Liuyang completes acquisition of fireworks wholesaler

- Acquisition supports Liuyang's vertical integration strategy -

TORONTO, May 6 /CNW/ - Liuyang Fireworks Limited (TSX-V: FWK) today announced it has entered the wholesale market and launched a new joint venture named Haining Jiale Liuyang Fireworks Co., based in China's Zhejiang province. The joint venture will bring together Liuyang's innovative fireworks products with Haining Jiale's wholesale experience and proximity to Shanghai, China's leading market for firework products. In 2009, Haining Jiale generated revenue of 7 million yuan, approximately CDN $1 million.

"The launch of our joint venture is our most significant achievement to date as a public company and is consistent with our strategy to grow our company through strategic acquisitions," said Mr. Miao Hu, President and CEO of Liuyang Fireworks. "By acquiring our first wholesale license, we have effectively become the most vertically integrated fireworks company in China, combining manufacturing, wholesale and display capabilities. We expect this competitive strength will allow us to capitalize on China's fragmented market and address growing demand for unique fireworks experiences."

Under the terms of the joint venture agreement, Liuyang Fireworks will own 70% of Haining Jiale Liuyang Fireworks Co. The joint venture is expected to have 2 million yuan or approximately CDN $300,000 in registered capital, which will be funded through the working capital of each joint venture member along the ownership structure.

No other terms of the transaction were disclosed. Liuyang expects to acquire up to three wholesale licenses throughout 2010.

About Liuyang Fireworks Limited

Liuyang Fireworks Limited is a leading China-based manufacturer of fireworks that are distributed domestically and in more than 15 countries in North America, South America and Europe. The Company has more than 16 years of experience in the fireworks industry and is a supplier to the world's top five fireworks wholesalers and retailers. Liuyang's ISO9001-certified manufacturing facilities are located in the Liuyang area of Hunan, China where more than half of the world's fireworks are produced.

The forward-looking information contained in this news release represents the expectations of the Company as of the date of this news release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, it does not undertake to update this information at any particular time except as required in accordance with applicable securities legislation.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For further information: Jacky Long, Chief Financial Officer, Liuyang Fireworks Limited, Tel: [phone] ext 206, [email protected]; Joe Racanelli, Investor Relations, The Equicom Group, Tel: [phone] ext 243, Email: [email protected]