Major Shareholder:

• Mr. Zhang En Rong ¡V 51.76% interest
• Mr. Zhang Yun San ¡V 5.67% interest

Company Subsidiaries:

• Molong Machinery (93.1%): Engaged in the production and sale of petroleum machinery, oil pipes and precision casting
• Maolong Recycle (10%): Engaged in the purchasing unwanted to use metals to the authorized scope.

The Group is engaged principally engages in the design, manufacture and sale of petroleum extraction machinery and related accessories, which can be grouped into 5 main categories of products, namely, oil well pipes, oil well sucker rods, oil well pumps, oil well pumping machiners and other petroleum extraction machinery accessories. These products are principally used for petroleum extraction. The products of the Group are largely for sale to domestic oil fields within the PRC and are partly for export to North America.

The Group has been designing and manufacturing petroleum extraction machinery since 1994. In August 1994. In 1996, the Group started to design and manufacture oil well pipes. In 2001. The Group succeeded in the trial production of oil well sucker rods. Over the years, the Group has been introducing different variety of particular products as well as to create new products types. In addition, the Group has placed significant attention to maintain the quality of its principal products in line with international standards.

The Group believes that the Group has an established reputation in the PRC petroleum extraction petroleum extraction machinery industry in its capability to manufacture quality petroleum extraction machinery and related accessories, as exemplified by the company having been awarded the quality system certification for comforming to ¡§quality system standards¡¨ ISO9002 for oil well pumps, underground petroleum electric pumps, high pressure switch and the parts in 1996, and the quality system certificate for conforming to ¡§quality system standard ISO9004 for inter alia, certain of its principal products.

The Directors believe that the Group has the following competitive advantages:

• The Group's commitment to deliver quality and reliable petroleum extraction machinery products to its customers;
• Its well-established customer base including well known oil fields in the PRC;
• Its comprehensive quality control monitoring procedures throughout the production process as demonstrated by the Company having been warded the ISO9000 certificate and the right to use the API Monogram on certain of the Group's principal products;
• Its strong in house research and development teams which enable the Group to design and develop new products, develop efficient methods of production and modify its existing products to meet changing market trends and customers needs;
• The steady demand of the Group's product from its principal customers. Since 1949, the PRC Government has adopted the view that petroleum was an important strategic resource and has adopted special policies to develop its national petroleum industry. In particular, it has provided funding for and allocated other resources to the petroleum industry;
• The Group's ability to adapt and respond quickly to customers demands and to provide efficient after sale services; and
• The Group' competitive advantages over its competitors. As compared with its primary competitors who are state-owned petroleum machinery manufacturers, the Group is able to adapt more quickly to changes in market conditions, provide products with more reliable quality, offer more efficient after sale services and set lower price tag, the Group will remain as a competitive player in the petroleum extraction machinery industry.

• Product concentration;
• Reliance on major suppliers;
• Reliance on major customers;
• Renewal of API Monogram licenses;
• Risks associated with the production of new products;
• Reliance on senior management
• Environmental protection

The Group's aim is to further consolidate it position a prime manufacturer of petroleum extractions machiners and related accessories in the PRC market, to explore the international market and ultimately, to become a world class petroleum extraction machinery manufacturer.

The Group's overall business objectives are:

• To maintain dynamic product development and improvement efforts on existing production lines;
• To enlarge its customer base by supply products to international market;
• To further upgrade its production quality to international standards;
• To further enhance the relationship with its long term customer; and
• To develop new product lines via research and development, design and its manufacturing capabilities and reputation.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$70.95 million (based on the offer price HK$0.66 per share). The Group at present intends to apply the net proceeds as follows: