ZHAOHENG HYDROPOWER CO,.LTD.

Zhaoheng Hydropower is committed to providing timely, orderly, consistent, and credible information consistent with legal and regulatory requirements, to ensure full and fair valuation of the company’s securities, maintain access to capital markets, protect the company and its shareholders, and aid in the orderly trading of the company’s securities in the investment markets. The company believes that disclosure should be made broadly, evenly, and fairly on a nonexclusionary basis so that all investors and potential investors have fair and equal access to material information and can make informed and timely judgments on prospects for future company performance.

It is the further intent of this policy to ensure compliance with Nasdaq and SEC rules and regulations, including Regulation Fair Disclosure. Any selective disclosure of material, nonpublic information about the company in violation of Regulation Fair Disclosure or Rule 10b-5 or both is strictly prohibited by this policy.

This policy covers disclosures in documents filed by the company with the SEC and written statements made in the company’s annual and quarterly reports, news and earnings releases and teleconferences, letters to shareholders, speeches and presentations by top management, and information contained in the company’s internet website. It covers oral statements made in meetings with analysts and investors, telephone calls with analysts and investors, speeches and presentations by top management, and interviews with media. It also includes other communication vehicles as deemed necessary to meet the objectives of the policy.

Certain executives of the company – referred to as the Disclosure Policy Committee, consisting of the CEO, president, VP of finance, Director of Investor Relations and Corporate Secretary, or their designated representatives – are responsible for ensuring that the policy guidelines described herein are adhered to by the company. Unless otherwise indicated, the Disclosure Policy Committee refers to two or more individuals from the list named above who may confer from time to time, on an ad hoc basis, as conditions dictate to consider disclosure issues.

The Disclosure Policy Committee is responsible for monitoring conditions of company performance and investment community expectations. The Committee evaluates the need for public release of material nonpublic information. Such evaluations include consideration of the content, confidentiality, and financial impact of the referenced information. The role of the Committee should not be construed as conducting day-to-day public relations or investor relations activities. The Committee will review and update this disclosure policy as needed.

The CEO, president, VP of finance, Director of Investor Relations and Corporate Secretary are the designated spokespersons for the company pertaining to financial results, expectations of future financial performance, or other material news and developments relating to the company. Other individuals may, from time to time, be designated by the Committee to respond to specific inquiries from the investment community or the media concerning these matters.

Officers, senior managers, or other designated spokespersons in the company’s business units, subsidiary operations, and manufacturing facilities are authorized to respond to routine queries from local, trade, and general media, subject to the guidelines established by the Committee.

Employees (other than designated spokespersons) are NOT authorized to respond to inquiries from the investment community or the media unless specifically authorized to do so by a designated spokesperson.

In addition, employees are NOT to communicate verbally, in writing, or via email, internet chat rooms, blogs, or other means about material company information, without authorization from a designated spokesperson.

The Disclosure Policy Committee monitors company results, market conditions, internal projections, and external expectations. When conditions arise that may indicate a duty to disclose or a duty to update the investment (financial) markets, the Committee determines whether such a duty exists.
If such a duty to disclose or update is determined to exist, the company makes full and fair disclosure of the material information through broad, nonexclusionary distribution of such information to the public, which almost always includes a news release and filing with the SEC The Committee determines the timing of such release. When the Committee determines that such developments must remain confidential for a period of time, it ensures that appropriate control of the nonpublic information is maintained.

News releases containing new material information and SEC filings are reviewed and approved by the Committee prior to issuance or filing and are retained as part of the company’s record of disclosures.

Material news releases are transmitted to the investment markets via the Dow Jones and Reuters news services, or other generally accepted disclosure vehicles. The company usually uses PR Newswire or Business News to distribute to Dow Jones, Reuters, and other news services and public media. A copy of the release is also transmitted to Nasdaq for notification prior to release of the news. In the event that a news release also includes a teleconference, as much advance notice as possible of such conference is provided. The company provides equal access to its material disclosures and management presentations through the use of communication technologies and notifications that are available to the public.

Any forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 made in the company’s news releases and SEC filings are accompanied by meaningful cautionary language. In the case of oral presentations or public teleconferences with investors and analysts, a cautionary notice concerning forward-looking statements accompanies the presentation, usually at the beginning of the presentation.

Should the Committee determine a material disclosure has been made in a selective manner, the company will ensure full public disclosure of that information in a timely manner consistent with SEC regulations.

The company’s spokespersons will respond consistently to all market speculations and rumors by saying, “It is the company’s policy not to comment on market speculation or rumors.” It is important that all company spokespersons recognize that a statement to the effect that they are “not aware of any information” or a denial that any development or transaction exists is not the same as and should not be substituted for the prepared “not to comment” statement above. The terse “No comment” statement is also not the same as the correct “policy” statement shown above that is to be used.

Should Nasdaq or other exchanges request that the company make a definitive statement in response to a market rumor, the Disclosure Policy Committee will consider the matter and determine whether to make a policy exception.

The IRO monitors, to the extent practicable, the projections of the security analysts concerning company performance and informs the other members of the Disclosure Policy Committee. Any earnings guidance provided by the company is provided publicly in a manner that ensures broad, nonexclusionary access to the information, consistent with SEC regulations. The company does not review analysts’ reports or earnings models except to correct any inaccuracies relating to public information.

Should the company’s financial results appear likely to fall materially outside the range of published estimates, the Disclosure Policy Committee determines the need for and timing of an update to the market.

The company regards brokerage analyst reports as proprietary information belonging to the analysts’ firms and does not provide such reports to investors nor post them on the company website.

The company may conduct public conference calls with analysts and investors and members of the media (always together as one audience, never separate) coincident with the quarterly earnings news release or at other times as circumstances dictate. Any material information to be discussed during such calls is broadly disseminated via news releases or other acceptable disclosure vehicles prior to or coincident with the commencement of a conference call.

The company, to the extent practicable, gives public advance notice of conference calls, which includes the time and date of the conference call and instructions on how to access the call. All interested parties may participate in or listen to the conference call through either the telephone connection or through an internet webcast. The webcast is maintained on the company’s website for a reasonable period of time following the conference call. Thereafter, the copy of the webcast is moved from the active website to the website’s online archive so that the information of public record remains available, but is accompanied with a cautionary statement that it contains dated information that may no longer be accurate.

As part of a conference call, a copy of prepared remarks (and slides or illustrations if any were used) are posted on the company’s website and also made available to anyone requesting such comments (and slides or illustrations). This information typically is available online at the time of the call’s start.

At the beginning of the call, a company spokesperson, usually the IRO, makes the cautionary safe harbor statement and the statement that forward-looking information may be discussed during the course of the call.

The IRO or his designee, to the extent practicable, accompanies the CEO, VP of finance or other company representatives when speaking with analysts or investors in person or on the telephone. The IRO or his designee is integrally involved in scheduling and developing presentations for meetings and communications with the investment community and the financial media. A copy of presentations made to members of the investment community may be maintained on the company’s website for a reasonable period of time and thereby made broadly available to interested persons.

Designated company spokespersons will continue to conduct meetings, both in person and via telephone, with analysts and investors on an individual or group basis as needed. No company spokesperson will disclose material nonpublic information in those meetings. One-on-one meetings will continue to be an important venue for educating and updating investors and analysts about topics such as strategy, history, mission, goals, values, management philosophy, strengths and depth of leadership, products and services, markets, competitive advantages and disadvantages, and previously disclosed material and nonmaterial information. Normally, the IRO participates in all such discussions, both to provide content and to monitor for and prevent selective disclosure.

Unless specifically restricted by the Disclosure Policy Committee, spokespersons may participate in meetings, presentations, and discussions with analysts and investors during the company’s quiet periods – provided that is made clear to participants that the discussions will not include matters related in any way to the company’s performance in the quarter just ended.

The IRO or his designee is responsible for maintaining the company’s record of public disclosures of material information to the investment community and for monitoring forward-looking statements made by the company to determine if an unintentional selective disclosure is made. In the event of such a disclosure, the Disclosure Policy Committee will act promptly to disclose such information in accordance with SEC regulations.

The IRO and the general counsel (or their designees) are responsible for ensuring that all information in the investor relations section of the company’s external website is monitored to ensure to the extent practicable that it is accurate, complete, up-to-date, and that meaningful cautionary language is included. Any material news or information that is released to the markets or any material changes in information is updated on the company’s external website as soon as practicable. The external and internal websites must be consistent with regard to material information disclosed; material information may not be presented on the internal website and fail to appear on the external website.

Regulation Fair Disclosure does not apply to ordinary-course business disclosures. However, for competitive business reasons and compliance with securities laws, the company is careful to disclose material nonpublic information to outside parties only when there is a valid business need for such disclosure. The SEC has stated that for purposes of Regulation Fair Disclosure, an “express oral agreement” is sufficient and a written agreement is not required. As a matter of general policy, whenever practicable, the company will seek a written confidentiality agreement from the entity or individual involved, to clearly document the understanding. The confidentiality agreement will prohibit the entity’s disclosure of the material nonpublic information and will prohibit the entity’s trading in the company’s stock as long as that material information is not public.

Zhaoheng Hydropower Disclosure Policy