Golden Elephant Glass (PINK:GOEG)

On May 6, 2008, our subsidiary Dollar Come Investment Limited entered into a loan agreement with Lin Tan to borrow $5 million at the annual interest rate of 8%. The agreement has a two-year term, and was unsecured and due no later than May 5, 2010. The loan proceeds were used for working capital. Under a July 30, 2008 agreement, $3,260,000 of this loan was paid with payment made to Fuxin Zhonglin Industry Limited and W.T. Construction Inc., both wholly owned by Ms. Tan. An amount of $1,108,343 was offset by advances to Lin Tan during 2009. An additional $146,500 of this loan was offset during the first quarter of 2010. As of July 2011, we owe Lin Tan $485,157 for the principal amount in default and $111,986 for interest incurred thereof. In the fourth quarter of 2010, Lin Tan made an additional loan to us in amount of $1,328,763. This loan bears no interest and will be due on demand. The loan proceeds were used for manufacturing facility constructions.

During the recent global economic crisis, becuase many of our customers operate in industry segments that have been hardest hit by the economic crisis, such as the automotive, construction and home furnishing industries, our performance was consequently suffered. From November 2008, we suspended operations (page20) of our float glass manufacturing operations in order to perform maintenance and system upgrades that eventually would be needed We opted to suspend operations and initiate the maintenance program at a time when pricing and demand for our products was low in order to minimize the adverse effect of suspending operations. Until the amelioration of the economic crisis, particularly in the industry segments in which our targeted customers operate, we expect to continue to experience significant challenges. In response to these challenges, we will continue to implement what we believe to be prudent, cost-saving measures in a judicious and timely fashion. We expect to complete our maintenance program and resume our operations in the second quarter of 2011. There is, however, no assurance that these activities will be successful.