hcinternational

1. Alternative Public Offerings - “APO”Access to US-Public Markets www.hcinternational.net www.hcinternational.net

2. The Benefits of Being a Public Company • While the choice to “go-public” is a serious consideration for a company, the benefits of listing the Company’s shares on an exchange are consistent world-wide. • These include: • Higher share price and thus higher company valuation than private market value. The ability to use company stock as currency. • Greater access to capital through the possibility of future stock offerings (raises) in the public markets. Capital to grow your business organically or through acquisitions. • Increased liquidity of the ownership shares of the company. • Incentivizing employees to extend their tenure at the company, provide more lucrative compensation packages, contracting new talent and aligning the employees benefit with the Company’s. • Estate and retirement planning for owners and family members of the Company looking to transition out of operations and into a board roles. • The prestige of being a publically-listed company on US exchanges such as OTCBB, AMEX, NASDAQ and NYSE. Recognition and respect by other companies.

3. Core Responsibilities of Chinese Public Companies • Capital market have changed over the last two years and successful Chinese public companies have adapted to meet the new demands. Below is a list of requirements to be successful in public markets. • Bilingual CFO – The CFO needs to be versed in public markets, extremely knowledgeable about operations of the business and maintain a close relationship with the CEO. • Fully Independent Board - A CEO and CFO who can attract experienced board members and demonstrate good governance and cooperation amongst board members. • Superior Financial and Operating Systems – A known Enterprise Resource Planning (ERP) software to manage accounting, finance and operations. Bilingual systems are preferred. • 4. Forecasting and Financial Modeling - Each will provide the business and investors visibility into the business.

4. Step 1. Chinese Company forms WFOE Step 2. WFOE merges off-shore with holding company China Co WFOE WFOE HOLDCO Step 3. Holding Company transfers /exchanges shares with US-listed “shell” company Step 4. China Co. lists on US exchange through shell company. China Co HOLDCO OTCBB: ABCD US Shell OTCBB: ABCD US Shell What is an Alternative Public Offering “APO” An Alternative Public Offering or “APO” is the method for an international private company to become a U.S. publicly-traded company with an simultaneous capital raise. An APO is an effective method to raise capital directly amongst institutional and accredited investors in the U.S. while speeding the process to a US listing. The APO process is a combination of the market-approved Reverse Merger “RTO” and private placement of equities with institutional and accredited investors termed a “PIPE”. The RTO process is comprised of four basic steps.

5. RTO Facts: • More than ½ of OTCBB-listed companies go public via Reverse Merger (RTO). • Several well known companies went public via reverse merger; Berkshire Hathaway, Blockbuster Video, Radio Shack and Turner Broadcasting • BERKSHIREHATHAWAYINC. Benefits of the RTO Model • The Reverse Merger “RTO” is a proven and widely-accepted method to quickly list a company on a U.S. exchange. The RTO process uses a “clean shell” of a previously publically-traded company with no liabilities or assets to merge with a revenue-generating operating company looking to go public. Though the practice is relatively new versus traditional IPO’s, the benefits are accepted world-wide. The benefits include: • The costs are significantly less than the costs required for an initial public offering. • The time required is considerably less than an IPO. • The risk to the company is less than an IPO. IPO’s are frequently withdrawn during unstable markets even after the up-front costs are paid to the bank. • IPO’s require significant management time, a long and stable history of earnings. IPO’s are usually reserved for mature, versus growing companies in need of capital. • RTO’s structure LESS dilution of ownership control and stock. Owners normally control more than 50% of their company. • RTO’s will frequently receive a higher valuation than IPOs.

6. RTO + PIPE = RTO • The APO process differs from the IPO and RTO with one simple benefit – the CAPITAL RAISE. Concurrent with the Reverse Merger, an APO allows companies to execute a simultaneous raise with accredited investors world-wide. Investors elect to purchase shares of the company before the company completes the RTO thus providing the Company with an immediate source of capital to grow their business. In addition to the considerations to “go public”, the APO process encourages the Company to further understand the following. • Welcoming new shareholders, thought and opinion into your Company. Owners and management should be ready for support and suggestions by significant new shareholders. • If your Company is not international already, it will become so after your APO. With new shareholders, the Company becomes an immediate GLOBAL entity, listed on a US-exchange and with shareholders from Dubai, UAE to Chicago, USA. • Development of the Chairman and CEO’s public voice and management's attention to necessary news (PR releases) required about the advancements of the Company in its marketplace and sector. • A commitment to communication and visits to existing and prospective shareholders on road-shows and investor conferences held in China and the US by the entire management team. • The hiring and inclusion of an English-speaking CFO to the management team to facilitate communication with investors world-wide. • The proper and reported use of raise proceeds and the revenue benefits the raise will enable the company to produce after the closing of the merger.

7. Preparation for the APO Process • CHECKLIST OVERVIEW • While the APO process is simpler and more lucrative than an IPO, preparations are necessary. Below is a brief checklist of items to consider with explanations of each on the following slides. • Are you going pubic for the right reasons? What is the interest level? • Is the company prepared for proper (PCAOB/GAPP) audit and to keep current with all filing deadlines? • Does the company have legal counsel knowledgeable of the structures necessary to create WFOE’s and holding companies? • Is the company prepared for an alternative view of its valuation? What are the internal expectations of the valuation? • Is the company prepared to present to PIPE investors and does it’s capital plan align with its strategic mission?

8. Chinese APO Overview - STEP 1 • STEP 1 – Determining Interest • The process of APO is initially costly and should be clearly delineated to management early in the process. The benefits of the APO outpace that of many competing private equity alternatives however the commitment and cooperation which is necessary needs to be understood by the Company. • Have you considered traditional routes of going public? Why consider an APO? • Are you properly financed to go through the process? Do you need bridge capital to fund the estimated $300,000 - $500,000 cost to APO? • Do you need money now? Are you prepared to detail the use of proceeds? Follow Up Question – If yes, what % of growth will it add to revenues and net income? In addition, is growth organic or acquisition based? • Is your Company “going against local favor” listing their firm in the US vs. China? Do your employees and shareholders agree? • Do you understand the challenges of international GAPP, SOX compliance and the structure/requirements of an independent board? • Are your prepared to have new investors own a percentage of you company and to commit to good shareholder relations?

9. Chinese APO Overview - STEP 2 • STEP 2 – The Two Year Audit • The Company must be ready to engage a GAPP-approved, PCAOB (recognized by the US public markets) international accounting firm to audit the Company for the 2-year prior period. All information must be readily available to the accounting firm. • Do you have a bi-lingual CFO? Any Bi-lingual management staff familiar with financial and/or SEC reporting? • Are you committed to the initial audit process and the same for each year thereafter, including quarterly revues by auditors?

10. Chinese APO Overview - STEP 3 • STEP 3 –Legal Opinions • Articles or organization, corporate ordinance, bi-laws, directives, corporate meeting minutes, etc. requires a full legal audit. The process is time intensive and revealing of additional work necessary to structure a deal in the U.S. public market place. Full public disclosure is required and cooperation with the U.S. Security and Exchange Commission (SEC). • Have you maintained all pertinent records and business formation documents? • 2. Is your service / product litigious? Do you Company have any current lawsuits pending? • Can the Company afford the initial legal audit costs of est. $250,000? • Are there any officers of the company who are, or have ever, experienced domestic or international legal problems?

11. Chinese APO Overview - STEP 4 • STEP 4 – Company Valuation • An important filtering process, company valuation, is often a sensitive topic when taking a private company onto a public market. Private boards may have an over-inflated view of the company’s worth, and thus stock price. Whether the Company is valued via Trading Comps, Deal Comps, Cash Flow, Earning Multiples/Growth or purely on Assets, the results for this process typically makes or breaks the deal. • Does the business have a number of other companies competing in the same space? Are any of these companies public? • Are there any “one-time expenses” or taxes levied or rewarded in one or more years that will skew the financial results? • Does the company have reporting dating back five years and a forecast for the following year?

12. Chinese APO Overview - STEP 5 • STEP 5 – Selling shares to PIPE investors • After the reverse merger (or simultaneous), the Company can raise money from an initial pool of investors. This first round of investors is not open for the general public, but institutional and accredited investors only. Associated with this initial raise of capital is the presentation of the investment thesis to the PIPE investors that this investment will yield above market returns based on risk. • How much money will be required to grow the business? • Can the Company provide an itemized plan to disburse the funds? • What would be the return of the initial investment? Over what time frame? • Is the company ready to travel to the US to support and present the investment thesis to PIPE investors? • Is the company prepared to enter into Make Goods vs. Net Income Targets?

13. Chinese APO Overview - STEP 6 • STEP 6 – Acquire a Shell / Reverse Merge Business Entities • This process is what makes the APO method quick and effective. A dormant or trading U.S. publicly traded “shell” company is purchased as the vehicle to bring the international firm public in the U.S. This requires cooperation from the shell owner, the company and the investment bank. This step is process driven and normally handled 100% by the advisors, lawyer and shell owner. After the shell has been purchased and merged, funding is simultaneously obtained from PIPE (Private Investment in Public Equity) investors. • Is the company prepared to give additional equity to the owners of the shell?

14. APO Overview - Sample DEAL • EXAMPLE • Company Before APO • $100 million revenues • $15 million net profit • Pre-Money Valuation - $75 million – 5x earnings • The Raise for Company and APO • Target of $20 million in required gross capital • 5,000,000 shares of restricted stock sold at an average of $4.00 per share • $17 million in net capital available after cost for going public and fees • Management retains approximately 68% and the Public Owns 21.0% • The Benefits for the Company post APO • Shares trade up from $6.00 to $8.00 to $10 to $12 consistent with the market and management execution – Market Capitalization increases rapidly. • Company transitions from OTCBB to fully-listed exchanges (AMEX, NASDAQ, NYSE) • Through second raise, Company makes further investments from additional cash flows and new capital. • Through new stock offerings or swaps, Company acquires other companies to grow

15. The Structure and Plan USA Step 5 Step 4 Step 7 PIPE (Private Investment in Public Equity) investors purchase shares during an investment banking “Road Show”. Proceeds of the raise are held in escrow in the US until the deal is done. Monies are then transferred to China via the Holding Company Operating Shell Company with TICKER agrees to buy out and transfers all shares to Holding Company Company Begins Trading on US-Exchanges OTC BB Off Shore Step 1 WFOE and Holding Company are formed to provide tax benefits, the platform to merge shell and Chinese operating company, transfer proceeds of raise to China, and serve as the vehicle to bring the Chinese operating company public in the US. China Chinese Company receives proceeds of the financing and now operates and reports to SEC and US Capital Markets Chinese WFOE transfers shares to holding company Chinese Company transfers shares to WFOE Step 2 Step 3 Step 6

16. APO Overview - The Cost Estimates

17. Chinese APO Overview - STEP 7 • STEP 7 – Positioning the Company with Investor Relations (“IR”) Services – THE AFTERMARKET • When the Chinese Company’s public offering goes effective, they should have already considered an investor relations firm to manage their presentation to the investor community. Creation of investor relations (IR) packet, corporate presentation, communications to the market, and compliance issues should be planned out for execution over a minimum of a one year period. • How does the Company coordinate interaction with their U.S.IR partner? • Is there an IR contact person on staff to coordinate with the IR firm? • How much time can the management team allocate to IR efforts? • Can the Company detail a list of “material” (important) news events each quarter on which the IR firm can publish PR? • Is the Company willing to come to the U.S. four times a year and to hold conference calls. • Samples of successes with HC International IR follow….

18. Case Study Comtech Group : COGO (NASDAQ) • 187% Price Appreciation During HCI Representation • Total Capital Raised (excluding warrants)- $35 million • HCI Services Performed/Collateral Created • 2 Page Overview; Corporate PowerPoint • All Press Releases • Initiated First Ever Quarterly Conference Call • Prepared management extensively to interact • with institutional investors which was crucial • to capital raise and building sponsorship • Assisted with articulating and providing initial • earnings guidance • Road Shows Conducted by HCI • Booked meetings in PRC, NYC, Boston, Dallas, San Francisco, Southern California • Gained attendance for the Roth Conference in • New York • Results • Stock price increased 196% • Introduced several of the largest current shareholders • Helped to add 3 new sell-side research analysts. (Hayden Representation – May 2005 – December, 2006)

19. Case Study American Oriental Bioengineering : AOB (NYSE) • 155% Price Appreciation Since Engaging HCI • Total Capital Raised (excluding warrants)- $60 million • HCI Services Performed/Collateral Created • 2 Page Overview; Corporate PowerPoint • All Press Releases • Initiated First Ever Quarterly Conference Call • Prepared management extensively to interact with • institutional investors which was crucial to capital • raise and building institutional sponsorship • Assisted with articulating and providing initial • earnings guidance • Road Shows Conducted by HCI • Booked meetings in Harbin PRC, NYC, Boston, Dallas, San Francisco, Southern California • Gained attendance for the Roth Conference in New York • Results • Stock price increased 131% • Introduced several of the largest current shareholders • Helped facilitate sell-side research coverage HC Representation September, 2005 – December 2006

20. Case Study China Security and Surveillance Technology : CSR (NYSE) • 467% Price Appreciation Since Engaging HCI • Total Capital Raised (excluding warrants)- $33 million • HCI Services Performed/Collateral Created • 2 Page Overview • Corporate PowerPoint • All Press Releases • Initiated First Ever Quarterly Conference Call • Road Shows Conducted by HCI • Shenzhen, Hong Kong, Roth Capital China Tour, NYC, Dallas, Boston • Results • Average daily volume nearly tripled and stock price is up over 256% despite 4 capital raises and an effective SB-2 • Research Initiated by Maxim Group & Brean Murray, Carret & Co., Oppenheimer • Dramatic increase in institutional sponsorship -primarily HCI introductions HC Representation from March, 2006 through March 2007

21. Case Study Fushi International: FSIN (NASDAQ) • 433% Price Appreciation Since Engaging HCI • Total Capital Raised (excluding warrants)- $80 million • HCI Services Performed/Collateral Created • 2 Page Overview • Corporate PowerPoint • All Press Releases • Initiated First Ever Quarterly Conference Call • Road Shows Conducted by HCI • NYC, Dallas, San Francisco, Southern California • Results • Average daily volume roughly doubled and stock price increased 76% during representation. • Research Initiated by Roth, • Dramatic increase in institutional sponsorship -primarily HCI introductions HC Representation from May 2006 through May 2007

22. HC International Services • HC International has been associated with many of the top performers of Chinese APOs since 2004. HC International can and will facilitate the Company in the following areas. • Initial consulting, due diligence, education and honest feedback for companies interested in pursuing listings- on US Capital Markets. • Introducing and facilitating key professionals including Chinese and US legal, pre-audit work, US GAAP PCAOB certified auditors. • Direct access to bridge capital financing to fund pre-public costs. • 4. Introducing owners of Shell for merger and negotiation on shell pricing and equity offer. • 5. Introducing Investment Bankers to facilitate the capital raise. • 6. Providing valuable aftermarket (IR) services to the company with the directive to increase institutional shareholder percentages, introduction to new investors worldwide, increased valuation, consultative approach on future capital raises and business plans to attract investors.

23. Contact Us In California: Ted Haberfield HC International – Executive Vice President Tel: (760) 755-2716 E-mail: thaberfield@hcinternational.net In Shanghai: Feng Peng HC International – Senior Vice PresidentRoom 704 Huachen Financial Mansion 900 Pudong Avenue, Pudong District Shanghai 200135, China Tel: 138-1227-1616 (China) Tel: (917) 558-7610 (US) E-mail: feng.peng@hcinternational.net