Invitation Letter for Offering Cooperation

     Shandong Huitong Rubber Co., Ltd. (hereafter called Shandong Huitong) was established in 2007 with registered capital of 9.6 million US Dollars. It is located at Jiaxiang Industrial Park of Jining City, which is famous as hometown for Confucius and Mencius. It is near to several highways, Grand Canal and Jining Airport.

     At present, Shandong Huitong owns land of 100 acres, workshop of 37216 square meters (including workshop and office buildings of 17888 square meters built in 2007 and workshop of 19328 square meters to be completed construction in May 2012) and 200 employees. [Xiangda" branded steel cord conveyor belts, PVC and PVG high-strength flame-resistant conveyor belts, and many kinds of heat-resistant, cold-resistant, acid and alkaline resistant multiply conveyor belts are widely used in coal mines, power plants, mines, ports, etc.

     The design, production, marketing, logistics of our conveyor belts are strictly complied with ISO9001: 2008 standard. High-performance equipments enable us with high quality and high standard products. Our annual capacity for PVC belt can reach 420,000 square meters and flame retarded PVG belt 365,000 square meters, with annual output value of 19.2 million US Dollars. After equipments for steel cord conveyor belts are installed, annual capacity for high strength environment-friendly steel cord conveyor belts can reach 12 million square meters with annual output value of 86.4 million US Dollars.

Introduction of Offer Cooperation Project

Holding market opportunities, Shandong Huitong achieved strategic cooperation with Qingdao University of Science and Technology which possesses most advanced R&D capabilities for conveyor belts in China, and put forward the project of high strength environment friendly steel cord conveyor belts with annual production of 12 million square meters which has been approved by Jining Development and Reform Commission. Budget for total investment of this project is 60 million US Dollars, including construction investment of 52 million US Dollars, current funds 8 million US Dollars. At present, we have total assets of 22.4 million US Dollars and have invested 14.4 million US Dollars in construction. The construction was started in July 2011. Now civil construction has been basically completed. After the production line begins working, annual production for steel cord conveyor belts can reach 12 million square meters, with annual output value of 86.4 million US Dollars and gross profit over 18.56 million US Dollars.

      Due to shortage for fund, the company intends to transfer 20% to 40% equity on the basis of total assets of 22.4 million US Dollars, to get equity financing of 4.48 million to 8.96 million US Dollars. The left 28.64 million US Dollars can be got through bank loan. Meanwhile, we are seeking strategic partners from overseas. We accept orders for shares or OEM. Our target is to complete listing of the company and withdrawal of investment in 3 to 5 years.

The advantages of investing Shandong Huitong:
a.High position in the industry and less competitions
The preparing project of high strength environment friendly steel cord conveyor belts by Shandong Huitong has high starting point in designing. After putting into production, its production capability, production equipments and technology can reach top three in China. 
b. High gross profit and more orders
Gross profit for steel cord conveyor belts is about 30% in China and over 80% by exporting to overseas. The largest shareholder-Qingdao UF has rich experience of exporting OTR tires for nearly 6 years, with a lot of customers from overseas mines industry. Now they have put forward purchasing requirement for conveyor belts, which takes advantages for exporting conveyor belts.
c. Advanced technical level in the industry
We have signed cooperation agreement with Qingdao University of Science and Technology which is maker for national standards in conveyor belts industry. With support of Qingdao University of Science and Technology on research and development capability of rubber vulcanization modifying methods, Shandong Huitong can compete with world famous big enterprises.
d. High quality managementFactory director, Mr. Chen Guanghua, has engaged in conveyor belts industry for over 30 years with rich management and marketing experience. General Manager, Mr. Song Zhaojun, has over 40 years of enterprise management experience. Technical director, Mr. Liu Zhengda, had worked as senior engineer in Qingdao Rubber Six Factory. 
e. High capability of procurement, low cost of construction and development
As the largest shareholder, Qingdao UF International Trade Co., Ltd has rich experience of purchasing rubber which enables us to purchase raw materials at cost lower than market price. 
f. Equity and debt integrated, return on investment guaranteed, equivalent repurchase of transferred equity can be completed within one year.
Capacity for two production lines for PVC conveyor belts is 19.2 million US Dollars with gross profit of 3.84 million US Dollars. After equity financing of 8.96 million US Dollars in place, capacity for steel cord conveyor belts is 86.4 million US Dollars with gross profit of 18.56 million US Dollars. After putting into production, 40% equity can get annual gross profit of 8.96 million US Dollars as investment income. If the company can be listed in 3 to 5 years, investors can get at least 500%-700% income.
g. Investors have the right of involving in daily management and product pricing and can participate in the Board of Directors. Equity can be transferred at intermediate stage without limitation.

Four Programs of Investment Cooperation:
1. Based on net assets of 22.4 million US Dollars, 20%-40% equity is equivalent to 4.48-8.96 million US Dollars. Transferring-stocks-to-bonds repurchase agreement can be signed with promised 20% annual interest for the period of 3-5 years.
2. Based on net assets of 22.4 million US Dollars, 20%-40% equity is equivalent to 4.48-8.96 million US Dollars. After one year of invested capital in place, the company can repurchase this portion of equity at original cost and pay 12% annual interest as interest income which is equivalent to 537,600 to 1,075,200 US Dollars.
3. Taking company equity and assets of company and shareholders as pledge to seek for 3-5 years long-term bank loan or 3-6 months short-term private lending. Interest can be discussed separately.
4. Seeking for overseas customers to cooperate by the way of taking order prepayment as shares, OEM and sample processing, etc.

Shandong Huitong Rubber Co., LTD.
Tel: 86+532-85026292
Fax: 86+532-85030700
Email: info@uf-china.cn
Contact: Anny Zhou