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Business Description Our company is in the business of producing and selling bromine and crude salt. We extract these materials from concentrated underground brine water reserves. The government has granted our company the rights to tap and extract brine water resources from reserves underneath approximately 24 square kilometers of land in Weifang City, Shandong Province, and we are applying for the mineral rights to approximately 10 square kilometers of land on which we plan to construct a salt farm in Dongying City, Shandong Province, China. We also use our self-developed processing technology to manufacture and sell brominated specialty chemicals, including decabromodiphenyl ether and decabromodiphenyl ethane, which are used as flame retardants in a variety of applications such as automobiles, electronic appliances and equipment, furniture and construction materials; and also including hydrobromic acid, which is used to produce other bromine compounds and itself is widely used in the medical, dyeing and perfume industries. Our business operations are conducted in two segments: (a) bromine and crude salt and (b) specialty chemical products. We conduct all of our operations in China and sell substantially all of our products to customers in China. We are located near China’s chemical and pharmaceutical manufacturing base and its rapidly growing market. We entered the bromine and crude salt production business in 2003 when Shandong Haiwang built its first plant. In this operating segment, we mainly manufacture bromine and crude salt for customers in China’s chemical and pharmaceutical industries. Bromine is a basic raw material widely used in a variety of applications such as flame retardants, medicines, agricultural pesticides, dyes, oil exploration and fine chemistry engineering. Crude salt also has a wide variety of industrial purposes as a basic chemical raw material. China is the world’s largest producer and the world’s largest consumer of crude salt. We are the largest privately-owned crude salt producer producing crude salt from seawater in China. The PRC laws require the licensing of bromine producers to produce bromine. Currently, approximately 75 bromine producers have been licensed in Shandong Province. In response to this policy, we have implemented a strategy of acquiring small bromine and crude salt producers. Since 2003 we have acquired the operating assets and related mining permits of 5 small bromine producers in Weifang City and one additional bromine factory in Dongying City, Shandong Province. As a result we now operate 7 bromine factories with 18 bromine production lines with a production capacity of 18,000 metric tons per year. We are one of the largest bromine producers in China in terms of production capacity and output. Our bromine factories are spread across 3 salt farms, which are used for producing crude salt from bromine production waste water, and which have a total annual production capacity of 1.02 million of crude salt. We also lease one property of 10 square kilometers to construct salt farm in Dongying City, Shandong Province. We are currently planning to salt pans on this salt field. We expect to complete construction and reach % of our crude salt capacity in mid-2011. Once we reach capacity, we expect salt farm to yield an additional 350,000 tons per year, for a total of 1.37 tons. We also lease space on our salt pans to smaller crude salt producers. Our brominated specialty chemicals include decabromodiphenyl ether, decabromodiphenyl ethane and hydrobromic acid. Our decabromodiphenyl ether and decabromodiphenyl ethane can serve as flame retardants due to their excellent thermal stability and low toxicity, and thus have been widely by the market and are undergoing a rapid growth stage in China. These same characteristics also allow them to be widely used in a variety of other areas including polymer composite materials, plastic, fiber and building materials. The brominated flame retardant is the most widely used flame retardant in China due to its excellent capability and lower price. Approximately 50% of all flame retardants used in China are brominated flame retardants. We anticipate that the Chinese government will in the future tighten the implementation of rules it has enacted in the compulsory application of flame retardants on construction materials to lessen damages from fire disasters. Our hydrobromic acid is used to produce other bromine compounds, and itself is widely used in a variety of industries such as medicine, dyeing and perfume. We are among the top three decabromodiphenyl ether and decabromodiphenyl ethane producers in China in terms of production capacity. We use our self-developed processing technology to manufacture and sell brominated specialty chemicals. We also invest in bromine production and assemble high-caliber bromine reservoirs, agitated reactors, buffer tankers and pipes into a reaction system to optimize output while maintaining production safety with our self-developed processing technologies. We currently derive the majority of our revenues from our bromine and crude salt operating segment. However our brominated specialty chemical products segment has been providing an increasing contribution to our total revenue, and we plan to increase our focus on this segment in the future. In recent years, we have experienced rapid organic growth. Our net revenue grew from $49.86 million in fiscal 2009 to $64.8 million in fiscal 2010, representing a growth rate of 30%. Our net income grew from $4.73 million to $6.76 million during the same period, a growth rate of 42.9%. Our net revenue grew to $56.7 million in the six months ended December 31, 2010 from $32.87 million in the same period in 2009, representing a growth rate of 73%. Our net income grew to $14.23 million in the six months ended December 31, 2010 from $2.8 million in the same period in 2009, representing a growth rate of 401%. ----- Our principal executive office is located at Haiwang Street, Yangzi Ave., Economic Development Zone, Weifang City, Shandong Province, China 261108. Our telephone number is (+86) 536 7578 888. Our fax number is (+86) 536 7578 888. The website for Shandong Haiwang is www.sdhwchem.com.