also served as Vice General Manager and General Manager of Fujian Yongchao Shoe Manufacture Corp. for 8 years, from 1997 to 2005. He earned a diploma in mechanical engineering from Fuzhou Mechanical College in 1983.
Gao Juguang	46	Director	Mr. Juguang has served as Sales Director of Guanwei since 2005, and during that time, he has successfully developed over 200 client relationships for company in over 10 provinces. Prior to joining Guanwei, he served as Sales Manager of Fujian Zhenyun Plastics Corp., Fujian Yatong Plastics Corp. and Rongyin Plastics Corp. from 1997 to 2005.  He earned a diploma in chemistry from Fuzhou University in 1982.

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Wang Changzhu	36	Director	Mr. Changzhu has served on the Board of Directors of Guanwei since 2004.  He founded and has served as President and CEO of Shandong Rongchen Real Property Development Corp. since 2004.  He earned a Bachelors degree in business administrationfrom Yokohama National University in 1995.
Wang Rui	39	Director	Mr. Rui has served on the Board of Directors of Guanwei since 2004.  In 2002, Mr. Rui founded and has served as President and CEO of Tianjin Yuanchuang Shuntian Architech Design & Consulting Inc.  He earned a Bachelors degree in English Literature from Tianjin Foreign Studies Universityin 1991 and a Bachelors degree in Business & Commerce from University of Tokyo in 1997.
Howard Barth	57	Director	Mr. Barth has served on the Board of Directors of Guanwei since 2005. Also since 2005, he served as President, CEO and as a director of Yukon Gold Corp.,  Mr. Barth is currently a director of Nuinsco Resources Limited (a TSX listed exploration company), New Oriental Energy & Chemical Corp. (a NASDAQ listed company) and Orsus Xelent Technologies, Inc. (an AMEX-listed company).  He is also currently a director for Uranium Hunter Corporation (an OTC BB company).  Mr. Barth has operated his own public accounting firm in Toronto, Canada since 1985, and has over 26 years of experience as a certified accountant.  He is a member of the Canadian Institute of Chartered Accountants and the Ontario Institute of Chartered Accountants. He earned a Bachelors and Masters degree in accountingfrom York University.
Qin Jingshou	38	Director	Mr. Jingshou has served on the Board of Directors of Guanwei since 2004.  In 2000, he founded and has served as General Manager of Fuqing Yonghe Plastic & Rubbery Corp. inception.  Prior to that he spent 8 years working for various plastic companies in sales and marketing.  He earned a Bachelors degree in Mathematicsfrom Fujian Normal University in 1993.

Executive Officers and Significant Employees

Yang Feng 40 Chief Financial Officer Mr. Yang has served as Chief Financial Officer of Guanwei since 2009; from 2007 to 2009, he served as Chief Financial Officer of Xi’An Li Ao Technology Inc. From 2003 to 2006, he worked as the financial controller for China Diary Group Limited (CHDA, Singapore Securities Exchange listing) and served as the Chief Financial Officer for Xi'An Silver Bridge Bio-tech Corp. (a Singapore listing corp.) from 2001 to 2003. Mr. Yang is a certified public accountant in China and has over 18 years of accounting experience.  He earned a Bachelors degree in Accounting from China Northwest University.

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Legal Proceedings Involving Officers and Directors

During the past five years, no officer or director of Guanwei or Chenxin has:

(1) Petitioned for bankruptcy or had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

(2) Been convicted in a criminal proceeding or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

(3) Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

(4) Been found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Family Relationships

There are no family relationships by and between or among the members of the Board or other executives. None of our directors and officers are directors or executive officers of any company that files reports with the SEC except as set forth in the Biographies section above.

Term of Office

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our Bylaws. Our officers are appointed by the Board and hold office until removed by the Board.

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth compensation information concerning all cash and non-cash compensation awarded to, earned or paid to certain of all executive officers and other key employees of the Company who were serving as of the date of this Current Report for services in all capacities during the last two (2) completed fiscal years ended December 31, 2008 and 2007. The compensation listed below was paid to our officers by Guanwei.  The following information includes the U.S. dollar value, based on the exchange rate of the RMB to U.S. dollars on September 29, 2009, bonus awards, the number of stock options granted and certain other compensation, if any, whether paid or deferred. Yang Feng, our Chief Financial Officer was not employed by Guanwei until 2009, so he is not included in the table.

Name and Principal Position	Year	Salary ($)		Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Chen Min, CEO and Chairman	2007 2008	5,273 5,273	(1)								5,273 5,273
Chen Qije, Vice General Manager	2007 2008	5,273 5,273	(2)								5,273 5,273
You Jianli, Workshop Manager	2007 2008	5,273 5,273	(3)								5,273 5,273
Gao Juguang, Operation Manager	2007 2008	5,273 5,273	(4)								5,273 5,273
You Jianming, Operation Manager	2007 2008	5,273 5,273	(5)								5,273 5,273
Gao Fei, Vice Workshop Manager	2007 2008	6,152 6,152	(6)								6,152 6,152

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(1) Chen Min’s base salary for the fiscal years ended December 31, 2007 and 2008 was RMB 36,000, and RMB 36,000, respectively, or $5,273 for each year (based on the exchange rate of RMB to U.S. dollars on September 29, 2009).

(2) Chen Qijie’s base salary for the fiscal years ended December 31, 2007 and 2008 was RMB 36,000, and RMB 36,000, respectively, or $5,273 for each year (based on the exchange rate of RMB to U.S. dollars on September 29, 2009).

(3) You Jianli’s base salary for the fiscal years ended December 31, 2007 and 2008 was RMB 36,000, and RMB 36,000, respectively, or $5,273 for each year (based on the exchange rate of RMB to U.S. dollars on September 29, 2009).

(4) Gao Juguang’s base salary for the fiscal years ended December 31, 2007 and 2008 was RMB 36,000, and RMB 36,000, respectively, or $5,273 for each year (based on the exchange rate of RMB to U.S. dollars on September 29, 2009).

(5) You Jianming’s base salary for the fiscal years ended December 31, 2007 and 2008 was RMB 36,000, and RMB 36,000, respectively, or $5,273 for each year (based on the exchange rate of RMB to U.S. dollars on September 29, 2009).

(6) Gao Fei’s base salary for the fiscal years ended December 31, 2007 and 2008 was RMB 42,000, and RMB 42,000, respectively, or $6,152 for each year (based on the exchange rate of RMB to U.S. dollars on September 29, 2009).

Each of the executive officers of the Company has entered into standard employment contracts with Guanwei, a form of which is attached as an exhibit to this Current Report as Exhibit 10.5. The contracts have 3-year terms and are otherwise consistent with the standard form prescribed by the Fujian Labor and Social Security Administration. The amounts listed in the table above were paid by Guanwei. We have no stock option, retirement, pension or profit-sharing programs for the benefit of directors, officers or other employees, but our Board of Directors may recommend adoption of one or more such programs in the future.

None of the directors or officers have any stock options.

Executive Compensation

Guanwei’s compensation program is designed to provide its executive officers with competitive remuneration and to reward their efforts and contributions to the Company. Elements of compensation for our executive officers include base salary and cash bonuses.

The level of compensation is determined based upon the business experience of our directors and management and anecdotal information obtained by them regarding compensation paid to similarly situated employees within the region. At this time, Guanwei has not yet established formal compensation metrics based upon performance of the executive or the company, nor has Guanwei engaged in a benchmarking process to determine compensation levels.

Cash bonuses may also be awarded to our executives on a discretionary basis at any time.

Director Compensation

Guanwei did not provide any compensation to its directors in the fiscal year ended December 31, 2008. The Company may establish certain compensation plans (e.g. options, cash for attending meetings, etc.) with respect to directors in the future.Prior to the Share Exchange Marshall Davis, the sole director and officer of MDHO was not receiving compensation for his services.

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Employment Agreements

Guanwei has a labor contract with each employee as required by law in the PRC. The labor contract mainly includes working content, contract period, working time, payment and other terms.

Benefit Plans

MDHO has no stock option, retirement, pension or profit-sharing programs for the benefit of its directors, officers or other employees; however our Board may recommend the adoption of one or more such programs in the future.

In accordance with Chinese law, Guanwei offers a welfare program pursuant to which it pays pension, accident, medical, birth, job and house allowance payments for all contract employees of Guanwei.

CORPORATE GOVERNANCE

Audit, Corporate Governance and Nominating, and Compensation Committees

Currently, MDHO does not have separately-designated standing audit, corporate governance and nominating, or compensation committees. Functions customarily performed by such committees are performed by our Board of Directors as a whole.  Our company is not required to maintain such committees under the rules applicable to companies listed on the OTCBB.  We intend to create board committees, including an independent audit committee, in the near future.  If we are successful in listing our common stock on NASDAQ, we would be required to have such committees under the NASDAQ rules.

Code of Ethics

MDHO does not currently have a Code of Ethics applicable to its executive officers, however the Board of Directors plans to adopt a Code of Ethics in the near future.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Exchange Agreement (Change of Control)

On the closing date of the Share Exchange, MDHO acquired all of the issued and outstanding capital stock of Chenxin from the Stockholder in exchange for the issuance to the stockholders of 12 million newly-issued shares of Common Stock pursuant to the terms of the Exchange Agreement. As a result of the Share Exchange, the Stockholder beneficially owns sixty percent (60%)of the voting capital stock of MDHO. All the shares of the Stockholder are held in trust for Chen Min, the President, CEO and Chairman of the Board of Guanwei.  Upon the execution of the Exchange Agreement, Marshall Davisresigned from each of his officer positions with the MDHO and Chen Min was appointed to serve as Chairman, Chief Executive Officer and President of MDHO. Additionally, Yang Fengwas appointed to serve as Chief Financial Officer of MDHO.

Of even date with this Current Report, the Registrant also filed with the SEC an Information Statement complying with Rule 14F-1 under the Exchange Act that describes a change in a majority of the Registrant’s Board that is occurring in connection with the change of control of the Registrant that is described in this Current Report. Upon the execution of the Exchange Agreement, Chen Minwas appointed to the Board of Directors of MDHO and not earlier than ten (10) days following the mailing of such Information Statement to the stockholders of MDHO, Mr. Davis’s resignation as a director will become effective and the remaining seven directors shall be appointed to the Board (as detailed in Item 5.02 herein below).

Purchase Agreement

Simultaneously with the consummation of the Share Exchange, Marshall Davis entered into a Stock Purchase Agreement (the “Purchase Agreement”) with MDHO pursuant to which Mr. Davis delivered to MDHO 64,510,540 shares of our Common Stock held by him for cancellation. In consideration for those shares, MDHO transferred to Mr. Davis of all the issued and outstanding capital stock of MD Mortgage Corporation, the wholly-owned subsidiary of MDHO (“MD Mortgage”). MD Mortgage has no operations and nominal assets.

Dividend

In 2009, Chenxin and Guanwei paid dividends in the aggregate amount of $4,409,934 to Chen Min, You Jianli, Chen Qijie and Gao Juguang, each of whom will be directors of MDHO following the consummation of the Share Exchange and the completion of the ten (10) day period following the mailing of the 14F-1 Information Statement discussed above. The dividend was declared in 2008, while Chen Min, You Jianli, Chen Qijie and Gao Juguang were shareholders of Guanwei and Chenxin, but the dividend payment was ratified at the annual shareholders meeting and board of directors meeting on March 11, 2009.

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Director Independence

The following non-employee directors of MDHO, each of whom will take office after giving affect to the Share Exchange and the expiration of the ten (10) day time period following the mailing of the Schedule 14F-1, are independent pursuant to Nasdaq Rules and the rules of the Securities and Exchange Commission:

Howard Barth

Wang Rui

Wang Changzhu

Qin Jingshou

The following directors are not independent pursuant to Nasdaq Rules and the rules of the Securities and Exchange Commission: Chen Min, Chen Qijie, You Jianli, and Gao Juguang.

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DESCRIPTION OF SECURITIES

CHENXIN AND GUANWEI

The authorized capital stock of Chenxin is comprised of 10,000 ordinary shares, nominal value HK$1.00 per share.  Following the consummation of the Share Exchange, all 10,000 ordinary shares of common stock of Chenxin are held by MDHO. Guanwei is a wholly-owned subsidiary of Chenxin.

MD HOLDINGS CORP.

As of the date of  this Current Report, and following the consummation of the Share Exchange, the authorized capital stock of MDHO consists of 500,000,000 shares of common stock, par value $0.001 per share, of which 20,000,001 are issued and outstanding, and 10,000,000 shares of preferred stock, par value $0.001 per share, none of which are issued and outstanding. The following statements set forth the material terms of MDHO’s capital stock; however, reference is made to the more detailed provisions of, and these statements are qualified in their entirety by reference to, MDHO’s Articles of Incorporation and Bylaws, copies of which are filed as exhibits to MDHO’s SEC filings.  There are no provisions in MDHO’s Articles of Incorporation or Bylaws that would delay, defer or prevent a change in our control.

Common Stock

Except as otherwise required by applicable law and subject to the preferential rights of the any outstanding preferred stock, all voting rights are vested in and exercised by the holders of Common Stock with each share of Common Stock being entitled to one (1) vote. In the event of liquidation, holders of Common Stock are entitled to share ratably in the distribution of assets remaining after payment of liabilities, if any. Holders of Common Stock have no cumulative voting rights. Holders of Common Stock have no preemptive or other rights to subscribe for shares. Holders of Common Stock are entitled to such dividends as may be declared by the Board out of funds legally available therefor.

Preferred Stock

The Board of Directors is empowered, without further action by stockholders, to issue from time to time one or more series of preferred stock, with such designations, rights, preferences and limitations as the Board may determine by resolution. The rights, preferences and limitations of separate series of preferred stock may differ with respect to such matters among such series as may be determined by the Board, including, without limitation, the rate of dividends, method and nature of payment of dividends, terms of redemption, amounts payable on liquidation, sinking fund provisions (if any), conversion rights (if any) and voting rights. Certain issuances of preferred stock may have the effect of delaying or preventing a change in control of our company that some stockholders may believe is not in their interest.

Penny Stock Rules

Our Common Stock is subject to the penny stock rules which impose significant restrictions on the Broker-Dealers and may affect the resale of our stock. A penny stock is generally a stock that:

¨ is not listed on a national securities exchange or NASDAQ,

¨ is listed in “pink sheets” or on the OTC,

¨ has a price per share of less than $5.00, and

¨ is issued by a company with net tangible assets less than $5,000,000.

The penny stock trading rules impose additional duties and responsibilities upon broker-dealers and salespersons effecting purchase and sale transactions in common stock and other equity securities, including:

¨ determination of the purchaser's investment suitability,

¨ delivery of certain information and disclosures to the purchaser and

¨ receipt of a specific purchase agreement from the purchaser prior to effecting the purchase transaction.

Many broker-dealers will not effect transactions in penny stocks, except on an unsolicited basis, in order to avoid compliance with the penny stock trading rules. In the event our common stock becomes subject to the penny stock trading rules, such rules may materially limit or restrict the ability to resell our common stock and the liquidity typically associated with other publicly traded equity securities may not exist.

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Many broker-dealers will not effect transactions in penny stocks, except on an unsolicited basis, in order to avoid compliance with the penny stock trading rules. In the event our common stock becomes subject to the penny stock trading rules, such rules may materially limit or restrict the ability to resell our common stock and the liquidity typically associated with other publicly traded equity securities may not exist.

Warrants

There are no outstanding warrants to purchase our securities.

Options

There are no options to purchase our securities outstanding. We may in the future establish an incentive stock option plan for our directors, employees and consultants.

Transfer Agent

Corporate Stock Transfer currently acts as our transfer agent and registrar. Corporate Stock Transfer may be contacted at 3200 Cherry Creek Dr. South, Suite 430, Denver, CO 80209 or by telephone at 303-282-4800.

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S

COMMON EQUITY AND OTHER STOCKHOLDER MATTERS

Our Common Stock has been listed on the OTCBB under the symbol “MDHO” since August 14, 2008. There has been an extremely limited public market for our Common Stock.  As of the date of this Current Report, and following the consummation of the Share Exchange, 20,000,001 shares of our Common Stock were issued and outstanding.

When the trading price of our Common Stock is below US$5.00 per share, the Common Stock is considered to be a “penny stock” that is subject to rules promulgated by the SEC (Rule 15-1 through 15g-9) under the Exchange Act. These rules impose significant requirements on brokers under these circumstances, including: (a) delivering to customers the SEC’s standardized risk disclosure document; (b) providing customers with current bid and ask prices; (c) disclosing to customers the brokers-dealer’s and sales representatives compensation; and (d) providing to customers monthly account statements.

The following table sets forth on a per share basis for the periods shown, the high and low closing bid prices of our Common Stock. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Closing Bid Prices	High		Low
Calendar Year Ending December 31, 2009
3 rd Quarter:	$	0.02857	$	0.02857
2 nd Quarter:		*		*
1 st Quarter:		*		*
Calendar Year Ended December 31, 2008
4 th Quarter:		*		*
3 rd Quarter:		*		*

*   We did not have a bid and ask price quoted for this time period.

The high and low bid quotations for the Common Stock as of November 5, 2009were $0.02857 and $0.02857, respectively.  The market quotations represent prices between dealers, do not include retail markup, markdown, or commissions and may not represent actual transactions.

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Dividends

Dividends, if any, will be contingent upon our revenues and earnings, if any, capital requirements and financial conditions. The payment of dividends, if any, will be within the discretion of the Board. We presently intend to retain all earnings, if any, for use in our business operations and accordingly, the Board does not anticipate declaring any cash dividends for the foreseeable future. We have not paid any cash dividends on our Common Stock.

Holders of Common Equity

As of the date of this Current Report and following the consummation of the Share Exchange, MDHO has issued 20,000,001 shares of our Common Stock to 19 holders.

The Company believes that it has more stockholders since many of its shares are held in “street” name. See also the “Security Ownership of Certain Beneficial Owners and Management” above for a table setting forth (a) each person known by us to be the beneficial owner of five percent (5%) or more of our Common Stock and (b) all directors and officers individually and all directors and officers as a group as of the date of this Report, after giving effect to the Exchange.

Securities Authorized for Issuance under Equity Compensation Plans

As of the date of this Current Report, we have no compensation plans (including individual compensation arrangements) under which MDHO’s equity securities are authorized for issuance.

LEGAL PROCEEDINGS

As of the date hereof, there is no pending or outstanding material litigation with respect to the Company.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Nevada law authorizes, and our Bylaws provide for, indemnification of our directors and officers against claims, liabilities, amounts paid in settlement and expenses in a variety of circumstances. Insofar as indemnification for liabilities arising under the Securities Act may be permitted for directors, officers and controlling persons pursuant to the foregoing, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

ADDITIONAL INFORMATION

We are obligated to file reports with the SEC pursuant to the Exchange Act. The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 on official business days during the hours of 10am and 3pm. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov ..

We also maintain a website at http://www.guanweirecycling.com .. We plan to make available in the near future on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Until the posting of such reports on our website, we will voluntarily provide electronic or paper copies of our filings free of charge upon written request to the Company at our principal executive offices.

 

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Item 3.02   Unregistered Sales of Equity Securities.

On November 5, 2009, pursuant to the Purchase Agreement, MDHO transferred to Marshall Davis all of the issued and outstanding capital stock of MD Mortgage Corporation, the wholly-owned subsidiary of MDHO. The consideration for such transfer was the delivery for cancellation of 64,510,540 shares of our Common Stock held by Mr. Davis. The issuance was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(2) of the Securities Act, as a transaction by an issuer not involving a public offering.

On November 5, 2009, pursuant to the Exchange Agreement, MDHO issued 12 million shares of our Common Stock to Fresh Generation Overseas Limited, a British Virgin Islands company (the “Stockholder”). The consideration for such issuance was the transfer by the Stockholder of all of the issued and outstanding capital stock of Hongkong Chenxin International Development Limited, a Hong Kong corporation. The issuance was exempt from registration under the Securities Act pursuant to Section 4(2) thereof, as a transaction by an issuer not involving a public offering.

Item 5.01   Change in Control of Registrant

On the Closing Date of the Exchange Agreement, MDHO acquired all of the issued and outstanding capital stock of Chenxin from the Stockholder in exchange for the issuance by the Company to the Stockholder of an aggregate of 12 millionnewly-issued shares of Common Stock. As a result of the Share Exchange, the Stockholder beneficially owns an aggregate of sixty percent (60%) of the voting capital stock of MDHO. Upon the execution of the Exchange Agreement, Marshall Davisresigned from each of his officer positions with the Registrant and Chen Min was appointed to serve as Chief Executive Officer of the Registrant. Marshall Davis’ resignation as a director of the Registrant, and the appointment of Howard Barth, Wang Rui, Wang Changzhu, Qin Jingshou, Chen Qijie, You Jianli, and Gao Juguang to serve as Board members of the Registrant, shall become effective on the 10th day following the Information Filing Date (as detailed in Item 5.02 herein below).

Item 5.02   Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

On the Closing Date, Marshall Davis resigned from each of his officer positions with the Registrant, and Chen Min was appointed as a director and Chief Executive Officer. Following the expiration of the ten (10) day time period following the mailing of an Information Statement complying with rule 14F-1 under the Exchange Act, Mr. Davis’ resignation as a director shall become effective and Howard Barth, Wang Rui, Wang Changzhu, Qin Jingshou, Chen Qijie, You Jianli, and Gao Juguang shall serve as directors of the Registrant, with Chen Min serving as Chairman of the Board. For further information on these individuals, please see the Section entitled “Directors, Executive Officers, Promoters and Control Persons” herein above.

Item 5.06   Change in Shell Company’s Status

Prior to the Closing Date, MDHO was a shell company, other than a business combination related shell company, as that term is defined in Rule 12b-2 under the Exchange Act.

Upon completion of the Exchange, MDHO ceased being a shell company. From and after the Closing Date, the operations of Chenxin and Guanwei are the only operations of MDHO.

Item 8.01   Other Events

On November 5, 2009, prior to the consummation of the Share Exchange discussed elsewhere in this Current Report, the Registrant effected a 3.5 for 1 forward split (the “Forward Split”) of its common stock, par value $0.001 per share (“Common Stock”). The number of  shares of authorized Common Stock and the par value did not change as a result of the Forward Split.

The record date for determining the shareholders entitled to receive the Forward Split shares was November 2, 2009. As a result of the Forward Split, all shareholders of record on November 2, 2009 received three and one half (3½) shares of Common Stock for every one (1) share of Common Stock they held on that date. On November 5, 2009, the Registrant’s transfer agent will cause to be issued and mailed to the eligible shareholders of record, two and one half (2½) additional shares of Common Stock for each share of Common Stock held by such shareholders, thereby effectuating the Forward Split on a 3.5:1 basis.

Consummation of the Forward Split did not result in a change in the relative equity position or voting power of the shareholders of the Registrant. Additionally, there was no change in the Registrant’s CUSIP number for the Common Stock or the Registrant’s trading symbol on the OTCBB as a result of the Forward Split. The Forward Split resulted in the increase the number of shares of the Registrant’s Common Stock issued and outstanding to 72,510,141.

Immediately following the consummation of the Forward Split, 64,510,140 shares of Common Stock held by Marshall Davis, the Registrant’s principal stockholder, were cancelled pursuant to the Stock Purchase Agreement discussed in Item 2.01 above. Following the consummation of the Share Exchange and as of the date of this Current Report, 20,000,001 shares of our Common Stock are issued and outstanding.

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Item 9.01   Financial Statements and Exhibits

(a) Financial Statements attached hereto as Exhibits 99.1 and 99.2.

(b) Pro Forma Financial Statements attached hereto as Exhibit 99.3.

(c) See (a) and (b) above.

(d) Exhibit No Description:

EXHIBIT NO.	DESCRIPTION
2.1	Share Exchange Agreement by and between MDHO, Chenxin and the Stockholder, dated November 5, 2009 (1)
3.1	Articles of Incorporation of MDHO, dated December 13, 2006.  (2)
3.2	Bylaws of MDHO  (3)
3.3	Certificate of Amendment to Articles of Incorporation of MDHO, dated January 28, 2008 (4)
3.4	Certificate of Incorporation of Chenxin  (1)
3.5	Memorandum and Articles of Association of Chenxin  (1)
3.6	Articles of Associations of Guanwei  (1)
3.7	Enterprise Business License of Guanwei, dated December 27, 2007 (1)
3.8	Enterprise Business License of Guanwei, dated December 23, 2008 (1)
10.1	Share Exchange Agreement and Stock Purchase between MDHO and MD Mortgage Corp., dated January 15, 2007  (5)
10.2	Asset Transfer Agreement, between Fuqing State-Owned Assets Management & Investment Corp. and Guanwei, dated January 11, 2006  (1)
10.3	Land Use Certificate, issued by the Ministry of State-Owned Land Resources of the People’s Republic of China to Guanwei, dated November 8, 2006  (1)
10.4	Audit Report and Certificate, issued by Tuv Rheinland Cert. gmbH to Guanwei  (1)
10.5	Form of Employment Contract  (1)
10.6	Stock Purchase Agreement, between MDHO and Marshall Davis, dated November 5, 2009  (1)
10.7	Indemnity Agreement, by and between Chenxin, the Stockholder, and Marshall Davis, dated November 5, 2009 (1)
10.8	Maximum Amount Loan with Pledge Contract, dated January 17, 2008 between Guanwei and Fuqing Rural Credit Cooperative Bank (1)
21.1	List of Subsidiaries of MDHO (1)
99.1	Audited Consolidated Balance Sheets of Chenxin and Guanwei as of December 31, 2008 and 2007 and Consolidated Statements of Income and Comprehensive Income, Cash Flows and Changes in Shareholders’s Equity for the years ended December 31, 2008 and 2007
99.2	Unaudited Condensed Consolidated Balance Sheets of Chenxin and Guanwei as of June 30, 2009 and December 31, 2008 and Unaudited Condensed Consolidated Statements of Income and Comprehensive Income and Cash Flows for the Three and Six Months Ended June 30, 2009 and 2008
99.3	Unaudited Pro Forma Combined Balance Sheets as of June 30, 2009

(1) Provided herewith.

(2) Incorporated by reference to the Registrant’s Registration Statement on Form SB-2 (File No. 333-149013), Exhibit 3.1, filed on February 1, 2008.

(3) Incorporated by reference to the Registrant’s Registration Statement on Form SB-2 (File No. 333-149013), Exhibit 3.2, filed on February 1, 2008.

(4) Incorporated by reference to the Registrant’s Registration Statement on Form SB-2 (File No. 333-149013), Exhibit 3.3, filed on February 1, 2008.

(5) Incorporated by reference to the Registrant’s Registration Statement on Form SB-2 (File No. 333-149013), Exhibit 10.1, filed on February 1, 2008.

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SIGNATURE PAGE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: November 6, 2009

MD HOLDINGS CORP.
By:	/s/ Chen Min
Name:	Chen Min
Title:	Chief Executive Officer and Chairman of the Board of Directors

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EX-2.1

K&L GATES DRAFT

11/4/09

SHARE EXCHANGE AGREEMENT

by and among

MD HOLDINGS CORP.,

HONG KONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED,

and

FRESH GENERATION OVERSEAS LIMITED

Dated as of November 5, 2009

TABLE OF CONTENTS

PAGE

ARTICLE I REPRESENTATIONS, COVENANTS, AND WARRANTIES OF HKCO		1
Section 1.01	Organization	2
Section 1.02	Capitalization	2
Section 1.03	Subsidiaries and Predecessor Corporations	2
Section 1.04	Financial Statements.	2
Section 1.05	Information	3
Section 1.06	Options or Warrants	3
Section 1.07	Absence of Certain Changes or Events	3
Section 1.08	Litigation and Proceedings	4
Section 1.09	Contracts.	4
Section 1.10	No Conflict With Other Instruments	4
Section 1.11	Compliance With Laws and Regulations	4
Section 1.12	Approval of Agreement	5
Section 1.13	Valid Obligation	5
ARTICLE II REPRESENTATIONS, COVENANTS, AND WARRANTIES OF USCO		5
Section 2.01	Organization	5
Section 2.02	Capitalization	5
Section 2.03	Subsidiaries and Predecessor Corporations	5
Section 2.04	Financial Statements.	6
Section 2.05	Information	6
Section 2.06	Options or Warrants	7
Section 2.07	Absence of Certain Changes or Events	7
Section 2.08	Litigation and Proceedings	7
Section 2.09	Contracts	7
Section 2.10	No Conflict With Other Instruments	8
Section 2.11	Compliance With Laws and Regulations	8
Section 2.12	Approval of Agreement	8
Section 2.13	Material Transactions or Affiliations	8
Section 2.14	Bank Accounts; Power of Attorney	8
Section 2.15	Valid Obligation.	8
Section 2.16	Filings.	9
Section 2.17	Shell Company	9
Section 2.18	OTCBB	9
ARTICLE III PLAN OF EXCHANGE		9
Section 3.01	The Exchange.	9
Section 3.02	Anti-Dilution	9
Section 3.03	Closing Events	9
Section 3.04	Termination	9
ARTICLE IV SPECIAL COVENANTS		10
Section 4.01	Access to Properties and Records	10
Section 4.02	Delivery of Books and Records	10
Section 4.03	Third Party Consents and Certificates	10

i

Section 4.04	USCo Stockholder Meeting.	10
Section 4.05	Cancellation of Certain Shares of USCo Common Stock.	10
Section 4.06	Designation of Directors and Officer.	10
Section 4.07	Exclusive Dealing Rights.	11
Section 4.08	Actions Prior to Closing	11
Section 4.09	Indemnification.	12
Section 4.10	The Acquisition of USCo Common Stock	13
Section 4.11	Sales of Securities Under Rule 144, If Applicable.	14
Section 4.12	Good Standing.	14
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF USCO		15
Section 5.01	Accuracy of Representations and Performance of Covenants	15
Section 5.02	Officer’s Certificate	15
Section 5.03	[Intentionally Omitted]	15
Section 5.04	No Governmental Prohibition	15
Section 5.05	Consents	15
Section 5.06	Other Items	15
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF HKCO AND THE HKCO STOCKHOLDER		15
Section 6.01	Accuracy of Representations and Performance of Covenants	15
Section 6.02	Officer’s Certificate	16
Section 6.03	Good Standing	16
Section 6.04	No Governmental Prohibition	16
Section 6.05	Consents	16
Section 6.06	Other Items	16
ARTICLE VII MISCELLANEOUS		16
Section 7.01	Brokers	16
Section 7.02	Governing Law	17
Section 7.03	Notices	17
Section 7.04	Attorney’s Fees	18
Section 7.05	Confidentiality	18
Section 7.06	Public Announcements and Filings	18
Section 7.07	Schedules; Knowledge	18
Section 7.08	Third Party Beneficiaries	19
Section 7.09	Expenses	19
Section 7.10	Entire Agreement	19
Section 7.11	Survival; Termination	19
Section 7.12	Counterparts	19
Section 7.13	Amendment or Waiver	19
Section 7.14	Best Efforts	19
Section 7.15	References	19

Exhibits
	A.	Suitability Letter
	B.	Investment Letter

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SHARE EXCHANGE AGREEMENT

THIS SHARE EXCHANGE AGREEMENT (hereinafter referred to as this “Agreement”) is entered into as of November 5, 2009 (the “Closing Date”), by and between MD Holdings Corp., a Nevada corporation (hereinafter referred to as “USCo”), with principal offices located at 135 Carolstowne Road, Reisterstown, Maryland 21136, and Hong Kong Chenxin International Development Limited, a Hong Kong company(hereinafter referred to as “HKCo”), and Fresh Generation Overseas Limited,a British Virgin Islands company(the “HKCo Stockholder”), upon the following premises:

Premises

WHEREAS, USCo is a publicly held corporation organized under the laws of the State of Nevada with no significant operations;

WHEREAS, Marshall Davis (the “Principal USCo Stockholder”) is currently the principal stockholder of USCo, owning, directly or indirectly, 65,625,000 shares of USCo Common Stock (as defined in Section 2.02 below), representing approximately 90.5% of the issued and outstanding USCo Common Stock as of the date hereof;

WHEREAS, HKCo is a privately held corporation organized under the laws of Hong Kong;

WHEREAS, USCo agrees to acquire 100% of the issued and outstanding capital stock of HKCo in exchange for the issuance of certain shares of USCo Common Stock (the “Exchange”) and the HKCo Stockholder agrees to exchange its shares of HKCo on the terms described herein; and

WHEREAS, the parties hereto intend for this transaction to constitute a tax-free reorganization pursuant to the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.

Agreement

NOW THEREFORE, on the stated premises and for and in consideration of the mutual covenants and agreements hereinafter set forth and the mutual benefits to the parties to be derived herefrom, and intending to be legally bound hereby, it is hereby agreed as follows:

ARTICLE I

REPRESENTATIONS, COVENANTS, AND WARRANTIES OF HKCO

As an inducement to, and to obtain the reliance of, USCo, and except as set forth in the corresponding disclosure schedules delivered by HKCo in connection with this Agreement (the “HKCo Schedules”), HKCo represents and warrants, as of the date hereof and as of the Closing Date, as defined below, as follows:

Section 1.01Organization.  HKCo is a corporation duly organized, validly existing, and in good standing under the laws of Hong Kong and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted.  Included in Schedule 1.01 of the HKCo Schedules are complete and correct copies of the articles of association (such documents, or other equivalent corporate organizational documents, the “Organizational Documents”) of HKCo as in effect on the date hereof.  The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby (collectively, the “Contemplated Transactions”), will not, violate any provision of HKCo’s Organizational Documents.  HKCo has full power, authority, and legal right and has taken all action required by law, its Organizational Documents, or otherwise to authorize the execution and delivery of this Agreement and to consummate the Contemplated Transactions.

Section 1.02Capitalization.  The authorized capital stock of HKCo consists of  10,000 ordinary shares, nominal value of HK$1.00 per share (the “HKCo Common Stock”), all of which are currently issued and outstanding.  All such shares of HKCo Common Stock are legally issued, fully paid, and non-assessable and not issued in violation of the preemptive or other rights of any person.

Section 1.03Subsidiaries and Predecessor Corporations.  Except as set forth on Schedule 1.03, HKCo does not have any predecessor corporation(s) or subsidiaries, and does not own, beneficially or of record, any shares of any other corporation.  Hereinafter, the term “HKCo” also includes those subsidiaries set forth in Schedule 1.03 of the HKCo Schedules.

Section 1.04Financial Statements.

(a)Included in Schedule 1.04 of the HKCo Schedules are the audited balance sheets of HKCo, as of December 31, 2008 (the “HKCo Balance Sheets”) and the related audited statements of operations, stockholders’ equity and cash flows for the fiscal years ended December 31, 2008 and December 31, 2007, together with the notes to such financial statements and the opinion of BDO Limited, independent certified public accountants (collectively, the “HKCo Financial Statements”).

(b)The HKCo Financial Statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) consistently applied throughout the periods involved. The HKCo Balance Sheets are true and accurate and fairly present as of their respective dates the financial condition of HKCo.  As of the date of the HKCo Balance Sheets, except as and to the extent reflected or reserved against therein, HKCo had no liabilities or obligations (absolute or contingent) which should be reflected in the HKCo Balance Sheets or the notes thereto prepared in accordance with GAAP, and all assets reflected therein are properly reported and fairly present the value of the assets of HKCo, in accordance with GAAP. The statements of operations, stockholders’ equity and cash flows included in the HKCo Financial Statements reflect fairly the information required to be set forth therein by GAAP.

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(c)HKCo has no liabilities with respect to the payment of any federal, state, county, local or other taxes (including any deficiencies, interest or penalties), except for taxes accrued but not yet due and payable.

(d)HKCo has timely filed all state, federal or local income and/or franchise tax returns required to be filed by it from inception to the date hereof.  Each such income tax return reflects the taxes due for the period covered thereby, except for amounts which, in the aggregate, are immaterial.

(e)All of HKCo’s assets are reflected on the HKCo Financial Statements, and, except as set forth in the HKCo Schedules or the HKCo Financial Statements, HKCo has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise.

Section 1.05Information.  The information concerning HKCo set forth in this Agreement and in the HKCo Schedules is complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.

Section 1.06Options or Warrants.  There are no existing options, warrants, calls, or commitments of any character relating to the authorized and unissued HKCo Common Stock.

Section 1.07Absence of Certain Changes or Events.  Except as set forth in Schedule 1.07, since December 31, 2008:

(a)there has not been any material adverse change in the business, operations, properties, assets, or condition (financial or otherwise) of HKCo;

(b)HKCo has not (i) amended its Organizational Documents; (ii) declared or made, or agreed to declare or make, any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) made any material change in its method of management, operation or accounting, (iv) entered into any other material transaction other than sales in the ordinary course of its business; or (v) made any increase in or adoption of any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement made to, for, or with its officers, directors, or employees; and

(c)Except as required by this Agreement, HKCo has not (i) granted or agreed to grant any options, warrants or other rights for its stock, bonds or other corporate securities calling for the issuance thereof, (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except as disclosed herein and except liabilities incurred in the ordinary course of business; (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights or canceled, or agreed to cancel, any debts or claims; or (iv) issued, delivered, or agreed to issue or deliver any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock).

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Section 1.08Litigation and Proceedings. There are no actions, suits, proceedings or investigations pending or, to the knowledge of HKCo after reasonable investigation, threatened by or against HKCo or affecting HKCo or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.  HKCo does not have any knowledge of any material default on its part with respect to any judgment, order, injunction, decree, award, rule, or regulation of any court, arbitrator, or governmental agency or instrumentality or of any circumstances which, after reasonable investigation, would result in the discovery of such a default.

Section 1.09Contracts.

(a)All “material” contracts, agreements, franchises, license agreements, debt instruments or other commitments to which HKCo is a party or by which it or any of its assets, products, technology, or properties are bound other than those incurred in the ordinary course of business are set forth in Schedule 1.09 of the HKCo Schedules.  A “material” contract, agreement, franchise, license agreement, debt instrument or commitment is one which would be required to be disclosed in connection with a current report on Form 8-K by HKCo if HKCo were a registrant subject to Rule 13a-1 and Rule 13a-11 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

(b)All contracts, agreements, franchises, license agreements, and other commitments to which HKCo is a party or by which its properties are bound and which are material to the operations of HKCo taken as a whole are valid and enforceable by HKCo in all respects, except as limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought (collectively, “Bankruptcy and Equity Exceptions”); and

(c)Except as included or described in Schedule 1.09 of the HKCo Schedules or reflected in the most recent HKCo Balance Sheet, HKCo is not a party to any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guaranty of any obligation; (vi) collective bargaining agreement; or (vii) agreement with any present or former officer or director of HKCo.

Section 1.10No Conflict With Other Instruments.  The execution of this Agreement and the consummation of the Contemplated Transactions will not result in the material breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of, any indenture, mortgage, deed of trust, or other material agreement, or instrument to which HKCo is a party or to which any of its assets, properties or operations are subject.

Section 1.11Compliance With Laws and Regulations.  To the best of its knowledge, HKCo has complied with all applicable statutes and regulations of any federal, state, or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of HKCo or except to the extent that noncompliance would not result in the occurrence of any material liability for HKCo.  This compliance includes, but is not limited to, the filing of all reports to date with federal and state securities authorities.

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Section 1.12Approval of Agreement.  The Board of Directors of HKCo has authorized the execution and delivery of this Agreement by HKCo and has approved this Agreement and the Contemplated Transactions.

Section 1.13Valid Obligation.  This Agreement and all agreements and other documents executed by HKCo in connection herewith constitute valid and binding obligations of HKCo, enforceable in accordance with their respective terms, except as may be limited by Bankruptcy and Equity Exceptions.

ARTICLE II

REPRESENTATIONS, COVENANTS, AND WARRANTIES OF USCO

As an inducement to, and to obtain the reliance of, HKCo, and except as set forth in the corresponding disclosure schedules delivered by USCo in connection with this Agreement (the “USCo Schedules”), USCo represents and warrants, as of the date hereof and as of the Closing Date, as follows:

Section 2.01Organization.  USCo is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted.  Included in Schedule 2.01 of the USCo Schedules are complete and correct copies of the Organizational Documents of USCo as in effect on the date hereof.  The execution and delivery of this Agreement does not, and the consummation of the Contemplated Transactions will not, violate any provision of USCo’s Organizational Documents.  USCo has full power, authority, and legal right and has taken all action required by law, its Organizational Documents, or otherwise to authorize the execution and delivery of this Agreement and to consummate the Contemplated Transactions.

Section 2.02Capitalization.  The authorized capital stock of USCo consists of  (a) 500,000,000 shares of common stock, par value $0.001 per share (“USCo Common Stock”), of which 72,510,141 shares are issued and outstanding immediately prior to the consummation of the Contemplated Transactions, 8,473 shares of which have been registered for resale with the U.S. Securities and Exchange Commission (“SEC”) pursuant to an effective registration statement, and (b) 10,000,000shares of preferred stock, par value $0.001 per share (“USCo Preferred Stock”), none of which are issued and outstanding.  All issued and outstanding shares of USCo Common Stock are legally issued, fully paid, and non-assessable and not issued in violation of the preemptive or other rights of any person.

Section 2.03Subsidiaries and Predecessor Corporations.  Except for MD Mortgage Corporation,a Maryland  corporation (“MD Mortgage”), which is a wholly-owned subsidiary of USCo, USCo does not have any predecessor corporation(s), no subsidiaries, and does not own, beneficially or of record, any shares of any other corporation.  Hereinafter, the term “USCo” also includes MD Mortgage.

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Section 2.04Financial Statements.

(a)Copies of (a) the audited balance sheet of USCo as of December 31, 2008 and the related audited statements of operations, stockholders’ equity and cash flows for the fiscal year ended December 31, 2008, together with the notes to such statements and the opinion of Webb & Company, P.A., independent certified public accountants, and (b) the unaudited balance sheet of USCo as of September 30, 2009 (together with the balance sheets of USCo as of December 31, 2008, the “USCo Balance Sheets”) and the related unaudited statements of operations, stockholders’ equity and cash flows for the nine-month period ending September 30, 2009 (the financial statements referred to in (a) and (b) collectively, the “USCo Financial Statements”) have been filed with the SEC.

(b)The USCo Financial Statements have been prepared in accordance with GAAP consistently applied throughout the periods involved. The USCo Balance Sheets are true and accurate and fairly present as of their respective dates the financial condition of USCo.  As of the respective dates of the USCo Balance Sheets, except as and to the extent reflected or reserved against therein, USCo had no liabilities or obligations (absolute or contingent) which should be reflected in the USCo Balance Sheets or the notes thereto prepared in accordance with GAAP, and all assets reflected therein are properly reported and fairly present the value of the assets of USCo, in accordance with GAAP. The statements of operations, stockholders’ equity and cash flows in the USCo Financial Statements reflect fairly the information required to be set forth therein by GAAP.

(c)USCo has no liabilities with respect to the payment of any federal, state, county, local or other taxes (including any deficiencies, interest or penalties), except for taxes accrued but not yet due and payable.

(d)USCo has timely filed all state, federal or local income and/or franchise tax returns required to be filed by it from inception to the date hereof.  Each such income tax return reflects the taxes due for the period covered thereby, except for amounts which, in the aggregate, are immaterial.

(e)All of USCo’s assets are reflected on the USCo Financial Statements, and, except as set forth in the USCo Schedules or the USCo Financial Statements, USCo has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise.

(f)Except as set forth on Schedule 2.09, USCo shall have no liabilities on the Closing Date.

Section 2.05Information.  The information concerning USCo set forth in this Agreement and the USCo Schedules is complete and accurate in all material respects and does not contain any untrue statements of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.

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Section 2.06Options or Warrants.  There are no existing options, warrants, calls, or commitments of any character relating to the authorized and unissued capital stock of USCo (including, but not limited to, the USCo Common Stock and the USCo Preferred Stock).

Section 2.07Absence of Certain Changes or Events.  Since the date of the most recent USCo Balance sheet:

(a)There has not been any material adverse change in the business, operations, properties, assets or condition (financial or otherwise) of USCo;

(b)Except as required by this Agreement, USCo has not (i) amended its Organizational Documents; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) made any material change in its method of management, operation or accounting; (iv) entered into any transactions or agreements; or (v) made any increase in or adoption of any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for or with its officers, directors, or employees; and

(c)Except as required by this Agreement, USCo has not (i) granted or agreed to grant any options, warrants, or other rights for its stock, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent); (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights, or canceled, or agreed to cancel, any debts or claims; or (iv) issued, delivered or agreed to issue or deliver, any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock).

Section 2.08Litigation and Proceedings.  There are no actions, suits, proceedings or investigations pending or, to the knowledge of USCo after reasonable investigation, threatened by or against USCo or affecting USCo or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.  USCo does not have any knowledge of any default on its part with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator, or governmental agency or instrumentality or any circumstance which after reasonable investigation would result in the discovery of such default.

Section 2.09Contracts.  USCo is not a party to, and neither it nor any of its assets, products, technology and properties are bound by:

(a)any contract, agreement, franchise, license, debt instrument, or other commitment, whether such agreement is in writing or oral;

(b)any charter or other corporate restriction, except as set forth in the Organizational Documents of USCo;

(c)any judgment, order, writ,  injunction, decree, or award; or

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(d)any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guaranty of any obligation, (vi) collective bargaining agreement; or (vii) agreement with any present or former officer or director of USCo.

Section 2.10No Conflict With Other Instruments.  The execution of this Agreement and the consummation of the Contemplated Transactions will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of, any indenture, mortgage, deed of trust, or other material agreement or instrument to which USCo is a party or to which any of its assets, properties or operations are subject.

Section 2.11Compliance With Laws and Regulations.  To the best of its knowledge, USCo has complied with all applicable statutes and regulations of any federal, state, or other applicable governmental entity or agency thereof.  This compliance includes, but is not limited to, the filing of all reports to date with federal and state securities authorities.

Section 2.12Approval of Agreement.  The Board of Directors of USCo has authorized the execution and delivery of this Agreement by USCo and has approved this Agreement and the Contemplated Transactions.

Section 2.13Material Transactions or Affiliations.  Except for this Agreement and the Contemplated Transactions, there exists no contract, agreement or arrangement between USCo and any predecessor and any person who was at the time of such contract, agreement or arrangement an officer, director, or person owning of record or known by USCo to own beneficially, five percent (5%) or more of the issued and outstanding USCo Common Stock and which is to be performed in whole or in part after the date hereof or was entered into not more than three (3) years prior to the date hereof.  Neither any officer, director, nor five percent (5%) stockholder of USCo has, or has had since inception of USCo, any known interest, direct or indirect, in any such transaction with USCo which was material to the business of USCo.  USCo has no commitment, whether written or oral, to lend any funds to, borrow any money from, or enter into any other transaction with, any such affiliated person.

Section 2.14Bank Accounts; Power of Attorney.  Set forth in Schedule 2.14 of  the USCo Schedules is a true and complete list of (a) all accounts with banks, money market mutual funds or securities or other financial institutions maintained by USCo within the past twelve (12) months, the account numbers thereof, and all persons authorized to sign or act on behalf of USCo, (b) all safe deposit boxes and other similar custodial arrangements maintained by USCo within the past twelve (12) months, (c) the check ledger for the last twelve (12) months, (d) the names of all persons holding powers of attorney from USCo or who are otherwise authorized to act on behalf of USCo with respect to any matter, other than its officers and directors, and a summary of the terms of such powers or authorizations, and (e) a list of all the current officers and directors of USCo.

Section 2.15Valid Obligation. This Agreement and all agreements and other documents executed by USCo in connection herewith constitute the valid and binding obligations of USCo, enforceable in accordance with their respective terms, except as may be limited by Bankruptcy and Equity Exceptions.

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Section 2.16Filings. USCo has timely filed all reports, statements, and other information required to be filed by it under the Exchange Act, as amended.

Section 2.17Shell Company.  Since December 31, 2008, USCo has at all times been a “shell company” as defined in Rule 12b-2 of the Exchange Act.

Section 2.18OTCBB.  USCo trades its USCo Common Stock on the Over-The-Counter Bulletin Board (“OTCBB”) and meets all requirements to be listed on the OTCBB.

ARTICLE III

PLAN OF EXCHANGE

Section 3.01The Exchange. On the terms and subject to the conditions set forth in this Agreement, on the Closing Date and after the consummation of the transaction contemplated in Section 4.05, the HKCo Stockholder shall (i) assign, transfer and deliver to USCo, free and clear of all liens, pledges, encumbrances, charges, restrictions or known claims of any kind, nature, or description, all of the shares of HKCo Common Stock held by the HKCo Stockholder, and (ii) pay to USCo in cash the amount of US$70,000; the objective of such Exchange being the acquisition by USCo of not less than 100% of the issued and outstanding HKCo Common Stock.  In exchange for the transfer of such securities by the HKCo Stockholder, USCo shall issue to the HKCo Stockholder twelve million (12,000,000) shares of USCo Common Stock, representing approximately 60% of the total issued and outstanding USCo Common Stock (the “Initial Shares”).  At the closing of the transactions described in this Section 3.01 (the “Closing”), the HKCo Stockholder shall, upon surrender of its certificate or certificates representing the HKCo Common Stock to USCo or its registrar or transfer agent, be entitled to receive a certificate or certificates evidencing its interest in the Initial Shares.  Upon consummation of the Contemplated Transactions, all of the shares of capital stock of HKCo shall be held by USCo.  Upon consummation of the Contemplated Transactions (including, but not limited to, the cancellation of the shares set forth in Section 4.05 below), there shall be 20,000,001 shares of USCo Common Stock issued and outstanding.

Section 3.02Anti-Dilution.  The number of shares of USCo Common Stock issuable upon exchange pursuant to Section 3.01 shall be appropriately adjusted to take into account any other stock split, stock dividend, reverse stock split, recapitalization, or similar change in the USCo Common Stock which may occur, other than share cancellation described in Section 4.05 (which has already been taken into consideration in the determination of the Initial Shares), between the date of the execution of this Agreement and the Closing Date, as to the Initial Shares.

Section 3.03Closing Events.  At the Closing, USCo, HKCo and the HKCo Stockholder shall execute, acknowledge, and deliver (or shall ensure to be executed, acknowledged, and delivered), any and all certificates, opinions, financial statements, schedules, agreements, resolutions, rulings or other instruments required by this Agreement to be so delivered at or prior to the Closing, together with such other items as may be reasonably requested by the parties hereto and their respective legal counsel in order to effectuate or evidence the Contemplated Transactions.

Section 3.04Termination.  This Agreement may be terminated by the Board of Directors of HKCo or HKCo only in the event that USCo or HKCo do not meet the conditions precedent set forth in Articles V and VI hereof.  If this Agreement is terminated pursuant this Section 3.04, this Agreement shall be of no further force or effect, and no obligation, right or liability shall arise hereunder.

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ARTICLE IV

SPECIAL COVENANTS

Section 4.01Access to Properties and Records.  USCo and  HKCo will each afford to the officers and authorized representatives of the other party full access to the properties, books and records of USCo or HKCo, as the case may be, in order that each party may have a full opportunity to make such reasonable investigation as it shall desire to make of the affairs of the other party, and each party will furnish to the other party such additional financial and operating data and other information as to the business and properties of USCo or HKCo, as the case may be, as the other party shall from time to time reasonably request.  Without limiting the foregoing, as soon as practicable after the end of each fiscal quarter (and in any event through the last fiscal quarter prior to the Closing Date), each party shall provide the other party with quarterly internally prepared and unaudited financial statements.

Section 4.02Delivery of Books and Records.  At the Closing, HKCo shall deliver to USCo the originals of the corporate minute books, books of account, contracts, records, and all other books or documents of HKCo now or then in the possession of HKCo or its representatives. USCo shall deliver to HKCo the originals of the corporate minute books, books of account, contracts, records, and all other books or documents of USCo now or then in the possession of USCo or its representatives.

Section 4.03Third Party Consents and Certificates.  USCo and HKCo agree to cooperate with each other in order to obtain any required third party consents to this Agreement and the Contemplated Transactions.

Section 4.04USCo Stockholder Meeting. USCo shall promptly call a special meeting of stockholders to be held on or prior to the Closing Date, at which meeting the stockholders of USCo shall be requested to approve, and the USCo Board of Directors shall recommend the approval of, the terms of this Agreement, the Contemplated Transactions, and such other matters as shall require stockholder approval hereunder.  In addition, USCo shall promptly file with the SEC necessary disclosure statements required by federal securities laws.

Section 4.05Cancellation of Certain Shares of USCo Common Stock. On or prior to the Closing Date, the Principal USCo Stockholder shall, pursuant to the terms of a Stock Purchase Agreement between USCo and the Principal USCo Stockholder, deliver to USCo, and USCo shall cause to be cancelled, 64,510,140 shares of USCo Common Stock held by the Principal USCo Stockholder, and in consideration for such cancellation, the Principal USCo Stockholder will receive all of the issued and outstanding shares of common stock of MD Mortgage, USCo’s wholly-owned subsidiary.

Section 4.06Designation of Directors and Officer. Upon the execution of this Agreement, USCo shall, as promptly as practicable, (i) accept the resignation of Marshall Davis as an officer of USCo, effective as of the Closing Date, (ii) increase its Board of Directors to eight (8), and (iii) elect Chen Min to its Board of Directors.  Upon compliance with Rule 14F-1, promulgated under the Exchange Act, USCo shall accept the resignation of Marshall Davis as a director of USCo and the following persons will be appointed as directors of USCo: Chen Qijie, You Jianli, Gao Juguang, Howard Barth, Wang Rui, Wang Changzhu, and Qin Jingshou.  In addition, USCo shall also, immediately upon the execution of this Agreement, appoint as officers of USCo the following persons: Chen Min, as Chief Executive Officer, President and Chairman of the Board, and Yang Feng, as Chief Financial Officer, Secretary and Treasurer, in each case effective as of the date hereof.

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Section 4.07Exclusive Dealing Rights. Until 5:00 P.M. New York City time on May 5, 2009:

(a)In recognition of the substantial time and effort which USCo has spent and will continue to spend in investigating HKCo and its business and in addressing the matters related to the Contemplated Transactions, each of which may preempt or delay other management activities, neither HKCo, nor any of its officers, directors, employees, representatives or agents will directly or indirectly solicit or initiate any discussions or negotiations with or, except where required by fiduciary obligations under applicable law as advised by counsel, participate in any negotiations with or provide any information to or otherwise cooperate in any other way with, or facilitate or encourage any effort or attempt by, any corporation, partnership, person or other entity or group (other than USCo and its directors, officers, employees, representatives and agents) concerning any merger, sale of substantial assets, sale of shares of capital stock, (including without limitation, any public or private offering of the HKCo Common Stock) or similar transactions involving HKCo (all such transactions being referred to as “HKCo Acquisition Transactions”), other than activities related to financings.  If HKCo receives any proposal with respect to an HKCo Acquisition Transaction, it will immediately communicate to USCo the fact that it has received such proposal and the principal terms thereof.

(b)In recognition of the substantial time and effort which HKCo has spent and will continue to spend in investigating USCo and its business and in addressing the matters related to the Contemplated Transactions, each of which may preempt or delay other management activities, neither USCo, nor any of its officers, directors, employees, representatives or agents will directly or indirectly solicit or initiate any discussions or negotiations with or, except where required by fiduciary obligations under applicable law as advised by counsel, participate in any negotiations with or provide any information to or otherwise cooperate in any other way with, or facilitate or encourage any effort or attempt by, any corporation, partnership, person or other entity or group (other than HKCo and its directors, officers, employees, representatives and agents) concerning any merger, sale of substantial assets, sale of shares of capital stock, (including without limitation, any public or private offering of the USCo Common Stock) (all such transactions being referred to as “USCo Acquisition Transactions”).  If USCo receives any proposal with respect to a USCo Acquisition Transaction, it will immediately communicate to HKCo the fact that it has received such proposal and the principal terms thereof.

Section 4.08Actions Prior to Closing.

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(a)From and after the date of this Agreement until the Closing Date and except as set forth in the USCo Schedules or HKCo Schedules or as permitted or contemplated by this Agreement, USCo (subject to paragraph (b) below) and HKCo respectively, will each:

(i)carry on its business in substantially the same manner as it has heretofore;

(ii)maintain and keep its properties in states of good repair and condition as at present, except for depreciation due to ordinary wear and tear and damage due to casualty;

(iii)maintain in full force and effect insurance comparable in amount and in scope of coverage to that now maintained by it;

(iv)perform in all material respects all of its obligations under any material contracts, leases, and instruments relating to or affecting its assets, properties, and business;

(v)use its best efforts to maintain and preserve intact its business organization, to retain its key employees, and to maintain its relationship with its material suppliers and customers; and

(vi)fully comply with and perform in all material respects all obligations and duties imposed on it by all federal and state laws and all rules, regulations, and orders imposed by federal or state governmental authorities.

(b)From and after the date of this Agreement until the Closing Date, neither USCo nor HKCo will:

(i)make any changes in their Organizational Documents, including any change of name, except as contemplated by this Agreement;

(ii)take any action described in Section 1.07, in the case of HKCo, or in Section 2.07, in the case of USCo (all except as permitted therein or as disclosed in the HKCo Schedules or USCo Schedules, as applicable);

(iii)enter into or amend any contract, agreement, or other instrument of any of the types described in the HKCo Schedules or USCo Schedules, except that a party may enter into or amend any contract, agreement, or other instrument in the ordinary course of business involving the sale of goods or services; or

(iv)sell any assets or discontinue any operations, sell any shares of capital stock or conduct any similar transactions other than in the ordinary course of business.

Section 4.09Indemnification.

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(a)HKCo hereby agrees to indemnify USCo and each of the officers, agents and directors of USCo as of the date of execution of this Agreement against any loss, liability, claim, damage, or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever) (“Loss”), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentations made under Article I.  The indemnification provided for in this paragraph shall survive the Closing and consummation of Contemplated Transactions and termination of this Agreement for one (1) year following the Closing.

(b)The HKCo Stockholder, agrees to indemnify USCo and each of the officers, agents and directors of USCo as of the date of execution of this Agreement against any Loss, to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentations made under Section 3.01.  The indemnification provided for in this paragraph shall survive the Closing and consummation of the Contemplated Transactions and termination of this Agreement for one (1) year following the Closing.

(c)USCo hereby agrees to indemnify HKCo and each of the officers, agents, and directors of HKCo and the HKCo Stockholder as of the date of execution of this Agreement against any Loss to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made under Article II.  The indemnification provided for in this paragraph shall survive the Closing and consummation of the Contemplated Transactions and termination of this Agreement for one (1) year following the Closing.

Section 4.10The Acquisition of USCo Common Stock.  USCo and HKCo understand and agree that the consummation of the Contemplated Transactions, including the issuance of the USCo Common Stock to HKCo Stockholder in exchange for the HKCo Common Stock as contemplated herein, constitutes the offer and sale of securities under the Securities Act of 1933, as amended (the “Securities Act”) and applicable state statutes.  USCo and HKCo agree that such transactions shall be consummated in reliance on exemptions from the registration and prospectus delivery requirements of such statutes, which depend, among other items, on the circumstances under which such securities are acquired.

(a)In order to provide documentation for reliance upon the exemptions from the registration and prospectus delivery requirements for such transactions, each stockholder of HKCo shall execute and deliver to USCo a Suitability Letter and an Investment Representation Letter in substantially the same form as those attached hereto as Exhibit A and Exhibit B, respectively.

(b)In connection with the Contemplated Transactions, USCo and HKCo shall each file, with the assistance of the other party and their respective legal counsel, such notices, applications, reports, or other instruments as may be deemed by them to be necessary or appropriate in an effort to document reliance on such exemptions, and the appropriate regulatory authority in the states where the stockholders of HKCo reside unless an exemption requiring no filing is available in such jurisdiction, all to the extent and in the manner as may be deemed by such party to be appropriate.

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(c)In order to more fully document reliance on the exemptions from registration as provided herein, HKCo, the HKCo Stockholder, and USCo shall execute and deliver to the other party, at or prior to the Closing, such further letters of representation, acknowledgment, suitability, or the like as HKCo or USCo and their respective counsel may reasonably request in connection with reliance on exemptions from registration under such securities laws.

(d)The HKCo Stockholder acknowledges that the basis for relying on exemptions from registration or qualifications are factual, depending on the conduct of the various parties, and that no legal opinion or other assurance will be required or given to the effect that the Contemplated Transactions are in fact exempt from registration or qualification.

Section 4.11Sales of Securities Under Rule 144, If Applicable.

(a)USCo will use its best efforts to at all times satisfy the current public information requirements of Rule 144 promulgated under the Securities Act so that its stockholders can sell restricted securities that have been held for one (1) year or more or such other restricted period as required by Rule 144 as it is from time to time amended.

(b)Upon being informed in writing by any person holding restricted stock of USCo that such person intends to sell any shares under Rule 144 promulgated under the Securities Act (including any rule adopted in substitution or replacement thereof), USCo will certify in writing to such person that it is compliance with Rule 144 current public information requirement to enable such person to sell such person’s restricted stock under Rule 144, as may be applicable under the circumstances.

(c)If any certificate representing any such restricted stock is presented to USCo’s transfer agent for registration or transfer in connection with any sales theretofore made under Rule 144, provided such certificate is duly endorsed for transfer by the appropriate person(s) or accompanied by a separate stock power duly executed by the appropriate person(s), in each case with reasonable assurances that such endorsements are genuine and effective and is accompanied by a legal opinion that such transfer has complied with the requirements of Rule 144, as the case may be, USCo will promptly instruct its transfer agent to register such transfer and to issue one or more new certificates representing such shares to the transferee and, if appropriate under the provisions of Rule 144, as the case may be, free of any stop transfer order or restrictive legend.

(d)This Section 4.11 shall survive the closing of this Agreement for a period of six (6) months.

Section 4.12Good Standing. No later than November 30, 2009, HKCo shall deliver to USCo a certificate of good standing from a qualified attorney in Hong Kong certifying that HKCo is in good standing as a corporation in Hong Kong.

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ARTICLE V

CONDITIONS PRECEDENT TO OBLIGATIONS OF USCO

The obligations of USCo under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:

Section 5.01Accuracy of Representations and Performance of Covenants.  The representations and warranties made by HKCo and the HKCo Stockholder in this Agreement were true when made and shall be true on the Closing Date with the same force and effect as if such representations and warranties were made on and as of the Closing Date.  HKCo shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by HKCo prior to or at the Closing.

Section 5.02Officer’s Certificate.  USCo shall have been furnished with a certificate dated the Closing Date and signed by a director of HKCo, certifying that: (a) no litigation, proceeding, investigation, or inquiry is pending, or to the best knowledge of HKCo, threatened, which might result in an action to enjoin or prevent the consummation of the Contemplated Transactions, or, to the extent not disclosed in the HKCo Schedules, by or against HKCo, which might result in any material adverse change in any of the assets, properties, business, or operations of HKCo, and (b) the conditions set forth in Sections 5.01, 5.04 and 5.05 have been satisfied.

Section 5.03[Intentionally Omitted].

Section 5.04No Governmental Prohibition.  No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the Contemplated Transactions.

Section 5.05Consents.  All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the Contemplated Transactions, or for the continued operation of HKCo after the Closing Date on the basis as presently operated shall have been obtained.

Section 5.06Other Items.  USCo shall have received such further opinions, documents, certificates or instruments relating to the Contemplated Transactions as USCo may reasonably request.

ARTICLE VI

CONDITIONS PRECEDENT TO OBLIGATIONS OF HKCO

AND THE HKCO STOCKHOLDER

The obligations of HKCo and the HKCo Stockholder under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:

Section 6.01Accuracy of Representations and Performance of Covenants.  The representations and warranties made by USCo in this Agreement and by the Principal USCo Stockholder in the Indemnity Agreement to be delivered on the Closing Date (the “Indemnity Agreement”) were true when made and shall be true on the Closing Date with the same force and effect as if such representations and warranties were made on and as of the Closing Date.  Each of USCo and the Principal USCo Stockholder shall have performed and complied with all covenants and conditions required by this Agreement and the Indemnity Agreement to be performed or complied with by USCo and the Principal USCo Stockholder (as the case may be) prior to or at the Closing.

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Section 6.02Officer’s Certificate.  HKCo shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of USCo, certifying that: (a) no litigation, proceeding, investigation or inquiry is pending, or to the best knowledge of USCo threatened, which might result in an action to enjoin or prevent the consummation of the Contemplated Transactions, or, to the extent not disclosed in the USCo Schedules, by or against USCo, which might result in any material adverse change in any of the assets, properties or operations of USCo, and (b) the conditions set forth in Sections 6.01, 6.04, and 6.05 have been satisfied.

Section 6.03Good Standing.  HKCo shall have received a certificate of good standing from the Secretary of State of the State of Nevada or other appropriate office, dated as of a date within ten (10) days prior to the Closing Date, certifying that USCo is in good standing as a corporation in the State of Nevada and has filed all tax returns required to have been filed by it to date and has paid all taxes reported as due thereon.

Section 6.04No Governmental Prohibition.  No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the Contemplated Transactions.

Section 6.05Consents.  All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the Contemplated Transactions, or for the continued operation of USCo after the Closing Date on the basis as presently operated shall have been obtained.

Section 6.06Other Items.  HKCo and the HKCo Stockholder shall have received:

(a)An original counterpart to the Indemnity Agreement duly executed by the Principal USCo Stockholder; and

(b)further opinions, documents, certificates, or instruments relating to the Contemplated Transactions as HKCo and the HKCo Stockholder may reasonably request.

ARTICLE VII

MISCELLANEOUS

Section 7.01Brokers.  USCo and HKCo agree that there were no finders or brokers involved in bringing the parties together or who were instrumental in the negotiation or execution of this Agreement or consummation of the Contemplated Transactions.  USCo and HKCo each agree to indemnify the other party against any claim by any third person other than those described above for any commission, brokerage, or finder’s fee arising from the Contemplated Transactions based on any alleged agreement or understanding between the indemnifying party and such third person, whether express or implied from the actions of the indemnifying party.

16

Section 7.02Governing Law.  This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of the United States of America and, with respect to the matters of state law, with the laws of the State of New York.  Venue for all matters shall be in New York, New York, without giving effect to principles of conflicts of law thereunder.  Each of the parties irrevocably consents and agrees that any legal or equitable action or proceedings arising under or in connection with this Agreement shall be brought exclusively in the federal courts of the United States. By execution and delivery of this Agreement, each party hereto irrevocably submits to and accepts, with respect to any such action or proceeding, generally and unconditionally, the jurisdiction of the aforesaid court, and irrevocably waives any and all rights such party may now or hereafter have to object to such jurisdiction.

Section 7.03Notices.  Any notice or other communications required or permitted hereunder shall  be in writing and shall be sufficiently given if personally delivered to it or sent by facsimile, overnight courier or registered mail or certified mail, postage prepaid, addressed as follows:

If to HKCo or HKCo Stockholder, to:

c/o Fuqing Guanwei Plastic Industry Co. Ltd.

Rong Qiao Economic Zone

Fuqing City, Fujian Province

People’s Republic of China 300500

Attn: Chen Min

Tel: (86-591) 8539-2532

With copies to: Robert S. Matlin, Esq.

K&L Gates LLP

599 Lexington Avenue

New York, NY  10022

Tel:  212-536-4066

Fax: 212-536-3901

If to USCo, to: MD Holdings Corp.

135 Carolstowne Road

Reisterstown, Maryland 21136

Attn: Marshall Davis

Tel: (410) 440-2323

With copies to: Greg E. Jaclin, Esq.

Anslow & Jaclin LLP

195 Route 9 South

Manalapan, NJ  07726

Tel:  732-409-1212

Fax: 732-577-1188

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or such other addresses as shall be furnished in writing by any party in the manner for giving notices hereunder, and any such notice or communication shall be deemed to have been given (a) upon receipt, if personally delivered, (b) on the day after dispatch, if sent by overnight courier, (c) upon dispatch, if transmitted by facsimile and receipt is confirmed by telephone, or (d) three (3) days after mailing, if sent by registered or certified mail.

Section 7.04Attorney’s Fees.  In the event that either party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the prevailing party shall be reimbursed by the losing party for all costs, including reasonable attorney’s fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.

Section 7.05Confidentiality.  Each party hereto agrees with the other parties that, unless and until the Contemplated Transactions have been consummated, it and its representatives will hold in strict confidence all data and information obtained with respect to another party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other party, and shall not use such data or information or disclose the same to others, except (a) to the extent such data or information is published, is a matter of public knowledge, or is required by law to be published; or (b) to the extent that such data or information must be used or disclosed in order to consummate the Contemplated Transactions.  In the event of the termination of this Agreement, each party shall return to the other parties all documents and other materials obtained by it or on its behalf and shall destroy all copies, digests, work papers, abstracts or other materials relating thereto, and each party will continue to comply with the confidentiality provisions set forth herein.

Section 7.06Public Announcements and Filings.  Unless required by applicable law or regulatory authority, none of the parties will issue any report, statement or press release to the general public, to the trade, to the general trade or trade press, or to any third party (other than its advisors and representatives in connection with the Contemplated Transactions) or file any document, relating to this Agreement and Contemplated Transactions, except as may be mutually agreed by the parties.  Copies of any such filings, public announcements or disclosures, including any announcements or disclosures mandated by law or regulatory authorities, shall be delivered to each party at least one (1) business day prior to the release thereof.

Section 7.07Schedules; Knowledge.  The HKCo Schedules and USCo Schedules referred to herein and delivered pursuant to and attached to this Agreement (collectively, “Schedules”) are integral parts of this Agreement.  Nothing in a Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, unless the Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail, including by cross-reference to another Schedule.  The inclusion of any information in the Schedules shall not be deemed to be an admission or acknowledgment, in and of itself, that such information is required by the terms hereof to be disclosed, is material to the business of HKCo or USCo, as the case may be, or is outside the ordinary course of business.  HKCo is responsible for preparing the HKCo Schedules and USCo is responsible for preparing the USCo Schedules. Each of the HKCo Schedules and the USCo Schedules will be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Agreement, and the disclosure in any such numbered and lettered section of the HKCo Schedules or the USCo Schedules, as the case may be, shall qualify and shall be deemed to qualify such other paragraphs in this Agreement to the extent such qualification is reasonably apparent regardless of the absence of any express cross-reference to such other paragraph.  Each party is presumed to have full knowledge of all information set forth in the other party’s Schedules delivered pursuant to this Agreement.

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Section 7.08Third Party Beneficiaries.  This contract is strictly between USCo, HKCo and the HKCo Stockholder, and, except as specifically provided, no director, officer, stockholder (other than the HKCo Stockholder), employee, agent, independent contractor or any other person or entity shall be deemed to be a third party beneficiary of this Agreement.

Section 7.09Expenses.  Subject to Section 7.04 above, whether or not the Exchange is consummated, each of USCo, the HKCo Stockholder and HKCo will bear their own respective expenses, including legal, accounting and professional fees, incurred in connection with the Exchange or any of the other Contemplated Transactions.

Section 7.10Entire Agreement.  This Agreement, together with the Schedules and any certificate or agreements delivered on the Closing Date, represents the entire agreement between the parties relating to the subject matter thereof and supersedes all prior agreements, understandings and negotiations, written or oral, with respect to such subject matter.

Section 7.11Survival; Termination.  Except as otherwise set forth in this Agreement, the representations, warranties, and covenants of the respective parties shall survive the Closing Date and the consummation of Contemplated Transactions for a period of two (2) years.

Section 7.12Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument.

Section 7.13Amendment or Waiver.  Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other parties shall be construed as a waiver or any other default then, theretofore, or thereafter occurring or existing.  At any time prior to the Closing Date, this Agreement may by amended by a writing signed by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance may be extended by a writing signed by the party or parties for whose benefit the provision is intended.

Section 7.14Best Efforts.  Subject to the terms and conditions herein provided, each party shall use its best efforts to perform or fulfill all conditions and obligations to be performed or fulfilled by it under this Agreement so that the Contemplated Transactions shall be consummated as soon as practicable.  Each party also agrees that it shall use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective this Agreement and the Contemplated Transactions.

Section 7.15References.  References to Sections, Articles, Schedules or Exhibits in this Agreement shall be to Sections, Articles, Schedules or Exhibits to this Agreement unless explicitly provided otherwise.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first-above written.

MD HOLDINGS CORP.
By:	/s/ Marshall Davis
	Name:  Marshall Davis
	Title:  Chief Executive Officer

	HONG KONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED
Date	By:	/s/ Bank Yu Po Fung
		Name: Bank Yu Po Fung
		Title:  Director

	FRESH GENERATION OVERSEAS LIMITED
Date	By:	/s/ Bank Yu Po Fung
		Name:  Bank Yu Po Fung
		Title:  Director

[Signature Page to Share Exchange Agreement]

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Exhibit A

SUITABILITY LETTER

TO:           MD HOLDINGS CORP.

I make the following representations with the intent that they may be relied on by MD HOLDINGS CORP. (the “Company”), in determining my suitability as a purchaser of securities of the Company.

1.I have had the opportunity to ask questions of, and receive answers and information, from the officers of the Company and I deemed such information sufficient to make an investment decision in the Company.

2.I have such knowledge and experience in business and financial matters that I am capable of evaluating the Company, its business activities, and the risks and merits of this prospective investment, and I am not utilizing a purchaser representative (as defined in regulation D (“Regulation D”) promulgated pursuant to the Securities Act of 1933, as amended (the “Securities Act”)) in connection with the evaluation of such risks and merits, except as set forth in paragraph 3.

3.I shall provide a separate written statement from each purchaser representative on the Purchaser Representative Acknowledgment Form available from the Company, in which is disclosed (i) the relationship of the purchaser representative with the Company, if any, which has existed at any time during the previous two (2) years, and compensation received or to be received as a result of such relationship, and (ii) the education, experience, and knowledge in financial and business matters which enables the purchaser representative to evaluate the relative merits and risks of an investment in the Company.

4.The undersigned and the purchaser representatives listed above, if any, together have such knowledge and experience in financial and business matters that they are capable of evaluating the Company and the proposed activities thereof and the merits and risks of this prospective investment.

5.I have adequate means of providing for my current needs and possible personal contingencies and have no need in the foreseeable future for liquidity of an investment in the Company.

6.Instructions:  Complete either (a) or (b) below, as applicable:

(a)FOR ACCREDITED INVESTORS.  I confirm that I am an “accredited investor” as defined under rule 501 of Regulation D, as checked below:

(i)Any bank as defined in section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(13) of the Securities Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any small business investment company licensed by the U. S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

o           Yes           x           No

A-1

(ii)Any private business development company as defined in section 302(a)(22) of the Investment Advisers Act of 1940;

o           Yes           x           No

(iii)Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

o           Yes           x           No

(iv)Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;

o           Yes           x           No

(v)Any natural person whose individual net worth or joint net worth with that person’s spouse, at the time of his or her purchase exceeds $1,000,000;

o           Yes           x           No

For purposes of category (v), the term “net worth” means the excess of total assets over total liabilities.  In computing net worth for the purposes of category (v) above, the undersigned’s principal residence must be valued either at (A) cost, including the cost of improvements, net of current encumbrances upon the property or (B) the appraised value of the property as determined upon a written appraisal used by an institutional lender making a loan to the individual secured by the property, including the cost of subsequent improvements, net of current encumbrances upon the property.

(vi)Any natural person who had an individual income in excess of $200,000 in each of the two (2) most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

o           Yes           x           No

A-2

In determining income, the undersigned should add to his or her adjusted gross income any amounts attributable to tax exempt income received, losses claimed as a limited partner in any limited partnership, deductions claimed for depletion, contributions to an IRA or Keogh retirement plan, alimony payments, and any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income.

(vii)Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in section 230.506(b)(2)(ii); and

o           Yes           x           No

(viii)Any entity in which all of the equity owners are accredited investors.

x           Yes           o           No

(b)FOR NONACCREDITED INVESTORS.  I am not an accredited investor.

The following information is being provided here in lieu of furnishing a personal financial statement.

(i)My net worth excluding principal residence, furnishings, and automobiles is at least _____ times the total investment I intend to make in the Company;

(ii)My annual disposable income, after excluding all of my personal and family living expenses and other cash requirements for current obligations, is such that the loss of my entire investment in the Company would not materially alter my standard of living;

o           Yes           o           No

(iii)Considering the foregoing and all other relevant factors in my financial and personal circumstances, I am able to bear the economic risk of an investment in the Company.

o           Yes           o   No

7.I have previously been advised that I would have an opportunity to review all the pertinent facts concerning the Company, and to obtain any additional information which I might request, to the extent possible or obtainable, without unreasonable effort and expense, in order to verify the accuracy of the information provided me.

A-3

8.I have personally communicated or been offered the opportunity to communicate with executive officers of the Company to discuss the business and financial affairs of the Company, its products and activities, and its plans for the future.  I acknowledge that if I would like to further avail myself of the opportunity to ask additional questions of the Company, the Company will make arrangements for such an opportunity on request.

9.I have been advised that no accountant or attorney engaged by the Company is acting as my representative, accountant, or attorney.

10.I will hold title to my interest as follows:

o	Community Property	x	Separate Property
o	Joint Tenants, with Right	o	Tenants in Common
	of Survivorship
		o	Other (Single Person, Trust, etc.,
			please indicate.)

11.I am an entity incorporated in the British Virgin Islands. The address below is my true and correct principal place of business.

DATED this 5th day of November, 2009.

Fresh Generation Overseas Limited

By:   /s/ Bank Yu Po Fung                                                           

Name: Bank Yu Po Fung

Title:  Director

Address:

A-4

Exhibit B

INVESTMENT LETTER

TO: MD HOLDINGS CORP.

Re:           Purchase of shares of Common Stock of MD HOLDINGS CORP.

Gentlemen:

In connection with the acquisition by the undersigned of shares of Common Stock of MD HOLDINGS CORP. (the “Securities”), the undersigned represents that the Securities are being acquired without a view to, or for, resale in connection with any distribution of such Securities or any interest therein without registration or other compliance under the Securities Act of 1933, as amended (the “Securities Act”), and that the undersigned has no direct or indirect participation in any such undertaking or in the underwriting of such an undertaking.

The undersigned understands that the Securities have not been registered, but are being acquired by reason of a specific exemption under the Securities Act as well as under certain state statutes for transactions by an issuer not involving any public offering and that any disposition of the subject Securities may, under certain circumstances, be inconsistent with this exemption and may make the undersigned an “underwriter” within the meaning of the Securities Act.  It is understood that the definition of an “underwriter” focuses on the concept of “distribution” and that any subsequent disposition of the subject Securities can only be effected in transactions which are not considered distributions.  Generally, the term “distribution” is considered synonymous with “public offering” or any other offer or sale involving general solicitation or general advertising.  Under present law, in determining whether a distribution occurs when securities are sold into the public market, under certain circumstances one must consider the availability of public information regarding the issuer, a holding period for the securities sufficient to assure that the persons desiring to sell the securities without registration first bear the economic risk of their investment, and a limitation on the number of securities which the stockholder is permitted to sell and on the manner of sale, thereby reducing the potential impact of the sale on the trading markets.  These criteria are set forth specifically in rule 144 promulgated under the Securities Act (“Rule 144”).

The undersigned acknowledges that the Securities must be held and may not be sold, transferred, or otherwise disposed of for value unless it is subsequently registered under the Securities Act or an exemption from such registration is available; the issuer is under no obligation to register the Securities under the Securities Act or under section 12 of the Securities Exchange Act of 1934, as amended, except as may be expressly agreed to by it in writing; if Rule 144 is available, and no assurance is given that it will be, initially only routine sales of such Securities in limited amounts can be made in reliance on Rule 144 in accordance with the terms and conditions of that rule; the issuer is under no obligation to the undersigned to make Rule 144 available, except as may be expressly agreed to by it in writing; in the event Rule 144 is not available, compliance with Regulation A promulgated under the Securities Act or some other exemption may be required before the undersigned can sell, transfer, or otherwise dispose of such Securities without registration under the Securities Act; the issuer’s registrar and transfer agent will maintain a stop transfer order against the registration of transfer of the Securities; and the certificate representing the convertible promissory notes and warrants composing the Securities will bear a legend in substantially the following form so restricting the sale of such Securities.

B-1

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ARE “RESTRICTED SECURITIES” WITHIN THE MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER COMPLIANCE UNDER THE SECURITIES ACT.

The issuer may refuse to register transfer of the Securities in the absence of compliance with Rule 144 unless the undersigned furnishes the issuer with a “no-action” or interpretative letter from the Securities and Exchange Commission or an opinion of counsel reasonably acceptable to the issuer stating that the transfer is proper; further, unless such letter or opinion states that the Securities are free of any restrictions under the Securities Act, the issuer may refuse to transfer the Securities to any transferee who does not furnish in writing to the issuer the same representations and agree to the same conditions with respect to such Securities as are set forth herein.  The issuer may also refuse to transfer the Securities if any circumstances are present reasonably indicating that the transferee’s representations are not accurate.

	Very truly yours, Fresh Generation Overseas Limited
Dated:November 5, 2009	By:	/s/ Bank Yu Po Fung
		Name: Bank Yu Po Fung
		Title:  Director

B-2

Schedule 1.03

Predecessor Corporations and Subsidiaries of HKCo

Subsidiaries

Fuqing Guanwei Plastic Industrial Co., Ltd. (a Chinese company) (100%)

Schedule 1.04

Audited Balance Sheets of HKCo

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

AUDITED CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2008 AND 2007 AND

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME,

CASH FLOWS AND CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

TOGETHER WITH REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

Report of Independent Registered Public Accounting Firm

To the sole director and shareholders of

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

We have audited the accompanying consolidated balance sheets of Hongkong Chenxin International Development Limited and its subsidiary (the “Company”) as of December 31, 2008 and 2007 and the related consolidated statements of income and comprehensive income, shareholders’ equity and cash flows for the years ended December 31, 2008 and 2007. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Hongkong Chenxin International Development Limited as of December 31, 2008 and 2007 and the consolidated results of its operations and cash flows for the years ended December 31, 2008 and 2007, in conformity with accounting principles generally accepted in the United States of America.

BDO Limited

Hong Kong, November 5, 2009

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31

	Note		2008		2007
			US$		US$
Assets
Current assets:
Cash and cash equivalents				1,029,710		1,471,358
Accounts receivable		5		68,972		155,793
Amount due from director		10		19,904		70,429
Prepayments and other current assets		6		1,385,225		82,316
Income tax recoverable				16,449		-
Inventories		7		12,975,877		4,271,842
Total current assets				15,496,137		6,051,738
Property, plant and equipment, net		8		4,968,798		5,002,339
Land use right, net		9		667,000		638,359
Total assets				21,131,935		11,692,436
Liabilities and shareholders’ equity
Current liabilities:
Short term borrowings		11		-		1,367,222
Accounts payable				12,157,940		4,344,733
Dividend payable to Original Shareholders				757,456		709,828
Other payables and accrued expenses		12		373,831		728,290
Income tax payable				-		228,607
Total current liabilities				13,289,227		7,378,680
Shareholders’ equity:
Paid-in capital (Common stock, HK$1 at par value; 10,000 shares authorized and issued)		13		1,287		1,287
Additional paid-in capital		14		1,238,636		1,238,636
PRC statutory reserves		15		802,428		523,099
Retained earnings				5,127,736		2,182,385
Accumulated comprehensive income				672,621		368,349
Total shareholders’ equity				7,842,708		4,313,756
Total liabilities and shareholders’ equity				21,131,935		11,692,436

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

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

	Note		2008			2007
			US$			US$
Revenue		3		25,430,714			15,777,997
Cost of revenue				(20,292,530	)		(11,052,199	)
Gross profit				5,138,184			4,725,798
Selling and administrative expenses				(984,000	)		(805,521	)
Operating income				4,154,184			3,920,277
Interest income				6,797			2,380
Interest expenses				(100,664	)		(77,548	)
Exchange gains, net				232,998			161,260
Income before income taxes				4,293,315			4,006,369
Income taxes		4		(1,103,734	)		(1,364,680	)
Net income				3,189,581			2,641,689
Comprehensive Income:
Net income				3,189,581			2,641,689
Other comprehensive income:
Foreign currency translation adjustment				339,371			306,886
Comprehensive income				3,528,952			2,948,575

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

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

	2008			2007
	US$			US$
Cash flows from operating activities:
Net income		3,189,581			2,641,689
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment		388,739			289,402
Amortization of land use right		13,972			21,840
Loss on disposal of property, plant and equipment		8,701			-
Changes in operating assets and liabilities:
Accounts receivable		95,773			(149,690	)
Amount due from director		54,312			(14,072	)
Amounts due to related companies		-			(173,877	)
Prepayments and other current assets		(1,277,356	)		(5,094	)
Inventories		(8,287,451	)		(2,224,977	)
Accounts payable		7,405,560			1,319,360
Other payables and accrued expenses		(397,099	)		(36,113	)
Income tax payable		(256,375	)		(7,910	)
Net cash provided by operating activities		938,357			1,660,558
Cash flows from investing activities:
Purchase of property, plant and equipment		(44,153	)		(938,853	)
Proceeds from disposal of property, plant and equipment		10,199			-
Dividend paid to shareholders		-			(788,199	)
Net cash used in investing activities		(33,954	)		(1,727,052	)
Cash flows from financing activities:
(Repayment)/Advance of bank borrowings		(1,436,435	)		1,186,239
Net cash (used in)/provided by financing activities		(1,436,435	)		1,186,239
Effect of exchange rate changes		90,384			65,354
Net (decrease)/increase in cash and cash equivalents		(441,648	)		1,185,099
Cash and cash equivalents, beginning of year		1,471,358			286,259
Cash and cash equivalents, end of year		1,029,710			1,471,358
Supplementary information	US$			US$
Interest received		6,797			2,380
Interest paid		100,664			77,548
Income taxes paid		1,360,108			1,372,590
Non-cash transaction - Issuance of share capital		1,287			1,287

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

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

	Paid-in capital		Additional paid-in capital		PRC statutory reserves		Retained  earnings			Accumulated Comprehensive income		Total
	US$				US$		US$			US$		US$
Balance as of January 1, 2007		1,287		1,238,636		176,943		1,404,836			73,640		2,895,342
Net income for the year		-		-		-		2,641,689			-		2,641,689
Foreign currency translation adjustment		-		-		12,177		-			294,709		306,886
Dividends		-		-		-		(1,530,161	)		-		(1,530,161	)
Transfer of reserve		-		-		333,979		(333,979	)		-		-
Balance as of December 31, 2007		1,287		1,238,636		523,099		2,182,385			368,349		4,313,756
Net income for the year		-		-		-		3,189,581			-		3,189,581
Foreign currency translation adjustment		-		-		35,099		-			304,272		339,371
Transfer of reserve		-				244,230		(244,230	)		-		-
Balance as of December 31, 2008		1,287		1,238,636		802,428		5,127,736			672,621		7,842,708

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

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

1             Organization and principal activities

Hongkong Chenxin International Development Limited (“Chenxin” or the “Company”) was incorporated in Hong Kong on September 29, 2008. Chenxin is a wholly-owned subsidiary of Fresh Generation Overseas Limited (“Fresh Generation”), a company incorporated in the British Virgin Islands (“BVI”).

Fuqing Guanwei Plastics Industry Company Limited (“Guanwei”) was incorporated in Fuzhou city, Fujian Province, the People’s Republic of China (“PRC”) on 9 April 2005 as a wholly domestic-owned enterprise with an operating period up to 8 April 2055.  Guanwei was owned by a group of PRC family members (the “Original Shareholders”) on incorporation.

Fresh Generation’s sole shareholder is a Canadian resident, who holds Fresh Generation’s shares by a trust on behalf of the Original Shareholders.

On November 22, 2008, the Company entered into an agreement of Plan of Reorganization (“the Plan”) with the Original Shareholders of Guanwei, pursuant to which the Company had issued 10,000 authorized shares of common stock of the Company to the Original Shareholders in exchange of 100% of the registered and fully paid up capital of Guanwei. The closing date of this exchange transaction was December 23, 2008. Guanwei was changed to a foreign-owned enterprise on December 23, 2008 after the change in shareholding. The ultimate controlled party remains as the Original Shareholders both before and after the Plan, and considered that their controls are not transitory, then the Plan involving entities or businesses under common control existed, merger accounting is considered as an appropriate accounting policy for common control combination.

The principal activity of the Company and Fresh Generation is investment holding. The principal activity of Guanwei is engaged in manufacturing and distribution of Low Density Polyethylene (“LDPE”) and scrapped and other plastic materials.

2             Summary of significant accounting policies

(a)   Basis of Accounting and Principles of Consolidation

The consolidated financial statements for Chenxin and its subsidiary for the years ended December 31, 2007 and 2008 are prepared in accordance with accounting principles generally accepted in United States of America (“GAAP”) and include the accounts of Hongkong Chenxin International Development Limited and Fuqing Guanwei Plastics Industry Company Limited (hereafter referred to as the (“Group”) for all periods presented.

In preparing the consolidated financial statements presented herewith, all significant intercompany balances and transactions have been eliminated on consolidation.

A single uniform set of accounting policies is adopted by the combined entity (i.e. Chenxin). Therefore, Chenxin recognized the assets, liabilities and equity of the combining entities (i.e. Chenxin and Guanwei) at the carrying amounts in the consolidated financial statements of the controlling parties (i.e. Original Shareholders) prior to the common control combination. These carrying amounts are referred to the existing book values from the Original Shareholder’s perspective.

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2             Summary of significant accounting policies

(a)           Basis of Accounting and Principles of Consolidation (Continued)

No goodwill or excess of the acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of the common control combination is recognized.

Comparative amounts in the consolidated financial statements are presented at the carrying amount as well, as if the combining entities had been combined throughout the periods.

Expenditure incurred (i.e. professional fees, registration fees, etc) in relation to a common control combination that is to be accounted for by using merger accounting is recognized as an expense in the period in which it is incurred.

(b)           Foreign Currency Translations and Transactions

Chenxin maintains its books and accounting records in United States Dollar (“US$”). The primary currency of the economic environment in which the operations of Chenxin are conducted is Renminbi (“RMB”). RMB is therefore considered as Chenxin’s “functional currency”.

Chenxin’s wholly-owned subsidiary, Guanwei maintains its books and accounting records in RMB, being the functional currency. RMB, the national currency of the PRC, is the primary currency of the economic environment in which the operation of Guanwei is conducted currently or to be conducted in the future. RMB is therefore considered as the “functional currency” of Guanwei.

Guanwei uses the “Current rate method” to translate its financial statements from RMB into US$, as required under the Statement of Financial Accounting Standards (“SFAS”) No. 52, “Foreign Currency Translation” issued by the Financial Accounting Standard Board (“FASB”). The assets and liabilities of Guanwei are translated into US$ using the rate of exchange prevailing at the balance sheet date. The capital accounts are translated at the historical rate. Adjustments resulting from the translation of the balance sheets of Guanwei from RMB into US$ are recorded in shareholders’ equity as part of accumulated comprehensive income. The statement of income and comprehensive income is translated at average rates during the reporting period. Gains or losses resulting from transactions in currencies other than the functional currencies are recognized in net income for the reporting periods. The statement of cash flows is translated at average rates during the reporting period, with the exception of issue of share and payment of dividends which are translated at historical rates. Due to the use of different rates for translation, the figures in the statement of changes in cash flows may not agree with the differences between the year end balances as shown in the balance sheets.

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2   Summary of significant accounting policies (Continued)

(c)   Comprehensive Income

The Group has adopted SFAS No. 130, “Reporting Comprehensive Income” (SFAS No. 130) issued by the FASB. SFAS No. 130 establishes standards for reporting and presentation of comprehensive income and its components in a full set of general-purpose financial statements. The Group has chosen to report comprehensive income in the statements of changes in shareholders’ equity. Comprehensive income comprised net income and all changes to shareholders’ equity except those due to investments by owners and distributors to owners.

(d)           Revenue Recognition

Revenue from sales of manufactured LDPE is recognized when persuasive evidence of an arrangement exists, delivery of the goods has occurred, customer acceptance has been obtained, which means the significant risks and ownership have been transferred to the customer, the price is fixed or determinable and collectability is reasonably assured.

Sales of scrapped and other plastic materials are recognized on the same basis as sales of LDPE.

Interest income is recognized on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.

(e)           Taxation

The Group accounts for income and deferred tax under the provision of SFAS No. 109: “Accounting for Income Taxes” (SFAS No. 109), under which deferred taxes are recognized for all temporary differences between the applicable tax balance sheets and the consolidated balance sheet.  Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  SFAS No. 109 also requires the recognition of the future tax benefits of net operating loss carry forwards.  A valuation allowance is established when the deferred tax assets are not expected to be realized within a reasonable period of time.

Effective January 1, 2007, the Group adopted FIN No. 48, “Accounting for Uncertainty in Income Taxes.” In accordance with FIN No. 48, the Group recognizes tax benefits that satisfy a greater than 50% probability threshold and provides for the estimated impact of interest and penalties for such tax benefits. The Group did not have such uncertain tax positions in 2007 and 2008.

Deferred tax assets and liabilities are measured using the enacted tax rates expected to be applicable for taxable income in the years in which temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income for the period that includes the enactment date.

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2           Summary of significant accounting policies (Continued)

(f)           Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and demand deposits with banks.

(g)           Receivables and Other Assets

Receivables and other assets are recorded at their nominal values.  Valuation allowances are provided for identified individual risks for these line items.  If the loss of a certain part of the receivables is probable, valuation allowances are provided to cover the expected loss. Receivables are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have credit line policy to customers. The customers mainly pay the upfront payments for sales.

(h)           Inventories

Inventories are stated at the lower of cost, on the first-in, first-out method, or market value.  Costs include purchase and related costs incurred in bringing each product to its present location and condition.  Market value is calculated based on the estimated normal selling price, less further costs expected to be incurred for disposal.  Provision is made for obsolete, slow moving or defective items, where appropriate.

(i)           Property, Plant and Equipment and Land Use Right

Property, plant and equipment and land use right are stated at cost less accumulated depreciation and amortization. Gains or losses on disposal are reflected in current operations.  Major expenditures for betterments and renewals are capitalized.  All ordinary repair and maintenance costs are expensed as incurred. Land in the PRC is owned by the PRC government. The government in the PRC, according to PRC law, may sell the right to use the land for a specified period of time. Thus, all of the Group’s land purchases in the PRC are considered to be leasehold land and classified as land use right. They are amortized on a straight-line basis over the respective term of the right to use the land. The period for right to use the land was extended from 30 years to 50 years in 2008 by the PRC government. Depreciation of property, plant and equipment and land use right is computed using the straight-line method over the assets’ estimated useful lives as follows:

Land use right	Over 30 years prior to the extension of lease to 50 years and 50 years thereafter
Building	20 years

Leasehold improvements	over terms of the leases or the useful lives whichever is shorter
Plant and machinery	5 to 10 years
Furniture, fixtures and office equipment	5 years
Motor vehicles	5 years

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2            Summary of significant accounting policies (Continued)

(j)           Impairment

The Group has adopted SFAS No. 144: “Accounting for Impairment or Disposal of Long-Lived Assets” which requires impairment losses to be recorded for property, plant and equipment and land use right to be held and used in operations when indicators of impairment are present.  Reviews are regularly performed to determine whether the carrying value of assets is impaired.  The Group determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the carrying amount of the assets.  An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value of such assets less costs to sell.  Asset impairment charges are recorded to reduce the carrying amount of the long-lived asset that will be sold or disposed of to their estimated fair values. Charges for the asset impairment reduce the carrying amount of the long-lived assets to their estimated salvage value in connection with the decision to dispose of such assets. There were no impairment losses recorded during each of the two years ended December 31, 2008.

 (k)           Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the financial statements and accompanying disclosures.  Although these estimates are based on management’s best knowledge of current events and actions that the Group may undertake in the future, actual results may be different from the estimates.

(l)           Related Parties

Entities are considered to be related to the Group if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Group.  Related parties also include principal owners of the Group, its management, members of the immediate families of principal owners of the Group and its management and other parties with which the Group may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.  A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2              Summary of significant accounting policies (Continued)

(m)          Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combination” (SFAS No. 141(R)), which replaces FASB Statement No. 141. FAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired.  The statement also establishes disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination.  SFAS No. 141(R) is effective as of the beginning of an entity’s fiscal year that begins after December 15, 2008. An entity is precluded from implementing Statement 141R early.  The Group will adopt this statement in fiscal year 2009 and its effects on future periods will depend on the nature and significance of business combinations subject to this statement.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (SFAS No. 160). SFAS No. 160 establishes accounting and reporting standards for noncontrolling interests in subsidiaries. This statement requires the reporting of all noncontrolling interests as a separate component of stockholders’ equity, the reporting of consolidated net income (loss) as the amount attributable to both the parent and the noncontrolling interests and the separate disclosure of net income (loss) attributable to the parent and to the noncontrolling interests. In addition, this statement provides accounting and reporting guidance related to changes in noncontrolling ownership interests. Other than the reporting requirements described above which require retrospective application, the provisions of SFAS No. 160 are to be applied prospectively in the first annual reporting period beginning on or after December 15, 2008. SFAS No. 160 has no impact on the Group’s financial position, results of operations or cash flows.

In February 2008, the FASB issued Staff Position (FSP) SFAS No. 157-2, “Effective Date of FASB Statement No. 157” (FSP SFAS 157-2).  FSP SFAS 157-2 delayed the effective date of SFAS No. 157 “Fair Value Measurements” (SFAS No. 157) from 2008 to 2009 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).  The adoption of the provisions of SFAS No. 157 related to non-financial assets and non-financial liabilities is not expected to have a material impact on the financial statements.  See note 19 for a further discussion of SFAS No. 157.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133” (SFAS No. 161).  SFAS No. 161 requires additional disclosures about the objectives of using derivative instruments, the method by which the derivative instruments and related hedged items are accounted for under Statement No. 133 and its related interpretations, and the effect of derivative instruments and related hedged items on financial position, financial performance, and cash flows.  SFAS No. 161 also requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format.  SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.  The Group has no derivative instruments or hedging activities and this pronouncement is only disclosure-related; accordingly, SFAS 161 has no impact on the Group’s financial position, results of operations or cash flows.

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2              Summary of significant accounting policies (Continued)

(m)          Recent Accounting Pronouncements (Continued)

In April 2009, the FASB issued FSP SFAS No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (FSP SFAS No. 157-4).  FSP SFAS No. 157-4 provides factors to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability and circumstances that may indicate that a transaction is not orderly. In those instances, adjustments to the transactions or quoted prices may be necessary to estimate fair value with SFAS No. 157. This FSP does not apply to Level 1 inputs. FSP SFAS No. 157 also requires additional disclosures, including inputs and valuation techniques used, and changes thereof, to measure the fair value. FSP SFAS No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. Early adoption is permitted for periods ending after March 15, 2009. Management of the Group is in the process of evaluating the impact of FSP SFAS No. 157-4 and will adopt this FSP, effective on January 1, 2009.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (SFAS No. 165).  SFAS No. 165 provides general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS No. 165 is applicable for interim or annual periods after June 15, 2009. The application of SFAS No. 165 is not expected to have a material effect on the Group’s financial statements.

In June 2009, the FASB issued SFAS No. 168, “The ‘FASB Accounting Standards Codification’ and the Hierarchy of Generally Accepted Accounting Principles” (SFAS No. 168). SFAS No. 168 established the “FASB Accounting Standards Codification” (“Codification”), which officially launched on July 1, 2009, to become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The subsequent issuances of new standards will be in the form of Accounting Standards Updates that will be included in the Codification. Generally, the Codification is not expected to change U.S. GAAP. All other accounting literature excluded from the Codification will be considered nonauthoritative. SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Group will adopt SFAS No. 168 for year ending December 31, 2009. The Group is currently evaluating the effect on the financial statement disclosures as all future references to authoritative accounting literature will be referenced in accordance with the Codification.

The Group does not believe that any other of the recently issued and adopted, but not yet effective, accounting standards would have a material effect on the accompanying financial statements.

3              Revenue

	2008		2007
	US$		US$
Sales of manufactured LDPE		24,051,803		15,047,027
Sales of scrapped and other plastic materials		1,378,911		730,970
		25,430,714		15,777,997

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

4             Income taxes

No provision for Hong Kong profits tax has been made as the Company has no assessable profits for tax purposes during the year.

Guanwei provides for PRC Enterprise Income Tax (“PRC – EIT”) at a rate of 25% (2007: 33%), after offsetting losses brought forward, if any, on the basis of its income for financial reporting purposes, adjusting for income and expense items which are not assessable or deductible for PRC-EIT .

Income before income taxes:

	2008		2007
	US$		US$
PRC – EIT		4,293,315		4,006,369

The provision for income taxes consists of:

	2008		2007
	US$		US$
Current tax expenses:
PRC – EIT		1,103,734		1,364,680

The principal reconciling items from income tax computed at the statutory rate and at the effective income tax rate are stated as follows:

	2008			2007
	US$			US$
Computed tax at the PRC statutory rate (2008: 25%; 2007: 33%)		1,073,329			1,322,102
Non-taxable items		-			(2,523	)
Non-deductible items		32,812			45,101
Others		(2,407	)		-
Total provision for income tax at effective tax rate		1,103,734			1,364,680

No provision for deferred taxation has been made in the consolidated financial statements as there were no significant temporary differences arising during each of the years or at the balance sheet dates.

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

5             Accounts receivable

	2008		2007
	US$		US$
Trade receivables		68,972		155,793
Less: Allowances for doubtful debt		-		-
		68,972		155,793

6             Prepayments and other current assets

	2008		2007
	US$		US$
VAT recoverable		1,300,846		-
Prepayments and other receivables		84,379		82,316
		1,385,225		82,316

Pursuant to the Provisional Regulation of PRC on Value Added Tax (“VAT”), and their implementing rules, all entities and individuals that are engaged in the sale of goods are generally required to pay VAT at a rate of 17% of the gross sales proceeds received, less any deductible VAT already paid or borne by the taxpayer. VAT recoverable represents the deductible VAT generated from purchase of imported regenerative plastic materials was excess of the output VAT generated by sales in 2008.

7              Inventories

	2008		2007
	US$		US$
Raw materials		12,878,051		4,145,783
Work in progress		35,657		54,686
Finished goods		62,169		71,373
		12,975,877		4,271,842

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

8              Property, plant and equipment, net

	2008			2007
	US$			US$
Building		4,669,380			4,375,776
Leasehold improvements		419,527			393,148
Plant and machinery		687,091			618,156
Furniture, fixtures and office equipment		46,315			36,132
Motor vehicles		39,322			53,367
		5,861,635			5,476,579
Less: Accumulated depreciation		(892,837	)		(474,240	)
		4,968,798			5,002,339

	2008		2007
	US$		US$
Depreciation charge		388,739		289,402

A building with a carrying amount as of December 31, 2007 of US$4,022,239 has been pledged to secure the short-term bank borrowings. The short-term bank borrowing was paid off in January 2008 and was taken again in January 2009.

9              Land use right, net

	2008			2007
	US$			US$
Land use right		727,682			681,927
Less: Accumulated amortization		(60,682	)		(43,568	)
		667,000			638,359

	2008		2007
	US$		US$
Amortization charge		13,972		21,840

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

9             Land use right, net (Continued)

Land use right with a carrying amount as of December 31, 2007 of US$638,359 has been pledged to secure the short-term bank borrowings. The short-term bank borrowing was paid off in January 2008 and was taken again in January 2009.

In 2008, the land use right period was extended from 30 years to 50 years with the approval from PRC government. The amortization rate has been changed to 50 years since 2008.

Future amortization charges are US$13,972 per year for each of the next five years through December 31, 2013 and US$597,140 thereafter.

10           Amount due from director

		2008		2007
	Notes	US$		US$
Cash held by Chen Min, Guanwei’s director, on behalf of the Group	(a)		18,614		69,139
Contribution paid by sole director for issuance of share capital of Chenxin	(b)		1,290		1,290
			19,904		70,429

(a) The balance represents cash held by a director on behalf of the Group for the Group’s daily operation, which is unsecured, interest-free and repayable on demand. The amount was repaid in September 2009.

(b) The balance represents cash contribution made by the director of Chenxin for the incorporation of the Company in Hong Kong, which is unsecured, interest-free and repayable on demand.

11           Short term borrowings

The secured bank loan bears interest at a fixed rate of 6.436% per annum in 2007 and the amount was fully settled on the maturity date on January 16, 2008.

12           Other payables and accrued expenses

Other payables and accrued expenses mainly represent VAT payable, deposits received from customers and accruals for operating expenses.

13           Paid-in capital

Paid-in capital represents the issued share capital of Chenxin at incorporation on September 29, 2008 which was receivable from a director.

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

14           Additional paid-in capital

		2008		2007
Date	Paid up to Guanwei by Original Shareholders in form of:	US$		US$
April 6, 2005	Cash		619,318		619,318
January 10, 2006	Injection of Property, plant and equipment and land use right		619,318		619,318
			1,238,636		1,238,636

15           PRC statutory reserves

Under the relevant PRC laws and regulations, Guanwei is required to appropriate certain percentage of its net income to statutory fund i.e. the statutory reserve fund.

Statutory reserve fund

Pursuant to applicable PRC laws and regulations, Guanwei is required to allocate at least 10% of its net income to the statutory reserve fund until such fund reaches 50% of Guanwei’s registered capital. The statutory reserve fund can be utilized upon the approval by the relevant authorities, to offset accumulated losses or to increase registered capital, provided that such fund be maintained at a minimum of 25% of the registered capital.

Statutory staff welfare fund

Pursuant to applicable PRC laws and regulations as applicable to PRC domestic-owned enterprise, Guanwei, the subsidiary is required to allocate certain amount of its net income to the staff welfare fund determined by Guanwei. Guanwei ceased to allocate such fund since it became a foreign-owned enterprise in December 2008. The staff welfare fund can only be used to provide staff welfare facilities and other collective benefits to the employees. This fund is non-distributable other than upon liquidation of the Guanwei.

16           Pension plan

As stipulated by the rules and regulations in the PRC, Guanwei contributes to the national retirement plans for its employees in the PRC.  Guanwei contributes approximately 20% of the basic salaries of its employees, and has no further obligations for the actual payment of pension or post-retirement benefits beyond the annual contributions.  The state-sponsored retirement plans are responsible for the entire pension obligations payable to retired employees.

During the years ended December 31, 2008 and 2007, the aggregate contributions of the Group to the aforementioned pension plan were approximately US$110,000 and US$105,000 respectively.

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

17           Risks, Uncertainties, and concentrations

(i) Nature of Operations

All of the Group’s operations are conducted in the PRC and are subject to various political, economic, and other risks and uncertainties inherent in this country.  Among other risks, the Group’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations.

(ii) Concentration of Credit Risk

Financial instruments that potentially subject the Group to concentrations of credit risk consist principally of cash.

As of December 31, 2008 and 2007, the Group had cash deposits of US$1 million and US$1.5 million placed with several banks in the PRC, where there is currently no rule or regulation in place for obligatory insurance of bank accounts. The Group has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

(iii) Concentration of Suppliers and Restriction of Import Quota

For the year ended December 31, 2008 and 2007, 86% and 85% of raw materials was purchased from three major suppliers respectively.

In the PRC, import of regenerative plastic materials is controlled by import quota. The grant of import quota to the Group is subject to review and approval by the Ministry of Environmental Protection of the PRC annually. For the year ended December 31, 2008 and 2007, the Group obtained an import quota of 24,000 tons of regenerative plastic materials for each respective year (note 18).

(iv) Foreign Exchange Risk

The Group operates in the PRC and purchases raw materials from overseas suppliers, and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to purchases in, US$ and Euro (“EUR”).  Foreign exchange risk arises from committed and unmatched future commercial transactions, such as confirmed import purchase orders, recognized assets and liabilities in the PRC operations.

The Company has not entered into any hedging transactions in an effort to reduce exposure to foreign exchange risk.

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

17           Risks, Uncertainties, and concentrations (Continued)

(v)           Dependence of Import Quota from a related company

During the years ended December 31, 2007 and 2008, import of regenerative plastic materials were heavily dependent on the import quota granted by a related company, Fuqing Huan Li Plastics Company Limited or “Huan Li” (note 18).  Although the Group has not experienced difficulties obtaining the import quota from Huan Li in the past, the Group can not guarantee the grant of import quota will be obtained from Huan Li in the future. If the Group fail to obtain the import quota from Huan Li, the Group may have to use domestically supplied plastics wastes for manufacturing.  Domestic plastic wastes are typically poorly sorted, so utilizing the domestic raw material increase production costs.

18           Related party transaction

During the years 2007 and 2008, the Group imported regenerative plastic materials at a level much more than its granted import quota level by utilizing 35,000 tons from Huan Li at nil consideration in each of the respective year. Huan Li and the Company have a common director.

19           Fair value of financial instruments

In September 2006, the FASB finalized SFAS No. 157 which became effective January 1, 2008 except as amended by FSP SFAS No. 157-2 as previously described and FSP SFAS No. 157-1 and FSP SFAS No. 157-3 as discussed below.  This statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements; however, it does not require any new fair value measurements.  On January 1, 2008, the provisions of this statement were applied prospectively to fair value measurements and disclosures of (a) financial assets and financial liabilities and (b) non-financial assets and non-financial liabilities which are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).  The adoption of this statement did not have a material effect on the financial statements for fair value measurements made for the year ended December 31, 2008.

In February 2008, the FASB issued FSP SFAS 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” (FSP SFAS No. 157-1).  FSP SFAS No. 157-1 removed leasing from the scope of SFAS No. 157.  In October 2008, the FASB issued FSP SFAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active” (FSP SFAS No. 157-3).  FSP SFAS 157-3 clarified the application of SFAS No. 157 in a market that is not active and provided an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active.  FSP SFAS No. 157-3 became effective immediately upon issuance, and its adoption did not have an effect on the financial statements.

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

19           Fair value of financial instruments (Continued)

The carrying values of financial instruments, which consist of cash and cash equivalents, accounts receivable and accounts payable, bank borrowings, other payables and accrued expenses, and balances with related parties approximate their fair values due to the short-term nature of these instruments.

20   Subsequent events

On March 11, 2009, the Group declared dividends of US$5,648,152 to the shareholders. The dividends of US$4,409,934 were paid to the shareholders in March 2009and the remaining balance in [September] 2009.

Schedule 1.07

Certain Changes or Events

(a)

None.

(b)

In 2009, HKCo declared and paid a dividend to certain of its original stockholders in the aggregate amount of approximately US$5.6million.

(c)

None.

Schedule 1.09

Contracts

Indemnity Agreement, between Marshall Davis, HKCo, and HKCo Stockholder, dated November 5, 2009.

Share Exchange Agreement and Stock Purchase, between USCo and MD Mortgage Corp., dated January 15, 2007.

Asset Transfer Agreement, between Fuqing State-Owned Assets Management & Investment Corp. and Fuqing Guanwei Plastic Industry Co. Ltd. (“Guanwei”), a wholly-owned subsidiary of HKCo, dated January 11, 2006.

Land Use Certificate, issued by the Ministry of State-Owned Land Resources of the People’s Republic of China to Guanwei, dated November 8, 2006.

Audit Report and Certificate, issued by Tuv Rheinland Cert. gmbH to Guanwei.

Form of Employment Contract, between Guanwei and its employees.

Schedule 2.01

Organizational Documents of USCo

BYLAWS

OF

MD HOLDINGS CORP.

A Nevada Corporation

As of December 13, 2006

ARTICLE I

Meetings of Stockholders

Section 1.1                        Time and Place. Any meeting of the stockholders may be held at such time and such place, either within or without the State of Nevada, as shall be designated from time to time by resolution of the board of directors or as shall be stated in a duly authorized notice of the meeting.

Section 1.2                      Annual Meeting. The annual meeting of the stockholders shall be held on the date and at the time fixed, from time to time, by the board of directors. The annual meeting shall be for the purpose of electing a board of directors and transacting such other business as may properly be brought before the meeting.

Section 1.3                        Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the articles of incorporation, may be called by the president  and shall be called by the president or secretary if requested in writing by the holders of not less than one-tenth (1/10) of all the shares entitled to vote at the meeting. Such request shall state the purpose or purposes of the proposed meeting.

Section 1.4                        Notices. Written notice stating the place, date and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, except as otherwise required by statute or the articles of incorporation, either personally, by mail or by a form of electronic transmission consented to by the stockholder, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the official government mail of the United States or any other country, postage prepaid, addressed to the stockholder at his address as it appears on the stock records of the Corporation. If given personally or otherwise than by mail, such notice shall be deemed to be given when either handed to the stockholder or delivered to the stockholder’s address as it appears on the records of the Corporation.

Section 1.5                        Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting, or at any adjournment of a meeting, of stockholders; or entitled to receive payment of any dividend or other distribution or allotment of any rights; or entitled to exercise any rights in respect of any change, conversion, or exchange of stock; or for the purpose of any other lawful action; the board of directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors. The record date for determining the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof shall not be more than sixty nor less than ten days before the date of such meeting. The record date for determining the stockholders entitled to consent to corporate action in writing without a meeting shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors. The record date for any other action shall not be more than sixty days prior to such action. If no record date is fixed, (i) the record date for determining stockholders entitled to notice of or to vote at any meeting shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived by all stockholders, at the close of business on the day next preceding the day on which the meeting is held; (ii) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is required, shall be the first date on which a signed written consent setting forth the action taken or to be taken is delivered to the Corporation and, when prior action by the board of directors is required, shall be at the close of business on the day on which the board of directors adopts the resolution taking such prior action; and (iii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating to such other purpose. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

Section 1.6                        Voting List. If the Corporation shall have more than five (5) shareholders, the secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, at the Corporation’s principal offices. The list shall be produced and kept at the place of the meeting during the whole time thereof and may be inspected by any stockholder who is present.

Section 1.7                        Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the articles of incorporation. If, however, such a quorum shall not be present at any meeting of stockholders, the stockholders entitled to vote, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice if the time and place are announced at the meeting, until a quorum shall be present. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the original meeting. If the adjournment is for more than thirty days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 1.8                        Voting and Proxies. At every meeting of the stockholders, each stockholder shall be entitled to one vote, in person or by proxy, for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after six months from its date unless the proxy provides for a longer period, which may not exceed seven years. When a specified item of business is required to be voted on by a class or series of stock, the holders of a majority of the shares of such class or series shall constitute a quorum for the transaction of such item of business by that class or series. If a quorum is present at a properly held meeting of the shareholders, the affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote on the subject matter under consideration, shall be the act of the shareholders, unless the vote of a greater number or voting by classes (i) is required by the articles of incorporation, or (ii) has been provided for in an agreement among all shareholders entered into pursuant to and enforceable under Nevada Revised Statutes §78.365.

Section 1.9                        Waiver. Attendance of a stockholder of the Corporation, either in person or by proxy, at any meeting, whether annual or special, shall constitute a waiver of notice of such meeting, except where a stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. A written waiver of notice of any such meeting signed by a stockholder or stockholders entitled to such notice, whether before, at or after the time for notice or the time of the meeting, shall be equivalent to notice. Neither the business to be transacted at, nor the purpose of, any meeting need be specified in any written waiver of notice.

Section 1.10                     Stockholder Action Without a Meeting.  Except as may otherwise be provided by any applicable provision of the Nevada Revised Statutes, any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if, before or after the action, a written consent thereto is signed by stockholders holding at least a majority of the voting power; provided that if a different proportion of voting power is required for such an action at a meeting, then that proportion of written consents is required.  In no instance where action is authorized by written consent need a meeting of stockholders be called or noticed.

ARTICLE II

Directors

Section 2.1                        Number. The number of directors shall be one or more, as fixed from time to time by resolution of the board of directors; provided, however, that the number of directors shall not be reduced so as to shorten the tenure of any director at the time in office. The initial number of directors shall be one.

Section 2.2                        Elections. Except as provided in Section 2.3 of this Article II, the board of directors shall be elected at the annual meeting of the stockholders or at a special meeting called for that purpose. Each director shall hold such office until his successor is elected and qualified or until his earlier resignation or removal.

Section 2.3                        Vacancies. Any vacancy occurring on the board of directors and any directorship to be filled by reason of an increase in the board of directors may be filled by the affirmative vote of a majority of the remaining directors, although less than a quorum, or by a sole remaining director. Such newly elected director shall hold such office until his successor is elected and qualified or until his earlier resignation or removal.

Section 2.4                        Meetings. The board of directors may, by resolution, establish a place and time for regular meetings which may be held without call or notice.

Section 2.5                        Notice of Special Meetings. Special meetings may be called by the chairman, the president  or any two members of the board of directors. Notice of special meetings shall be given to each member of the board of directors: (i) by mail by the secretary, the chairman or the members of the board calling the meeting by depositing the same in the official government mail of the United States or any other country, postage prepaid, at least seven days before the meeting, addressed to the director at the last address he has furnished to the Corporation for this purpose, and any notice so mailed shall be deemed to have been given at the time when mailed; or (ii) in person, by telephone or by electronic transmission addressed as stated above at least forty-eight hours before the meeting, and such notice shall be deemed to have been given when such personal or telephone conversation occurs or at the time when such electronic transmission is delivered to such address.

Section 2.6                        Quorum. At all meetings of the board, a majority of the total number of directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, except as otherwise specifically required by statute, the articles of incorporation or these bylaws. If less than a quorum is present, the director or directors present may adjourn the meeting from time to time without further notice. Voting by proxy is not permitted at meetings of the board of directors.

Section 2.7                        Waiver. Attendance of a director at a meeting of the board of directors shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. A written waiver of notice signed by a director or directors entitled to such notice, whether before, at or after the time for notice or the time of the meeting, shall be equivalent to the giving of such notice.

Section 2.8                        Action Without Meeting. Any action required or permitted to be taken at a meeting of the board of directors may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the directors and filed with the minutes of proceedings of the board of directors. Any such consent may be in counterparts and shall be effective on the date of the last signature thereon unless otherwise provided therein.

Section 2.9                        Attendance by Telephone. Members of the board of directors may participate in a meeting of such board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

ARTICLE III

Officers

Section 3.1                        Election. The Corporation shall have such officers, with such titles and duties, as the board of directors may determine by resolution, which must include a chairman of the board, a president, a secretary and a treasurer and may include one or more vice presidents and one or more assistants to such officers. The officers shall in any event have such titles and duties as shall enable the Corporation to sign instruments and stock certificates complying with Section 6.1 of these bylaws, and one of the officers shall have the duty to record the proceedings of the stockholders and the directors in a book to be kept for that purpose. The officers shall be elected by the board of directors; provided, however, that the chairman may appoint one or more assistant secretaries and assistant treasurers and such other subordinate officers as he deems necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as are prescribed in the bylaws or as may be determined from time to time by the board of directors or the chairman. Any two or more offices may be held by the same person.

Section 3.2                        Removal and Resignation. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any officer appointed by the chairman may be removed at any time by the board of directors or the chairman. Any officer may resign at any time by giving written notice of his resignation to the chairman or to the secretary, and acceptance of such resignation shall not be necessary to make it effective unless the notice so provides. Any vacancy occurring in any office of chairman of the board, president, vice president, secretary or treasurer shall be filled by the board of directors. Any vacancy occurring in any other office may be filled by the chairman.

Section 3.3                        Chairman of the Board. The chairman of the board shall preside at all meetings of shareholders and of the board of directors, and shall have the powers and  perform the duties usually pertaining to such office, and shall have such other powers and perform such other duties as may be from time to time prescribed by the board of directors..

Section 3.4                        President. The president shall be the chief executive officer of the Corporation, and shall have general and active management of the business and affairs of the Corporation, under the direction of the board of directors. Unless the board of directors has appointed another presiding officer, the president shall preside at all meetings of the shareholders.

Section 3.5                        Vice President. The vice president or, if there is more than one, the vice presidents in the order determined by the board of directors or, in lieu of such determination, in the order determined by the president, shall be the officer or officers next in seniority after the president. Each vice president shall also perform such duties and exercise such powers as are appropriate and such as are prescribed by the board of directors or, in lieu of or in addition to such prescription, such as are prescribed by the president from time to time. Upon the death, absence or disability of the president, the vice president or, if there is more than one, the vice presidents in the order determined by the board of directors or, in lieu of such determination, in the order determined by the president, or, in lieu of such determination, in the order determined by the chairman, shall be the officer or officers next in seniority after the president. in the order determined by the and  shall perform the duties and exercise the powers of the president.

Section 3.6                        Assistant Vice President. The assistant vice president, if any, or, if there is more than one, the assistant vice presidents shall, under the supervision of the president or a vice president, perform such duties and have such powers as are prescribed by the board of directors, the president or a vice president from time to time.

Section 3.7                        Secretary. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, keep the minutes of such meetings, have charge of the corporate seal and stock records, be responsible for the maintenance of all corporate files and records and the preparation and filing of reports to governmental agencies (other than tax returns), have authority to affix the corporate seal to any instrument requiring it (and, when so affixed, attest it by his signature), and perform such other duties and have such other powers as are appropriate and such as are prescribed by the board of directors or the president from time to time.

Section 3.8                        Assistant Secretary. The assistant secretary, if any, or, if there is more than one, the assistant secretaries in the order determined by the board of directors or, in lieu of such determination, by the president or the secretary shall, in the absence or disability of the secretary or in case such duties are specifically delegated to him by the board of directors, the chairman, or the secretary, perform the duties and exercise the powers of the secretary and shall, under the supervision of the secretary, perform such other duties and have such other powers as are prescribed by the board of directors, the chairman, or the secretary from time to time.

Section 3.9                        Treasurer. The treasurer shall have control of the funds and the care and custody of all the stocks, bonds and other securities of the Corporation and shall be responsible for the preparation and filing of tax returns. He shall receive all moneys paid to the Corporation and shall have authority to give receipts and vouchers, to sign and endorse checks and warrants in its name and on its behalf, and give full discharge for the same. He shall also have charge of the disbursement of the funds of the Corporation and shall keep full and accurate records of the receipts and disbursements. He shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as shall be designated by the board of directors and shall perform such other duties and have such other powers as are appropriate and such as are prescribed by the board of directors or the president from time to time.

Section 3.10                                  Assistant Treasurer. The assistant treasurer, if any, or, if there is more than one, the assistant treasurers in the order determined by the board of directors or, in lieu of such determination, by the chairman or the treasurer shall, in the absence or disability of the treasurer or in case such duties are specifically delegated to him by the board of directors, the chairman or the treasurer, perform the duties and exercise the powers of the treasurer and shall, under the supervision of the treasurer, perform such other duties and have such other powers as are prescribed by the board of directors, the president or the treasurer from time to time.

Section 3.11                                  Compensation. Officers shall receive such compensation, if any, for their services as may be authorized or ratified by the board of directors. Election or appointment as an officer shall not of itself create a right to compensation for services performed as such officer.

ARTICLE IV

Committees

Section 4.1                        Designation of Committees. The board of directors may establish committees for the performance of delegated or designated functions to the extent permitted by law, each committee to consist of one or more directors of the Corporation, and if the board of directors so determines, one or more persons who are not directors of the Corporation. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of such absent or disqualified member.

Section 4.2                        Committee Powers and Authority. The board of directors may provide, by resolution or by amendment to these bylaws, for an Executive Committee to consist of one or more directors of the Corporation (but no persons who are not directors of the Corporation) that may exercise all the power and authority of the board of directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that an Executive Committee may not exercise the power or authority of the board of directors in reference to amending the articles of incorporation (except that an Executive Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors, pursuant to Article 3(3) of the articles of incorporation, fix the designations and any of the preferences or rights of shares of preferred stock relating to dividends, redemption, dissolution, any distribution of property or assets of the Corporation, or the conversion into, or the exchange of shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease, or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending these bylaws; and, unless the resolution expressly so provides, no an Executive Committee shall have the power or authority to declare a dividend or to authorize the issuance of stock.

Section 4.3                        Committee Procedures. To the extent the board of directors or the committee does not establish other procedures for the committee, each committee shall be governed by the procedures established in Section 2.4 (except as they relate to an annual meeting of the board of directors) and Sections 2.5, 2.6, 2.7, 2.8 and 2.9 of these bylaws, as if the committee were the board of directors.

ARTICLE V

Indemnification

Section 5.1                        Expenses for Actions Other Than By or In the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, association or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with which action, suit or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, that he had reasonable cause to believe that his conduct was unlawful.

Section 5.2                       Expenses for Actions By or In the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, association or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

Section 5.3                        Successful Defense. To the extent that any person referred to in the preceding two sections of this Article V has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in such sections, or in defense of any claim issue, or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.

Section 5.4                        Determination to Indemnify. Any indemnification under the first two sections of this Article V (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because he has met the applicable standard of conduct set forth therein. Such determination shall be made (i) by the stockholders, (ii) by the board of directors by majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (iii) if such quorum is not obtainable or, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion.

Section 5.5                        Expense Advances. Expenses incurred by an officer or director in defending any civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article V.

Section 5.6                        Provisions Nonexclusive. The indemnification and advancement of expenses provided by, or granted pursuant to, the other sections of this Article V shall not be deemed exclusive of any other rights to which any person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation or under any other bylaw, agreement, insurance policy, vote of stockholders or disinterested directors, statute or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

Section 5.7                        Insurance. By action of the board of directors, notwithstanding any interest of the directors in the action, the Corporation shall have power to purchase and maintain insurance, in such amounts as the board of directors deems appropriate, on behalf of any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, association or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not he is indemnified against such liability or expense under the provisions of this Article V and whether or not the Corporation would have the power or would be required to indemnify him against such liability under the provisions of this Article V or of the Nevada Revised Statutes §78.7502; §78.751 or §78.752 or by any other applicable law.

Section 5.8                        Surviving Corporation. The board of directors may provide by resolution that references to “the Corporation” in this Article V shall include, in addition to this Corporation, all constituent corporations absorbed in a merger with this Corporation so that any person who was a director or officer of such a constituent corporation or is or was serving at the request of such constituent corporation as a director, employee or agent of another corporation, partnership, joint venture, trust, association or other entity shall stand in the same position under the provisions of this Article V with respect to this Corporation as he would if he had served this Corporation in the same capacity or is or was so serving such other entity at the request of this Corporation, as the case may be.

Section 5.9                        Inurement. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article V shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors, and administrators of such person.

Section 5.10                                  Employees and Agents. To the same extent as it may do for a director or officer, the Corporation may indemnify and advance expenses to a person who is not and was not a director or officer of the Corporation but who is or was an employee or agent of the Corporation or who is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, association or other enterprise.

ARTICLE VI

Stock

Section 6.1                        Certificates. Every holder of stock in the Corporation represented by certificates and, upon request, every holder of uncertificated shares shall be entitled to have a certificate, signed by or in the name of the Corporation by the President or chairman of the board of directors, or a vice president, and by the secretary or an assistant secretary, or the treasurer or an assistant treasurer of the Corporation, certifying the number of shares owned by him in the Corporation.

Section 6.2                        Facsimile Signatures. Where a certificate of stock is countersigned (i) by a transfer agent other than the Corporation or its employee or (ii) by a registrar other than the Corporation or its employee, any other signature on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature or signatures have been placed upon, any such certificate shall cease to be such officer, transfer agent or registrar, whether because of death, resignation or otherwise, before such certificate is issued, the certificate may nevertheless be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

Section 6.3                        Transfer of Stock. Transfers of shares of stock of the Corporation shall be made on the books of the Corporation only upon presentation of the certificate or certificates representing such shares properly endorsed or accompanied by a proper instrument of assignment, except as may otherwise be expressly provided by the laws of the State of Nevada or by order by a court of competent jurisdiction. The officers or transfer agents of the Corporation may, in their discretion, require a signature guaranty before making any transfer.

Section 6.4                        Lost Certificates. The board of directors may direct that a new certificate of stock be issued in place of any certificate issued by the Corporation that is alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen, or destroyed. When authorizing such issue of a new certificate, the board of directors may, in its discretion and as a condition precedent to the issuance of a new certificate, require the owner of such lost, stolen, or destroyed certificate, or his legal representative, to give the Corporation a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

ARTICLE VII

Seal

The board of directors may, but are not required to, adopt and provide a common seal or stamp which, when adopted, shall constitute the corporate seal of the Corporation. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or manually reproduced.

ARTICLE VIII

Fiscal Year

The board of directors, by resolution, may adopt a fiscal year for the Corporation.

ARTICLE IX

Amendment

These bylaws may at any time and from time to time be amended, altered or repealed exclusively by the board of directors, as provided in the articles of incorporation.

Schedule 2.09

Liabilities on the Closing Date

- Webb & Company, P.A.: $1,207.50

- Corporate Stock Transfer: $4,062.25

- Olde Monmouth Stock Transfer: $2,950 (termination fee)

- Globex Transfer, LLC: $3,500 (DTC eligibility)

- Berman & Company, P.A.: $885

- EDGAR Agents, LLC: $1,174

Schedule 2.14

Bank Accounts; Power of Attorney

(a)

None

(b)

None

(c)

None

(d)

None

(e)

Marshall Davis, sole officer and director

EX-3.7

EX-3.8

Enterprise Business License

Registration Number: 3501810006147 Established on: April 9, 2005 Registration agency: Fuqing Administration Bureau for Industry and Commerce Date: December 23, 2008

Name: Fuqing Guanwei Plastic Industry Co. Limited. Address: Shizhu Road, Fuqing City Legal Representative: Chen Min Registered Capital: RMB 10,000,000 Type of organization: Limited Liability Company (wholly invested by Taiwan, Hong Kong or Macau) Range of Business: Manufacturing and sales of PE, PET and other type of recycling plastics (if the manufacturing and sales requires special approval, company can only conduct this business within the approved period of time) Shareholder: Hong Kong Chenxin International Development Corp. Operation Term: From April 9, 2005 to April 8, 2055

Enterprise Business License (Transcript)		No. 1310750
Registration Number: 3501810006147	Notes
Name: Fuqing Guanwei Plastic Industry Co. Limited. Address: Shizhu Road, Fuqing City Legal Representative: Chen Min Type of organization: corporation with limited responsibilities . Registered Capital: RMB 5,000,000 Business scope: Manufacturing and sales of PE, PET and other type of recycling plastics (Business items related to the permit and special approval should only be carried out with effective certificate or license approved.)***		1.Enterprise Business license is the certificate of Legal company’s legal qualification and the license to operate its business. 2. Enterprise Business license has the original copy and its transcript copy, both have the same legal effectiveness. The original copy should be placed at obvious position of company. Company can apply several transcripts from registration agency when necessary. 3. This license must not be forged, altered, leased, lent, or transferred. No agency or individual has right to detain or cancel the license except registration agency. 4. Company shall operate within its range of business. 5. Any amendment should be filed with registration agency. 6. Annual examination should be conducted from January 1st to April 30th. 7. Both original copy and transcripts shall be returned when the company terminates its business. The license becomes ineffective when being canceled.
		Date of Registration: April 9, 2005
Operation Term:    From April 9, 2005 To April 8, 2035
Registration agency: Fuqing Administration for Industry and Commerce
Established on: April 9, 2005

EX-10.2

EX-10.4

EX-10.5

EX-10.6

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of November [5], 2009, is made by and between MD Holdings, Corp., a Nevada corporation (“Seller”), and Marshall Davis (“Buyer”).

RECITALS

WHEREAS, Seller owns all of the issued and outstanding shares of common stock (the “Shares”) of MD Mortgage Corporation, a Maryland corporation (the “Company”), which Shares constitute, as of the date hereof, all of the issued and outstanding capital stock of the Company.

WHEREAS, effective as of the date hereof, Seller effectuated a 3.5 for 1 forward split (the “Split”) of its issued and outstanding common stock (the “Common Stock”).

WHEREAS,                                Buyer holds [65,625,000] shares of Common Stock (post-Split) and Buyer hereby agrees to transfer [61,510,140] shares of Common Stock (the “Purchase Price Shares”) to Seller for cancellation (the “Repurchase”).

WHEREAS,                                In connection with the Repurchase, Buyer wishes to acquire from Seller, and Seller wishes to transfer to Buyer, the Shares, upon the terms and subject to the conditions set forth herein.

Accordingly, the parties hereto agree as follows:

1.           Purchase and Sale of Shares.

(a)           Purchased Shares. Subject to the terms and conditions provided below, Seller shall sell and transfer to Buyer and Buyer shall purchase from Seller, on the Closing Date (as defined in Section 1(c)), all of the Shares.

(b)           Purchase Price.  The purchase price for the Shares shall be the transfer and delivery by Buyer to Seller of the Purchase Price Shares, deliverable as provided in Section 2(b).

(c)           Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated in this Agreement (the “Closing”) shall take place as soon as practicable following the execution of this Agreement. The date on which the Closing occurs shall be referred to herein as the Closing Date (the “Closing Date”).

2.           Closing.

(a)           Transfer of Shares. At the Closing, Seller shall deliver to Buyer a certificate or certificates representing the Shares, duly endorsed to Buyer or as directed by Buyer, which delivery shall vest Buyer with good and marketable title to all of the issued and outstanding shares of capital stock of the Company, free and clear of all liens and encumbrances.

(b)  Payment of Purchase Price. At the Closing, Buyer shall deliver to Seller a certificate or certificates representing the Purchase Price Shares duly endorsed to Seller, which delivery shall vest Seller with good and marketable title to the Purchase Price Shares, free and clear of all liens and encumbrances.

3.           Representations and Warranties of Buyer. Buyer represents and warrants to Seller as of the date hereof as follows:

(a)           Enforceability. The execution, delivery and performance by Buyer of this Agreement are within Buyer’s powers. This Agreement has been duly executed and delivered by Buyer and constitutes the valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles.

(b)           Governmental Authorization. The execution, delivery and performance by Buyer of this Agreement require no consent, approval, Order, authorization or action by or in respect of, or filing with, any governmental authority.

(c)           Non-Contravention; Consents. The execution, delivery and performance by Buyer of this Agreement, and the consummation of the transactions contemplated hereby do not violate any applicable Law or Order.

(d)           Purchase for Investment.  Buyer is financially able to bear the economic risks of acquiring an interest in the Company and the other transactions contemplated hereby, and has no need for liquidity in this investment. Buyer has such knowledge and experience in financial and business matters in general, and with respect to businesses of a nature similar to the business of the Company, so as to be capable of evaluating the merits and risks of, and making an informed business decision with regard to, the acquisition of the Shares. Buyer is acquiring the Shares solely for his own account and not with a view to or for resale in connection with any distribution or public offering thereof, within the meaning of any applicable securities laws and regulations, unless such distribution or offering is registered under the Securities Act of 1933, as amended (the “Securities Act”), or an exemption from such registration is available. Buyer has (i) received all the information he has deemed necessary to make an informed investment decision with respect to the acquisition of the Shares, (ii) had an opportunity to make such investigation as he has desired pertaining to the Company and the acquisition of an interest therein, and to verify the information which is, and has been, made available to him and (iii) had the opportunity to ask questions of Seller concerning the Company. Buyer has received no public solicitation or advertisement with respect to the offer or sale of the Shares. Buyer realizes that the Shares are “restricted securities” as that term is defined in Rule 144 promulgated by the Securities and Exchange Commission under the Securities Act, the resale of the Shares is restricted by federal and state securities laws and, accordingly, the Shares must be held indefinitely unless their resale is subsequently registered under the Securities Act or an exemption from such registration is available for their resale. Buyer understands that any resale of the Shares by him must be registered under the Securities Act (and any applicable state securities law) or be effected in circumstances that, in the opinion of counsel for the Company at the time, create an exemption or otherwise do not require registration under the Securities Act (or applicable state securities laws). Buyer acknowledges and consents that certificates now or hereafter issued for the Shares will bear a legend substantially as follows:

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THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER THE STATE ACTS OR PURSUANT TO EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE EXEMPTIONS AFFORDED BY SECTION 4(2) OF THE SECURITIES ACT AND RULE 144 THEREUNDER). AS A PRECONDITION TO ANY SUCH TRANSFER, THE ISSUER OF THESE SECURITIES SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES LAWS.

Buyer understands that the Shares are being sold to him pursuant to the exemption from registration contained in Section 4(2) of the Securities Act and that Seller is relying upon the representations made herein as one of the bases for claiming the Section 4(2) exemption.

(e)           Liabilities.  Following the Closing, Seller will have no debts, liabilities or obligations relating to the Company or its business or activities, whether before or after the Closing, and there are no outstanding guaranties, performance or payment bonds, letters of credit or other contingent contractual obligations that have been undertaken by Seller directly or indirectly in relation to the Company or its business and that may survive the Closing.

(f)           Title to Purchase Price Shares.  Buyer is the sole record and beneficial owners of the Purchase Price Shares. At the Closing, Buyer will have good and marketable title to the Purchase Price Shares, which Purchase Price Shares are, and at the Closing will be, free and clear of all options, warrants, pledges, claims, liens and encumbrances, and any restrictions or limitations prohibiting or restricting transfer to Seller, except for restrictions on transfer as contemplated by applicable securities laws.

4.           Indemnification and Release.

(a)           Indemnification. Buyer covenants and agrees to indemnify, defend, protect and hold harmless Seller, and its officers, directors, employees, stockholders, agents, representatives and affiliates (collectively, together with Seller, the “Seller Indemnified Parties”) at all times from and after the date of this Agreement from and against all losses, liabilities, damages, claims, actions, suits, proceedings, demands, assessments, adjustments, costs and expenses (including specifically, but without limitation, reasonable attorneys’ fees and expenses of investigation), whether or not involving a third party claim and regardless of any negligence of any Seller Indemnified Party (collectively, “Losses”), incurred by any Seller Indemnified Party as a result of or arising from (i) any breach of the representations and warranties of Buyer set forth herein or in certificates delivered in connection herewith, (ii) any breach or nonfulfillment of any covenant or agreement on the part of Buyer under this Agreement, (iii) any debt, liability or obligation of the Company, whether incurred or arising prior to the date hereof or after, (iv) any debt, liability or obligation of Seller for actions taken prior to that certain Share Exchange Agreement of even date herewith by and between Seller, Hong Kong Chenxin International Development Limited, a Hong Kong company, and Fresh Generation Overseas Limited, a British Virgin Islands company (the “Share Exchange”), (v) the conduct and operations of the business of the Company whether before or after the Closing Date, (vi) claims asserted against the Company whether arising before or after the Closing Date and whether in connection with the transactions contemplated hereunder or otherwise, or (vii) any federal or state income tax payable by Seller and attributable to the transaction contemplated by this Agreement or activities prior to the Share Exchange or with respect to the Company after the Share Exchange.

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(b)           Third Party Claims.

(i)           If any claim or liability (a “Third-Party Claim”) should be asserted against any of the Seller Indemnified Parties (the “Indemnitee”) by a third party after the Closing for which Buyer has an indemnification obligation under the terms of Section 5(a), then the Indemnitee shall notify Buyer (the “Indemnitor”) within 20 days after the Third-Party Claim is asserted by a third party (said notification being referred to as a “Claim Notice”) and give the Indemnitor a reasonable opportunity to take part in any examination of the books and records of the Indemnitee relating to such Third-Party Claim and to assume the defense of such Third-Party Claim and in connection therewith and to conduct any proceedings or negotiations relating thereto and necessary or appropriate to defend the Indemnitee and/or settle the Third-Party Claim. The expenses (including reasonable attorneys’ fees) of all negotiations, proceedings, contests, lawsuits or settlements with respect to any Third-Party Claim shall be borne by the Indemnitor. If the Indemnitor agrees to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, through counsel reasonably satisfactory to Indemnitee, then the Indemnitor shall be entitled to control the conduct of such defense, and shall be responsible for any expenses of the Indemnitee in connection with the defense of such Third-Party Claim so long as the Indemnitor continues such defense until the final resolution of such Third-Party Claim. The Indemnitor shall be responsible for paying all settlements made or judgments entered with respect to any Third-Party Claim the defense of which has been assumed by the Indemnitor. Except as provided in subsection (ii) below, both the Indemnitor and the Indemnitee must approve any settlement of a Third-Party Claim. A failure by the Indemnitee to timely give the Claim Notice shall not excuse Indemnitor from any indemnification liability except only to the extent that the Indemnitor is materially and adversely prejudiced by such failure.

(ii)           If the Indemnitor shall not agree to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, or shall fail to continue such defense until the final resolution of such Third-Party Claim, then the Indemnitee may defend against such Third-Party Claim in such manner as it may deem appropriate and the Indemnitee may settle such Third-Party Claim, in its sole discretion, on such terms as it may deem appropriate. The Indemnitor shall promptly reimburse the Indemnitee for the amount of all settlement payments and expenses, legal and otherwise, incurred by the Indemnitee in connection with the defense or settlement of such Third-Party Claim. If no settlement of such Third-Party Claim is made, then the Indemnitor shall satisfy any judgment rendered with respect to such Third-Party Claim before the Indemnitee is required to do so, and pay all expenses, legal or otherwise, incurred by the Indemnitee in the defense against such Third-Party Claim.

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(c)           Non-Third-Party Claims. Upon discovery of any claim for which Buyer has an indemnification obligation under the terms of this Section 5 which does not involve a claim by a third party against the Indemnitee, the Indemnitee shall give prompt notice to Buyer of such claim and, in any case, shall give Buyer such notice within 30 days of such discovery. A failure by Indemnitee to timely give the foregoing notice to Buyer shall not excuse Buyer from any indemnification liability except to the extent that Buyer is materially and adversely prejudiced by such failure.

(d)           Release.  Buyer, on behalf of itself and its Related Parties, as defined below, hereby releases and forever discharges Seller and its individual, joint or mutual, past and present representatives, Affiliates, officers, directors, employees, agents, attorneys, stockholders, controlling persons, subsidiaries, successors and assigns (individually, a “Releasee” and collectively, “Releasees”) from any and all claims, demands, proceedings, causes of action, orders, obligations, contracts, agreements, debts and liabilities whatsoever, whether known or unknown, suspected or unsuspected, both at law and in equity, which Buyer or any of its Related Parties now have or have ever had against any Releasee. Buyer hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any proceeding of any kind against any Releasee, based upon any matter released hereby. “Related Parties” shall mean, with respect to Buyer, (i) any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with Buyer, (ii) any Person in which Buyer hold a Material Interest or (iii) any Person with respect to which any Buyer serves as a general partner or a trustee (or in a similar capacity). For purposes of this definition, “Material Interest” shall mean direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of voting securities or other voting interests representing at least ten percent (10%) of the outstanding voting power of a Person or equity securities or other equity interests representing at least ten percent (10%) of the outstanding equity securities or equity interests in a Person.

5.           Definitions. As used in this Agreement:

(a)  “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with the first Person. For the purposes of this definition,

(b) “Control,” when used with respect to any Person, means the possession, directly or indirectly, of the power to (i) vote 10% or more of the securities having ordinary voting power for the election of directors (or comparable positions) of such Person or (ii) direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” have meanings correlative to the foregoing;

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(c)           “Governmental Authority” means any domestic or foreign governmental or regulatory authority;

(d)           “Law” means any federal, state or local statute, law, rule, regulation, ordinance, code, Permit, license, policy or rule of common law;

(e)           “Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset. For purposes of this Agreement, a Person will be deemed to own, subject to a Lien, any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset;

(f)           “Order” means any judgment, injunction, judicial or administrative order or decree;

(g)           “Permit” means any government or regulatory license, authorization, permit, franchise, consent or approval; and

(h)           “Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

6.           Miscellaneous.

(a)           Counterparts. This Agreement may be signed in any number of counterparts, each of which will be deemed an original but all of which together shall constitute one and the same instrument.

(b)           Amendments and Waivers.

(i)           No provision of this Agreement may be amended or waived unless such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.

(ii)           No failure or delay by any party in exercising any right, power or privilege hereunder will operate as a waiver thereof nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided will be cumulative and not exclusive of any rights or remedies provided by Law.

(c)           Successors and Assigns. The provisions of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer (including by operation of Law) any of its rights or obligations under this Agreement without the consent of each other party hereto.

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(d)           No Third Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their permitted successors and assigns and nothing herein expressed or implied will give or be construed to give to any Person, other than the parties hereto, those referenced in Section 5 above, and such permitted successors and assigns, any legal or equitable rights hereunder.

(e)           Governing Law. This Agreement will be governed by, and construed in accordance with, the internal substantive law of the State of Delaware.

(f)           Headings. The headings in this Agreement are for convenience of reference only and will not control or affect the meaning or construction of any provisions hereof.

(g)           Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter of this Agreement. This Agreement supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof of this Agreement.

(h)           Severability. If any provision of this Agreement or the application of any such provision to any Person or circumstance is held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the remainder of the provisions of this Agreement (or the application of such provision in other jurisdictions or to Persons or circumstances other than those to which it was held invalid, illegal or unenforceable) will in no way be affected, impaired or invalidated, and to the extent permitted by applicable Law, any such provision will be restricted in applicability or reformed to the minimum extent required for such provision to be enforceable. This provision will be interpreted and enforced to give effect to the original written intent of the parties prior to the determination of such invalidity or unenforceability.

(i)           Notices. Any notice, request or other communication hereunder shall be given in writing and shall be served either personally, by overnight delivery or delivered by mail, certified return receipt and addressed to the following addresses:

(a)	If to Buyer:
	Marshall Davis
	135 Carolstowne Road
	Reisterstown, Maryland
	Tel.: (410) 440-2323
(b)	If to Seller:
	MD Holdings Corp.
	135 Carolstowne Road
	Reisterstown, Maryland
	Tel.: (410) 440-2323

- 7 - -

With a copy to:

Anslow & Jaclin, LLP

195 Route 9 South, Suite 204

Manalapan, New Jersey 07726

Attention: Eric M. Stein, Esq.

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

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[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered, effective as of the date first above written.

MD HOLDINGS CORP.
By:	/s/ Marshall Davis
	Name: Marshall Davis
	Title:  Chief Executive Officer

MARSHALL DAVIS
By:	/s/ Marshall Davis

EX-10.7

Execution Copy

INDEMNITY AGREEMENT

THIS INDEMNITY AGREEMENT is made as of November 5, 2009 by and among Hong Kong Chenxin International Development Limited, a Hong Kong company (“HKCo”), Fresh Generation Overseas Limited (the “HKCo Stockholder”) and Marshall Davis (the “Principal USCo Stockholder” or “Indemnitor”).

RECITALS

WHEREAS, HKCo, the HKCo Stockholder and MD Holdings Corp., a Nevada corporation (“USCo”), entered into a Share Exchange Agreement, dated as of the date hereof (the “Share Exchange Agreement”); and

WHEREAS, the Share Exchange Agreement requires as a condition to the obligation of HKCo and the HKCo Stockholder to close that, among other things, the Indemnitor provides an indemnity to the Indemnitees (as herein defined).

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Indemnitor and HKCo agree to be legally bound as follows:

ARTICLE I

DEFINITIONS

Section 1.01.Certain Definitions.  The following terms shall have the meanings herein specified throughout this Agreement:

“Agreement”	This Indemnity Agreement, as same may be amended from time to time.
“Contract Documents”	The Share Exchange Agreement and any and all other documents comprising the entire documentation relating to, pertaining to or delivered in connection with, the Share Exchange Agreement, including, but not limited to, this Agreement.
“Governing Jurisdiction”	State of New York.
“Indemnitees”	HKCo and the HKCo Stockholder.
“Person”	Any natural person, partnership, limited liability company or corporation and any other form of business or legal entity and any governmental or quasi-governmental agency or authority.

“Third Party Claims” Any claims, liens, encumbrances, adverse interests, executions, levies, actions, demands, injunctions, orders, judgments, actions or proceedings, whether or not seeking costs, damages, penalties or expenses, brought by any Person relating to or in connection with USCo.

Section 1.02.Additional Definitions.  All terms of this Agreement which are not defined in Section 1.01 shall have the meanings set forth in this Agreement.  Capitalized terms used but not otherwise defined herein have the meanings specified in the Share Exchange Agreement.

Section 1.03.Captions.  Article and Section captions and headings of this Agreement are for convenience of reference only and in no way define, limit, prescribe, expand or otherwise alter the scope or intent of this Agreement or in any way affect this Agreement or any provision hereof.

Section 1.04.Interpretation.  Words in the singular number shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires.  The terms “hereof,” “herein” and “herewith” and words of similar import shall be construed to refer to this Agreement in its entirety and not to any particular provision unless otherwise stated.

Section 1.05.Governing Law.  This Agreement shall be construed and enforced in accordance with and governed by the laws of the Governing Jurisdiction without giving effect to choice of laws or conflicts of laws principles thereof as though the entire Agreement were to be fully performed within the Governing Jurisdiction among Persons who were all residents only of the Governing Jurisdiction.

Section 1.06.Construction.  This Agreement shall be construed without regard to any presumption or rule requiring construction against the party drafting any instrument or causing any instrument to be drafted.

Section 1.07.Recitals.  The foregoing recitals are true and correct and are hereby incorporated into this Agreement as if set forth at length herein.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF INDEMNITOR

The Indemnitor represents and warrants to the Indemnitees, at and as of the Closing Date (as defined in the Share Exchange Agreement), solely with respect to himself, all of the following:

Section 2.01.Legal Capacity.

(a)The Indemnitor has the power and the legal capacity to enter into and to perform his obligations hereunder and to carry out the terms hereof.

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(b)The execution, delivery and performance by the Indemnitor of this Agreement does not require any other approval or consent;

(c)This Agreement is in full force and effect, has been duly executed and delivered by the Indemnitor, and constitutes the valid and binding obligation of the Indemnitor, enforceable against the Indemnitor in accordance with its terms, except as the enforceability thereof may be limited by Bankruptcy and Equity Exceptions; and

(d)The execution, delivery and performance by the Indemnitor of this Agreement, and the consummation of the Contemplated Transactions and the transactions contemplated hereby, will not result in any violation of, breach of or default under any contract, instrument, or agreement to which it is a party or by which it or its property is bound, or of any license, permit, franchise, judgment, writ, injunction, decree, order, law, ordinance, rule or regulation applicable to it.

Section 2.02.Stock Ownership.  The Indemnitor is the sole record and beneficial owner of the USCo Common Stock to be tendered and cancelled by him pursuant to Section 4.05 of the Share Exchange Agreement (the “Cancelled Shares”), and the Cancelled Shares are free and clear of all restrictions on transfer (other than restrictions of general applicability under the Securities Act and state securities laws), liens and taxes.  The Indemnitor is not a party to any option, warrant, right, agreement or commitment providing for the disposition or acquisition of any shares of USCo Common Stock (other than the Share Exchange Agreement) or any other capital stock of USCo.  The Indemnitor is not a party to any voting trust, proxy or other agreement or understanding with respect to the transfer or voting of the Cancelled Shares.

ARTICLE III

COVENANTS OF INDEMNITORS

Section 3.01.Notice of Claims or Liens.  The Indemnitor will notify HKCo, in writing, promptly upon learning of any existing, pending or threatened Third Party Claims.

Section 3.02.Tender of Cancelled Shares.   Prior to the Closing, the Principal USCo Stockholder shall tender to the Company for cancellation the Cancelled Shares in accordance with Section 4.05 of the Share Exchange Agreement, and be entitled to receive the consideration set forth therein.

Section 3.03.Further Assurances.  The Indemnitor shall use his best efforts to perform or fulfill all conditions and obligations (a) to be performed or fulfilled by him under this Agreement, (b) to be performed and fulfilled by USCo under the Share Exchange Agreement and the other Contract Documents, so that the Contemplated Transactions shall be consummated as soon as practicable.  In addition, the Indemnitor shall from time to time execute, deliver, record, register and file any and all further documents, agreements, and other instruments and documents, and take all further actions which may be required under applicable law or which HKCo and the HKCo Stockholder may reasonably request, in order to effectuate the Contemplated Transactions and more fully document any securities laws exemptions available with respect to the Contemplated Transactions.

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ARTICLE IV

INDEMNIFICATION BY INDEMNITORS

Section 4.01.Indemnification.  Subject to the limitations on the survival of the representations and warranties contained in Section 7.11 of the Share Exchange Agreement, the Indemnitor hereby agrees to indemnify, defend and hold harmless each Indemnitee from and against any losses, liabilities, damages, deficiencies, costs or expenses (including interest, penalties and reasonable attorneys’ fees and disbursements) based upon, arising out of or otherwise due to (a) any inaccuracy in, or any breach of, any representation, warranty, covenant or agreement of USCo contained in the Share Exchange Agreement (other than Section 4.11 thereof)or in any document or other writing delivered pursuant to the Share Exchange Agreement or any other Contract Document and (b) the business or operations of MD Mortgage Corporation.

Section 4.02.Subsequent Events.  The Indemnitor’s liability hereunder shall be unaffected by (i) any amendment or modification of the provisions of the Share Exchange Agreement, or any other Contract Document, (ii) any extensions of time for performance required by the Share Exchange Agreement or any other Contract Document, (iii) the release (in whole or in part) of USCo from performance or observance of any of the agreements, covenants, terms or conditions contained in the Share Exchange Agreement or this Agreement by operation of law or otherwise, whether made with or without notice to the Indemnitor, or (iv) any exculpatory provision in the Share Exchange Agreement or any other Contract Document.

Section 4.03.Defenses.  The Indemnitor shall not claim that he has any defense to his obligations hereunder other than performance of such obligations in accordance with the terms of this Agreement or the non-existence of a default of such obligations.  The Indemnitor indemnifies the Indemnitees against loss, cost or expense incurred by reason of the assertion by the Indemnitor of any defense to his obligations hereunder except the non-existence of a default by the Indemnitor.  In no event shall HKCo or any of its Affiliates be required to seek any remedy from or assert any claims or rights against any other Person (including USCo) before seeking remedy against the Indemnitor, nor shall HKCo or any of its Affiliates be required to post any bond or provide any notice in connection with the enforcement of any remedies available to it at law or in equity.

ARTICLE V

MISCELLANEOUS

Section 5.01.Survivorship.  The representations, warranties, covenants, conditions and indemnities contained in this Agreement shall continue after and survive the execution and delivery of this Agreement.

Section 5.02.Reliance.  The Indemnitees are entitled to rely upon each and every representation and warranty contained in this Agreement notwithstanding any independent investigations by the Indemnitees or their respective beneficiaries, trustees, agents or representatives and no such independent investigations nor the results of any such investigations shall be the basis of any defense of any Indemnitor’s obligations hereunder.

4

Section 5.03.Remedies.  The Indemnitee’s rights and remedies against the Indemnitor hereunder shall be in addition to and not in lieu of all other rights and remedies of the Indemnitees at law or in equity.

Section 5.04.Notices.  Unless otherwise specifically provided, all notices, demands, consents, approvals or other communications (collectively, “Notices”) shall be delivered to the parties in accordance with the procedures and to the addresses set forth in Section 7.03 of the Share Exchange Agreement.

Section 5.05.Successors and Assigns.  This Agreement shall be binding upon the Indemnitor and the heirs, successors, assigns and legal representatives of the Indemnitor and shall inure to the benefit of the Indemnitees and the successors and assigns of each respective Indemnitee.

Section 5.06.Conflict.  To the extent there is any conflict between the provisions of this Agreement and the Share Exchange Agreement or the other Contract Documents, the terms of this Agreement shall control.

Section 5.07.No Waiver.  No delay, forbearance or neglect by the Indemnitees in the enforcement of any of the conditions of this Agreement or any of the Indemnitees rights or remedies hereunder shall constitute or be construed as a waiver thereof.  No waiver of any provision hereof, or any consent required hereunder, shall be effective unless made in writing signed by or on behalf of the party to be charged with such waiver.  No waiver shall be or be deemed to be a continuing waiver or waiver in respect of any subsequent condition, breach or default, either of a similar or different nature, unless expressly so stated in such writing by the Indemnitees.

Section 5.08.Amendment.  No amendment, change, modification or addition to this Agreement or any part hereof shall be effective unless made in writing and signed by or on behalf of each party to be charged therewith.

Section 5.09.Counterparts.  This Agreement may be executed in two or more counterparts, including by facsimile, each of which shall for all purposes be deemed to constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when copies hereof, when taken together, bear the signatures of each of the parties hereto.

Section 5.10.Severability

.  Should any clause, section or part of this Agreement be held or declared to be void or illegal for any reason, all other clauses, sections or parts of this Agreement which can be effected without such illegal clause, section or part shall nevertheless continue in full force and effect.

Section 5.11.Consent to Jurisdiction.  The Indemnitor irrevocably submits to the non-exclusive jurisdiction of any of the designated courts over any suit, action or proceeding arising out of or relating to this Agreement.

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Section 5.12.Entire Agreement.  This instrument contains and constitutes the entire agreement of the parties hereto regarding the subject matter hereof, and supersedes all prior agreements, written or oral, between the parties regarding the subject matter hereof.

[The remainder of this page is intentionally left blank; Signature page follows]

6

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have executed this Indemnity Agreement on the date first above written.

MARSHALL DAVIS
	/s/ Marshall Davis
	Name

HONG KONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED
By:	/s/ Bank Yu Po Fung
	Name: Bank Yu Po Fung
	Title:  Director

FRESH GENERATION OVERSEAS LIMITED
By:	/s/ Bank Yu Po Fung
	Name: Bank Yu Po Fung
	Title:  Director

[Signature Page to Indemnity Agreement]

EX-10.8

Maximum Amount Loan With Pledge Contract

No.: 2008001

Borrower: Fuqing Guanwei Plastics Industry Co. Ltd.

Lender: Fuqing Rural Credit Cooperative Bank

Mortgagor: Fuqing Guanwei Plastics Industry Co. Ltd.

This contract is entered ande excuted upon friendly negotiaion among all parties and is in compliance with provisions of Guarantee Law of PRC.

Article 1

From January 21, 2008 to January 20, 2011, within maxmium amount of loan RMB 9,700,000, creditor shall release loans by divided payment to debtor upon debtor’s requirement. Within this time period and within the limitation of amount, each divided issuance of loan is not required to be equipped with separate pledge contract. The last divided issuance of loan shall not be later than January 20, 2011. The type of loan, usage of loan, principal of loan, interest charges and repayment requirements shall be in compliance with loan notes of each divided issuance of loan. The interest charges date is 20th day of last month each quarter. In the circumstance of pre-payment of loan, the interest rate will be the same as in this contract and the creditor is entitled to collect interest charges accordingly. The due bill is regarded as part of this contract and has the same legal binding effect as this contract.

Article 2 Mortgagor is willingly to pledge its assets of which mortgagor is entitled the legal ownership to secure the loan under this contract and the pledged goods list is regarded as part of this contract

(1) If the debtor failed to make the repayment, creditor is entitled to appraisal, auction or to liquidate the pledged assets and is entitled the priority of dedcution from the assets realization

(2) Total value of the pledged goods is RMB 23,528,000, and the actual value of pledged goods will be referred to the realization amount at acution or liquidation of assets

(3) The scope of pledge is principal, interest, compounded interest, penalty charges, breach of contract charges, damages compensation and the coverage of expenses incurred including but not limited to overdue loan claim expenses, arbitration fee, insurance fee, public notification fee, execution fee, attorney fee, travel expenses and other expenses

(4) The legal force of the mortgaged right has been entitled to the subordinated mortgaged properties and rights, supplementary materials, additonal materials, natural and legal interests, subrogated mortgaged properties of  the mortgages, the insured amount, compensation and penalty of the damage, loss or requisition arised

(5) Mortgagor keeps the mortgaged properties and it shall keep them properly and shall be responsible for maintaining and keeping them intact. Creditor is entitled the custody of ownership registration/certificate of pledged goods

(6) The pledged goods under this contract is not regarded part of bankruptcy or liquidation processing and the residual amount of pledged goods can only apply after the repayment of all debts with creditor

Article 3 RIGHTS AND RESPONSIBILITIES OF DEBTOR

(1) Debtor is entitled to collect and to use the loan according to the terms under this contract

(2) To repay the principal and interests

(3) Debtor shall only use the loan for the purpose as restricted in this contract and shall not impropirately use the loan

(4) To provide to creditor true balance sheet, income statement and cash flow monthly

(5) To accept creditor’s review and investigate of its operational and financial status

(6) To send the written notice and to obtain approval if debtor is to provide guarantee to any third party, and to ensure that the guarantee is not going to affect its repayment capability

(7) Provide notice in advance once debtor’s domicile, registered captial, legal representative or operation location changes

(8) Debtor shall send the written notice to creditor at least 30 days prior to the occurrence of the practices of contracting, leasing operations, joint operations, joint-stock reconstruction, mergers & acquisition, joint-venture or cooperation. Debtor is not allowed to conduct the above without creditor’s written consent

(9) Debtor shall also notify creditor immediately in the circumstance of split-off & subsidiaries establishment, the transfer of property ownership, capital reduction, winding-up, dissolution and bankruptcy application etc. which will affect debtor’s repayment capability materially. Debtor shall not only provide written notice to creditor but also to provide the solvency plan

(10) Debtor and its investor also guarantees not to withdraw or transfer capital to avoid the repayment performance

(11) Debtor agrees that all the payment, including principal and interests and expenses, could be deducted from its account with creditor

Article 4 STATEMENTS OF MORTGAGOR

(1)   Mortgagor is entitled full ownership and dissolution rights on the pledged assets. In the circumstance that the pledged assets is leased, mortgagor shall provide the written notice to creditor. Creditor is entitled the first right on the pledged assets or mortgagor shall provide the written notice to creditor

(2)   Mortgagor shall guard and to maintain the pledged assets in good condition during the pledge period

(3)   Mortgagor shall obtain written approval from creditor if the pledged asset is to be leased or to be transferred. Mortgagor shall discharge the debt with creditor or to negotiate with creditor of deposit & withdraw terms for the consideration obtained from the lease or the transfer

(4)   Mortgagor shall go through property insurance alteration procedure with creditor as first beneficiary or in case that the insurance of mortgaged properties provided by the insurance company and bought by mortgagor cannot be longer than the performance term of guaranteed creditor’s right, mortgagor shall extend the term of insurance correspondingly to guarantee the insurance continuity of the mortgaged properties during the valid term.

(5)   In case of insurance accidents occurred to mortgaged properties, insurance compensation shall be used for paying the debts of main debtor under the main contract in advance or, if agreed by creditor, be used for the value restoration of such mortgaged properties or be deposited at the account designed by creditor to ensure the contract performance of those debts under the main contract.

(6)   To accept the investigate and review of pledged assets by creditor

(7)   The pledged assets shall be registered with governing agency and the registration approval/license shall be provide to creditor, creditor is entitled the custody of these registration files

(8)   The pledge responsibilities continues even in the circumstance of the invalidation of main loan contract

(9)   In any usage purpose of loan by debtor, mortgagor agrees to perform its related responsibilities on debt under the main contract in full

Article 5 RIGHTS AND RESPONSIBILITIES OF CREDITOR

(1) To issue loans according to the terms under this contract to debtor once debtor has fulfilled the presupposition of loan and the guarantee of loan is provided

(2) Creditor is entitled to review and investigate the operational and financial status, including the assets status of debtor and to require debtor to provide related documents and files

(3) To deduct the repayment of principal, interests, compounded interests and penalty and expenses incurred due to the overdue of loan or impropriate usage of loan from the accounts of debtor. Creditor is also entitled to require the deduction of above from banks/financial institutions which debtor has accounts with, or to demand repayment in advance in legal processing

(4) If debtor makes the repayment prior to the maturity of loan, debtor shall obtain creditor’s written consent

Article 6 If the debtor is not able to make the repayment in full at the maturity date, it shall provide the written request at least 15 days prior to the maturity date. The maturity date could be extended only upon the approval by all creditor, debtor and guarantor and the interest rate in the extension period shall be in compliance with primary rate issued by Bank of China

Article 7 BREACH OF CONTRACT

(1)   Debtor’s breach of contract

1.   Debtor is responsible for Interest charges on the overdue loan if the extension is not granted, which shall be calculated on the amount of overdue loan amount, 50% upward fluctuation of interest set force in this contract will be charged for amount of overdue loan.

2.   Debtor is responsible for Interest charges on the impropriate usage of loan if the usage of loan is not approved by creditor, which shall be calculated on the amount of impropriate usage amount, 80% upward fluctuation of interest set force in this contract will be charged for amount of impropriate usage of loan.

3.   Debtor is to be fined for the penalty on overdue interest and the penalty rate is as overdue loan interest penalty

4.   Creditor is entitled to stop issuance of loan or to demand pre-payment of loan if debtor breaches any terms under this contract

(2)  Creditor’s breach of contract

In the circumstance that debtor has fulfilled the presuppositions of this contract and has provided the required guarantee and creditor does not issue loans in divided payment to debtor on time, creditor is to be fined as penalty.

(3)   Mortgagor’s breach of contract

The mortgagor is to be claimed related responsibilities if he/she does not fulfill its pledge responsibilities and mortgagor is to compensate the creditor for its los

Article 8 Creditor is entitled to auction or liquidate the pledged assets if the debtor failed to make the repayment in full at maturity date. If the consideration obtained from auction or liquidation is not fully recover the loan, creditor is entitled the claim rights till the debt is cleared in full

Article 9 The pledge registration is debtor’s responsibility and debtor is responsible for the payment of appraisal fee, valuation fee, registration fee and insurance fee.

Article 10 If the collection of debt is to be realized by the form of lawsuits or arbitration, debtor and mortgagor is jointly responsible for the expenses incurred for the realization, which including but not limited to attorney fee, travel expenses and other expenses

Article 11 Parties shall consult to settle disputes arising from this contract at first instance. Where consultation fails, the parties may choose to settle the dispute with suits at local court of creditor’s domicile

Article12 Supplementary terms

Article 13 For any unsettled issues in this contract, PRC law and regulations shall be referred to

Article 14 This contract is in centuplicate, creditor, debtor and guarantor each holds one copy。 This contract comes into effect only with the execution and corporate seal of all parties

Article 12 IMPORTANT NOTICE

DEBTOR AND MORTGAGOR HAVE REVIEWED AND UNDERSTOOD THE TERMS AS HEREINABOVE IN THIS CONTRACT AND CERDITOR HAD BEEN EXPALINED FOR ALL THE QUESTIONS

DEBTOR      CREDITOR MORTGAGOR

(Corporate seal)

(Execution by legal representative/person in charge)

Execution date: January 17,2008

EX-21.1

Subsidiaries of Registrant

Hong Kong Chenxin International Development Limited (a Hong Kong Company) (100%)

Fuqing Guanwei Plastic Industrial Co., Ltd. (a Chinese company) (100%)

EX-99.1

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

AUDITED CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2008 AND 2007 AND

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME,

CASH FLOWS AND CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

TOGETHER WITH REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

Report of Independent Registered Public Accounting Firm

To the sole director and shareholders of

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

We have audited the accompanying consolidated balance sheets of Hongkong Chenxin International Development Limited and its subsidiary (the “Company”) as of December 31, 2008 and 2007 and the related consolidated statements of income and comprehensive income, shareholders’ equity and cash flows for the years ended December 31, 2008 and 2007. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Hongkong Chenxin International Development Limited as of December 31, 2008 and 2007 and the consolidated results of its operations and cash flows for the years ended December 31, 2008 and 2007, in conformity with accounting principles generally accepted in the United States of America.

BDO Limited

Hong Kong, November 5, 2009

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HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31

	Note		2008		2007
			US$		US$
Assets
Current assets:
Cash and cash equivalents				1,029,710		1,471,358
Accounts receivable		5		68,972		155,793
Amount due from director		10		19,904		70,429
Prepayments and other current assets		6		1,385,225		82,316
Income tax recoverable				16,449		-
Inventories		7		12,975,877		4,271,842
Total current assets				15,496,137		6,051,738
Property, plant and equipment, net		8		4,968,798		5,002,339
Land use right, net		9		667,000		638,359
Total assets				21,131,935		11,692,436
Liabilities and shareholders’ equity
Current liabilities:
Short term borrowings		11		-		1,367,222
Accounts payable				12,157,940		4,344,733
Dividend payable to Original Shareholders				757,456		709,828
Other payables and accrued expenses		12		373,831		728,290
Income tax payable				-		228,607
Total current liabilities				13,289,227		7,378,680
Shareholders’ equity:
Paid-in capital (Common stock, HK$1 at par value; 10,000 shares authorized and issued)		13		1,287		1,287
Additional paid-in capital		14		1,238,636		1,238,636
PRC statutory reserves		15		802,428		523,099
Retained earnings				5,127,736		2,182,385
Accumulated comprehensive income				672,621		368,349
Total shareholders’ equity				7,842,708		4,313,756
Total liabilities and shareholders’ equity				21,131,935		11,692,436

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

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HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

	Note		2008			2007
			US$			US$
Revenue		3		25,430,714			15,777,997
Cost of revenue				(20,292,530	)		(11,052,199	)
Gross profit				5,138,184			4,725,798
Selling and administrative expenses				(984,000	)		(805,521	)
Operating income				4,154,184			3,920,277
Interest income				6,797			2,380
Interest expenses				(100,664	)		(77,548	)
Exchange gains, net				232,998			161,260
Income before income taxes				4,293,315			4,006,369
Income taxes		4		(1,103,734	)		(1,364,680	)
Net income				3,189,581			2,641,689
Comprehensive Income:
Net income				3,189,581			2,641,689
Other comprehensive income:
Foreign currency translation adjustment				339,371			306,886
Comprehensive income				3,528,952			2,948,575

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

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HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

	2008			2007
	US$			US$
Cash flows from operating activities:
Net income		3,189,581			2,641,689
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment		388,739			289,402
Amortization of land use right		13,972			21,840
Loss on disposal of property, plant and equipment		8,701			-
Changes in operating assets and liabilities:
Accounts receivable		95,773			(149,690	)
Amount due from director		54,312			(14,072	)
Amounts due to related companies		-			(173,877	)
Prepayments and other current assets		(1,277,356	)		(5,094	)
Inventories		(8,287,451	)		(2,224,977	)
Accounts payable		7,405,560			1,319,360
Other payables and accrued expenses		(397,099	)		(36,113	)
Income tax payable		(256,375	)		(7,910	)
Net cash provided by operating activities		938,357			1,660,558
Cash flows from investing activities:
Purchase of property, plant and equipment		(44,153	)		(938,853	)
Proceeds from disposal of property, plant and equipment		10,199			-
Dividend paid to shareholders		-			(788,199	)
Net cash used in investing activities		(33,954	)		(1,727,052	)
Cash flows from financing activities:
(Repayment)/Advance of bank borrowings		(1,436,435	)		1,186,239
Net cash (used in)/provided by financing activities		(1,436,435	)		1,186,239
Effect of exchange rate changes		90,384			65,354
Net (decrease)/increase in cash and cash equivalents		(441,648	)		1,185,099
Cash and cash equivalents, beginning of year		1,471,358			286,259
Cash and cash equivalents, end of year		1,029,710			1,471,358
Supplementary information	US$			US$
Interest received		6,797			2,380
Interest paid		100,664			77,548
Income taxes paid		1,360,108			1,372,590
Non-cash transaction - Issuance of share capital		1,287			1,287

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

- 4 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

	Paid-in capital		Additional paid-in capital		PRC statutory reserves		Retained  earnings			Accumulated Comprehensive income		Total
	US$				US$		US$			US$		US$
Balance as of January 1, 2007		1,287		1,238,636		176,943		1,404,836			73,640		2,895,342
Net income for the year		-		-		-		2,641,689			-		2,641,689
Foreign currency translation adjustment		-		-		12,177		-			294,709		306,886
Dividends		-		-		-		(1,530,161	)		-		(1,530,161	)
Transfer of reserve		-		-		333,979		(333,979	)		-		-
Balance as of December 31, 2007		1,287		1,238,636		523,099		2,182,385			368,349		4,313,756
Net income for the year		-		-		-		3,189,581			-		3,189,581
Foreign currency translation adjustment		-		-		35,099		-			304,272		339,371
Transfer of reserve		-		-		244,230		(244,230	)		-		-
Balance as of December 31, 2008		1,287		1,238,636		802,428		5,127,736			672,621		7,842,708

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

- 5 - -

   HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

   NOTES TO THE FINANCIAL STATEMENTS

1 Organization and principal activities

Hongkong Chenxin International Development Limited (“Chenxin” or the “Company”) was incorporated in Hong Kong on September 29, 2008. Chenxin is a wholly-owned subsidiary of Fresh Generation Overseas Limited (“Fresh Generation”), a company incorporated in the British Virgin Islands (“BVI”). Fresh Generation’s sole shareholder is a Canadian resident, who holds Fresh Generation’s shares by a trust on behalf of the Original Shareholders.

Fuqing Guanwei Plastics Industry Company Limited (“Guanwei”) was incorporated in Fuzhou city, Fujian Province, the People’s Republic of China (“PRC”) on April 9, 2005 as a wholly domestic-owned enterprise with an operating period up to April 8, 2055.  Guanwei was owned by a group of PRC family members (the “Original Shareholders”) on incorporation.

On November 22, 2008, the Company entered into an agreement of Plan of Reorganization (“the Plan”) with the Original Shareholders of Guanwei, pursuant to which the Company had issued 10,000 authorized shares of common stock of the Company to the Original Shareholders in exchange of 100% of the registered and fully paid up capital of Guanwei. The closing date of this exchange transaction was December 23, 2008. Guanwei was changed to a foreign-owned enterprise on December 23, 2008 after the change in shareholding. The ultimate controlling party remains as the Original Shareholders both before and after the Plan, and considered that their controls are not transitory, then the Plan involving entities or businesses under common control existed, merger accounting is considered as an appropriate accounting policy for common control combination.

The principal activity of the Company and Fresh Generation is investment holding. The principal activity of Guanwei is engaged in manufacturing and distribution of Low Density Polyethylene (“LDPE”) and the sales of scrap materials, including plastic.

2 Summary of significant accounting policies

(a) Basis of Accounting and Principles of Consolidation

The consolidated financial statements for Chenxin and its subsidiary for the years ended December 31, 2007 and 2008 are prepared in accordance with accounting principles generally accepted in United States of America (“GAAP”) and include the accounts of Hongkong Chenxin International Development Limited and Fuqing Guanwei Plastics Industry Company Limited (hereafter referred to as the (“Group”) for all periods presented.

In preparing the consolidated financial statements presented herewith, all significant intercompany balances and transactions have been eliminated on consolidation.

A single uniform set of accounting policies is adopted by the combined entity (i.e. Chenxin). Therefore, Chenxin recognized the assets, liabilities and equity of the combining entities (i.e. Chenxin and Guanwei) at the carrying amounts in the consolidated financial statements of the controlling parties (i.e. Original Shareholders) prior to the common control combination. These carrying amounts are referred to the existing book values from the Original Shareholder’s perspective.

- 6 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2 Summary of significant accounting policies

(a) Basis of Accounting and Principles of Consolidation (Continued)

No goodwill or excess of the acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of the common control combination is recognized.

Comparative amounts in the consolidated financial statements are presented at the carrying amount as well, as if the combining entities had been combined throughout the periods.

Expenditure incurred (i.e. professional fees, registration fees, etc) in relation to a common control combination that is to be accounted for by using merger accounting is recognized as an expense in the period in which it is incurred.

(b) Foreign Currency Translations and Transactions

Chenxin maintains its books and accounting records in United States Dollar (“US$”). The primary currency of the economic environment in which the operations of Chenxin are conducted is Renminbi (“RMB”). RMB is therefore considered as Chenxin’s “functional currency”.

Chenxin’s wholly-owned subsidiary, Guanwei maintains its books and accounting records in RMB, being the functional currency. RMB, the national currency of the PRC, is the primary currency of the economic environment in which the operation of Guanwei is conducted currently or to be conducted in the future. RMB is therefore considered as the “functional currency” of Guanwei.

Guanwei uses the “Current rate method” to translate its financial statements from RMB into US$, as required under the Statement of Financial Accounting Standards (“SFAS”) No. 52, “Foreign Currency Translation” issued by the Financial Accounting Standard Board (“FASB”). The assets and liabilities of Guanwei are translated into US$ using the rate of exchange prevailing at the balance sheet date. The capital accounts are translated at the historical rate. Adjustments resulting from the translation of the balance sheets of Guanwei from RMB into US$ are recorded in shareholders’ equity as part of accumulated comprehensive income. The statement of income and comprehensive income is translated at average rates during the reporting period. Gains or losses resulting from transactions in currencies other than the functional currencies are recognized in net income for the reporting periods. The statement of cash flows is translated at average rates during the reporting period, with the exception of issue of share and payment of dividends which are translated at historical rates. Due to the use of different rates for translation, the figures in the statement of changes in cash flows may not agree with the differences between the year end balances as shown in the balance sheets.

- 7 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(c) Comprehensive Income

The Group has adopted SFAS No. 130, “Reporting Comprehensive Income” (SFAS No. 130) issued by the FASB. SFAS No. 130 establishes standards for reporting and presentation of comprehensive income and its components in a full set of general-purpose financial statements. The Group has chosen to report comprehensive income in the statements of changes in shareholders’ equity. Comprehensive income comprised net income and all changes to shareholders’ equity except those due to investments by owners and distributors to owners.

(d) Revenue Recognition

Revenue from sales of manufactured LDPE is recognized when persuasive evidence of an arrangement exists, delivery of the goods has occurred, customer acceptance has been obtained, which means the significant risks and ownership have been transferred to the customer, the price is fixed or determinable and collectability is reasonably assured.

Sales of scrap materials are recognized on the same basis as sales of LDPE.

Interest income is recognized on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.

(e) Taxation

The Group accounts for income and deferred tax under the provision of SFAS No. 109: “Accounting for Income Taxes” (SFAS No. 109), under which deferred taxes are recognized for all temporary differences between the applicable tax balance sheets and the consolidated balance sheet.  Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  SFAS No. 109 also requires the recognition of the future tax benefits of net operating loss carry forwards.  A valuation allowance is established when the deferred tax assets are not expected to be realized within a reasonable period of time.

Effective January 1, 2007, the Group adopted FIN No. 48, “Accounting for Uncertainty in Income Taxes.” In accordance with FIN No. 48, the Group recognizes tax benefits that satisfy a greater than 50% probability threshold and provides for the estimated impact of interest and penalties for such tax benefits. The Group did not have such uncertain tax positions in 2007 and 2008.

Deferred tax assets and liabilities are measured using the enacted tax rates expected to be applicable for taxable income in the years in which temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income for the period that includes the enactment date.

- 8 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(f) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and demand deposits with banks.

(g) Receivables and Other Assets

Receivables and other assets are recorded at their nominal values.  Valuation allowances are provided for identified individual risks for these line items.  If the loss of a certain part of the receivables is probable, valuation allowances are provided to cover the expected loss. Receivables are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have credit line policy to customers. The customers mainly pay the upfront payments for sales.

(h) Inventories

Inventories are stated at the lower of cost, on the first-in, first-out method, or market value.  Costs include purchase and related costs incurred in bringing each product to its present location and condition.  Market value is calculated based on the estimated normal selling price, less further costs expected to be incurred for disposal.  Provision is made for obsolete, slow moving or defective items, where appropriate.

(i) Property, Plant and Equipment and Land Use Right

Property, plant and equipment and land use right are stated at cost less accumulated depreciation and amortization. Gains or losses on disposal are reflected in current operations.  Major expenditures for betterments and renewals are capitalized.  All ordinary repair and maintenance costs are expensed as incurred. Land in the PRC is owned by the PRC government. The government in the PRC, according to PRC law, may sell the right to use the land for a specified period of time. Thus, all of the Group’s land purchases in the PRC are considered to be leasehold land and classified as land use right. They are amortized on a straight-line basis over the respective term of the right to use the land. The period for right to use the land was extended from 30 years to 50 years in 2008 by the PRC government. Depreciation of property, plant and equipment and land use right is computed using the straight-line method over the assets’ estimated useful lives as follows:

Land use right	Over 30 years prior to the extension of lease to 50 years and 50 years thereafter
Building	20 years
Leasehold improvements	Over terms of the leases or the useful lives whichever is shorter
Plant and machinery	5 to 10 years
Furniture, fixtures and office equipment	5 years
Motor vehicles	5 years

- 9 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(j) Impairment

The Group has adopted SFAS No. 144: “Accounting for Impairment or Disposal of Long-Lived Assets” which requires impairment losses to be recorded for property, plant and equipment and land use right to be held and used in operations when indicators of impairment are present.  Reviews are regularly performed to determine whether the carrying value of assets is impaired.  The Group determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the carrying amount of the assets.  An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value of such assets less costs to sell.  Asset impairment charges are recorded to reduce the carrying amount of the long-lived asset that will be sold or disposed of to their estimated fair values. Charges for the asset impairment reduce the carrying amount of the long-lived assets to their estimated salvage value in connection with the decision to dispose of such assets. There were no impairment losses recorded during each of the two years ended December 31, 2008.

(k) Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the financial statements and accompanying disclosures.  Although these estimates are based on management’s best knowledge of current events and actions that the Group may undertake in the future, actual results may be different from the estimates.

(l) Related Parties

Entities are considered to be related to the Group if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Group.  Related parties also include principal owners of the Group, its management, members of the immediate families of principal owners of the Group and its management and other parties with which the Group may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.  A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

- 10 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(m) Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combination” (SFAS No. 141(R)), which replaces FASB Statement No. 141. FAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired.  The statement also establishes disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination.  SFAS No. 141(R) is effective as of the beginning of an entity’s fiscal year that begins after December 15, 2008. An entity is precluded from implementing Statement 141R early.  The Group will adopt this statement in fiscal year 2009 and its effects on future periods will depend on the nature and significance of business combinations subject to this statement.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (SFAS No. 160). SFAS No. 160 establishes accounting and reporting standards for noncontrolling interests in subsidiaries. This statement requires the reporting of all noncontrolling interests as a separate component of stockholders’ equity, the reporting of consolidated net income (loss) as the amount attributable to both the parent and the noncontrolling interests and the separate disclosure of net income (loss) attributable to the parent and to the noncontrolling interests. In addition, this statement provides accounting and reporting guidance related to changes in noncontrolling ownership interests. Other than the reporting requirements described above which require retrospective application, the provisions of SFAS No. 160 are to be applied prospectively in the first annual reporting period beginning on or after December 15, 2008. SFAS No. 160 has no impact on the Group’s financial position, results of operations or cash flows.

In February 2008, the FASB issued Staff Position (FSP) SFAS No. 157-2, “Effective Date of FASB Statement No. 157” (FSP SFAS 157-2).  FSP SFAS 157-2 delayed the effective date of SFAS No. 157 “Fair Value Measurements” (SFAS No. 157) from 2008 to 2009 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).  The adoption of the provisions of SFAS No. 157 related to non-financial assets and non-financial liabilities is not expected to have a material impact on the financial statements.  See note 19 for a further discussion of SFAS No. 157.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133” (SFAS No. 161).  SFAS No. 161 requires additional disclosures about the objectives of using derivative instruments, the method by which the derivative instruments and related hedged items are accounted for under Statement No. 133 and its related interpretations, and the effect of derivative instruments and related hedged items on financial position, financial performance, and cash flows.  SFAS No. 161 also requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format.  SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.  The Group has no derivative instruments or hedging activities and this pronouncement is only disclosure-related; accordingly, SFAS 161 has no impact on the Group’s financial position, results of operations or cash flows.

- 11 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

2 Summary of significant accounting policies (Continued)

(m) Recent Accounting Pronouncements (Continued)

In April 2009, the FASB issued FSP SFAS No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (FSP SFAS No. 157-4).  FSP SFAS No. 157-4 provides factors to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability and circumstances that may indicate that a transaction is not orderly. In those instances, adjustments to the transactions or quoted prices may be necessary to estimate fair value with SFAS No. 157. This FSP does not apply to Level 1 inputs. FSP SFAS No. 157 also requires additional disclosures, including inputs and valuation techniques used, and changes thereof, to measure the fair value. FSP SFAS No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. Early adoption is permitted for periods ending after March 15, 2009. Management of the Group is in the process of evaluating the impact of FSP SFAS No. 157-4 and will adopt this FSP, effective on January 1, 2009.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (SFAS No. 165).  SFAS No. 165 provides general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS No. 165 is applicable for interim or annual periods after June 15, 2009. The application of SFAS No. 165 is not expected to have a material effect on the Group’s financial statements.

In June 2009, the FASB issued SFAS No. 168, “The ‘FASB Accounting Standards Codification’ and the Hierarchy of Generally Accepted Accounting Principles” (SFAS No. 168). SFAS No. 168 established the “FASB Accounting Standards Codification” (“Codification”), which officially launched on July 1, 2009, to become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The subsequent issuances of new standards will be in the form of Accounting Standards Updates that will be included in the Codification. Generally, the Codification is not expected to change U.S. GAAP. All other accounting literature excluded from the Codification will be considered nonauthoritative. SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Group will adopt SFAS No. 168 for year ending December 31, 2009. The Group is currently evaluating the effect on the financial statement disclosures as all future references to authoritative accounting literature will be referenced in accordance with the Codification.

The Group does not believe that any other of the recently issued and adopted, but not yet effective, accounting standards would have a material effect on the accompanying financial statements.

3 Revenue

	2008		2007
	US$		US$
Sales of manufactured LDPE		24,051,803		15,047,027
Sales of scrap materials, including plastic		1,378,911		730,970
		25,430,714		15,777,997

- 12 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

4 Income taxes

No provision for Hong Kong profits tax has been made as the Company has no assessable profits for tax purposes during the year.

Guanwei provides for PRC Enterprise Income Tax (“PRC – EIT”) at a rate of 25% (2007: 33%), after offsetting losses brought forward, if any, on the basis of its income for financial reporting purposes, adjusting for income and expense items which are not assessable or deductible for PRC-EIT .

Income before income taxes:

	2008		2007
	US$		US$
PRC – EIT		4,293,315		4,006,369

The provision for income taxes consists of:

	2008		2007
	US$		US$
Current tax expenses:
PRC – EIT		1,103,734		1,364,680

The principal reconciling items from income tax computed at the statutory rate and at the effective income tax rate are stated as follows:

	2008			2007
	US$			US$
Computed tax at the PRC statutory rate (2008: 25%; 2007: 33%)		1,073,329			1,322,102
Non-taxable items		-			(2,523	)
Non-deductible items		32,812			45,101
Others		(2,407	)		-
Total provision for income tax at effective tax rate		1,103,734			1,364,680

No provision for deferred taxation has been made in the consolidated financial statements as there were no significant temporary differences arising during each of the years or at the balance sheet dates.

- 13 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

5 Accounts receivable

	2008		2007
	US$		US$
Trade receivables		68,972		155,793
Less: Allowances for doubtful debt		-		-
		68,972		155,793

6 Prepayments and other current assets

	2008		2007
	US$		US$
VAT recoverable		1,300,846		-
Prepayments and other receivables		84,379		82,316
		1,385,225		82,316

Pursuant to the Provisional Regulation of PRC on Value Added Tax (“VAT”), and their implementing rules, all entities and individuals that are engaged in the sale of goods are generally required to pay VAT at a rate of 17% of the gross sales proceeds received, less any deductible VAT already paid or borne by the taxpayer. VAT recoverable represents mainly of the deductible VAT generated from purchases of imported regenerative plastic materials was in excess of the output VAT generated by sales in 2008.

7 Inventories

	2008		2007
	US$		US$
Raw materials		12,878,051		4,145,783
Work in progress		35,657		54,686
Finished goods		62,169		71,373
		12,975,877		4,271,842

- 14 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

8 Property, plant and equipment, net

	2008			2007
	US$			US$
Building		4,669,380			4,375,776
Leasehold improvements		419,527			393,148
Plant and machinery		687,091			618,156
Furniture, fixtures and office equipment		46,315			36,132
Motor vehicles		39,322			53,367
		5,861,635			5,476,579
Less: Accumulated depreciation		(892,837	)		(474,240	)
		4,968,798			5,002,339

	2008		2007
	US$		US$
Depreciation charge		388,739		289,402

A building with a carrying amount of US$4,022,239 as of December 31, 2007 has been pledged to secure the short-term bank borrowings. The short-term bank borrowing was paid off in January 2008 and the loan facility was utilized again in January 2009.

9 Land use right, net

	2008			2007
	US$			US$
Land use right		727,682			681,927
Less: Accumulated amortization		(60,682	)		(43,568	)
		667,000			638,359

	2008		2007
	US$		US$
Amortization charge		13,972		21,840

- 15 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

9 Land use right, net (Continued)

Land use right with a carrying amount of US$638,359 as of December 31, 2007 has been pledged to secure the short-term bank borrowings. The short-term bank borrowing was paid off in January 2008 and the loan facility was utilized again in January 2009.

In 2008, the land use right period was extended from 30 years to 50 years with the approval from PRC government. The amortization rate has been changed to 50 years since 2008.

Future amortization charges are US$13,972 per year for each of the next five years through December 31, 2013 and US$597,140 thereafter.

10 Amount due from director

		2008		2007
	Notes	US$		US$
Cash held by Chen Min, Guanwei’s director	(a)		18,614		69,139
Share proceeds due from Yu Banks Po Fung, a director and shareholder of Chenxin	(b)		1,290		1,290
			19,904		70,429

(a) The balance represents cash held by a director on behalf of the Group for the Group’s daily operation, which is unsecured, interest-free and repayable on demand. The amount was repaid in September 2009.

(b) The balance represents cash contribution made by the shareholder, who is also the director of Chenxin for the incorporation of the Company in Hong Kong. The amount is unsecured, interest-free and repayable on demand.

11 Short term borrowings

The secured bank loan bears interest at a fixed rate of 6.436% per annum in 2007 and the amount was fully settled on the maturity date on January 16, 2008.

12 Other payables and accrued expenses

Other payables and accrued expenses mainly represent VAT payable, deposits received from customers and accruals for operating expenses.

13 Paid-in capital

Paid-in capital represents the issued share capital of Chenxin at incorporation on September 29, 2008 which was a receivable from the Company’s director.

- 16 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

14 Additional paid-in capital

Date	Paid up to Guanwei by Original Shareholders in form of:	2008 US$		2007 US$
April 6, 2005	Cash		619,318		619,318
January 10, 2006	Injection of  Property, plant and equipment and land use right		619,318		619,318
			1,238,636		1,238,636

15 PRC statutory reserves

Under the relevant PRC laws and regulations, Guanwei is required to appropriate certain percentage of its net income to statutory fund i.e. the statutory reserve fund.

Statutory reserve fund

Pursuant to applicable PRC laws and regulations, Guanwei is required to allocate at least 10% of its net income to the statutory reserve fund until such fund reaches 50% of Guanwei’s registered capital. The statutory reserve fund can be utilized upon the approval by the relevant authorities, to offset accumulated losses or to increase registered capital, provided that such fund be maintained at a minimum of 25% of the registered capital.

Statutory staff welfare fund

Pursuant to applicable PRC laws and regulations as applicable to PRC domestic-owned enterprise, Guanwei, the subsidiary is required to allocate certain amount of its net income to the staff welfare fund determined by Guanwei. Guanwei ceased to allocate such fund since it became a foreign-owned enterprise in December 2008. The staff welfare fund can only be used to provide staff welfare facilities and other collective benefits to the employees. This fund is non-distributable other than upon liquidation of Guanwei.

16 Pension plan

As stipulated by the rules and regulations in the PRC, Guanwei contributes to the national retirement plans for its employees in the PRC.  Guanwei contributes approximately 20% of the basic salaries of its employees, and has no further obligations for the actual payment of pension or post-retirement benefits beyond the annual contributions.  The state-sponsored retirement plans are responsible for the entire pension obligations payable to retired employees.

During the years ended December 31, 2008 and 2007, the aggregate contributions of the Group to the aforementioned pension plan were approximately US$110,000 and US$105,000 respectively.

- 17 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

17 Risks, Uncertainties, and concentrations

(i) Nature of Operations

All of the Group’s operations are conducted in the PRC and are subject to various political, economic, and other risks and uncertainties inherent in this country.  Among other risks, the Group’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations.

(ii) Concentration of Credit Risk

Financial instruments that potentially subject the Group to concentrations of credit risk consist principally of cash.

As of December 31, 2008 and 2007, the Group had cash deposits of US$1 million and US$1.5 million placed with several banks in the PRC, where there is currently no rule or regulation in place for obligatory insurance of bank accounts. The Group has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

(iii) Concentration of Suppliers and Restriction of Import Quota

For the year ended December 31, 2008 and 2007, 86% and 85% of raw materials was purchased from three major suppliers respectively.

In the PRC, import of regenerative plastic materials is controlled by import quota. The grant of import quota to the Group is subject to review and approval by the Ministry of Environmental Protection of the PRC annually. For the year ended December 31, 2008 and 2007, the Group obtained an import quota of 24,000 tons of regenerative plastic materials for each respective year (note 18).

(iv) Foreign Exchange Risk

The Group operates in the PRC and purchases raw materials from overseas suppliers, and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to purchases in, US$ and Euro (“EUR”).  Foreign exchange risk arises from committed and unmatched future commercial transactions, such as confirmed import purchase orders, recognized assets and liabilities in the PRC operations.

The Company has not entered into any hedging transactions in an effort to reduce exposure to foreign exchange risk.

- 18 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

17 Risks, Uncertainties, and concentrations (Continued)

(v) Dependence of Import Quota from a related company

During the years ended December 31, 2007 and 2008, import of regenerative plastic materials were heavily dependent on the import quota granted by a related company, Fuqing Huan Li Plastics Company Limited or “Huan Li” (note 18).  Although the Group has not experienced difficulties obtaining the import quota from Huan Li in the past, the Group can not guarantee the grant of import quota will be obtained from Huan Li in the future. If the Group fail to obtain the import quota from Huan Li, the Group may have to use domestically supplied plastics wastes for manufacturing.  Domestic plastic wastes are typically poorly sorted, so utilizing the domestic raw materials would increase production costs.

18 Related party transaction

During the years 2007 and 2008, the Group imported regenerative plastic materials at a level much more than its granted import quota level by utilizing the quota of Huan Li at nil consideration in each of the respective year. Huan Li is considered to be a related party since Chen Min, a director and shareholder of Guanwei is also the legal representative of Huan Li.

19 Fair value of financial instruments

In September 2006, the FASB finalized SFAS No. 157 which became effective January 1, 2008 except as amended by FSP SFAS No. 157-2 as previously described and FSP SFAS No. 157-1 and FSP SFAS No. 157-3 as discussed below.  This statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements; however, it does not require any new fair value measurements.  On January 1, 2008, the provisions of this statement were applied prospectively to fair value measurements and disclosures of (a) financial assets and financial liabilities and (b) non-financial assets and non-financial liabilities which are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).  The adoption of this statement did not have a material effect on the financial statements for fair value measurements made for the year ended December 31, 2008.

In February 2008, the FASB issued FSP SFAS 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” (FSP SFAS No. 157-1).  FSP SFAS No. 157-1 removed leasing from the scope of SFAS No. 157.  In October 2008, the FASB issued FSP SFAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active” (FSP SFAS No. 157-3).  FSP SFAS 157-3 clarified the application of SFAS No. 157 in a market that is not active and provided an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active.  FSP SFAS No. 157-3 became effective immediately upon issuance, and its adoption did not have an effect on the financial statements.

- 19 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE FINANCIAL STATEMENTS

19 Fair value of financial instruments (Continued)

The carrying values of financial instruments, which consist of cash and cash equivalents, accounts receivable and accounts payable, bank borrowings, other payables and accrued expenses, and balances with related parties approximate their fair values due to the short-term nature of these instruments.

20 Subsequent events

On March 11, 2009, the Group declared dividends of US$5,648,152 to the Original Shareholders. The dividends of US$4,409,934 were paid to the Original Shareholders in March 2009and the remaining balance in September 2009.

- 20 - -

EX-99.2

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

AS AT JUNE 30, 2009 AND DECEMBER 31, 2008, AND

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME, AND CASH FLOWS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

	Note		June 30,		December 31,
			2009		2008
			US$		US$
Assets
Current assets:
Cash and cash equivalents				6,003,535		1,029,710
Accounts receivable				6,127		68,972
Amount due from director		6		13,153		19,904
Prepayments and other current assets				234,370		1,385,225
Income tax recoverable				-		16,449
Inventories		5		3,163,149		12,975,877
Total current assets				9,420,334		15,496,137
Property, plant and equipment, net				4,800,375		4,968,798
Land use right, net				660,811		667,000
Total assets				14,881,520		21,131,935
Liabilities and shareholders’ equity
Current liabilities:
Short term borrowings		7		1,417,134		-
Accounts payable				4,243,898		12,157,940
Dividend payable to Original Shareholders				2,000,293		757,456
Other payables and accrued expenses		8		480,487		373,831
Income tax payable				807,478		-
Total current liabilities				8,949,290		13,289,227
Shareholders’ equity:
Paid-in capital (Common stock, HK$1 at par value; 10,000 shares authorized and issued)		9		1,287		1,287
Additional paid-in capital		10		1,238,636		1,238,636
PRC statutory reserves		11		803,530		802,428
Retained earnings				3,207,754		5,127,736
Accumulated comprehensive income				681,023		672,621
Total shareholders’ equity				5,932,230		7,842,708
Total liabilities and shareholders’ equity				14,881,520		21,131,935

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

- 1 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

			For the Three Months Ended June 30,						For the Six Months Ended June 30,
	Note		2009			2008			2009			2008
			US$			US$			US$			US$
Revenue		3		7,819,356			6,511,973			30,447,450			12,220,592
Cost of revenue				(4,025,245	)		(4,714,035	)		(24,717,529	)		(8,894,457	)
Gross profit				3,794,111			1,797,938			5,729,921			3,326,135
Selling and administrative expenses				(490,014	)		(268,916	)		(720,057	)		(446,744	)
Operating income				3,304,097			1,529,022			5,009,864			2,879,391
Interest income				700			2,802			1,714			3,465
Interest expenses				(21,527	)		(26,889	)		(35,788	)		(47,203	)
Exchange gains, net				-			98,098			-			273,428
Income before income taxes				3,283,270			1,603,033			4,975,790			3,109,081
Income taxes		4		(819,941	)		(410,315	)		(1,243,071	)		(790,551	)
Net income				2,463,329			1,192,718			3,732,719			2,318,530
Comprehensive Income:
Net income				2,463,329			1,192,718			3,732,719			2,318,530
Other comprehensive income:
Foreign currency translation adjustment				113			124,844			8,401			299,126
Comprehensive income				2,463,442			1,317,562			3,741,120			2,617,656

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

- 2 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

UNAUDITED  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Six Months
	Ended June 30,
	2009			2008
	US$			US$
Cash flows from operating activities:
Net income		3,732,719			2,318,530
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment		196,746			192,145
Amortization of land use right		7,108			6,913
Loss on disposal of property, plant and equipment		2,692			-
Changes in operating assets and liabilities:
Accounts receivable		62,962			125,021
Amount due from director		6,779			66,936
Prepayments and other current assets		1,153,148			72,373
Inventories		9,833,881			(58,490	)
Accounts payable		(7,933,428	)		(628,838	)
Other payables and accrued expenses		106,179			(49,475	)
Income tax payable		824,229			81,292
Net cash provided by operating activities		7,993,015			2,126,407
Cash flows from investing activities:
Purchase of property, plant and equipment		(24,132	)		(39,573	)
Dividend paid to shareholders		(4,409,934	)		-
Net cash used in investing activities		(4,434,066	)		(39,573	)
Cash flows from financing activities:
Advance/(Repayment) of bank borrowings		1,417,615			(42,641	)
Net cash provided/(used in) by financing activities		1,417,615			(42,641	)
Effect of exchange rate changes		(2,739	)		143,399
Net increase in cash and cash equivalents		4,973,825			2,187,592
Cash and cash equivalents, beginning of year		1,029,710			1,471,358
Cash and cash equivalents, end of period		6,003,535			3,658,950
Supplementary information	US$			US$
Interest received		1,714			3,465
Interest paid		35,788			47,203
Tax paid		418,842			707,527
Non-cash transaction - Issuance of share capital		1,287			1,287

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

- 3 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1  Organizationand principal activities

Hongkong Chenxin International Development Limited (“Chenxin” or the “Company”) was incorporated in Hong Kong on September 29, 2008. Chenxin is a wholly-owned subsidiary of Fresh Generation Overseas Limited (“Fresh Generation”), a company incorporated in the British Virgin Islands (“BVI”). Fresh Generation’s sole shareholder is a Canadian resident, who holds Fresh Generation’s shares by a trust on behalf of the Original Shareholders.

Fuqing Guanwei Plastics Industry Company Limited (“Guanwei”) was incorporated in Fuzhou city, Fujian Province, the People’s Republic of China (“PRC”) on April 9, 2005 as a wholly domestic-owned enterprise with an operating period up to April 8, 2055.  Guanwei was owned by a group of PRC family members (the “Original Shareholders”) on incorporation.

On November 22, 2008, the Company entered into an agreement of Plan of Reorganization (“the Plan”) with the Original Shareholders of Guanwei, pursuant to which the Company had issued 10,000 authorized shares of common stock of the Company to the Original Shareholders in exchange of 100% of the registered and fully paid up capital of Guanwei. The closing date of this exchange transaction was December 23, 2008. Guanwei was changed to a foreign-owned enterprise on December 23, 2008 after the change in shareholding. The ultimate controlling party remains as the Original Shareholders both before and after the Plan, and considered that their controls are not transitory, then the Plan involving entities or businesses under common control existed, merger accounting is considered as an appropriate accounting policy for common control combination.

The principal activity of the Company and Fresh Generation is investment holding. The principal activity of Guanwei is engaged in manufacturing and distribution of Low Density Polyethylene (“LDPE”) and the sales of scrap materials, including plastic.

2 Summary of significant accounting policies

(a) Basis of Presentation

The unaudited condensed consolidated financial statements of the Company as of June 30, 2009 and for the three and six months ended June 30, 2009 and 2008 have been prepared in accordance with generally accepted accounting principles of interim financial information. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements. However, the information included in these interim financial statements reflect all adjustments (consisting solely of normal recurring adjustment) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position and the consolidated results of operation. Results shown for interim periods are not necessarily indicative of the results to be obtained for the full year. The condensed consolidated balance sheet information as of December 31, 2008 was derived from the audited consolidated financial statements included in this Form 8-K.

- 4 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(b)          Foreign Currency Translations and Transactions

Chenxin maintains its books and accounting records in United States Dollar (“US$”). The primary currency of the economic environment in which the operations of Chenxin are conducted is Renminbi (“RMB”). RMB is therefore considered as Chenxin’s “functional currency”.

Chenxin’s wholly-owned subsidiary, Guanwei maintains its books and accounting records in RMB, being the functional currency. RMB, the national currency of the PRC, is the primary currency of the economic environment in which the operation of Guanwei is conducted currently or to be conducted in the future. RMB is therefore considered as the “functional currency” of Guanwei.

Guanwei uses the “Current rate method” to translate its financial statements from RMB into US$, as required under the Statement of Financial Accounting Standards (“SFAS”) No. 52, “Foreign Currency Translation” issued by the Financial Accounting Standard Board (“FASB”). The assets and liabilities of Guanwei are translated into US$ using the rate of exchange prevailing at the balance sheet date. The capital accounts are translated at the historical rate. Adjustments resulting from the translation of the balance sheets of Guanwei from RMB into US$ are recorded in shareholders’ equity as part of accumulated comprehensive income. The statement of income and comprehensive income is translated at average rates during the reporting period. Gains or losses resulting from transactions in currencies other than the functional currencies are recognized in net income for the reporting periods. The statement of cash flows is translated at average rates during the reporting period, with the exception of issue of share and payment of dividends which are translated at historical rates. Due to the use of different rates for translation, the figures in the statement of changes in cash flows may not agree with the differences between the year end balances as shown in the balance sheets.

 (c)         Revenue Recognition

Revenue from sales of manufactured LDPE is recognized when persuasive evidence of an arrangement exists, delivery of the goods has occurred, customer acceptance has been obtained, which means the significant risks and ownership have been transferred to the customer, the price is fixed or determinable and collectability is reasonably assured.

Sales of scrap materials are recognized on the same basis as sales of LDPE.

Interest income is recognized on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.

(d)          Related Parties

Entities are considered to be related to the Group if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Group.  Related parties also include principal owners of the Group, its management, members of the immediate families of principal owners of the Group and its management and other parties with which the Group may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.  A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

- 5 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(e)          Recent Accounting Pronouncements

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (SFAS No. 165).  SFAS No. 165 provides general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS No. 165 is applicable for interim or annual periods after June 15, 2009. The application of SFAS No. 165 is not expected to have a material effect on the Group’s financial statements.

3            Revenue

	Three months ended June 30,				Six months ended  June 30,
	2009		2008		2009		2008
	US$		US$		US$		US$
Sales of manufactured LDPE		7,657,122		6,266,973		22,649,780		11,715,071
Sales of scrapped materials, including plastic		162,234		245,000		7,797,670		505,521
		7,819,356		6,511,973		30,447,450		12,220,592

4            Income taxes

No provision for Hong Kong profits tax has been made as the Company has no assessable profits for tax purposes during the year.

Guanwei provides for PRC Enterprise Income Tax (“PRC – EIT”) at a rate of 25% (for the six months ended June 30, 2008: 25%), after offsetting losses brought forward, if any, on the basis of its income for financial reporting purposes, adjusting for income and expense items which are not assessable or deductible for PRC- EIT.

Income before income taxes:

	Three months ended June 30,				Six months ended  June 30,
	2009		2008		2009		2008
	US$		US$		US$		US$
PRC – EIT		3,283,270		1,603,033		4,975,790		3,109,081

- 6 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4             Income taxes (Continued)

The provision for income taxes consists of:

	Three months ended June 30,				Six months ended  June 30,
	2009		2008		2009		2008
	US$		US$		US$		US$
Current tax expenses:
PRC - EIT		819,941		410,315		1,243,071		790,551

The principal reconciling items from income tax computed at the statutory rate and at the effective income tax rate are stated as follows:

	Three months ended  June 30,					Six months ended June 30,
	2009			2008		2009			2008
	US$			US$		US$			US$
Computed tax at the PRC statutory rate (25%)		820,818			400,758		1,243,948			775,022
Non-taxable items		(877	)		-		(877	)		-
Non-deductible items		-			9,557		-			15,529
Total provision for income tax at effective tax rate		819,941			410,315		1,243,071			790,551

No provision for deferred taxation has been made in the consolidated financial statements as there were no significant temporary differences arising during each of the periods or at the balance sheet dates.

5             Inventories

	June 30,  2009		December 31, 2008
	US$		US$
Raw materials		2,395,177		12,878,051
Work in progress		33,712		35,657
Finished goods		734,260		62,169
		3,163,149		12,975,877

- 7 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6             Amount due from director

		June 30,  2009		December 31, 2008
	Notes	US$		US$
Cash held by Chen Min, Guanwei’s director	(a)		11,863		18,614
Share proceeds due from Yu Banks Po Fung, a director and shareholder of Chenxin	(b)		1,290		1,290
			13,153		19,904

(a) The balance represents cash held by a director on behalf of the Group for the Group’s daily operation, which is unsecured, interest-free and repayable on demand. The amount was repaid in September 2009.

(b) The balance represents cash contribution made by the shareholder, who is also the director of Chenxin for the incorporation of the Company in Hong Kong. The amount is unsecured, interest-free and repayable on demand.

7             Short term borrowings

The secured bank loan bears interest at a fixed rate of 5.94% per annum in 2009.The maturity date is January 18, 2010.

8             Other payables and accrued expenses

Other payables and accrued expenses mainly represent VAT payable, deposits received from customers and accruals for operating expenses.

9             Paid-in capital

Paid-in capital represents the issued share capital of Chenxin at incorporation on September 29, 2008 which was a receivable from the Company’s director.

10           Additional paid-in capital

Date	Paid up to Guanwei by Original Shareholders in form of:	June 30, 2009 US$		December 31, 2008 US$
April 6, 2005	Cash		619,318		619,318
January 10, 2006	Injection of property, plant and equipment and land use right		619,318		619,318
			1,238,636		1,238,636

- 8 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11           PRC statutory reserves

Under the relevant PRC laws and regulations, Guanwei is required to appropriate certain percentage of its net income to statutory fund i.e. the statutory reserve fund.

Statutory reserve fund

Pursuant to applicable PRC laws and regulations, Guanwei is required to allocate at least 10% of its net income to the statutory reserve fund until such funds reaches 50% of Guanwei’s registered capital. The statutory reserve fund can be utilized upon the approval by the relevant authorities, to offset accumulated losses or to increase registered capital, provided that such fund be maintained at a minimum of 25% of the registered capital.

12           Pension plan

As stipulated by the rules and regulations in the PRC, Guanwei contributes to the national retirement plans for its employees in the PRC.  Guanwei contributes approximately 20% of the basic salaries of its employees, and has no further obligations for the actual payment of pension or post-retirement benefits beyond the annual contributions.  The state-sponsored retirement plans are responsible for the entire pension obligations payable to retired employees.

During the six months ended June 30, 2009 and 2008, the aggregate contributions of the Group to the aforementioned pension plan were approximately US$56,000 and US$48,000 respectively.

13           Risks, Uncertainties, and concentrations

(i)            Nature of Operations

All of the Group’s operations are conducted in the PRC and are subject to various political, economic, and other risks and uncertainties inherent in this country.  Among other risks, the Group’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations.

(ii) Concentration of Credit Risk

Financial instruments that potentially subject the Group to concentrations of credit risk consist principally of cash.

As of June 30, 2009, the Group had cash deposits of US$6 million placed with several banks in the PRC, where there is currently no rule or regulation in place for obligatory insurance of bank accounts. The Group has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

- 9 - -

HONGKONG CHENXIN INTERNATIONAL DEVELOPMENT LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13           Risks, Uncertainties, and concentrations (Continued)

(iii)  Concentration of Suppliers and Restriction of Import Quota

For the six months ended June 30, 2009 and 2008, 68%and 93% of raw materials was purchased from three major suppliers, respectively.

In the PRC, import of regenerative plastic materials is controlled by import quota. The grant of import quota to the Group is subject to review and approval by the Ministry of Environmental Protection of the PRC annually.  For the six months ended June 30, 2009 and 2008, the Group obtained an import quota of 24,000 tons of regenerative plastic materials for each respective year (note 14).

(iv)         Foreign Exchange Risk

The Group operates in the PRC and purchases raw materials from overseas suppliers, and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to purchases in, US$ and Euro (“EUR”).  Foreign exchange risk arises from committed and unmatched future commercial transactions, such as confirmed import purchase orders, recognized assets and liabilities in the PRC operations.

The Company has not entered into any hedging transactions in an effort to reduce exposure to foreign exchange risk.

(v)          Dependence of Import Quota from a related company

During the years ended December 31, 2007 and 2008, import of regenerative plastic materials were heavily dependent on the import quota granted by a related company, Fuqing Huan Li Plastics Company Limited or “Huan Li” (note 14).  Although the Group has not experienced difficulties obtaining the import quota from Huan Li in the past, the Group can not guarantee the grant of import quota will be obtained from Huan Li in the future. If the Group fail to obtain the import quota from Huan Li, the Group may have to use domestically supplied plastics wastes for manufacturing.  Domestic plastic wastes are typically poorly sorted, so utilizing the domestic raw materials would increase production costs.

14           Related party transaction

During the six months ended June 30, 2009 and 2008, the Group imported regenerative plastic materials at a level much more than its granted import quota level by utilizing the quota of Huan Li at nil consideration in each of the respective year. Huan Li is considered to be a related party since Chen Min, a director and shareholder of Guanwei is also the legal representative of Huan Li.

- 10 - -

EX-99.3

MD HOLDINGS CORP.

UNAUDITED PROFORMA COMBINED BALANCE SHEETS

AS OF JUNE 30, 2009

	MD Holdings Corp.			Hongkong Chenxin International Development Limited		Pro Forma  Adjustment		Pro Forma Combined
	Unaudited			Unaudited
	US$			US$		US$		US$
Assets
Current assets:
Cash and cash equivalents		170			6,003,535				6,003,705
Accounts receivable					6,127				6,127
Amount due from director					13,153				13,153
Prepayments and other current assets					234,370	(a)70,000			304,370
Inventories					3,163,149				3,163,149
Total current assets		170			9,420,334				9,490,504
Property, plant and equipment, net					4,800,375				4,800,375
Land use right, net					660,811				660,811
Total assets		170			14,881,520				14,951,690
Liabilities and shareholders’ equity
Current liabilities:
Short term borrowings					1,417,134				1,417,134
Accounts payable		25,117			4,243,898				4,4,269,015
Dividend payable to ex-shareholders					2,000,293				2,000,293
Other payables and accrued expenses		27,500			480,487				507,987
Income tax payable					807,478				807,478
Total current liabilities		52,617			8,949,290				9,001,907
Shareholders’ equity:
Paid-in capital		20,717			1,287	(a)12,000 (b)(1,287	)		32,717
Additional paid in capital		456,328			1,238,636	(a)58,000 (b)1,287			1,754,251
PRC statutory reserve					803,530				803,530
Retained earnings		(529,492	)		3,207,754				2,678,262
Accumulated comprehensive income					681,023				681,023
Total shareholders’ equity		(52,407	)		5,932,230				5,949,783
Total liabilities and shareholders’ equity		170			14,881,520				14,951,690

Pro Forma Adjustment

(a) MD Holdings Corp (“MDHO”) acquired all of the issued and outstanding securities of Hongkong Chenxin International Development Limited (“Chenxin”) of $1,287 as well as a cash payment in the amount of $70,000 in exchange for 12 million newly-issued shares of MDHO’s common stock, par value $0.001 per share. Which arising an additional paid in capital of $58,000.

(b) The paid in capital of Chenxin of $1,287 was transferred to additional paid in capital after the share exhange.