Kasen has taken environmental protection as an integral part of its business. We strive to protect our environment as we grow. We strongly believe that a good company should take on social responsibilities while creating economic benefits.

We believe that going forward our environmental protection systems and facilities are adequate for us to comply with currently applicable national and local environmental protection regulations in China.

We have implemented a pollution control system to control our discharge and to oversee our compliance with Chinese environmental regulations. Our central environmental development department directly administers the operation and management of our environmental protection programs at our various leather processing, manufacturing and water treatment facilities, as well as provides general guidance. Our environmental development department has established a comprehensive set of operational rules, which we require our various subsidiaries to implement.

Zhejiang Kasen was issued a pollutant discharge permit on November 30, 2002 with a term of five years from the date of issuance. In a document dated July 4, 2005 the Haining Environment Protection Bureau is satisfied that Zhejiang Kasen and its subsidiaries in Haining are in compliance with PRC environmental laws and regulations applicable to pollutant discharge. Our PRC legal advisers have advised that the subsidiaries of Zhejiang Kasen have obtained waivers from the obligation to obtain a pollutant discharge permit for their current operation within the business scope indicated in their respective business licenses. Based on the foregoing, our PRC legal advisers have confirmed that Zhejiang Kasen and its subsidiaries are in compliance with PRC environmental laws and regulations regarding waste discharge.