MIRA INFORM REPORT

Report Date :

30.11.2011

IDENTIFICATION DETAILS

Name :	ARMSTRONG MACHINERY (CHINA) CO., LTD.
Registered Office :	No. 40 Yongda Road, Daxing Bioengineering & Pharmaceutical Industrial Park (Cbp), Daxing District, Beijing, 102600 Pr
Country :	China
Financials (as on) :	31.12.2009
Date of Incorporation :	13.02.1995
Com. Reg. No.:	110000410097393
Legal Form :	Chinese-Foreign Equity Joint Venture Enterprise
Line of Business :	manufacturing steam, air, hot water system energy-saving products, etc.
No. of Employees :	150 Persons

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	USD 1,500,000
Status :	Satisfactory
Payment Behaviour :	No Complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – September 30^th, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
China	a2	a2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Company name & address

ARMSTRONG MACHINERY (CHINA) CO., LTD.

No. 40 Yongda Road, Daxing Bioengineering & Pharmaceutical Industrial Park (CBP), Daxing District, Beijing, 102600 PR CHINA.

TEL: 86 (0) 10-61255888/61255828/61255809 FAX: 86 (0) 10-6052828967

EXECUTIVE SUMMARY

INCORPORATION DATE : FEB. 13, 1995

REGISTRATION NO. : 110000410097393

REGISTERED LEGAL FORM : CHINESE-FOREIGN EQUITY JOINT VENTURE ENTERPRISE

CHIEF EXECUTIVE : MR. PATRICK Brian Armstrong (CHAIRMAN)

STAFF STRENGTH : 150

REGISTERED CAPITAL USD 7,178,751

BUSINESS LINE : MANUFACTURING

TURNOVER : CNY 172,849,000 (AS OF DEC. 31, 2010)

EQUITIES : CNY 168,534,000 (AS OF DEC. 31, 2010)

PAYMENT : AVERAGE

RECOMM. CREDIT RANGE : UP TO USD 1,500,000

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : FAIRLY GOOD

OPERATIONAL TREND : STEADY

GENERAL REPUTATION : well-known

EXCHANGE RATE : CNY 6.3621 = USD 1

Adopted abbreviations

ANS - amount not stated

NS - not stated

SC - subject company (the company inquired by you)

NA - not available

CNY - China Yuan Renminbi

SC was registered as a Chinese-foreign equity joint venture enterprise at local Administration for Industry & Commerce (AIC - The official body of issuing and renewing business license) on Feb. 13, 1995.

Company Status: Chinese-foreign equity joint venture enterprise

This form of business in PR China is defined as a legal person. It is a limited co. jointly invested by one or more foreign companies and one or more PR China controlled companies within the territories of PR China according to a certain proportion of capital investment. The investing parties exercise business management, share profits and bear all risks and liabilities of the co. together. The equity joint venture law requires that foreign party contribute not less than 25% of the registered capital, with no maximum. The investing parties are free to agree on method of profit distribution and liabilities bearing according to the proportion of capital investment. Each investing parties contributes funds, tangible assets, technology & etc. The board of directors excises the high authority. The joint venture usually has a limited duration of 10 to 50 years. Enterprise with large investment, long construction periods, low investment returns, introducing of advanced technology & advanced technology products that have good competition position in international market may extend beyond the 50 years limit.

SC’s registered business scope includes improving and managing steam system, air system, and hot water system; developing and manufacturing energy-saving products, control pipe network, pipe network software; technology innovation and service for items related to steam system, condensate water recycle system, water treatment system; undertaking facility installation, engineering design and service; new technology development for steam system energy-saving, condensate water recycle, combustion efficiency, environmental improvement, heat input, cooling, ventilation, humidifying and energy environmental machinery system and electronic system; new products designing, planning, and popularizing; undertaking equipment installing projects and engineering services; energy-saving environmental technology consultant; developing and technology popularizing for cleaning environment, comfortable environment; selling self-made products.

SC is mainly engaged in manufacturing steam, air, hot water system energy-saving products, etc.

Mr. Patrick Brian Armstrong is legal representative and chairman of SC since 2010.

SC is known to have approx. 150 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office and factory in the industrial zone of Beijing. Our checks reveal that SC owns the total premise, but SC’s accountant refused to release the gross area.

https://www.armstronginternational.com It is the website of Armstrong International, Inc. (U.S.A.) The design is professional and the content is well organized. At present it is in English and Chinese versions.

Changes of its registered information:

Date of change	Item	Before the change	After the change
2006	Registered capital	USD 3,150,000	USD 5,750,000
2008-11	Company name	Beijing Kangsen Armstrong Machinery Co., Ltd.	Armstrong Machinery (China) Co., Ltd.
	Registered capital	USD 5,750,000	USD 7,178,751
2009-9	Shareholders	Beijing Tuofeng Technology Development Co., Ltd. 30.002%; Armstrong International Inc. (USA) 69.998%	Present ones
2010-9	Legal representative	David M. Amstrong 大卫	Patrick Brian Armstrong 帕特里克
Unspecified	Registered number	009739	110000410097393

MAIN SHAREHOLDERS:

Name % of Shareholding

Beijing Tuofeng Technology Development Co., Ltd. 30.002

Armstrong Equity Ventures, Inc. (U.S.A.) 69.998

*Beijing Tuofeng Technology Development Co., Ltd.

=======================================

Beijing Tuofeng Technology Development Co., Ltd is affiliated to China Machine Technology Development Foundation. It has done excellent job at the transformation of technological achievements into usable products, especially in the field of energy saving, environmental protection and water treatment.

Registration No.: 110115005107099

Legal representative: Hou Rui 侯睿

Add.: No. 15 GuangMao Avenue Daxing Industrial Development Zone Beijing (102600)

Tel.: 0086-10-51578811

Fax: 0086-10-60216599

Web: http://www.tuofeng.com.cn/

E-mail: admin@tuofeng.com.cn

l Legal representative and chairman:

Mr. Patrick Brian Armstrong , American, # 044577582. He is currently responsible for the overall management of SC

Working Experience(s):

From 2010 to present Working in SC as chairman and legal representative

Also working in Armstrong Equity Ventures, Inc. (U.S.A.) as chairman

l General manager:

Mr. Li Damin , ID# 32031119620217121X, born in 1962. He is currently responsible for the daily management of SC.

Working Experience(s):

From 2006 to present Working in SC as general manager.

Directors:

…………

Douglas V. Bloss #044728507

Rex Cheskaty # 023933989

Kurt Armstrong # 457271391

Yao Wenbao ID# 110108450709462

SC is mainly engaged in manufacturing steam, air, hot water system energy-saving products, etc.

Main Products: steam, air, hot water system energy-saving products, etc.

SC sources its materials 60% from domestic market, and 40% from overseas market, mainly U.S.A. SC sells 85% of its products in domestic market, and 15% to overseas market, mainly U.S.A.

The buying terms of SC include Check, T/T, L/C and Credit of 30-60 days. The payment terms of SC include Check, T/T, L/C and Credit of 30-60 days.

SC is not known to have any subsidiary at present.

Overall payment appraisal:

( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet determined

The appraisal serves as a reference to reveal SC's payments habits and ability to pay. It is based on the 3 weighed factors: Trade payment experience (through current enquiry with SC's suppliers), our delinquent payment and our debt collection record concerning SC.

Trade payment experience: SC did not provide any name of trade/service suppliers and we have no other sources to conduct the enquiry at present.

Delinquent payment record: None in our database.

Debt collection record: No overdue amount owed by SC was placed to us for collection within the last 6 years.

Bank of China Beijing Daxing Sub-branch

AC#：801704919808092001

Relationship: Normal.

Balance Sheet

Unit: CNY’000

	as of Dec. 31, 2009
Cash & bank	30,019
Notes receivable	591
Inventory	24,486
Accounts receivable	75,419
Advances to suppliers	2,894
Other receivables	2,795
Prepaid expenses	0
Other current assets	0
	------------------
Current assets	136,204
Fixed assets net value	38,339
Projects under construction	7,966
Long term investment	0
Intangible assets	2,977
Other assets	539
	------------------
Total assets	186,025
	=============
Short loans	0
Accounts payable	16,799
Advances from customers	1,895
Accrued payroll	4,962
Welfare expenses payable	0
Taxes payable	3,661
Other payable	18,589
Accrued expenses	0
Other current liabilities	0
	------------------
Current liabilities	45,906
Long term liabilities	0
	------------------
Total liabilities	45,906
Equities	140,119
	------------------
Total liabilities & equities	186,025
	=============

Income Statement

Unit: CNY’000

	as of Dec. 31, 2009
Turnover	147,371
Cost of goods sold	75,372
Sales expense	26,388
Management expense	14,708
Finance expense	-475
Non-operating income	186
Non-operating expense	0
Profit before tax	31,564
Less: profit tax	5,524
Profits	26,040

Summary

Unit: CNY’000

	As of Dec. 31, 2010
Long term investment	750
Total liabilities	62,526
Equities	168,534
	--------------------
Total liabilities & equities	231,060
	=============
Turnover	172,849
Profit before tax	33,630
Less: profit tax	4,926
Profits	28,704

Note: SC’s detailed financial reports for Yr2010 were not found in local AIC.

Important Ratios

=============

	as of Dec. 31, 2009	as of Dec. 31, 2010
*Current ratio	2.97	/
*Quick ratio	2.43	/
*Liabilities to assets	0.25	0.27
*Net profit margin (%)	17.67	16.61
*Return on total assets (%)	14.00	12.42
*Inventory /Turnover ×365	61 days	/
*Accounts receivable/Turnover ×365	187 days	/
*Turnover/Total assets	0.79	0.75
* Cost of goods sold/Turnover	0.51	/

PROFITABILITY: GOOD

l The turnover of SC appears fairly good in its line in both two years and it was rising in 2010.

l SC’s net profit margin is good in both two years.

l SC’s return on total assets is good in both two years.

l SC’s cost of goods sold is low in 2009, comparing with its turnover.

LIQUIDITY: FAIRLY GOOD

l The current ratio of SC is maintained in a fairly good level in 2009.

l SC’s quick ratio is maintained in a fairly good level in 2009.

l The inventory of SC appears average in 2009.

l The accounts receivable of SC appears fairly large in 2009.

l SC has no short-term loan in 2009.

l SC’s turnover is in a fair level in both two years, comparing with the size of its total assets.

LEVERAGE: FAIRLY GOOD

l The debt ratio of SC is low.

l The risk for SC to go bankrupt is low.

Overall financial condition of the SC: FAIRLY GOOD.

SC is considered medium-sized in its line with fairly good financial conditions. The given credit amount would appear to be within SC’s capacities.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.51.93
UK Pound	1	Rs.80.62
Euro	1	Rs.69.37

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
----	NB	New Business	----

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.