Exhibit








Exhibit 10.101






MOMENTIVE UV COATINGS (SHANGHAI) CO., LTD.


FINANCIAL STATEMENTS AND 
REPORT OF THE AUDITORS 
FOR THE YEAR ENDED 31 DECEMBER 2018















































































































Audit Report
SAAF (2018) AR.NO.070




TO THE BOARD OF DIRECTORS OF 
MOMENTIVE UV COATINGS (SHANGHAI) CO., LTD.
We have audited the accompanying financial statements of Momentive UV Coatings (Shanghai) Co., Ltd. (hereinafter referred to as “the Company”),including the balance sheet as of 31 December 2018 and the income statement, cash flow statement for the year then ended as well as notes to the financial statements.
1. Responsibility of the Company’s management on these financial statements
Management is responsible for the preparation of these financial statements. This responsibility includes: (1) these financial statements are prepared in accordance with Accounting Standards for Business Enterprises and the Accounting System for Business Enterprises, and present fairly. (2) designing, implementing and maintaining internal control relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. 
2. Responsibility of certified public accountants
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in United States of America.  Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. 
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider the internal control relevant to the preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.  
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.















3.  Auditor’s  opinion
In our opinion, the financial statements of Momentive UV Coatings (Shanghai) Co., Ltd. have been prepared in accordance with U.S. Generally accepted accounting principles, and present fairly, in all material respects, the financial position of the Company as of 31 December 2018, and the results of its operations and cash flows for the year then ended. 






/s/ Shanghai Asahi Accounting Firm              Chinese CPA : Li Can






Chinese CPA : Zhu Jun




Shanghai    P. R. China                         1 March 2019















BALANCE SHEET ( to be continued)
AS AT 31 DECEMBER 2018
(All amounts in Renminbi (“RMB”) Yuan unless otherwise stated)
	
							
	 	 
	 
	31 December
	

	31 December
	


	 	ASSETS
	Notes
	2018
	

	2017
	


	 	Current assets
	 
	 
	 

	 	Cash and cash equivalent
	4.1
	14,526,068.46
	

	17,028,827.70
	


	 
	 	Notes receivable
	4.2
	55,224,664.21
	

	34,706,282.28
	


	 
	 	Accounts receivable
	2.6, 4.3
	100,989,258.28
	

	82,854,248.92
	


	 
	 	Other receivables
	2.6
	2,400.00
	

	2,400.00
	


	 
	 	Inventories
	2.7, 4.4
	24,056,196.83
	

	15,844,695.65
	


	 
	 	Prepaid expenses
	 
	—
	

	—
	


	 
	 	Total current assets 
	 
	194,798,587.78
	

	150,436,454.55
	


	 	 
	 
	 

	 	Fixed assets 
	 
	 
	

	 
	


	 	 

	 	Fixed assets - cost
	2.8, 4.5
	6,702,353.18
	

	6,652,902.87
	


	 	Less: Accumulated depreciation
	2.8, 4.5
	6,289,685.26
	

	6,105,199.31
	


	 	Fixed assets - net
	 
	412,667.92
	

	547,703.56
	


	 	Less: Provision for impairment of fixed assets
	 
	—
	

	—
	


	 
	 	Fixed assets - net book value
	 
	412,667.92
	

	547,703.56
	


	 
	 	Other assets
	 
	 
	 

	 	Long-term prepaid expenses
	2.9
	333,807.92
	

	482,063.89
	


	 
	 	Deferred tax - debit
	 
	48,331.19
	

	126,654.49
	


	 
	 	TOTAL ASSETS
	 
	195,593,394.81
	

	151,592,876.49
	





  


The accompanying notes form an integral part of these financial statements.













BALANCE SHEET (continued)
AS AT 31 DECEMBER 2018
(All amounts in Renminbi (“RMB”) Yuan unless otherwise stated)


    
	
							
	 	 
	  
	31 DECEMBER
	

	31 DECEMBER
	


	 	LIABILITIES AND OWNERS’ EQUITY
	Notes
	2018
	

	2017
	


	 	Current liabilities
	 
	 
	 

	 	Short-term bank borrowings
	 
	15,000,000.00
	

	15,000,000.00
	


	 
	 	Accounts payable
	4.6
	43,452,904.69
	

	34,208,095.93
	


	 
	 	Salary payable
	 
	1,240,000.00
	

	650,000.00
	


	 
	 	Tax payable
	4.7
	5,177,523.14
	

	3,672,341.93
	


	 
	 	Dividend payable
	 
	9,000,000.00
	

	9,000,000.00
	


	 
	 	Other payable
	4.8
	1,210,510.58
	

	1,513,164.86
	


	 
	 	Accrued expenses
	 
	23,925.00
	

	—
	


	 
	 	Total current liabilities


	 
	75,104,863.41
	

	64,043,602.72
	


	 
	 	Total liabilities
	 
	75,104,863.41
	

	64,043,602.72
	


	 
	 	Owners' equity
	 
	 
	 

	 
	 	Paid-in capital
	4.9
	4,138,525.00
	

	4,138,525.00
	


	 
	 	Surplus reserve
	4.10
	2,100,000.00
	

	2,100,000.00
	


	 
	 	Undistributed profits
	4.11
	114,250,006.40
	

	81,310,748.77
	


	 
	 	Total owners' equity
	 
	120,488,531.40
	

	87,549,273.77
	


	 
	 	TOTAL LIABILITIES AND OWNERS’ EQUITY
	 
	195,593,394.81
	

	151,592,876.49
	


	 



  
    
The accompanying notes form an integral part of these financial statements.

































INCOME STATEMENT 
FOR THE YEAR ENDED 31 DECEMBER 2018 
(All amounts in Renminbi (“RMB”) Yuan unless otherwise stated)




	
								
	 
	Notes
	Year 2018
	Year 2017
	Year 2016

	Revenues from main operations
	2.10
4.12
	359,147,478.31
	

	344,034,346.69
	

	334,219,891.26
	


	 
	 
	 
	 

	Less: Costs main operations
	4.12
	277,961,210.71
	

	246,795,208.60
	

	233,818,221.10
	


	 
	 
	 
	 
	 

	      Surcharges for main operations
	 
	538,143.62
	

	845,169.28
	

	979,176.41
	


	Profit from main operations
	 
	80,648,123.98
	

	96,393,968.81
	

	99,422,493.75
	


	 
	 
	 
	 
	 

	Less: Selling and distribution expenses
	4.13
	4,737,243.94
	

	3,311,996.76
	

	4,128,783.69
	


	 
	 
	 
	 
	 

	Other operation income
	 
	1,032.27
	

	256.41
	

	388.89
	


	 
	 
	 
	 
	 

	General and 
administrative expenses 
	4.14
	13,187,238.71
	

	42,741,332.18
	

	17,416,177.10
	


	 
	 
	 
	 
	 

	Finance (income) expenses - net
	4.15
	(1,243,283.24
	)
	2,964,599.83
	

	(2,695,350.25
	)

	 
	 
	 
	 
	 

	Operating profit
	 
	63,967,956.84
	

	47,376,296.45
	

	80,573,272.10
	


	 
	 
	 
	 
	 

	Non-operating income
	4.16
	65,243.83
	

	273,121.29
	

	191,919.03
	


	 
	 
	 
	 
	 

	Non-operating expense 
	4.16
	—
	

	—
	

	2,046.15
	


	 
	 
	 
	 
	 

	Income before income tax
	 
	64,033,200.67
	

	47,649,417.74
	

	80,763,144.98
	


	 
	 
	 
	 
	 

	Less: Income taxes
	2.11
	16,093,943.04
	

	11,959,285.40
	

	20,237,953.84
	


	 
	 
	 
	 
	 

	Net income
	 
	47,939,257.63
	

	35,690,132.34
	

	60,525,191.14
	


	 
	 
	 
	 
	 








The accompanying notes form an integral part of these financial statements.











































CASHFLOW STATEMENT  
FOR THE YEAR ENDED 31 DECEMBER 2018
(All amounts in Renminbi (“RMB”) Yuan unless otherwise stated)


	
							
	1. Cash flows from operating activities
	Year 2018
	Year 2017
	Year 2016

	Cash received from sales of goods or rendering of services
	378,277,855.09
	

	403,969,468.06
	

	406,222,940.09
	


	Cash received relating to other operating activities 
	65,243.83
	

	273,121.29
	

	191,919.03
	


	Sub-total of cash inflows
	378,343,098.92
	

	404,242,589.35
	

	406,414,859.12
	


	Cash paid for goods and services
	(324,252,690.58
	)
	(305,120,883.87
	)
	(277,618,516.29
	)

	Cash paid to and on behalf of employees
	(8,201,814.17
	)
	(8,168,074.26
	)
	(7,989,408.44
	)

	Payments of taxes and levies
	(27,075,279.16
	)
	(32,730,895.84
	)
	(47,133,802.28
	)

	Cash paid relating to other operating activities 
	(7,322,923.24
	)
	(37,162,567.98
	)
	(5,730,450.09
	)

	Sub-total of cash outflows
	(366,852,707.15
	)
	(383,182,421.95
	)
	(338,472,177.10
	)

	Net cash flows from operating activities 
	11,490,391.77
	

	21,060,167.40
	

	67,942,682.02
	


	2. Cash flows from investing activities
	 
	 
	 

	Intangible assets and other long-term assets
	—
	

	—
	

	23,398.06
	


	Sub-total of cash inflows
	—
	

	—
	

	23,398.06
	


	Cash paid to acquire fixed assets, intangible assets  and other long-term assets
	(202,116.81
	)
	(595,246.68
	)
	(212,142.73
	)

	Sub-total of cash outflows
	(202,116.81
	)
	(595,246.68
	)
	(212,142.73
	)

	Net cash flows used in investing activities
	(202,116.81
	)
	(595,246.68
	)
	(188,744.67
	)

	3. Cash flows from financing activities
	 
	 
	 

	Cash received from bank loans
	—
	

	15,000,000.00
	

	—
	


	Sub-total of cash inflows
	—
	

	15,000,000.00
	

	—
	


	Cash payments for distribution of dividends or profits
	(13,418,314.64
	)
	(29,346,226.12
	)
	(87,145,723.63
	)

	Sub-total of cash outflows
	(13,418,314.64
	)
	(29,346,226.12
	)
	(87,145,723.63
	)

	Net cash flows used in financing activities
	(13,418,314.64
	)
	(14,346,226.12
	)
	(87,145,723.63
	)

	4. Effect of foreign exchange rate changes on cash  and cash equivalents
	(372,719.56
	)
	(767,188.69
	)
	(415,321.51
	)

	5. Cash and cash equivalents
	

	

	

	

	 

	The beginning balance of cash and cash equivalent
	17,028,827.70
	

	11,677,321.79
	

	31,484,429.58
	


	The ending balance of cash and cash equivalent
	14,526,068.46
	

	17,028,827.70
	

	11,677,321.79
	


	Net increase (used) in cash and cash equivalents
	(2,502,759.24
	)
	5,351,505.91
	

	(19,807,107.79
	)















STATEMENT OF CHANGES IN OWNER'S EQUITY
 (All amounts in Renminbi (“RMB”) Yuan unless otherwise stated)




For year 2017
	
									
	Item
	Paid-in capital
	Surplus reserve
	Undistributed profit
	Total owner’s equity

	 
	 
	 
	 
	 

	1. Balance at 31 December 2016
	4,138,525.00
	

	2,100,000.00
	

	60,620,616.43
	

	66,859,141.43
	


	2. The current decrease amount change (“-” for decrease)
	 
	 
	20,690,132.34
	

	20,690,132.34
	


	(A) Total net income
	 
	 
	35,690,132.34
	

	35,690,132.34
	


	(B) Profit distribution to equity owners or shareholders
	 
	 
	(15,000,000.00
	)
	(15,000,000
	)

	3. Balance at 31 December 2017
	4,138,525.00
	

	2,100,000.00
	

	81,310,748.77
	

	87,549,273.77
	









For year 2018
	
									
	Item
	Paid-in capital
	Surplus reserve
	Undistributed profit
	Total owner’s equity

	 
	 
	 
	 
	 

	1. Balance at 31 December 2017
	4,138,525.00
	

	2,100,000.00
	

	81,310,748.77
	

	87,549,273.77
	


	2. The current decrease amount change (“-” for decrease)
	 
	 
	32,939,257.63
	

	32,939,257.63
	


	(A) Total net income
	 
	 
	47,939,257.63
	

	47,939,257.63
	


	(B) Profit distribution to equity owners or shareholders
	 
	 
	(15,000,000.00
	)
	(15,000,000
	)

	3. Balance at 31 December 2018
	4,138,525.00
	

	2,100,000.00
	

	114,250,006.40
	

	120,488,531.40
	






















NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2018


(All amounts in Renminbi (“RMB”) Yuan unless otherwise stated)




1. COMPANY BACKGROUND AND PRINCIPAL ACTIVITIES
Momentive UV Coatings (Shanghai) Co., Ltd., formally known as Borden UV (Shanghai) Co., Ltd. ("the Company” or "MUV") is a Sino-foreign equity joint venture enterprise between Borden UV Coatings Holdings (Shanghai) Limited and Prime Union Limited. The Company was established on 18 March 2004 with the approval of the Shanghai Municipal Government in Shangwaihuhuiduzizi[2004]0768 and the business license number is 913101157595925826 with the operation period of 30 years. The Company’s registered capital is USD$500,000.00.


The approved Company’s business operation scope includes manufacture and sale of various kinds of UV coatings and provision of related technical consulting services (Comment: extracted from Articles of Associations of the Company.)


In 2007, the Company’s prior shareholder Borden UV Coating Holding (Shanghai) Limited was renamed Hexion Specialty UV Coating (Shanghai) Limited and transferred 0.01% of its shares to Prime Union Limited, and the Company was renamed Hexion UV Coatings (Shanghai) Co., Ltd.. In 2013, based on the approvals of the Company’s Board of Directors and the Pudong District of Shanghai Municipal government, the Company was renamed Momentive UV Coatings (Shanghai) Co., Ltd., and one of the Company’s investors, Hexion Specialty UV Coatings (Shanghai) Ltd., was renamed Momentive Specialty UV Coatings (Shanghai) Limited. In 2016 Momentive Specialty UV Coatings (Shanghai) Limited was renamed Hexion UV Coatings (Shanghai) Limited.




2. PRINCIPAL ACCOUNTING POLICIES
2.1  Accounting standards
The Company adopts accounting principles generally accepted in the United States of America.


2.2  Accounting period
The Company’s accounting year starts on 1 January and ends on 31 December.


2.3  Basis of accounting and measurement bases
The Company follows the accrual method of accounting. Assets are initially recorded at their actual costs and are subsequently adjusted for impairment, if any, as events and circumstances warrant.


2.4  Reporting currency
The recording currency of the Company is RMB Yuan.


2.5  Foreign currency translation
Except for the accounting treatment for paid-in capital, foreign currency transactions are translated into RMB at the exchange rates stipulated by the People’s Bank of China on the first day of the month in which the transactions took place. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into RMB at the stipulated exchange rates by the People’s Bank of China at the balance sheet date. Exchange differences arising from these translations are expensed, except for those which occurred in the pre-operation period, which are recorded as long-term deferred expenses, and those attributable to foreign currency borrowings that have been taken out specifically for the construction of fixed assets, which are capitalized as part of the fixed asset costs.




2.6  Provision for Bad Debt
Full provisions are applied to receivables where events or changes in circumstances indicate that the balances cannot be collected (the debtor is deregistered, bankrupt and the Company can not take back the accounts receivable according to the bankruptcy procedure in law; the debtor is dead, has no heritage to pay or has no haeres; has solid evidence that the accounts receivable aged over three years and can not be taken back). When the bad debt occurs, it is written off through the bad debt provision with the approvals according to the authorized level.















2.7 Inventories
2.7.1 Inventories include materials in transit, raw materials, work in progress, finished goods, low cost consumables and packaging materials.
2.7.2 Inventories are stated at the lower of cost or market.
2.7.3 The inventory issuance cost was determined using the weighted average method.
2.7.4 Low cost consumables are fully amortized when issued for use. 


2.8  Fixed assets and depreciation
2.8.1 Fixed assets include buildings, machinery and equipment used in production or rendering of services, or held for management purposes, which have useful lives of more than one year. 
2.8.2 Fixed assets purchased or constructed by the Company are recorded at actual cost.
2.8.3 Fixed assets are depreciated using the straight-line method to write off the cost of the assets to their residual values of 0% which represents their estimated salvage value over their estimated useful lives. Their estimated useful lives are as follows:
	
			
	Category:
	useful lives (years) :
	Annual depreciation rate (%):

	Machinery 
	10
	10

	Electronic equipment 
	10
	10

	Motor vehicle
	10
	10

	Other equipment
	10
	10






2.9 Long-term prepaid expenses
Long-term prepaid expenses was recorded in actual cost and are amortized on the straight-line basis over the expected beneficial periods and are presented at cost net of accumulated amortization. 


2.10 Sales of goods
		
	     
	Revenue from the sale of goods is recognized when significant risks and rewards of ownership of the goods are transferred to the buyer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and it is probable that the economic benefit associated with the transaction will flow to the Company and the relevant revenue and costs can be measured reliably.




2.11 Enterprise income tax (“EIT”)
EIT is recognized under the liability method (balance sheet approach).


3. Taxations
The Company’s applicable major taxations and rate are as follows:
	
			
	Category:
	Tax base:
	Statutory Tax %:

	Value added tax
	Valuation amount
	17

	EIT
	Taxable income
	25




The actual EIT rate applicable for 2018 was 25%.













4. NOTES TO MAJOR ACCOUNTS IN THE FINANCIAL STATEMENTS
4.1 Cash at bank and in hand
	
													
	Item:
	31 December 2018
	31 December 2017

	Original currency
	Exchange rate
	RMB equivalent
	Original currency
	Exchange rate
	RMB equivalent

	Cash in hand
	 
	 
	16,667.47
	

	 
	 
	20,988.16
	


	RMB
	 
	 
	16,667.47
	

	 
	 
	20,988.16
	


	Cash at bank
	 
	 
	14,509,400.99
	

	 
	 
	17,007,839.54
	


	RMB
	 
	 
	6,136,249.5
	

	 
	 
	13,452,674.3
	


	USD
	1,220,006.92
	

	6.8632
	

	8,373,151.49
	

	544,085.77
	

	6.5342
	

	3,555,165.24
	


	Total
	 
	 
	14,526,068.46
	

	 
	 
	17,028,827.7
	







4.2 Notes Receivable
	
			
	Category:
	31 December 2018
	31 December 2017

	Bank Note
	55,224,664.21
	34,706,282.28




The top major debtors are as follows:
	
				
	No.
	Debtor Name:
	Note Quantity:
	31 December 2018

	1
	Changfei Optical Fiber Co., Ltd.
	22
	24,445,550.95

	2
	Zhong Tian Technology Optical Fiber Co., Ltd.
	8
	19,500,000.00

	3
	Jiangdong science and Technology Co., Ltd.
	8
	7,388,605.26

	4
	Chengdu Zhongzhu Optic fiber Co., Ltd
	5
	2,320,000.00

	5
	Nanjing Fiberhome Fujikura Optical Communication Ltd.
	3
	1,290,284.00

	 
	        Total
	 
	54,944,440.21






	
				
	No.
	Debtor Name:
	Note Quantity:
	31 December 2017

	1
	Zhong Tian Technology Optical Fiber Co., Ltd.
	12
	23,495,820.80

	2
	Changfei Optical Fiber Co., Ltd.
	5
	7,223,975.61

	3
	Jiangdong Science and Technology Co., Ltd.
	3
	3,500,000.00

	4
	Chengdu Zhongzhu Optic fiver Co., Ltd
	1
	260,147.10

	5
	Nanjing Wasin Fujikura Optical Communication Ltd.
	1
	138,338.77

	 
	        Total
	 
	34,618,282.28

















4.3 Accounts Receivable          
	
		
	31 December 2018
	31 December 2017

	100,989,258.28
	82,854,248.92




The top 5 major debtors are as follows:
	
				
	Debtor Name:
	Nature:
	31 December 2018
	%

	Furukawa Japan
	Goods sold
	30,629,544.68
	30.33%

	Changfei Optical Fiber Co., Ltd.
	Goods sold
	14,655,578.09
	14.51%

	Zhong Tian Technology Optical Fiber Co., Ltd.
	Goods sold
	14,178,197.99
	14.04%

	Jiangdong Science and Technology Co., Ltd.
	Goods sold
	13,389,533.28
	13.26%

	OFSLLC
	Goods sold
	10,851,151.58
	10.74%

	Total
	 
	83,704,005.62
	82.88%




There was no receivable from related parties as of 31 December 2018.


	
									
	Aging:
	31 December 2018
	%
	31 December 2017
	%

	Within 1 year
	100,989,258.28
	

	100
	

	82,854,248.92
	

	100
	


	1 to 2 years
	—
	

	—
	

	—
	

	—
	


	Total
	100,989,258.28
	

	100
	

	82,854,248.92
	

	100
	







4.4 Inventory
	
							
	Item:
	31 December 2018
	31 December 2017

	Amount
	Reserve
	Amount
	Reserve

	Raw materials
	14,554,992.07
	

	—
	8,227,171.32
	

	—

	Packing material
	227,275.10
	

	—
	100,480.10
	

	—

	Low valued consumables
	820,299.19
	

	—
	504,684.53
	

	—

	Finished goods
	8,453,630.47
	

	—
	7,012,359.70
	

	—

	Total
	24,056,196.83
	

	—
	15,844,695.65
	

	—






4.5 Fixed Assets and Accumulated Depreciation
Original Cost 
	
									
	Category:
	31 December 2018
	Addition
	Deductions
	31 December 2017

	Machinery
	3,038,046.77
	

	43,706.90
	

	20,374.04
	

	3,014,713.91
	


	Electronic equipment
	977,002.42
	

	35,741.38
	

	4,965.81
	

	946,226.85
	


	Motor Vehicle
	413,071.79
	

	—
	

	—
	

	413,071.79
	


	Other equipment
	2,274,232.20
	

	—
	

	4,658.12
	

	2,278,890.32
	


	Total
	6,702,353.18
	

	79,448.28
	

	29,997.97
	

	6,652,902.87
	


















Accumulated depreciation
	
									
	Category:
	31 December 2018
	Addition 
	Deductions
	31 December 2017

	Machinery
	2,843,242.40
	

	28,644.09
	

	20,374.04
	

	2,834,972.35
	


	Electronic equipment
	910,009.58
	

	62,212.36
	

	4,965.81
	

	852,763.03
	


	Motor Vehicle
	323,771.75
	

	90,865.08
	

	—
	

	232,906.67
	


	Other equipment
	2,212,661.53
	

	32,762.39
	

	4,658.12
	

	2,184,557.26
	


	Total
	6,289,685.26
	

	214,483.92
	

	29,997.97
	

	6,105,199.31
	







4.6 Accounts Payable
	
		
	31 December 2018
	31 December 2017

	43,452,904.69
	34,208,095.93




The top 5 major Creditors are as follows:
	
				
	Creditor Name:
	Nature:
	31 December 2018

	Sartomer Logistics (Shanghai) Co., Ltd.
	Goods Purchased
	14,048,438.27
	


	MIWON.
	Goods Purchased
	7,953,295.78
	


	Tianjin Jiurui Xianghe Trading Company
	Goods Purchased
	7,231,600.00
	


	Zhan Xin Resin
	Goods Purchased
	2,351,997.26
	


	Shanghai Xuan Wan
	Goods Purchased
	1,572,000.00
	


	Total
	 
	33,157,331.31
	







	
				
	Creditor Name:
	Nature:
	31 December 2017

	Sartomer Logistics (Shanghai) Co., Ltd.
	Goods Purchased
	10,409,966.94
	


	MIWON
	Goods Purchased
	10,181,015.43
	


	Shuangjian
	Goods Purchased
	2,747,500.00
	


	Tianjin Jiuruixianghe
	Goods Purchased
	1,781,000.00
	


	Allnex Resins (Shanghai) Co., Ltd. 
	Goods Purchased
	1,485,212.63
	


	Total
	 
	26,604,695.00
	







4.7 Taxes Payable
	
					
	Item:
	31 December 2018
	31 December 2017

	VAT payable
	1,041,322.35
	

	1,389,892.02
	


	EIT payable
	3,903,317.32
	

	1,921,599.59
	


	Individual income tax payable
	232,883.47
	

	277,456.80
	


	City construction tax
	—
	

	13,898.92
	


	Extra charges of education funds 
	—
	

	69,494.60
	


	Total
	5,177,523.14
	

	3,672,341.93
	


















4.8 Other Payables
	
		
	31 December 2018
	31 December 2017

	1,210,510.58
	1,513,164.86






The top 3 major Creditors are as follows:
	
				
	Creditor Name:
	Nature:
	31 December 2018

	Momentive Chemical
	Export commission
	513,497.76
	


	Caribou Specialty Materials
	Technology service charge
	411,792.00
	


	Taiwan Ruihua Polychem
	Export commission
	56,915.76
	







	
				
	Creditor Name:
	Nature:
	31 December 2017

	  Fishand Richardson PC
	Lawyer fee
	1,164,880.98
	


	  Caribou Specialty Materials
	Technology service charge
	294,039.00
	


	TaiWan Polychem
	Market promotion
	52,681.27
	









4.9 Paid-in Capital
	
							
	Investor Name:
	31 December 2018, 2017, 2016
	 

	 
	In USD$
	RMB equivalent
	(%)

	Hexion UV coatings (Shanghai) Limited
	249,950.00
	

	2,068,848.65
	

	49.99%
	


	Prime Union Limited
	250,050.00
	

	2,069,676.35
	

	50.01%
	


	Total
	500,000.00
	

	4,138,525.00
	

	100.00
	%






4.10 Surplus Reserve
	
		
	Item:
	31 December 2018, 2017, 2016

	Reserve fund
	2,100,000.00

	Total
	2,100,000.00






4.11 Retained Earnings
	
							
	Item:
	2018
	2017
	2016

	Retained earnings, beginning
	81,310,748.77
	

	60,620,616.43
	

	96,557,119.09
	


	Add: current year profit
	129,250,006.40
	

	35,690,132.34
	

	60,525,191.14
	


	Less: Profit distribution to equity owners
	15,000,000.00
	

	15,000,000
	

	96,461,693.80
	


	Retained earnings, ending
	195,560,755.17
	

	81,310,748.77
	

	60,620,616.43
	


















4.12 Operation Income / Operation Cost
	
												
	Operation Income for Year 2018
	Operation Income for Year 2017
	Operation Income for Year 2016

	Sales
	Other Operation Income
	Sales
	Other Operation Income
	Sales
	Other Operation Income

	359,147,478.31
	

	1,032.27
	

	344,034,346.69
	

	256.41
	

	334,219,891.26
	

	388.89
	







	
						
	Operation Cost for year 2018
	Operation Cost for year 2017
	Operation Cost for year 2016

	Cost of sales
	Other Operation Cost
	Cost of sales
	Other Operation Cost
	Cost of sales
	Other Operation Cost

	277,961,210.71
	—
	246,795,208.60
	—
	233,818,221.1
	—






4.13 Selling and distribution expenses
	
						
	Year 2018
	Year 2017
	Year 2016

	4,737,243.94
	

	3,311,996.76
	

	4,128,783.69
	





The major items include:
	
							
	Item:
	Year 2018
	Year 2017
	Year 2016

	Transportation
	3,653,589.09
	

	3,148,268.11
	

	2,709,713.24
	


	Market promotion
	130,017.84
	

	(143,252.00
	)
	1,042,392.38
	


	Gas and parking
	128,855.55
	

	88,505.85
	

	111,927.71
	


	Custom inspection
	69,375.58
	

	59,391.23
	

	50,334.64
	


	Office expense
	66,222.93
	

	46,950.82
	

	33,284.66
	







4.14 G&A Expenses
	
						
	Year 2018
	Year 2017
	Year 2016

	13,187,238.71
	

	42,741,332.18
	

	17,416,177.1
	





The major items include:
	
							
	Item
	Year 2018
	Year 2017
	Year 2016

	Consultant fees
	1,246,105.60
	

	32,420,062.21
	

	7,425,998.20
	


	Overseas R & D fee
	5,294,339.45
	

	4,067,513.60
	

	3,466,126.79
	


	Payroll
	4,237,410.84
	

	3,893,449.31
	

	4,010,501.34
	


	Statutory social insurance
	542,525.90
	

	522,638.10
	

	458,919.92
	


	Entertainment expenses
	378,335.98
	

	453,526.00
	

	453,334.71
	


	Office expense
	303,571.99
	

	378,853.77
	

	399,906.96
	


	Taxes
	205,321.90
	

	204,579.96
	

	310,493.10
	







4.15 Financial Expenses
	
							
	Item:
	Year 2018
	Year 2017
	Year 2016

	Interest expense
	657,822.52
	

	884,532.32
	

	455,052.04
	


	Interest income
	(38,411.85
	)
	(41,330.03
	)
	(162,426.65
	)

	Foreign exchange loss (gain) 
	(1,917,266.54
	)
	2,093,345.22
	

	(3,049,485.53
	)

	Bank charges
	54,572.63
	

	28,052.32
	

	61,509.89
	


	Total
	(1,243,283.24
	)
	2,964,599.83
	

	(2,695,350.25
	)

















4.16 Non-operation Income / Non-operation (Expense)
	
								
	 	Item
	Year 2018
	Year 2017
	Year 2016

	 	Net non-operation result
	65,243.83
	

	273,121.29
	

	189,872.88
	


	 	Total non-operation income
	65,243.83
	

	273,121.29
	

	191,919.03
	


	 	1. tax return
	54,916.76
	

	—
	

	122,322.16
	


	 	2. service charge return for tax payment
	—
	

	—
	

	16,423.10
	


	 	3. sponsor
	3,000.00
	

	—
	

	9,000.00
	


	 	4. government subsidies
	—
	

	200,000.00
	

	—
	


	 	5. other
	7,327.07
	

	73,121.29
	

	44,173.77
	


	 	Total non-operation expense
	—
	

	—
	

	(2,046.15
	)

	 





4.17 Cash Flow Information
	
							
	Supplemental Information
	Year 2018
	Year 2017
	Year 2016

	Reconciliation of net profit to cash flows from operating activities
	 
	 
	 

	   Net profit
	47,939,257.63
	

	35,690,132.34
	

	60,525,191.14
	


	Depreciation of tangible assets
	214,483.92
	

	223,654.10
	

	363,104.37
	


	Amortization of long-term prepaid expenses
	270,924.50
	

	230,981.93
	

	90,000.00
	


	Amortization of prepaid expense
	—
	

	4,512.95
	

	(320.95
	)

	Losses on disposal of fixed assets, intangible assets and  other long-term assets
	—
	

	—
	

	(23,398.06
	)

	Finance expenses
	372,719.56
	

	1,651,721.01
	

	415,321.51
	


	Decrease in deferred tax debit
	78,323.30
	

	114,105.68
	

	(201,915.74
	)

	(Increase) Decrease in inventories
	(8,211,501.18
	)
	2,862,576.02
	

	2,158,597.73
	


	(Increase) Decrease in operating receivables
	(38,653,391.29
	)
	(1,082,113.95
	)
	22,091,110.19
	


	Increase in operating payables
	11,061,260.69
	

	(18,635,402.68
	)
	(17,475,008.17
	)

	Others
	(1,581,685.36
	)
	—
	

	—
	


	Net cash flows from operating activities
	11,490,391.77
	

	21,060,167.40
	

	67,942,682.02
	







5. Related party relationships and transactions
5.1 Related party relationships
	
		
	Name:
	Related party relationships

	Hexion UV Coating (Shanghai ) Limited                                                                                            
	Investor

	Prime Union Limited
	Investor






5.2 Transactions
There were no material related party transactions in 2018.

















6. Subsequent event
On October 31, 2016 DSM filed a petition with the International Trade Commission (ITC) to commence an investigation against MUV and its customer OFS for allegedly importing UV curable coatings that infringe four DSM patents.  In response, the ITC commenced an investigation.  On February 6, 2017, the Federal District Court in the Southern District of Ohio stayed the infringement case pending the outcome of the ITC investigation.  On February 15, 2018, the Administrative Law Judge in the ITC investigation issued an Initial Determination recommending that the ITC find many of the claims invalid but also that MUV infringed certain claims in two of DSM’s patents.  As of May 8, 2018, the ITC had found all of the asserted claims of the four DSM patents-in-suit either invalid or not infringed.  On July 9, 2018, DSM filed a Notice of Appeal at the Court of Appeals for the Federal Circuit (“Federal Circuit”) for review of the Commission’s May 8, 2018 Opinion.  Both MUV and OFS moved to intervene.  These motions were granted by the Federal Circuit on July 25, 2018.  On September 27, 2018, DSM filed a motion to extend the time to file its opening brief.  The motion was granted.  On December 21, 2018, DSM filed its Principal Brief.  The responsive briefs of the ITC, MUV and OFS are all due on April 1, 2019.  No other dates have been set.  However, based on the present schedule, DSM’s reply brief would be due on April 15, 2019.  Oral argument should occur approximately ninety days later, (i.e., July 2019).  Unless there is an affirmance without an opinion, a decision should be issued approximately six months later.