U.S. Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended ~~September~~March 3031, ~~2011~~2012

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From ____to _____

000-53272

(Commission File Number)

DÉCOR PRODUCTS INTERNATIONAL, INC.

(Exact name of small business issuer as specified in its charter)

Nevada	20-8211061
(State or other jurisdiction of	(IRS Employer Identification No.)
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
incorporation or organization)

No. 6 Economic Zone, Wushaliwu, Chang’an Town

Dongguan, Guangdong Province, China

(Address of principal executive offices)

(86) 769-85533948

(Issuer’s telephone number, including area code)

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

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

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

Large accelerated filer 		Accelerated filer 

Non-accelerated filer 		Smaller reporting company 
(Do not check if smaller reporting company)

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

Number of shares of common stock outstanding as of ~~November~~March 2131, ~~2011~~2012: 7 6,~~341~~866,122

TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
		Page No.
	Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS	1
Condensed Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010	1
Condensed Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011		1
Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Nine months ended September 30, 2011 and 2010	2
Condensed Consolidated Statements of Operations and Comprehensive Income for the Three Months ended March 31, 2012 and 2011		2
Condensed Consolidated Statements of Cash Flows for the Nine months ended September 30, 2011 and 2010	3
Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2012 and 2011		3
Condensed Consolidated Statement of Stockholders’ Equity for the Nine months ended September 30, 2011	4
Condensed Consolidated Statement of Stockholders’ Equity for the Three Months ended March 31, 2012		4
Notes to Condensed Consolidated Financial Statements	5	5
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17	16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21	20
ITEM 4. CONTROLS AND PROCEDURES	21	20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	22	21
ITEM 1A. RISK FACTORS	22	21
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	22	21
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	22	21
ITEM 4. REMOVED AND RESERVED	22
ITEM 4. MINE SAFETY DISCLOSURES		21
ITEM 5. OTHER INFORMATION	22	21
ITEM 6. EXHIBITS	22	21
SIGNATURES	23	22

ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DÉCOR PRODUCTS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012 AND DECEMBER 31, ~~2010~~2011

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

	March 31, 2012		December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	1,370,107	$	578,494
Restricted cash		529,670		-
Accounts receivable, trade		13,303,951		13,483,457
Inventories		333,589		415,924
Advances to suppliers		1,554,525		163,182
Deposits and prepayments		126,232		125,684
Total current assets		17,218,074		14,766,741

Non-current assets:
Plant and equipment, net		14,510,467		15,270,216
Construction in progress		13,201,803		12,608,417
TOTAL ASSETS	$	44,930,344	$	42,645,374

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, trade	$	1,727,316	$	232,224
Short-term bank borrowings		1,581,102		1,574,234
Current portion of long-term bank borrowings		885,077		798,158
Convertible notes		1,578,720		1,578,720
Promissory notes		405,000		405,000
Amount due to a related party		30,578		18,629
Income tax payable		140,798		89,763
Accrued liabilities and other payable		1,369,988		1,068,686
Total current liabilities		7,718,579		5,765,414

Long-term liabilities:
Long-term bank borrowings		3,094,545		3,320,211

Total liabilities		10,813,124		9,085,625

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.001 par value; 1,666,667 shares authorized; 0 shares issued and outstanding, respectively		-		-
Common stock, $0.001 par value; 33,333,333 shares authorized; 6,866,122 shares issued and outstanding, respectively		6,866		6,866
Additional paid-in capital		2,126,130		2,126,130
Statutory reserve		1,458,023		1,458,023
Accumulated other comprehensive income		5,669,177		5,513,061
Retained earnings		24,857,024		24,455,669

Total stockholders’ equity		34,117,220		33,559,749

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	44,930,344	$	42,645,374

	September 30, 2011		December 31, 2010
	(Unaudited)		(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	302,234	$	972,888
Accounts receivable, trade		14,904,804		13,558,147
Inventories		403,509		342,015
Advances to suppliers		171,827		865,303
Deposits and prepayments		13,181		12,762
Total current assets		15,795,555		15,751,115
Non-current assets:
Plant and equipment, net		14,671,037		14,150,249
Construction in progress		12,510,926		6,172,668
TOTAL ASSETS	$	42,977,518	$	36,074,032
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, trade	$	202,889	$	369,832
Short-term bank borrowings		2,343,091		1,512,447
Current portion of long-term bank borrowings		692,093		71,673
Convertible notes		1,578,720		1,772,254
Promissory notes		405,000		405,000
Amount due to a related party		48,950		111,599
Income tax payable		146,236		382,620
Accrued liabilities and other payable		1,338,206		1,182,614
Total current liabilities		6,755,185		5,808,039
Long-term liabilities:
Long-term bank borrowings		3,525,471		1,058,713
Total liabilities		10,280,656		6,866,752
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 1,666,667 shares authorized; 0 shares issued and outstanding, respectively		-		-
Common stock, $0.001 par value; 33,333,333 shares authorized; 6,866,122 shares issued and outstanding, respectively		6,866		6,866
Additional paid-in capital		2,126,130		2,126,130
Statutory reserve		1,393,213		1,393,213
Accumulated other comprehensive income		5,184,171		3,833,377
Retained earnings		23,986,482		21,847,694
Total stockholders’ equity		32,696,862		29,207,280
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	42,977,518	$	36,074,032

See accompanying notes to condensed consolidated financial statements.

- 1 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ~~AND COMPREHENSIVE INCOME~~

~~FOR THE THREE~~ AND ~~NINE~~COMPREHENSIVE ~~MONTHS ENDED SEPTEMBER 30, 2011 AND 2010~~INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

2011

2010

2011

2010

2012

2011

Revenues, net

43,~~375~~818,~~633~~908

65,~~824~~037,~~543~~928

~~15,219,691~~

~~19,704,867~~

Cost of revenue (inclusive of depreciation)

(32,~~125~~737,~~362~~254

)

(43,~~219~~505,~~836~~777

)

~~(10,428,645~~

)

~~(11,843,787~~

)

Gross profit

1,~~250~~081,~~271~~654

21,~~604~~532,~~707~~151

~~4,791,046~~

~~7,861,080~~

Operating expenses:

Sales and marketing

(~~306~~190,~~665~~663

)

(~~311~~295,~~541~~797

)

~~(831,423~~

)

~~(917,570~~

)

General and administrative

(~~259~~163,~~213~~369

)

(~~295~~247,~~957~~494

)

~~(729,772~~

)

~~(840,278~~

)

Total operating expenses

(~~565~~354,~~878~~032

)

(~~607~~543,~~498~~291

)

~~(1,561,195~~

)

~~(1,757,848~~

)

Income from operations

~~684~~727,~~393~~622

1988,~~997,209~~860

~~3,229,851~~

~~6,103,232~~

Other income (expense):

Interest income

101,~~864~~024

~~664~~314

~~11,970~~

~~2,069~~

Interest expense

(~~124~~187,~~985~~400

)

(~~327~~82,~~948~~027

)

~~(323,270~~

)

~~(985,749~~

)

Income before income taxes

~~570~~541,~~272~~246

1907,~~669,925~~147

~~2,918,551~~

~~5,119,552~~

Income tax expense

(~~147~~139,~~991~~891

)

(~~547~~256,~~428~~664

)

~~(779,763~~

)

~~(1,611,183~~

)

NET INCOME

~~422~~401,~~281~~355

1650,~~122,497~~483

~~2,138,788~~

~~3,508,369~~

Other comprehensive income:

- Foreign currency translation gain

~~411~~156,~~932~~116

~~634~~253,~~219~~767

~~1,350,794~~

~~790,227~~

COMPREHENSIVE INCOME

~~834~~557,~~213~~471

1904,~~756,716~~250

~~3,489,582~~

~~4,298,596~~

Net income per share – Basic

0.06

0.1609

~~0.31~~

~~0.51~~

Net income per share – Diluted

0.06

0.1409

~~0.31~~

~~0.44~~

Weighted average common share outstanding – Basic

6,866,122

~~6,866,122~~

Weighted average common share outstanding – Diluted

6,866,122

76,~~914~~866,~~435~~122

~~6,866,122~~

~~7,914,435~~

See accompanying notes to condensed consolidated financial statements.

- 2 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012 AND ~~2010~~2011

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

	Nine months ended September 30,
	Three months ended March 31,
	2011			2010
	2012			2011
Cash flows from operating activities:
Net income	$	2401,~~138,788~~355		$	3650,~~508,369~~483
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2827,~~052,501~~402			1681,~~106,773~~366
Loss on disposal of plant and equipment		~~4,750~~-			~~254~~2,213
Interest expenses, non-cash		-			747,962
Changes in operating assets and liabilities:
Accounts receivable, trade		~~(887~~238,~~459~~518	)		(~~286~~944,~~375~~488	)
Advances to suppliers		~~710~~(1,~~299~~391,639	)		~~(369~~63,~~192~~923	)
Deposits and prepayments		-			138,866
Inventories		84,212			(408,356	)
Inventories		(49,470	)		(550,539	)
Accounts payable, trade		1,495,161			1,693,618
Accounts payable, trade		(176,206	)		(97,715	)
Income tax payable		50,680			(127,257	)
Income tax payable		(244,948	)		22,505
Accrued liabilities and other payable		298,113			14,395
Accrued liabilities and other payable		125,323			613,058
Net cash provided by operating activities		2,003,802			1,625,897
Net cash provided by operating activities		3,673,578			4,833,966
Cash flows from investing activities:
Payments on plant and equipment		(~~1,332,141~~418	)		(1772,~~107,061~~323	)
Proceeds from disposal of plant and equipment		-			968
Payments on construction in progress		(538,756	)		-
Payments on construction in progress		(6,818,311	)		(3,142,581	)
Net cash used in investing activities		(539,174	)		(772,323	)
Net cash used in investing activities		(8,150,452	)		(4,248,674	)
Cash flows from financing activities:
Advance from (repayment to) a related party		215,185			(461,873	)
Change in restricted cash		(530,053	)		(758,794	)
Payments on convertible notes		(203,097	)		-
Advance from a related party		11,949			186,852
Proceeds from short-term bank borrowing		768,520			-
Payment on convertible notes		-			(154,999	)
Proceeds from long-term bank borrowings		3,074,081			1,026,935
Payment on long-term bank borrowings		(156,834	)		(71,916	)
Payments on short-term bank borrowing		-			(572,149	)
Net cash used in financing activities		(674,938	)		(798,857	)
Payments on long-term bank borrowings		(72,838	)		(918,723	)
Effect of exchange rate changes on cash and cash equivalents		1,923			7,955
Net cash provided by (used in) financing activities		3,781,851			(925,810	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		791,613			62,672
Effect of exchange rate changes on cash and cash equivalents		24,369			9,944
BEGINNING OF PERIOD		578,494			972,888
NET CHANGE IN CASH AND CASH EQUIVALENTS		(670,654	)		(330,574	)
END OF PERIOD	$	1,370,107		$	1,035,560
BEGINNING OF PERIOD		972,888			777,332
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
END OF PERIOD	$	302,234		$	446,758
Cash paid for income taxes	$	168,531		$	383,921
Cash paid for interest	$	89,210		$	55,680

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	1,024,710	$	1,588,678
Cash paid for interest	$	263,262	$	237,787

See accompanying notes to condensed consolidated financial statements.

- 3 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012

(Currency expressed in United States Dollars (“US$"”), except for number of shares)

(Unaudited)

	Common stock				~~Additional paid-in capital~~		~~Statutory reserve~~		~~Accumulated other comprehensive income~~		~~Retained earnings~~		~~Total stockholders’ equity~~
	No. of shares		Amount		Additional paid-in capital		Statutory reserve		Accumulated other comprehensive income		Retained earnings		Total stockholders’ equity
Balance as of January 1, 2011		6,866,122	$	6,866	$	2,126,130	$	1,393,213	$	3,833,377	$	21,847,694	$	29,207,280
Balance as of January 1, 2012		6,866,122	$	6,866	$	2,126,130	$	1,458,023	$	5,513,061	$	24,455,669	$	33,559,749
Net income for the period		-		-		-		-		-		2401,~~138,788~~355		2401,~~138,788~~355
Foreign currency translation adjustment		-		-		-		-		1156,~~350,794~~116		-		1156,~~350,794~~116
Balance As of September 30, 2011		6,866,122	$	6,866	$	2,126,130	$	1,393,213	$	5,184,171	$	23,986,482	$	32,696,862
Balance as of March 31, 2012		6,866,122	$	6,866	$	2,126,130	$	1,458,023	$	5,669,177	$	24,857,024	$	34,117,220

See accompanying notes to condensed consolidated financial statements.

- 4 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

~~The~~NOTE ~~accompanying~~1 ~~unaudited~~– ~~condensed~~BASIS ~~consolidated~~OF financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States of America (“GAAP”) and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.PRESENTATION

InThe ~~the~~accompanying ~~opinion~~unaudited ofcondensed ~~management,~~consolidated ~~the~~financial ~~consolidated~~statements ~~balance~~have ~~sheet~~been asprepared ofby ~~December~~management ~~31,~~in ~~2010~~accordance ~~which~~with ~~has~~both ~~been~~accounting ~~derived~~principles ~~from~~generally ~~audited~~accepted ~~financial~~in ~~statements~~the ~~and~~United ~~these~~States ~~unaudited~~(“GAAP”), ~~condensed~~and ~~financial~~the ~~statements~~instructions ~~reflect~~to ~~all~~Form ~~normal~~10-Q and ~~recurring~~Rule ~~adjustments~~10-01 ~~considered~~of ~~necessary~~Regulation toS-X. ~~state~~Certain ~~fairly~~information ~~the~~and ~~results~~note ~~for~~disclosures ~~the~~normally ~~periods~~included ~~presented.~~in ~~The~~audited ~~results~~financial ~~for~~statements ~~the~~prepared ~~period~~in ~~ended~~accordance ~~September~~with ~~30,~~generally ~~2011~~accepted ~~are~~accounting ~~not~~principles ~~necessarily~~have ~~indicative~~been ofcondensed ~~the~~or ~~results~~omitted pursuant to bethose ~~expected~~rules ~~for~~and regulations, although the ~~entire~~Company ~~fiscal~~believes ~~year~~that ~~ending~~the ~~December~~disclosures ~~31,~~made ~~2011~~are oradequate ~~for~~to ~~any~~make ~~future~~the ~~period~~information not misleading.

~~These~~In ~~unaudited~~the ~~condensed~~opinion of management, the consolidated ~~financial~~balance ~~statements~~sheet ~~and~~as ~~notes~~of ~~thereto~~December ~~should~~31, be2011 ~~read~~which inhas ~~conjunction~~been ~~with~~derived ~~the~~from ~~Management’s~~audited ~~Discussion~~financial statements and ~~Analysis~~these ofunaudited ~~Financial~~condensed ~~Condition~~consolidated ~~and~~financial ~~Results~~statements ofreflect ~~Operations~~all normal and recurring adjustments considered necessary to state fairly the ~~audited~~results ~~financial~~for ~~statements~~the ~~and~~periods ~~notes~~presented. ~~thereto~~The ~~included~~results infor the ~~Annual~~period ~~Report~~ended onMarch ~~Form~~31, ~~10-K~~2012 are not necessarily indicative of the results to be expected for the entire fiscal year ~~ended~~ending December 31, ~~2010~~2012 or for any future period.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2011.

NOTE 2 – ORGANIZATION AND BUSINESS BACKGROUND

Décor Products International, Inc. (“DCRD” or the “Company”) was organized under the laws of the State of Nevada on January 11, 2007 as Murals by Maurice, Inc. On July 1, 2009, the Company changed to its current name.

The Company, through its subsidiaries, mainly engaged in the manufacture and sales of furniture decorative paper and related products in the People’s Republic of China (the “PRC”). All the customers are located in the PRC.

The Company and its subsidiaries are hereinafter referred to as (the "Company").

NOTE 3 －GOING CONCERN UNCERTAINTIES

The accompanying condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

As of ~~September~~March 3031, ~~2011~~2012, the Company ~~was~~defaulted ~~in default~~ on the repayment of convertible notes and promissory notes with an aggregate amount of $12 million,~~983,720,~~ which became immediately due and payable. ~~In addition, on or about May 19, 2011, a default judgment was entered against the Company in connection with $140,000 in principal amount of promissory notes owed by the Company._~~ The continuation of the Company as a going concern through ~~September~~March 3031, ~~2012~~2013 is dependent upon the continuing financial support from its stockholders or negotiation of repayment ~~terms of these liabilities~~term. Management believes the existing shareholders will provide the additional cash ~~or renegotiate the terms of its liabilities~~ to meet the Company’s obligations as they become due.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. These ~~condensed~~ consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.

NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.Use of estimates

In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amount of assets and liabilities in the balance sheets and revenues and expenses during the periods reported. Actual results may differ from these estimates.

- 5 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

l Use of estimates

l	Basis of consolidation

The condensed consolidated financial statements include the accounts of DCRD and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

l	Cash and cash equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

l	Restricted cash

The Company maintains certain amount of cash balance held by a financial institution in the PRC as collateral for banking facilities.

l	Accounts receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 90 to 180 days. Credit is extended based on evaluation of a customer's financial condition. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 180 days and over a specified amount are reviewed individually for collectibility. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history and the current economic conditions to make adjustments in the allowance when it is considered necessary. When receivable balances are determined to be uncollectible, these balances are written off. The Company does not have any off-balance-sheet credit exposure related to its customers.

As of ~~September~~March 3031, ~~2011~~2012 and December 31, ~~2010~~2011, the Company did not record an allowance for doubtful accounts.

l	Inventories

Inventories consist of raw papers, painting materials and components used in the manufacture of the Company’s products and the related parts and supplies. Inventories are stated at the lower of cost or net realizable value, with cost being determined on a weighted average basis. Costs include purchased cost of papers and painting inks, direct labor and manufacturing overhead costs. The Company periodically reviews historical sales activity to determine excess, slow moving items and potentially obsolete items and also evaluates the impact of any anticipated changes in future demand. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand.

As of ~~September~~March 3031, ~~2011~~2012 and December 31, ~~2010~~2011, there was no allowance for obsolete inventories, nor have there been any write-offs.

l	Advances to suppliers

The Company makes advances to certain vendors for purchase of its inventory items or material. The advances to suppliers are interest free and unsecured. Advances to suppliers are recorded when payment is made by the Company and relieved against inventory when goods are received. All inventory items or raw materials relating to these advances are subsequently made delivery to the Company.

- 6 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

l	Plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

	Expected useful lives	Residual value
Plant and machinery	3-10 years		3	%
Leasehold improvement	Shorter of 10 years or lease term		0	%
Motor vehicles	3-5 years		3	%
Office equipment	3-5 years		3	%

Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

Depreciation expense for the three months ended ~~September~~March 3031, ~~2011~~2012 and ~~2010~~2011 were $~~694~~827,~~916~~402 and $~~481~~681,~~281~~366, which included $~~725~~826,~~709~~199 and $~~478~~679,~~452in~~169 in cost of revenue, respectively.

Depreciation expense for the nine months ended September 30, 2011 and 2010 were $2,052,501 and $1,106,773, which included $2,050,473 and $1,098,268 in cost of revenue, respectively.

l	Construction in progress

Construction in progress is stated at cost and represents the cost of acquiring contracts to build ~~additional~~the now printing lines and ~~related facilities and~~ prepayments paid to equipment vendors or builders during ~~this~~the construction of the new manufacturing facility (until it is substantially complete and ready for its intended use). No provision for depreciation is made on construction in progress until such time as the relevant assets are completed and put into operational use. No capitalized interest was incurred during the period of construction. The Company is ~~constructing~~anticipating a new manufacturing facility for the production of laminated boards, in an area of 100,000 square feet, adjacent to the existing facility, which is scheduled to be completed in the ~~first~~third quarter of 2012.

l	Valuation of long-lived assets

In accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment and construction in progress held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of assets to estimated discounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment charge for the periods presented.

l	Revenue recognition

In accordance with ASC Topic 605, “Revenue Recognition”, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectibility is reasonably assured.

The Company derives revenues from the sales of ~~decorative~~ furniture decorative paper and related products. The Company recognizes its revenues net of value-added taxes ("VAT"). The Company is subject to VAT which is levied on the majority of the products at the standard rate of 17% on the invoiced value of sales. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export sales. The Company experienced no material product returns and recorded no reserve for sales returns for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2011~~2012 and ~~2010~~2011.

- 7 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

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

l	Comprehensive income

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

l	Income taxes

Income taxes are determined in accordance with ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2011~~2012 and ~~2010~~2011, the Company did not have any interest and penalties associated with tax positions. As of ~~September~~March 3031, ~~2011~~2012, the Company did not have any significant unrecognized uncertain tax positions.

The Company conducts major businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax authority.

l	Net income per share

The Company calculates net income per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options. In periods where losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion will be anti-dilutive.

~~For~~l ~~the~~Foreign ~~nine~~currencies months ended September 30, 2011, the Company has outstanding warrants exercisable into 1,048,333 shares of its common stock that were excluded from its diluted income per share as the exercise price of the warrants was higher than the average market price of the common stock during the period, thereby making the warrants anti-dilutive under the treasury method. There was no movement during the periods reported.translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

The reporting currency of the Company is the United States Dollars ("US$"). The Company's subsidiary in the PRC maintain its books and records in its local currency, Renminbi Yuan ("RMB"), which is functional currency as being the primary currency of the economic environment in which the entity operates.

- 8 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

lIn ~~Foreign~~general, ~~currencies~~for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

The reporting currency of the Company is the United States Dollar ("US$"). The Company's subsidiary in the PRC maintains its books and records in its local currency, Renminbi or Yuan ("RMB"), which is the functional currency as being the primary currency of the economic environment in which the entity operates.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of the Company’s foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective period:

	September 30, 2011		September 30, 2010
	March 31, 2012		March 31, 2011
Period-end RMB:US$1 exchange rate		6.~~4018~~3247		6.~~6981~~5701
Period average RMB:US$1 exchange rate		6.~~5060~~3201		6.~~8164~~5894

l	Related parties

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

l	Segment reporting

ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. The Company operates in one reportable operating segment in the PRC.

l	Fair value of financial instruments

The carrying value of the Company’s financial instruments: cash, accounts receivable, advances to suppliers, deposits and prepayments, accounts payable, income tax payable, amount due to a related party, accrued liabilities and other payables approximate at their fair values because of the short-term nature of these financial instruments.

Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of short-term and long-term bank borrowings approximate at ~~their~~its carrying ~~amounts~~amount. The fair value of convertible notes and promissory notes ~~approximate~~is atdisclosed ~~their~~in ~~carrying~~Note ~~amounts~~10 and 11.

The Company also follows the guidance of ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.

-	Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;
-	Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and; and
-	Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.

l	Recent accounting pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

- 9 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

lNOTE ~~Recent~~5 ~~accounting~~– ~~pronouncements~~SHORT-TERM BANK BORROWINGS

~~The~~Short-term ~~Company~~bank ~~has~~borrowings ~~reviewed~~consisted ~~all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption~~ of ~~any such pronouncements may be expected to cause a material impact on its financial condition or~~ the ~~results of its operations.~~following:

NOTE 5 – CONVERTIBLE NOTES

	March 31, 2012		December 31, 2011
Bank loans, payable to financial institutions in the PRC:

Equivalent to RMB5 million with effective interest rate at 8.528% per annum, payable monthly, due July 11, 2012, secured by a unrelated third party on a cross-guarantee basis	$	790,551	$	787,117

Equivalent to RMB5 million with effective interest rate at 8.528% per annum, payable monthly, due October 23, 2012, secured by a unrelated third party on a cross-guarantee basis		790,551		787,117


Total short-term bank borrowings	$	1,581,102	$	1,574,234

AtNOTE ~~September~~6 ~~30,~~– ~~2011~~CONVERTIBLE ~~and December 31, 2010, the carrying value of the convertible notes payable was $1,578,720 and $1,772,254, respectively and the debt discount was fully amortized.~~NOTES

~~During~~At ~~the~~March ~~nine~~31, ~~months~~2012 ~~ended~~and ~~September~~December 3031, 2011, the ~~Company~~carrying ~~made~~value ~~a partial repayment~~ of ~~$193,534 to Ms. Shi and Mr. Zhuang,~~ the ~~holders of the Convertible Notes. The unpaid portion of~~ convertible notes ~~matured~~payable ~~and~~was ~~became due on November 10~~$1, ~~2010. Since the the Company did not pay the convertible notes when they became due~~578,720 ~~an event of default occured. During the period of default, the interest rate increased from 8% to 16%. In addition, Ms. Shi~~ and ~~Mr. Zhuang are entitled to retain the proceeds from the sale of the assets of Dongguan CHDITN Printing Co.~~$1, ~~Ltd. ledge and the 13~~578,~~532~~720,~~000~~ ~~shares~~respectively ~~of the Company’s common stock owned by Liu Rui Sheng to the extent of the unpaid interest~~ and ~~principal of~~ the ~~convertible~~debt ~~notes.~~discount ~~Ms.~~was ~~Shi~~fully ~~and Mr~~amortized. ~~Zhuang shall have recourse for the outstanding balance.~~

~~The~~During ~~Company~~the ~~has~~three ~~been~~months inended ~~negotiations~~March ~~with~~31, ~~the~~2012, ~~holders of~~ the convertible notes ~~regarding~~were matured and became immediately overdue. In the event that the Company’s ~~November~~cannot 10pay the convertible note when due, ~~2010~~an event of default would occur. The default interest shall be subject to 16%, ~~but~~if the Company has ~~not~~failed ~~yet~~to ~~reached~~make anpayments ~~agreement~~of asinterest and principal on the maturity date. Ms. Shi and Mr. Zhuang shall have rights to akeep ~~repayment~~the ~~schedule~~proceeds from the sales of the pledge and the Shares to the extent of the unpaid interest and principal of the convertible notes. Ms. Shi and Mr. Zhuang shall have recourse for the outstanding balance.

~~NOTE~~As 6of ~~–PROMISSORY~~March ~~NOTES~~31, 2012, the convertible notes became immediately due and the Company has been in negotiations with the holders of the convertible notes, but has not yet reached an agreement as to repayment schedule.

AsNOTE of7 ~~September~~– ~~30,~~CONVERTIBLE ~~2011,~~PROMISSORY the $405,000 in principal amount of promissory notes, which are also convertible into common stock, became immediately due and the Company has been in negotiations with the holders of the promissory notes, but has not yet reached an agreement as to repayment schedule.NOTES

InAs ~~accordance~~of ~~with~~March ~~the terms and conditions in promissory notes~~31, ~~if the Company defaults in the payment of principal or interest due on the promissory notes~~2012, the ~~holder of~~ promissory notes ~~(the~~became ~~“holder”)~~immediately ~~shall~~due ~~be entitled to receive~~ and the Company ~~agreed~~has tobeen pay all reasonable costs of collection incurred by holder, including, without limitation, reasonable attorney’s fees for consultation and suit. If any payment due is not made and remains unpaid for ten (10) days, it is in ~~default~~negotiations ~~hereof.~~with ~~Any such payment in default shall bear interest at 18% per annum. Should any payment not be made when due, there shall also be a late charge equal to 5% of~~ the ~~amount~~holders of the ~~installment~~promissory ~~of principal or interest which is paid after the due date. In the event of default hereunder~~notes, ~~the~~but ~~entire~~has ~~unpaid~~not ~~balance~~yet ~~hereof~~reached ~~shall,~~an atagreement ~~the option of the holder, become due and payable upon demand. All costs and fees (including reasonable fees and disbursements of legal counsel) incurred by the holder~~ as ~~the result of any default by anyone liable hereunder or as the result of any collection effort by the holder shall also be due and owing~~ to ~~the~~repayment ~~holder~~schedule. ~~Failure to exercise any right shall not be deemed a waiver of the right to exercise the same at any subsequent date, or event.~~

~~NOTE~~In 7accordance –with ~~AMOUNT~~the ~~DUE~~terms TOand Aconditions ~~RELATED~~in ~~PARTY~~Promissory Notes, if the Company defaults in the payment of principal or interest due on the Promissory Notes, the holder of Promissory Notes (the “holder”) shall be entitled to receive and the Company agreed to pay all reasonable costs of collection incurred by holder, including, without limitation, reasonable attorney’s fees for consultation and suit. If any payment due is not made and remains unpaid for ten (10) days, it is in default hereof. Any such payment in default shall bear interest at 18% per annum. Should any payment not be made when due, there shall also be a late charge equal to 5% of the amount of the installment of principal or interest which is paid after the due date. In the event of default hereunder, the entire unpaid balance hereof shall, at the option of the holder, become due and payable upon demand. All costs and fees (including reasonable fees and disbursements of legal counsel) incurred by the holder as the result of any default by anyone liable hereunder or as the result of any collection effort by the holder shall also be due and owing to the holder. Failure to exercise any right shall not be deemed a waiver of the right to exercise the same at any subsequent date, or event.

As of September 30, 2011, amount due to a related party represented temporary advances made by Mr. Liu, the director of the Company, which was unsecured, interest-free with no fixed repayment term.

NOTE 8 – ACCRUED LIABILITIES AND OTHER PAYABLE

	September 30, 2011		December 31, 2010
VAT payable	$	130,646	$	77,782
Accrued payroll and benefit costs		650,900		541,454
Accrued operating expenses		542,405		554,613
Other payable		14,255		8,765
	$	1,338,206	$	1,182,614

- 10 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

NOTE 98 –~~BANK~~ ~~BORROWINGS~~AMOUNT DUE TO A RELATED PARTY

~~Bank~~As ~~borrowings~~of ~~consisted~~March 31, 2012 and December 31, 2011, amount due to a related party represented temporary advances made by Mr. Liu, the director of the ~~following:~~Company, which was unsecured, interest-free with no fixed repayment term.

	September 30, 2011		December 31, 2010
Short-term bank loans, payable to financial institutions in the PRC:
Equivalent to RMB10 million (2010: RMB10 million) with effective interest rate at 6.94% per annum, payable monthly, due October 10, 2011, secured by a unrelated third party on a cross-guarantee basis	$	1,562,061	$	1,512,447
Equivalent to RMB5 million with effective interest rate at 8.528% per annum, payable monthly, due July 11, 2012, secured by a unrelated third party on a cross-guarantee basis		781,030		-
Total short-term bank borrowings	$	2,343,091	$	1,512,447
Long-term bank loans, payable to financial institutions in the PRC:

NOTE 9 – ACCRUED LIABILITIES AND OTHER PAYABLE

Equivalent to RMB0 (2010: RMB297,197) with effective interest rate ranging from 7.02% to 9.83% per annum, payable monthly, due January 16, 2011, collateralized by certain plant and machinery	$	-		$	44,950
	March 31, 2012			December 31, 2011
Equivalent to RMB0 (2010: RMB176,685) with effective interest rate ranging from 7.02% to 9.83% per annum, payable monthly, due January 17, 2011, collateralized by certain plant and machinery		-			26,723
VAT payable	$	192,941		$	27,784
Equivalent to RMB20,000,000 (2010: RMB0) with effective interest rate at 8.418% per annum, payable monthly, due September 20, 2016, collateralized by certain plant and machinery		3,124,121			-
Accrued payroll and benefit costs		494,694			493,549
Equivalent to RMB7,000,000 with effective interest rate at 6.65% per annum, payable monthly, due March 8, 2015, guaranteed and secured by the director		1,093,443			1,058,713
Accrued professional and consulting fees		316,579			225,470
Total long-term bank borrowings		4,217,564			1,130,386
Accrued interest		337,443			317,974
Less: current portion		(692,093	)		(71,673	)
Other payables		28,331			3,909
Total long-term bank borrowings, non-current portion	$	3,525,471		$	1,058,713
	$	1,369,988		$	1,068,686

NOTE 10 – LONG-TERM BANK BORROWINGS

Long-term bank borrowings were as follows:

	March 31, 2012			December 31, 2011

Bank loans, payable to financial institutions in the PRC:

Equivalent to RMB6,827,491 (2011: RMB7,000,000) with effective interest rate at 8.723% per annum, payable with monthly principal and interest payments of $35,052, due March 8, 2015, guaranteed and secured by the director	$	1,079,495			1,101,962

Equivalent to RMB18,342,423 (2011: RMB20,000,000) with effective interest rate at 8.723% per annum, with monthly principal and interest payments of $65,110, due September 20, 2016, collateralized by certain plant and machinery		2,900,127			3,016,407

Total bank borrowings		3,979,622			4,118,369

Less: current portion		(885,077	)		(798,158	)

Long-term bank borrowings, net of current portion	$	3,094,545		$	3,320,211

- 11 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

As of ~~September~~March 3031, ~~2011~~2012, the minimum future payments of the aggregate bank borrowings in the next five years are as follows:

Year ending September 30:
Period ending March 31:
2012	$	3,035,184
2013	$	885,077
2013		922,603
2014		970,194
2014		996,667
2015		1,024,382
2015		872,416
2016		713,445
2016		733,785
2017		386,524
Total borrowings	$	63,~~560~~979,~~655~~622

NOTE 1011 – ~~INCOME~~STOCKHOLDERS’ ~~TAXES~~EQUITY

~~For the nine months ended September 30, 2011 and 2010, the local~~ (~~United States~~a) ~~and~~Common ~~foreign components of income (loss) before income taxes were comprised of the following:~~stock

	Nine months ended September 30,
	2011			2010
Tax jurisdictions from:
- Local	$	(18,426	)	$	(817,893	)
- Foreign		2,936,977			5,937,445
Income before income taxes	$	2,918,551		$	5,119,552

As of March 31, 2012, the Company had a total of 6,866,122 shares of its common stock issued and outstanding.

(b)

Warrants

As of March 31, 2012, the Company has 1,048,333 shares of outstanding warrants at the weighted-average exercise price of $3.15. There was no movement during the three months ended March 31, 2012. The Company measured the fair value of warrants on the grant date using the Black-Scholes option pricing model, with the following assumptions:

Expected life (in years)	5
Volatility	159	%
Risk free interest rate	0.31%-0.37	%
Dividend yield	0	%

NOTE 12 – INCOME TAXES

For the three months ended March 31, 2012 and 2011, the local (United States) and foreign components of income before income taxes were comprised of the following:

	Three months ended March 31,
	2012		2011
Tax jurisdictions from:
- Local	$	-	$	(85,666	)
- Foreign		541,246		992,813
Income before income taxes	$	541,246	$	907,147

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company has subsidiaries that operate in various countries: United States, BVI and the PRC that are subject to taxes in the jurisdictions in which they operate, as follows:

United States of America

The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America.

British Virgin Islands (BVI)

Under the current BVI law, Wide Broad Group, Ltd. (“Wide Broad”) is not subject to tax on its income or profits. For the nine months ended September 30, 2011 and 2010, Wide Broad suffered from an operating loss of $226,497 and $248,253, respectively.

The PRC

The Company generated its income from a subsidiary operating in the PRC for the nine months ended September 30, 2011 and 2010, which is subject to the Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”) at a unified income tax rate of 25%.

- 12 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

ABritish ~~reconciliation~~Virgin ~~of income tax rate to the effective income tax rate for the nine months ended September 30, 2011 and 2010 is as follows:~~Islands

	Nine months ended September 30,
	2011			2010
Income before income taxes	$	3,163,474		$	6,185,698
Statutory income tax rate		25	%		25	%
Income tax expense at statutory tax rate		790,868			1,546,425
Tax effect of non-deductible item		-			64,758
Tax effect of non-taxable items		(11,105	)		-
Income tax expense	$	779,763		$	1,611,183

Under the current BVI law, Wide Broad is not subject to tax on its income or profits. For the three months ended March 31, 2012 and 2011, Wide Broad suffered from an operating profit of $4 and an operating loss of $0, respectively.

The PRC

The Company generated its income from a subsidiary operating in the PRC for the three months ended March 31, 2012 and 2011. CHDITN is subject to the Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”) at a unified income tax rate of 25%.

A reconciliation of income tax rate to the effective income tax rate for the three months ended March 31, 2012 and 2011 is as follows:

	Three months ended March 31,
	2012			2011

Income before income taxes	$	541,242		$	992,813
Statutory income tax rate		25	%		25	%
Income tax expense at statutory tax rate		135,310			248,203

Tax effect of non-taxable items		4,581			8,461
Income tax expense	$	139,891		$	256,664

No provision for deferred tax assets or liabilities has been made, since the Company has no material temporary difference between the tax bases of assets and liabilities and their carrying amounts.

NOTE 1113 – CONCENTRATIONS OF RISK

The Company is exposed to the following concentrations of risk:

(a) Major customers

For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2011~~2012 and ~~2010~~2011, there was no single customer who accounted for 10% or more of the Company’s revenues.

(b) Major vendors

For the three months ended ~~September~~March 3031, ~~2011~~2012, ~~there~~the ~~was one single~~ vendor who accounted for 4210% or more of the Company’s purchases ~~amounting~~and toits ~~$865~~outstanding balance at period-end date,~~975.~~ are presented as follows:

For the nine months ended September 30, 2011, the vendor who accounted for 10% or more of the Company’s purchases and its outstanding balance at period-end date, are presented as follows:

	Three months ended March 31, 2012			March 31, 2012
Vendor	Purchases		Percentage of purchases	Accounts payable, trade

Vendor A	$	520,744	28%	$	-
Vendor B		227,427	12%		104,410

Total:	$	748,171	40%	$	104,410

	Nine months ended September 30, 2011			September 30, 2011
Vendor	Purchases		Percentage of purchases	Accounts payable, trade
Vendor A	$	3,086,999	41%	$	-
Vendor B		958,728	13%		49,358
Vendor C		767,632	10%		-
Total:	$	4,813,359	64%	$	49,358

For the three months ended March 31, 2011, there was a single vendor who accounted for 30% of the Company’s purchases amounting to $1,521,383 with accounts payable of $0.

- 13 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

For the three and nine months ended September 30, 2010, the vendor who accounted for 10% or more of the Company’s purchases and its outstanding balance at period-end date, are presented as follows:

	Three months ended September 30, 2010			September 30, 2010
Vendor	Purchases		Percentage of purchases	Accounts payable, trade
Vendor A	$	1,078,059	32%	$	-
Vendor B		428,414	13%		-
Vendor C		376,609	11%		-
Vendor D		368,069	11%		135,918
Total:	$	2,251,151	67%	$	135,918

	Nine months ended September 30, 2010			September 30, 2010
Vendor	Purchases		Percentage of purchases	Accounts payable, trade
Vendor A	$	2,581,848	25%	$	-
Vendor B		1,521,761	15%		-
Vendor E		1,159,810	11%		132,414
Total:	$	5,263,419	51%	$	132,414

Financial instruments that are potentially subject to credit risk consist principally of accounts receivable. The Company believes the concentration of credit risk in its accounts and retention receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. Credit is extended based on evaluation of a customer's financial condition. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

(d) Exchange rate risk

The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in RMB and a significant portion of the assets and liabilities are denominated in RMB. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and RMB. If RMB depreciates against US$, the value of RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.

(e) Interest rate risk

As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are substantially independent of changes in market interest rates.

The Company’s interest-rate risk arises from bank borrowings, convertible notes and promissory notes. Borrowings issued at variable rates expose the Company to cash flow interest-rate risk. Borrowings issued at fixed rates expose the Company to fair value interest-rate risk. Company policy is to maintain approximately all of its borrowings in fixed rate instruments. At the period-end, the bank borrowings were both at fixed and floating rates.

- 14 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011

(Unaudited)

(f) Economic and political risks

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

The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.

NOTE 1214 – COMMITMENTS AND CONTINGENCIES

(a)	Operating lease commitments

The Company’s subsidiary in the PRC is committed under several non-cancelable operating leases of office premises and manufacturing facility with a term of 10 years with fixed monthly rentals, due through December 31, 2020. Total rent expense for the ~~nine~~three months ended ~~September~~March 3031, ~~2011~~2012 and ~~2010~~2011 was $~~162~~23,~~630~~734 and $~~155~~59,~~717~~186, respectively.

~~As of September 30, 2011, the Company has future minimum rental payments due under non~~-~~cancelable~~ ~~operating~~14 ~~leases in the next five years and thereafter, as follows:~~-

Year ending September 30:
2012	$	224,937
2013		224,937
2014		246,025
2015		253,054
2016		253,054
Thereafter		664,266
Total	$	1,866,273

(b) Capital commitment

The Company is committed under a number of agreements with an independent contractors or suppliers in relation to the construction of the new manufacturing facility for the production of laminated boards. The construction is expected to be completed in the first quarter of 2012. As of September 30, 2011, the Company has the aggregate contingent payments of approximately $8 million to the third party contractors and equipment vendors in the next twelve months.

As of September 30, 2011, the Company, through its subsidiary is contingently liable as guarantor with respect to the maximum exposure of $4,686,182 (equivalent to RMB30,000,000) to a unrelated third party, Dongguan XiaoYuanDing Technology Co., Ltd (“DXT”) on a cross-guarantee basis. The term of these guarantees are commenced for 2 years, expiry in October 2012. At any time from the date of guarantees, should DXT fail to make its due debt payments, the Company will be obligated to perform under the guarantees by primarily making the required payments, including late fees and penalties.

In accordance with ASC 460-10, “Guarantees”, a guarantor must recognize a liability for the fair value of the obligations it assumes under certain guarantees. The Company did not receive any consideration for the guarantee and has determined the indemnification fair value to be insignificant. As of September 30, 2011, the Company has not recorded any liabilities under these guarantees.

- 15 -

DÉCOR PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011~~2012

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

As of March 31, 2012, the Company has future minimum rental payments due under non-cancelable operating leases in the next five years and thereafter, as follows:

Year ending March 31:
2013	$	94,866
2014		234,794
2015		256,139
2016		256,139
2017		258,747
Thereafter		544,295

Total	$	1,644,980

(b)	Capital commitment

The Company is committed under a number of agreements with an independent contractors or suppliers in relation to the construction of the new manufacturing facility for the production of laminated boards. The construction is expected to be completed in the third quarter of 2012. Total estimated construction costs are approximately $32 million.

As of March 31, 2012, the Company has the aggregate contingent payments of approximately $8.6 million to the third party contractors and equipment vendors in the next twelve months.

(c)	Guarantees

As of March 31, 2012, the Company’s subsidiary, CHDITN is contingently liable as guarantor with respect to the maximum exposure of $4,743,308 (equivalent to RMB30,000,000) to a unrelated third party, Dongguan XiaoYuanDing Technology Co., Ltd (“DXT”) on a cross-guarantee basis. The term of these guarantees are commenced for 2 years, expiry in October 2012. At any time from the date of guarantees, should DXT fail to make its due debt payments, CHDITN will be obligated to perform under the guarantees by primarily making the required payments, including late fees and penalties.

In accordance with ASC 460-10, “Guarantees”, a guarantor must recognize a liability for the fair value of the obligations it assumes under certain guarantees. The Company did not receive any consideration for the guarantee and has determined the indemnification fair value to be insignificant. As of March 31, 2012, the Company has not recorded any liabilities under these guarantees.

(d)	Unused available line of credit

The Company has a credit facility with Industrial Bank Co., Ltd totaling $4,~~686~~743,~~182~~308 (equivalent to RMB30 million), including short-term bank borrowings and bills payable, under which the Company may borrow on an unsecured and cross-guarantee basis in a term of 2 years, expiry in October 2012. As of ~~September~~March 3031, ~~2011~~2012, the Company has the unused available line of credit totaling $21,~~343~~845,~~091~~147 on a cross-guarantee basis.

~~NOTE13~~NOTE 15 － SUBSEQUENT EVENTS

The Company evaluated subsequent events through the date the financial statements were issued and filed with this Form 10-Q. There were no subsequent events that required recognition or disclosure ~~except as follows:~~.

On- ~~September~~15 30, 2011 we entered into a consulting agreement with China Direct Investments, Inc. (“China Direct Investments”) whereby China Direct Investments agreed to perform certain consulting services for us, including general business consulting, management of professional resources, coordination of preparation and filing of public disclosures, assistance in financial management and the implementation of internal controls and U.S. based investor relations activities and offices. Under the term of the agreement, we will issue China Direct Investments a total of 950,000 shares of our common stock. 237,500 shares are payable each quarter beginning in October 2011, January 2012, April 2012 and July 2012. In addition, we agreed to pay China Direct Investments RMB 180,000 (approximately $27,700) in quarterly installments of RMB45,000 (approximately $6,923) payable each quarter beginning in October 2011, January 2012, April 2012 and July 2012.-

-ITEM 162. MANAGEMENT’S -DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and our future results within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations, estimates, forecasts and projections about us, our future performance and the industries in which we operate as well as our management’s assumptions and beliefs. Statements that contain words like “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “will”, or variations of such words and similar expressions are forward-looking statements. In addition, any statements that refer to trends in our businesses, future financial results, and our liquidity and business plans are forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. There can be no assurance that forward-looking statements will be achieved, and actual results could differ materially from those expressed or implied by forward-looking statements. Important factors that could cause actual results to differ materially include those discussed under “Risk Factors” in our Annual Report on ~~Form~~From 10-K for the year ended December 31, ~~2010~~2011. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-Q.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our Condensed Consolidated Financial Statements, which we have prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Estimates are based on historical experience, knowledge of economic and market factors and various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates.

OnWe aregularly ~~regular basis we~~ evaluate our estimates, assumptions and judgments and make changes accordingly. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements. We believe that the estimates, assumptions and judgments involved in revenue recognition, receivables and allowances for doubtful accounts, accruals, stock-based compensation, , inventories, deferred costs, income taxes, impairment of long-lived assets, and valuation and impairment of investments have the greatest potential impact on our condensed consolidated financial statements, so we consider these to be our critical accounting policies.

RECENT ACCOUNTING PRONOUNCEMENTS

For a description of the new accounting standards that affect us, see Note 4 of notes to our condensed consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2011 AND 2010~~2012

		For the three months ended September 30,				For the nine months ended September 30,
	For the three months ended March 31,
		2011		2010		2011		2010
		2012		2011
Revenues, net		$	43,~~375~~818,~~633~~908	$	65,~~824~~037,~~543~~928	$	~~15,219,691~~	$	~~19,704,867~~
Cost of Revenue			3,125,362		4,219,836		10,428,645		11,843,787
Cost of Revenue:		$	(2,737,254)	$	(3,505,777)
Operating Expenses			565,878		607,498		1,561,195		1,757,848
Operating Expenses:		$	(354,032)	$	(543,291)
Income from Operations			684,393		1,997,209		3,229,851		6,103,232
Income from Operations:		$	727,622	$	988,860
Interest Expense			124,985		327,948		323,270		985,749
Interest Expense:		$	(187,400)	$	(82,027)
Income Taxes			147,991		547,428		779,763		1,611,183
Income Taxes:		$	(139,891)	$	(256,664)
Net Income			422,281		1,122,497		2,138,788		3,508,369
Net Income:		$	401,355	$	650,483
Other Comprehensive Income			411,932		634,219		1,350,794		790,227
Other Comprehensive Income:		$	156,116	$	253,767
Total Comprehensive Income		$	834,213	$	1,756,716	$	3,489,582	$	4,298,596
Total Comprehensive Income:		$	557,471	$	904,250

- 1716 -

Revenues

We generated net revenues of $43,~~375~~818,~~633~~908 ~~and $15,219,691~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2011~~2012, ~~respectively,~~ compared to net revenues of $65,~~824~~037,~~543~~928 ~~and $19,704,867~~ for the ~~same~~three ~~periods~~months ended ~~September~~March 3031, ~~2010, respectively~~2011. Our net revenues were due primarily to the sales of our décor paper. The ~~decreases~~decrease in ~~revenues~~sales byof $21,~~448~~219,~~910~~020 ~~and $4,485,176~~ in the ~~third~~first quarter ~~and first nine months~~ of ~~2011 respectively~~2012, compared to the same ~~periods~~period in ~~2010~~2011, ~~were~~was due primarily to a decline in sales of our décor paper.

InAfter ~~2011 and beyond, after~~ the commencement of our new production line for laminated boards, which is expected to be completed in the ~~first~~third quarter of 2012, we expect that our net revenues will grow steadily due to our core production shift from the decor paper to laminated board, which we expect to generate higher sales revenues and profits.

Cost of Revenue

Cost of revenue primarily includes cost of supplies to manufacture our décor paper. We incurred $32,~~125~~737,~~362~~254 and $103,~~428~~505,~~645~~777 in cost of ~~revenue~~sales, or 71.47%% and 6869.56%% of ~~revenues~~sales, during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2011,~~2012 ~~respectively. During the three~~ and ~~nine months ended September 30~~2011, ~~2010, we incurred $4,219,836 and $11,843,787 in cost of revenue, or 61.8%% and 60.1% of revenues,~~ respectively. Cost ~~The cost~~ of revenue as a percentage of net revenues increased during the ~~third~~first quarter of ~~2011~~2012, ~~compared to same periods in 2010~~ mainly due to ~~due~~the toincrease ~~increases~~ in the purchase price of raw materials, ink and paper, ~~which~~and wea ~~were~~decline ~~unable~~in ~~to pass along to~~ our ~~customers~~net ~~by way of higher prices~~revenues.

Operating Expenses

The following table summarizes our operating expenses during the period indicated:

	Three months ended September 30,												Nine months ended September 30,
		Three months ended March 31,
		2011		% of net sales			2010			% of net sales			2011			% of net sales			2010			% of net sales
		2012		% of net sales			2011		% of net sales
	(in thousands)												(in thousands)
Sales and marketing			190,663		5	%		295,797			5.9	%
Sales and marketing		$	306,665		7.0	%	$	311,541			4.6	%		$	831,423		5.5	%		$	917,570		4.7	%
General and Administrative			163,369		4.3	%		247,494			4.9	%
General and Administrative			259,213		5.9	%		295,957			4.3	%			729,772		4.8	%			840,278		4.3	%
Total net operating expenses		$	354,032		9.3	%		543,291			10.8	%
Total net operating expenses		$	565,878		12.9	%	$	607,498			8.9	%		$	1,561,195		10.3	%		$	1,757,848		8.9	%

We incurred operating expenses of $~~565~~354,~~878~~032 and $1543,~~561,195~~291 for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2011,~~2012 ~~respectively, compared to operating expenses of $607,498~~ and ~~$1,757,848 for the same periods in 2010. The decrease in operating expenses during the third quarter of~~ 2011 ~~was primary due to a decrease in sales and marketing expenses~~, ~~which decreased in line with the decline in sales~~respectively. The decrease in operating expenses during the ~~nine~~three months ended ~~September~~March 3031, ~~2011~~2012 was mainly due primarily to ~~decrease~~the ~~in sales and marketing expenses, which~~ decrease ~~was~~ in ~~line with decline in~~ sales, ~~plus~~revenues. aWe ~~consulting~~initiatively ~~fee~~reduce ~~of $62,766 incurred in~~ the ~~first~~operating ~~quarter of 2010 in connection with investor relations which was not incurred in the same period in 2011~~expenses.

Interest Expense

We incurred interest expense of $~~124~~187,~~985~~400 and $~~323~~82,~~270~~027 for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2011,~~2012 ~~respectively, compared to interest expense of $327,948~~ and ~~$985~~2011,~~749~~ ~~for the same periods ended September 30, 2010,~~ respectively. The ~~significant~~increase ~~decrease~~ in interest ~~expenses~~expense ~~was~~in ~~primarily~~2012 ~~due~~compared towith ~~amortization~~2011 ofwas ~~debt~~primary ~~discount~~due ~~arising~~to ~~from convertible notes payable for~~ the ~~nine~~increase ~~months~~in ~~ended~~balances ~~September 30, 2010, but no such amortization was incurred for the same periods~~ of ~~2011~~bank borrowings.

Income Tax Expense

We incurred income ~~tax~~taxes ~~expense~~ of $~~147~~139,~~991~~891 and $~~779~~256,~~763~~664 for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2011,~~2012 ~~respectively, compared to the income tax expense of $547,428~~ and ~~$1,611,183~~2011 ~~for the same periods ended September 30, 2010,~~ respectively. The decrease in income tax expense in ~~the~~2012 ~~third~~was ~~quarter~~due ~~and~~primarily ~~first~~to ~~nine~~a ~~months~~decrease ofin ~~2011,~~taxable asincome ~~compared~~in ~~with~~ the ~~same~~first ~~periods~~quarter of ~~2010 was primarily due to a decrease in taxable income~~2012.

- 18 -

Net Income

We generated net income of $~~422~~401,~~281~~355 and $2650,~~138,788~~483 for the three ~~and nine~~ months ended ~~September~~March 3031, 2012 and 2011, respectively,. ~~compared~~The todecrease in net income ofin ~~$1,122,497~~the ~~and~~2012 $3quarter was due primarily to a decline in income from operations,~~508,369~~ ~~for~~which was caused by a decline in our sales of décor paper in the ~~same~~first ~~periods~~quarter ~~ended~~of ~~September~~2012 ~~30,~~compared ~~2010,~~to ~~respectively~~the same quarter of 2011.

~~The~~- ~~decrease~~17 in net income in the third quarter and first nine months of 2011 compared to the same periods in 2010 was primarily due to a decline in income from operations, which was caused by a decline in our sales of our décor paper and an increase in our cost of revenue in the first quarter and first nine months of 2011 compared to the same periods of 2010.-

Liquidity and Capital Resources

Balance Sheet and Cash Flows

Cash flows provided by operating activities were $32,~~673~~003,~~578~~802 and $41,~~833~~625,~~966~~897 for the ~~nine~~three months ended ~~September~~March 3031, ~~2011~~2012 and ~~2010~~2011, respectively. ~~Cash~~Positive ~~inflows~~cash flows from operations for the ~~nine~~three months ended ~~September~~March 3031, ~~2011~~2012 resulted primarily from our net income of $2401,~~138~~355,~~788, the~~ ~~increase~~a decrease in ~~advances~~accounts toreceivable ~~suppliers, accrued liabilities~~ and ~~other~~inventories ~~payables~~ of $~~710~~238,~~299~~518 and $~~125~~84,~~323~~212, respectively, ~~partially~~an ~~offset~~increase ~~by increases~~ in accounts ~~receivable~~payable by $1,495,161, and ~~inventories~~an ofincrease ~~$887,459~~in accrued liabilities and other payables by $49298,~~470 respectively~~113, plus aan ~~decrease~~increase in ~~accounts payable, and~~ income tax payable byof $~~176~~50,~~206~~680; ~~and~~partially offset by an increase in advances to suppliers by $~~244~~1,~~948 respectively~~391,639. ~~Cash~~ ~~inflows~~Positive cash flows from operations for the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 resulted primarily from our net income of $3650,~~508~~483,~~369,~~ ana ~~increase~~decrease in ~~income~~advances ~~tax~~to ~~payable~~suppliers ~~and~~by ~~accrued~~$ ~~liabilities~~63,923 ~~of $22~~,~~505~~ ~~and~~a increase in accounts payable by $~~613~~1,~~058 respectively~~693,618, aand ~~decrease~~an increase in ~~deposits~~accrued liabilities and ~~prepayments~~other payables by $~~138~~14,~~866~~395, partially offset by ~~the~~increases ~~decrease~~ in ~~advances~~accounts toreceivable ~~suppliers~~ and ~~accounts~~inventories ~~payable~~ of $~~369~~944,~~192~~488 and $97408,~~715~~356 respectively, plus ~~the~~a ~~increases~~decrease in ~~accounts~~income ~~receivable~~tax ~~and~~payable ~~inventories~~ of $~~286~~127,~~375 and $550,539 respectively~~257.

Cash flows used in investing activities were $8539,~~150,452~~174 ~~and $4,248,674~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2011~~2012 and ~~2010~~772,323 ~~respectively.~~during ~~The cash flows used in investments for~~ the ~~nine~~three months ended ~~September~~March 3031, 2011 ~~was due to [payments of $1,332,141 and $6,818,311 to acquire plant and equipment and construction in progress respectively~~. The cash flows used in investments for the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2012 ~~was~~were ~~primary~~ due to the ~~payment~~payments of $~~1,107,061~~418 ~~and $ 3,142,581~~ to acquire plant and equipment and ~~construction in progress respectively~~$538,756 ~~and~~to ~~the~~construction ~~proceeds~~in ~~from disposal of plant and equipment of $968~~progress.

Cash flows ~~provided~~used byin financing activities were $3674,~~781,851~~938 and ~~cash flows used in financing activities were~~ $~~925~~798,~~810~~857 during the ~~nine~~three months ended ~~September~~March 3031, ~~2011~~2012 and ~~2010,~~2011 respectively. Cash ~~inflows~~outflows during the ~~nine~~three months ended ~~September~~March 3031, ~~2011~~2012 were ~~primarily~~ due primarily to ~~the~~an increase in ~~advance~~restricted ~~from~~cash ~~a related party~~ of $~~215~~530,~~185~~053, and the ~~proceeds~~payments ofon bank borrowings of $3156,~~842~~834,~~601,~~ offset by ~~the~~an ~~payments~~advance onfrom ~~convertible~~a ~~notes~~related ~~and~~party ~~bank borrowings~~ of $~~203~~11,~~097 and 72,838 respectively~~949. Cash outflows during the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 were due primarily to ~~the~~an ~~proceeds~~increase ~~from~~in ~~bank~~restricted ~~borrowing~~cash of $1758,~~026~~794,~~935~~ and the repayment to convertible note holders of $ 154,999 ~~offset~~, byand the payments on bank borrowings of $171,~~490~~916,~~872~~ ~~and~~offset ~~repayment~~by toan advance from a related party of $~~461~~ 186,~~873~~852.

Liquidity

We project that we will need additional capital to fund operations over the next 6 months. We anticipate ~~that~~ we will need ~~approximately~~an additional $2,000,000 ~~in additional capital~~ per year in ~~each~~2012 ~~of 2011~~ and ~~2012~~2013.

Overall, we have funded our cash needs from inception through ~~September~~March 3031, ~~2011~~2012 with a series of debt and equity transactions, primarily with related parties. If we are unable to receive additional cash from our related parties, we may need to rely on financing from outside sources through debt or equity transactions. ~~The~~Our Company does not presently have any firm commitment from any third parties to raise the additional cash needed and it is possible that we may not be able to raise cash on terms acceptable to the Company. Also, our related parties are under no legal obligation to provide us with capital infusions. Failure to obtain such financing could have a material adverse effect on ~~our~~ operations and financial condition.

-We 19had -cash of $1,370,107 on hand as of March 31, 2012. Currently, we have enough cash to fund our operations for about six months. This is based on an assumed continuation of our current cash flows from operating activities and financing activities, positive working capital and projected revenues and a favorable outcome of our ongoing negotiations with the holders of our outstanding convertible notes which have matured. However, if our actual revenues fall short of needed capital or we are unable to resolve our negotiations with our note holders with either a conversion into shares or extension of the terms of the convertible notes, we may not be able to sustain our capital needs. We will then need to obtain additional capital through equity or debt financing to sustain operations for an additional year. Our current level of operations would require capital of approximately $2,000,000 per year starting in 2012. Modifications to our business plans may require additional capital for us to operate. For example, if we are unable to raise additional capital in the future we may need to curtail our number of product offers or limit our marketing efforts to the most profitable geographical areas. This may result in lower revenues and market share for us.

We had cash of $302,234 on hand as of September 30, 2011. Currently, we have enough cash to fund our operations for about nine months. This is based on an assumed continuation of our current cash flows from operating activities and financing activities, positive working capital and projected revenues and a favorable outcome of our ongoing negotiations with the holders of our outstanding convertible notes which have matured and a judgment creditor. However, if our actual revenues fall short of needed capital or we are unable to resolve our negotiations with our note holders or judgment creditor with either a conversion into shares or extension of the terms of the convertible notes or amounts due, we may not be able to sustain our operations. We will then need to obtain additional capital through equity or debt financing to sustain operations for an additional year. Modifications to our business plans may require additional capital for us to operate. For example, if we are unable to raise additional capital in the future we may need to curtail our number of product offers or limit our marketing efforts to the most profitable geographical areas. This may result in lower revenues and market share for us.

On a long-term basis, liquidity is dependent on continuation and expansion of operations, receipt of revenues, additional infusions of capital and debt financing. However, there can be no assurance that we will be able to obtain additional equity or debt financing in the future, if at all. If we are unable to raise additional capital, our growth potential will be adversely affected. Additionally, we will have to significantly modify our business plan.

Demand for our products and services will depend on, among other things, market acceptance of our products, the décor paper ~~market~~ and laminated board market in general, and general economic conditions, which are cyclical in nature. Inasmuch as a major portion of our activities is the receipt of revenues from the sales of our products, our business operations may be adversely affected by our competitors and prolonged ~~recession~~recessionary periods.

- 18 -

Off-balance sheet arrangements

At ~~September~~March 3031, ~~2011~~2012, we had no off-balance sheet arrangements.

Contractual obligations and other commitments

Our obligations under contractual obligations and commercial commitments at ~~September~~March 3031, ~~2011~~2012 were as follows:

Payments Due by Period

Total

Less than 1 year

1-3 years

3-5 years

More Than 5 years

Operating leases

1,~~866~~644,~~273~~980

~~224~~94,~~937~~866

~~470~~490,~~962~~933

~~506~~514,~~108~~886

~~664~~544,~~266~~295

Purchase commitments

8,~~141~~619,~~831~~757

Total

10,~~008~~264,~~104~~737

8,~~366~~714,~~768~~623

~~470~~490,~~962~~933

~~506~~514,~~108~~886

~~664~~544,~~266~~295

Operating leases

We lease certain facilities under non-cancelable operating leases that expire at various dates beyond 2015.

Purchase commitments

The Company is committed under a number of agreements with independent contractors or suppliers in relation to the construction of the new manufacturing facility for ~~the production of~~ laminated boards. ~~The~~Construction ~~construction~~ is expected to be completed in the ~~first~~third quarter of 2012. Total estimated construction costs are approximately $32 million. As of ~~September~~March 3031, ~~2011~~2012, the Company has aggregate contingent payments of approximately $8.6 million to ~~the~~ third party contractors and equipment vendors in the next twelve months.

- 2019 -

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Evaluation of disclosure controls and procedures.

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company previously reported a lawsuit filed against the Company and its subsidiary CHDITN on or about January 5, 2011 by Greentree Financial Group Inc. (“Greentree”) in the Circuit Court of Broward County, Florida, Case No. 11-000245-09, seeking repayment of the principal of a $140,000 promissory note plus unpaid interest, late charges, attorneys’ fees and court costs. On or about May 19, 2011, a default judgment was entered against the Company. There have been no further material developments involving this litigation.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed under “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended December 31, ~~2010~~2011. The risks discussed in our Annual Report on Form 10-K could materially affect our business, financial condition and future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~On September 30, 2011 we entered into a consulting agreement with China Direct Investments, Inc~~None. (“China Direct Investments”) whereby China Direct Investments agreed to perform certain consulting services for us, including general business consulting, management of professional resources, coordination of preparation and filing of public disclosures, assistance in financial management and the implementation of internal controls and U.S. based investor relations activities and offices over a period of one year beginning on October 1, 2011. Under the term of the agreement, we agreed to issue China Direct Investments a total of 950,000 shares of our common stock. 237,500 shares are payable each quarter beginning in October 2011, January 2012, April 2012 and July 2012. In addition, we agreed to pay China Direct Investments RMB 180,000 (approximately $27,700) in quarterly installments of RMB45,000 (approximately $6,923) payable each quarter beginning in October 2011, January 2012, April 2012 and July 2012.

The issuance of our common stock described in this Item 2 is exempt from registration under the Securities Act of 1933, as amended in reliance on an exemption provided by Section 4(2) of that act. China Direct Investments was an accredited or otherwise sophisticated investor who had such knowledge and experience in business matters and was capable of evaluating the merits and risks of the prospective investment in our securities. In addition, China Direct Investments had access to business and financial information concerning our company.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Two convertible notes issued by the Company with a principal amount of $2,340,000 matured and became due on November 10, ~~2010~~2011. We are currently negotiating with the holders of these notes, including a possible conversion of the notes into shares of stock or extension of the terms of the convertible notes.

ITEM 4. ~~REMOVED~~MINE ~~AND~~SAFETY ~~RESERVED~~DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

~~31.1~~	~~Certification of Chief Executive Officer~~31.1	Certification of Chief Executive Officer*
~~31.2~~	~~Certification of Chief Financial Officer~~31.2	Certification of Chief Financial Officer*
~~32.1~~	~~Statement required by 18 U~~32.~~S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.~~1	Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS*	XBRL INSTANCE DOCUMENT
	32.2	Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002*
101.SCH*	XBRL TAXONOMY EXTENSION SCHEMA
101.CAL*	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF*	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB*	XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE*	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

*In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 in this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.

	101.INS		XBRL INSTANCE DOCUMENT**
	101.SCH		XBRL TAXONOMY EXTENSION SCHEMA**
	101.CAL		XBRL TAXONOMY EXTENSION CALCULATION LINKBASE**
	101.DEF		XBRL TAXONOMY EXTENSION DEFINITION LINKBASE**
	101.LAB		XBRL TAXONOMY EXTENSION LABEL LINKBASE**
	101.PRE		XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE**

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	*		Filed herewith.
	**		In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 in this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

	DÉCOR PRODUCTS INTERNATIONAL, INC.
Date: November 21, 2011	By:	/s/ Rui Sheng Liu
Date: May 21, 2012	By:	/s/ Rui Sheng Liu
		Rui Sheng Liu President and Chief Executive Officer
		Rui Sheng Liu President and Chief Executive Officer (Principal Executive Officer)
Date: November 21, 2011	By:	/s/ Qing Hua Lin
Date: May 21, 2012	By:	/s/ Qing Hua Lin
		Qing Hua Lin Chief Financial Officer
		Qing Hua Lin Chief Financial Officer (Principal Financial Officer)

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Filing Compare · VIADERMA, INC.