We are committed to the safety of our local community and our valued partners and clients. To ensure that our products are in full compliance with the regulations, we have published our Leo Safety Compliance Declaration to reassure our clients of the safety of our products. We are also enhancing our product safety assurance workflow to keep all related parties posted of any updates and new developments.

• As a socially responsible organization that is committed to producing high-quality products, we recognize the importance of product safety. Product safety is our first priority.
• To ensure that the raw materials we use are safe, whether they are manufactured internally or supplied by vendors, we stringently test to make sure that they conform to the two internationally recognized compliance standards – the American Society for Testing and Materials (ASTM) and the EN—71 (European) toy safety standard. These standards include restrictions on both lead content and toxic chemicals.
• We monitor and review the conformity of all raw materials, including but not limited to inks, varnishes, and paper materials on a regular basis. We also purchase components and accessories only from approved and preferred suppliers, who are able to certify that the materials supplied have passed the corresponding safety tests, standards, and/or regulations.

All our approved raw material suppliers are required to submit relevant and valid safety test reports and certificates of compliance for our inspection. We also notified our suppliers that all raw materials provided must be in compliance with both EN71 part 3 and ASTM 963 standards. Internally, we review our incoming material-testing procedures and conduct frequent testing on the various materials used. All these, and other new measures, are audited by our Corporate Planning Department. In addition, we comply with the audit requirements of a number of our worldwide multinational clients.

We therefore continue to pay particular attention to product safety, expending every effort to guarantee that our products will be safe for everyone concerned.

First and foremost, we keep a close eye on all legal requirements as well as the latest industry standards to make sure that we comply with rules and guidelines in every way. According to legislation from the Chinese government, there are two policies that we need to take into consideration.

Policy 1 covers the latest safety regulations in China. Our Customs Department received notice of this new policy on August 8, 2007, from the Guangdong Entry-Exit Inspection and Quarantine Bureau. Under this policy, we are required to provide an updated raw materials safety test report within 12 months. The Bureau has also set up procedures to test sample products for safety at least once every three months.

Under Policy 2 (Notice #671), the Chinese government requires all vendors to apply for an export toys quality license before December 1, 2007, for the export of toy products. As a result, we conducted an internal audit followed by an external audit, by the Guangdong Entry-Exit Inspection and Quarantine Bureau in September 2007. Both audits included laboratory tests and the issuing of certificates of compliance.

We have received our license, although not compulsory, and can provide copies to clients for the successful export of toy products.