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While they supply their steel billet from native steel manufacturers, including Longhai Steel Group, they provide all of our billets solely through Longhai Steel Group. However, since 2009, the Company has bought metal billet at prevailing market costs from impartial third celebration trading firms. Prior to 2009, the Company bought our steel billet at a slight low cost from Longhai Steel Group, an entity owned and controlled by our CEO, Chaojun Wang. They additionally operate as financing intermediaries to facilitate supply of metal billets to Longhai, The price of the billets has been set via arm’s length negotiations with Longhai Steel Group and based mostly on the published daily commodity index value. Foreign-invested enterprises like Kalington that need foreign exchange for the distribution of earnings to its shareholders could impact cost from their foreign exchange accounts or buy and pay overseas change charges at the designated international change banks to their foreign shareholders by producing board resolutions for such profit distribution. Based on their wants, foreign-invested enterprises are permitted to open foreign change settlement accounts for present account receipts and funds of foreign trade together with specialized accounts for capital account receipts and payments of international exchange at certain designated foreign trade banks.

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