Pursuant to the
laws applicable to Chinas Foreign Investment Enterprises, each of the Companys subsidiaries in China allow make
appropriations from its after-tax profit to non-distributable reserve funds as determined by the Board of Directors. These reserve
funds include a (i) general reserve, (ii) enterprise expansion fund and (iii) staff bonus and welfare fund. The general reserve
fund requires annual appropriations of 10% of after-tax profit (as determined under PRC GAAP) until these reserves equal 50% of
the amount of paid-in capital; the other fund appropriations are at the Companys discretion. Payment to the statutory
general reserve fund is at the Company discretion. Allocations to these statutory reserve funds can only be used for specific
purposes and are not transferable to us in the form of loans, advances or cash dividends.