Condensed
Parent-Only Financial Statements of Fushi Copperweld, Inc. under Schedule I of
Article 5-04 of Regulation S-X





Restricted Net
Assets





Schedule
I of Article 5-04 of Regulation S-X requires the condensed financial information
of registrant shall be filed when the restricted net assets of consolidated
subsidiaries exceed 25 percent of consolidated net assets as of the end of the
most recently completed fiscal year. For purposes of the above test, restricted
net assets of consolidated subsidiaries shall mean that amount of the
registrant’s proportionate share of net assets of consolidated subsidiaries
(after intercompany eliminations) which as of the end of the most recent fiscal
year may not be transferred to the parent company by subsidiaries in the form of
loans, advances or cash dividends without the consent of a third party (i.e.,
lender, regulatory agency, foreign government, etc.).





The
condensed parent company financial statements have been prepared in accordance
with Rule 12-04, Schedule I of Regulation S-X as the restricted net assets of
the subsidiaries of Fushi Copperweld, Inc. exceed 25% of the consolidated net
assets of Fushi Copperweld, Inc. The ability of our Chinese operating affiliates
to pay dividends may be restricted due to the foreign exchange control policies
and availability of cash balances of the Chinese operating subsidiaries. Because
a significant portion of our operations and revenues are conducted and generated
in China, a significant portion of our revenues being earned and currency
received are denominated in Renminbi (RMB). RMB is subject to the exchange
control regulation in China, and, as a result, we may be unable to distribute
any dividends outside of China due to PRC exchange control regulations that
restrict our ability to convert RMB into US Dollars.





The
condensed parent company financial statements have been prepared using the same
accounting principles and policies described in the notes to the consolidated
financial statements. Refer to the consolidated financial statements and notes
presented in this 10Q filing for additional information and disclosures with
respect to these financial statements.








FUSHI
      COPPERWELD, INC.CONDENSED
      PARENT COMPANY BALANCE SHEETSAS
      OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008ASSETSSeptember
      30,
                                                                      
                                                                      
                                                                      December
      31,2009
                                                                      
                                                                      
                                                                      2008UnauditedCURRENT
      ASSETS:Cash
                                                                      
                                                                      $
                                                                      5,522
                                                                      
                                                                      
                                                                      $
                                                                      30,414Restricted
      cash
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      1,000,000Deposit
      in derivative hedge
                                                                      
                                                                      
                                                                      1,000,000
                                                                      
                                                                      
                                                                      
                                                                      1,000,000Total
      current assets
                                                                      
                                                                      
                                                                      1,005,522
                                                                      
                                                                      
                                                                      
                                                                      2,030,414OTHER
      ASSETS:Investments
      in subsidiaries
                                                                      
                                                                      
                                                                      278,842,423
                                                                      
                                                                      
                                                                      
                                                                      252,761,912Deferred
      loan expense, net
                                                                      
                                                                      
                                                                      2,400,851
                                                                      
                                                                      
                                                                      
                                                                      3,188,344Deferred
      tax assets
                                                                      
                                                                      
                                                                      11,057,111
                                                                      
                                                                      
                                                                      
                                                                      7,804,027Total
      other assets
                                                                      
                                                                      
                                                                      292,300,385
                                                                      
                                                                      
                                                                      
                                                                      263,754,283Total
      assets
                                                                      
                                                                      $
                                                                      293,305,907
                                                                      
                                                                      
                                                                      $
                                                                      265,784,697LIABILITIES
      AND SHAREHOLDERS' EQUITYCURRENT
      LIABILITIES:Notes
      payable, current
                                                                      
                                                                      $
                                                                      10,000,000
                                                                      
                                                                      
                                                                      $
                                                                      5,000,000Other
      payables and accrued liabilities
                                                                      
                                                                      
                                                                      7,237,859
                                                                      
                                                                      
                                                                      
                                                                      3,613,789Extinguished
      convertible note liabilities
                                                                      
                                                                      
                                                                      6,060,000
                                                                      
                                                                      
                                                                      
                                                                      -Cross
      currency hedge payable
                                                                      
                                                                      
                                                                      1,071,557
                                                                      
                                                                      
                                                                      
                                                                      104,324Total
      current liabilities
                                                                      
                                                                      
                                                                      24,369,416
                                                                      
                                                                      
                                                                      
                                                                      8,718,113LONG-TERM  LIABILITIES:Intercompany
      payables
                                                                      
                                                                      
                                                                      15,842,779
                                                                      
                                                                      
                                                                      
                                                                      2,512,023Notes
      payable, non-current
                                                                      
                                                                      
                                                                      25,000,000
                                                                      
                                                                      
                                                                      
                                                                      40,000,000Fair
      value of derivative instrument
                                                                      
                                                                      
                                                                      7,652,664
                                                                      
                                                                      
                                                                      
                                                                      4,377,076Total
      long-term liabilities
                                                                      
                                                                      
                                                                      48,495,443
                                                                      
                                                                      
                                                                      
                                                                      46,889,099Total
      liabilities
                                                                      
                                                                      
                                                                      72,864,859
                                                                      
                                                                      
                                                                      
                                                                      55,607,212COMMITMENTS
      AND CONTINGENCIES
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      
                                                                      7,197,794SHAREHOLDERS'
      EQUITY:Preferred
      stock,$0.001 par value, 5,000,000 shares authorized, none
                                                                        issued
      or outstanding as of September 30, 2009 and December 31,
    2008
                                                                      
                                                                      
                                                                      -
                                                                      
                                                                      
                                                                      
                                                                      -Common
      stock,$0.006  par value, 100,000,000 shares
      authorized,September
      30, 2009: 30,543,716 shares issued and 28,343,716
    outstandingDecember
      31, 2008: 27,499,034 shares issued and 27,399,034
    outstanding
                                                                      
                                                                      
                                                                      170,063
                                                                      
                                                                      
                                                                      
                                                                      164,395Restricted
      common stock in escrow
                                                                      
                                                                      
                                                                      13,200
                                                                      
                                                                      
                                                                      
                                                                      600Additional
      paid in capital
                                                                      
                                                                      
                                                                      105,197,671
                                                                      
                                                                      
                                                                      
                                                                      91,172,889Common
      stock subscription receivable
                                                                      
                                                                      
                                                                      (5,919,597
                                                                      )
                                                                      
                                                                      
                                                                      -Statutory
      reserves
                                                                      
                                                                      
                                                                      14,979,861
                                                                      
                                                                      
                                                                      
                                                                      12,316,147Retained
      earnings
                                                                      
                                                                      
                                                                      88,450,843
                                                                      
                                                                      
                                                                      
                                                                      78,613,158Accumulated
      other comprehensive income
                                                                      
                                                                      
                                                                      17,549,007
                                                                      
                                                                      
                                                                      
                                                                      20,712,502Total
      shareholders' equity
                                                                      
                                                                      
                                                                      220,441,048
                                                                      
                                                                      
                                                                      
                                                                      202,979,691Total
      liabilities and shareholders' equity
                                                                      
                                                                      $
                                                                      293,305,907
                                                                      
                                                                      
                                                                      $
                                                                      265,784,697







FUSHI
      COPPERWELD, INC.CONDENSED
      PARENT COMPANY STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
      (LOSS)FOR
      THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND
2008(UNAUDITED)Three
      months ended September 30,
                                                                  
                                                                  
                                                                  Nine
      months ended September 30,2009
                                                                  
                                                                  
                                                                  2008
                                                                  
                                                                  
                                                                  2009
                                                                  
                                                                  
                                                                  2008OPERATING
      EXPENSESGeneral
      and administrative expenses
                                                                  
                                                                  $
                                                                  600,777
                                                                  
                                                                  
                                                                  $
                                                                  765,766
                                                                  
                                                                  
                                                                  $
                                                                  2,701,597
                                                                  
                                                                  
                                                                  $
                                                                  3,429,862Total
      operating expenses
                                                                  
                                                                  
                                                                  600,777
                                                                  
                                                                  
                                                                  
                                                                  765,766
                                                                  
                                                                  
                                                                  
                                                                  2,701,597
                                                                  
                                                                  
                                                                  
                                                                  3,429,862OTHER
      INCOME (EXPENSE)Interest
      and other expense, net
                                                                  
                                                                  
                                                                  (1,055,023
                                                                  )
                                                                  
                                                                  
                                                                  (1,252,839
                                                                  )
                                                                  
                                                                  
                                                                  (3,859,033
                                                                  )
                                                                  
                                                                  
                                                                  (5,770,730
                                                                  )(Loss)
      gain on derivative instrument
                                                                  
                                                                  
                                                                  (1,199,438
                                                                  )
                                                                  
                                                                  
                                                                  (32,482
                                                                  )
                                                                  
                                                                  
                                                                  (1,581,812
                                                                  )
                                                                  
                                                                  
                                                                  322,708Gain
      on convertible note extinguishment
                                                                  
                                                                  
                                                                  3,842,935
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  3,842,935Change
      in fair value of derivative liabilities
                                                                  
                                                                  
                                                                  (2,058,352
                                                                  )
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  (7,933,312
                                                                  )
                                                                  
                                                                  
                                                                  -Total
      other expense, net
                                                                  
                                                                  
                                                                  (469,878
                                                                  )
                                                                  
                                                                  
                                                                  (1,285,321
                                                                  )
                                                                  
                                                                  
                                                                  (9,531,222
                                                                  )
                                                                  
                                                                  
                                                                  (5,448,022
                                                                  )EQUITY
      INCOME EARNINGS OF SUBSIDIARIES
                                                                  
                                                                  
                                                                  9,377,210
                                                                  
                                                                  
                                                                  
                                                                  10,991,647
                                                                  
                                                                  
                                                                  
                                                                  22,838,284
                                                                  
                                                                  
                                                                  
                                                                  31,480,891INCOME
      BEFORE INCOME TAXES
                                                                  
                                                                  
                                                                  8,306,555
                                                                  
                                                                  
                                                                  
                                                                  8,940,560
                                                                  
                                                                  
                                                                  
                                                                  10,605,465
                                                                  
                                                                  
                                                                  
                                                                  22,603,007BENEFIT
      FOR INCOME TAXES
                                                                  
                                                                  
                                                                  (888,378
                                                                  )
                                                                  
                                                                  
                                                                  (106,390
                                                                  )
                                                                  
                                                                  
                                                                  (3,253,085
                                                                  )
                                                                  
                                                                  
                                                                  (1,295,285
                                                                  )NET
      INCOME
                                                                  
                                                                  
                                                                  9,194,933
                                                                  
                                                                  
                                                                  
                                                                  9,046,950
                                                                  
                                                                  
                                                                  
                                                                  13,858,550
                                                                  
                                                                  
                                                                  
                                                                  23,898,292OTHER
      COMPREHENSIVE INCOMEUnrealized
      gain on marketable securities
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  22,301Foreign
      currency translation adjustment
                                                                  
                                                                  
                                                                  72,136
                                                                  
                                                                  
                                                                  
                                                                  1,899,163
                                                                  
                                                                  
                                                                  
                                                                  112,093
                                                                  
                                                                  
                                                                  
                                                                  14,062,515Change
      in fair value of derivative instrument
                                                                  
                                                                  
                                                                  237,768
                                                                  
                                                                  
                                                                  
                                                                  3,940,908
                                                                  
                                                                  
                                                                  
                                                                  (3,275,588
                                                                  )
                                                                  
                                                                  
                                                                  3,209,403COMPREHENSIVE
      INCOME
                                                                  
                                                                  $
                                                                  9,504,837
                                                                  
                                                                  
                                                                  $
                                                                  14,887,021
                                                                  
                                                                  
                                                                  $
                                                                  10,695,055
                                                                  
                                                                  
                                                                  $
                                                                  41,192,511







FUSHI
      COPPERWELD, INC.CONDENSED
      PARENT COMPANY STATEMENTS OF CASH FLOWSFOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008(UNAUDITED)2009
                                                          
                                                          
                                                          2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                                          
                                                          $
                                                          13,858,550
                                                          
                                                          
                                                          $
                                                          23,898,292Adjustments
      to reconcile net lossused
      in operating activities:Equity
      in earnings of subsidiaries
                                                          
                                                          
                                                          (22,838,284
                                                          )
                                                          
                                                          
                                                          (31,480,891
                                                          )Deferred
      taxes
                                                          
                                                          
                                                          (3,253,085
                                                          )
                                                          
                                                          
                                                          (1,295,286
                                                          )Amortization
      of loan commission
                                                          
                                                          
                                                          787,492
                                                          
                                                          
                                                          
                                                          2,495,899Interest
      penalty
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          710,544Amortization
      of stock compensation expense
                                                          
                                                          
                                                          1,108,254
                                                          
                                                          
                                                          
                                                          1,437,557Loss
      (gain) on derivative instrument
                                                          
                                                          
                                                          1,581,812
                                                          
                                                          
                                                          
                                                          (322,708
                                                          )Gain
      on convertible note extinguishment
                                                          
                                                          
                                                          (3,842,935
                                                          )
                                                          
                                                          
                                                          -Change
      in fair value of derivative liabilities
                                                          
                                                          
                                                          7,933,312
                                                          
                                                          
                                                          
                                                          -Investment
      loss on marketable securities
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          16,158Change
      in operating assets and liabilities:Net
      intercompany payables
                                                          
                                                          
                                                          13,330,755
                                                          
                                                          
                                                          
                                                          4,086,624Other
      payables and accrued liabilities
                                                          
                                                          
                                                          (2,866,051
                                                          )
                                                          
                                                          
                                                          (2,312,830
                                                          )Net
      cash provided by (used in) operating activities
                                                          
                                                          
                                                          5,799,820
                                                          
                                                          
                                                          
                                                          (2,766,641
                                                          )CASH
      FLOWS FROM INVESTING ACTIVITIES:Investment
      in subsidiaries
                                                          
                                                          
                                                          (3,130,132
                                                          )
                                                          
                                                          
                                                          (849,980
                                                          )Proceeds
      from sale of marketable securities
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          2,983,842Deposit
      in derivative hedge
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          (1,000,000
                                                          )Payments
      on derivative instrument
                                                          
                                                          
                                                          (614,580
                                                          )
                                                          
                                                          
                                                          -Proceeds
      from derivative instrument
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          973,556Net
      cash (used in) provided by investing activities
                                                          
                                                          
                                                          (3,744,712
                                                          )
                                                          
                                                          
                                                          2,107,418CASH
      FLOWS FROM FINANCING ACTIVITIES:Release
      of restricted cash
                                                          
                                                          
                                                          1,000,000
                                                          
                                                          
                                                          
                                                          -Payment
      of high yield notes payable
                                                          
                                                          
                                                          (5,000,000
                                                          )
                                                          
                                                          
                                                          -Proceeds
      from exercise of stock warrants
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          139,394Proceeds
      on issuance of common stock and warrants
                                                          
                                                          
                                                          1,920,000
                                                          
                                                          
                                                          
                                                          -Net
      cash (used in) provided by financing activities
                                                          
                                                          
                                                          (2,080,000
                                                          )
                                                          
                                                          
                                                          139,394DECREASE
      IN CASH
                                                          
                                                          
                                                          (24,892
                                                          )
                                                          
                                                          
                                                          (519,829
                                                          )CASH,
      beginning of period
                                                          
                                                          
                                                          30,414
                                                          
                                                          
                                                          
                                                          591,087CASH,
      end of period
                                                          
                                                          $
                                                          5,522
                                                          
                                                          
                                                          $
                                                          71,258SUPPLEMENTAL
      CASH FLOWS DISCLOSURE:Interest
      paid
                                                          
                                                          $
                                                          3,375,092
                                                          
                                                          
                                                          $
                                                          4,233,231