Liuyang Fireworks

Liuyang Fireworks

Liuyang FireworksInvestor Presentation

Liuyang Fireworks

Cautionary Note on Forward-Looking Information

In addition to historical information, the statements set forth throughout this presentation include forward-looking statements that may involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. This forward-looking information includes, among other things, information with respect to expected growth in the domestic Chinese market, the recovery of the Chinese economy, the shift to more profitable products, decreased selling expenses related to transportation costs, as well as information with respect to the Company’s beliefs, plans expectations, anticipations, estimates and intentions. The words, “may”, “could”, “should”, “would”, “suspect”, “outlook”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “continue”, “plan”, “predict”, “probable”, “potential”, “target” and similar words and expressions are used to identify forward-looking information. Risks and uncertainties affecting forward-looking information include, but are not limited to, fluctuations and seasonality in demand for fireworks, fluctuations in the costs of production and transportation, fluctuation and uncertainty in foreign currency exchange rates, fluctuation in costs of materials, changes in the laws of the PRC that affect the Company’s operations, regulatory approval, competition, product spoilage and liability, and the risk that revenues do not grow as expected. These and other such factors are discussed in greater detail in the Company’s Filing Statement dated may 27, 2009 and in its other public filings available on SEDAR at www.sedar.com. Potential investors and other readers are urged to consider these factors carefully in evaluating these forward-looking statements and information and are cautioned not to place undue reliance on them. The forward-looking information contained in this presentation reflects the expectations of the Company as of the date of this presentation and, accordingly, is subject to change after such date. While the Company may elect to, the Company does not undertake to update this information at any particular time excepts as required in accordance with applicable securities legislation.

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Liuyang Fireworks

fireworksfireworks

more than just the Fourth of July...

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Liuyang Fireworks

Canada Day

Sporting Events

Concerts

Victoria Day Display Events

July 4

Canada Day Theme Parks

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New Yearfireworks in

North America

fireworks inNorth

America

City Events

Liuyang Fireworks

of the global fireworks supply is consumed in China

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Liuyang Fireworks

Moon Festival

Concerts Grand Openings

Birthdays

FestivalsGraduationSummer Holidays

Grand Openings

New Year’s Day

Sporting Events

Lantern Festival

BirthdaysTheme Parks

QingmingFestival

Sporting Events

Births

Spring Festival

FuneralsSummer Holidays

City Events

Concerts New Homes

Weddings

Festivals City Events

Graduations

Store Openings

Dragon Boat

Festival

Chinese Valentine’s

Day

Anniversaries

fireworks in China

fireworks in China

Liuyang Fireworks

Market Size1

4-Year CAGR2

$2.7B

5.8%

ChinaInternational

$6.3B

27.5%

1 2007 2 2004 to 2007

Liuyang Fireworks 8

$1.3

$1.5

$1.7

$2.2

$2.3

9%7

US$ Trillions

Growth Driver:Disposable income rising in China

2005 2006 2007 2008 2009

Liuyang Fireworks

Growth Driver:Easing of Restrictions in Urban Areas

282 Chinese cities placed restrictionson the use of fireworks in urban areas

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1993

Liuyang Fireworks

Growth Driver:Easing of Restrictions in Urban Areas

200920062005 2007

106 citiesease restrictions




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Liuyang Fireworks

Liuyang Fireworks

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Among the top 5 manufacturers in China

16 years in operation

Extensive product portfolio in all categories

Focused on consumer products

Track record of innovation

Strategically located in China’s Liuyang region

Leading manufacturer of premium fireworks

Liuyang Fireworks

Substantial tax incentives

Large pool of skilled workers

Reputation for quality

90% of global fireworks supply is produced

in China.

Of that 90%, 60% is produced in the Liuyang region.

60%

Liuyang Region

The “Silicon Valley of Fireworks”

90%

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Liuyang Fireworks

Leading Products

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Palm Tree

Dragon Egg

Coconuts

Liuyang Fireworks

,000 products

34 wholesalecustomers

countries15

1 +

+

Liuyang Fireworks

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2006 2007 2008 YTD

$M CDNRevenue EBITDA Net Income

$M CDN$M CDN

Strategic decision to focus on high margin productsto position company for new growth opportunities

14.9

8.4 8.8

2.6

1.7 1.8

Historical Financial ResultsPositioning the Company for Future Growth

1.78.7

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2006 2007 2008 YTD

2007

1.6

1.31.0

2.4

0

2

4

6

8

10

12

14

16

2006 2007 2008 YTD

Liuyang Fireworks

Liuyang Fireworks

Current

Liuyang Fireworks

Target

International sales Domestic sales

50%50%

5%5%

Growth Strategy

95%95%

50%50%

Liuyang Fireworks

Domestic Opportunity

Fragmentedindustry

Uniquelypositioned

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Liuyang Fireworks

Chinese fireworks industry supply chain

Liuyang Fireworks today

Industry Structure

manufacturer wholesaler retailer

consumer

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15% net margin 30% net margin 50% net margin

Liuyang Fireworks

Municipal license required to wholesale fireworks

Limit of 2-3 licenses per municipality

> 3,000 municipalities

Fragmented Wholesaler Market

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Liuyang Fireworks

Access higher margins in wholesale segment

Leverage successful export distribution model

Vertical Integration

manufacturer wholesaler retailer

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consumer

15% net margin 30% net margin 50% net margin

Liuyang Fireworks

Consolidate Wholesale Segment

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Guangdong Region

ShanghaiRegion

NortheastRegion

Strategically target key regions with highest growth opportunities

Acquire controlling position of dominant wholesaler

Each acquisitionshould generate $1M to $10M in incremental sales

Liuyang Fireworks

Proposed Acquisition Timeline

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Sept. 2009

3wholesalers

Sept. 2010

Sept. 2011

Sept. 2012

7wholesalers

TBD(targets already identified)

Liuyang Fireworks

Uniquely Positioned

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Only Chinese fireworks company publicly-listed in North America—provides access to capital

Ability to expand capacity with minimal capital expenditure

Critical mass and size to execute consolidation strategy

Extensive experience as a distributor through historical export business

Liuyang Fireworks

Additional Opportunities in China

Acquire fireworks distribution logistics company

• Reduce costs

• Ensure capacity

Long term

Acquire fireworks display company• Integral to marketing and promotion

in domestic market

Open retail product showcase store(s)• Showcase products to end user

• Generate higher margins

Short term

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Liuyang Fireworks

International Growth Strategy

Growth of sales in existing country markets• Expand breadth of product offering

• Focus on specific customer needs

• Capture larger share of our customers’ purchases

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US: Establish relationship with hybrid wholesaler/retailer

• Build Liuyang Fireworks brand

• Leverage strong reputation

Liuyang Fireworks

Capture a larger part of a growing market

Uniquely positioned

of integration and consolidation

Proven experience

Opportunity

Strategy

in the fragmented Chinese fireworks industry

in fireworks industry

with access to capital markets

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Liuyang Fireworks

Liuyang FireworksInvestor presentation

Liuyang Fireworks

Market Facts

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Symbol (TSX-V): FWK

Recent Share Price: $0.63

Common Shares Outstanding: ~43.20 million

Market Capitalization: $27.2 million

52-Week Price Range: $0.40 - $1.56

Fiscal Year-End: December 31, 2009

Liuyang Fireworks

Jacky LongChief Financial Officer

Liuyang Fireworks LimitedTel : 416-613-0208 ext [email protected]

www.liuyangfwk.com

Contact

For more information, please contact:

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Liuyang Fireworks

Capital Structure

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50,76037,097,518Shares issued to Strive Best’s original 50,000 shares

2,852,4534,754,089Shares issued on private placement at $0.60 per share

254,565424,275Shares issued on private placement at $0.60 per share

(638,760)-Share issuance costs paid at completion of RTO

(449,961)-Share issuance costs paid by Far Ocean Group prior to RTO

$ 2,069,05743,197,917Balance, June 30, 2009

-64,535Issuance of shares at a price of $0.60 per share for debt

-122,500Issuance of shares at a price of $0.60 per share for debt

-735,000Consolidation of New Legend shares at 12:1

-(50,000)Shares redeemed at RTO

$ 50,76050,000Balance, December 31, 2008

Number of shares

outstanding Amount

In 2008, Strive Best issued 50,000 common shares at $1.0152 per share for gross proceeds of $50,760. On June 24, 2009, such 50,000 common shares were redeemed on the reverse takeover.

Liuyang Fireworks

Liuyang FireworksInvestor presentation

Liuyang Fireworks

Investor Relations

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