UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark one)

OR

For the fiscal year ended June 30, 2016

OR

OR

OR

Date of event requiring this shell company report: September 19, 2014______________________

Commission File Number: 001-35755

CIS ACQUISITION LTD.Delta Technology Holdings Limited

(Exact name of the Registrant as specified in its charter)

British Virgin Islands

(Jurisdiction of incorporation or organization)

16 Kaifa Avenue

Danyang, Jiangsu, China 212300

(Address of principal executive offices)

Xin Chao

Chief Executives Officer

16 Kaifa Avenue

Danyang, Jiangsu, China 212300

Tel: +86 511-8673-3102

Email: chaoxin77@sina.com

(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)

with a copy to:

Richard Friedman, Esq.

Wei Wang, Esq.

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32^nd Fl.

New York, NY 10006

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None.Not Applicable.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None.Not Applicable.

On September 23, 2014,As of November 11, 2016, the issuer had 7,033,059*9,618,852 ordinary shares outstanding.

*Excluding 1,500,000 Class C Shares in escrow that areoutstanding (including 1,000,000 ordinary shares subject to certain net income targets and after giving effect to the redemption of 3,500,000 Class A Shares.

performance targets).

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes¨          Nox

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes¨           No          No¨x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesx           No¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YesYesx           No¨          Nox

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

¨ Item 17         ¨ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes¨           No          No¨x

TABLE OF CONTENTS

INTRODUCTORY NOTES

Use of Certain Defined Terms

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to:

Our financial statements are expressed in U.S. dollars, which is our reporting currency. Certain of our financial data in this annual report on Form 20-F is translated into U.S. dollars solely for the reader’s convenience. Unless otherwise noted, all translations from Renminbi to U.S. dollars in this annual report on Form 20-F were made at a rate of RMB6.6439 to US$1.00, the average exchange rate for the fiscal year ended June 30, 2016 as set forth atwww.usforex.com. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, at the rate stated above, or at all.

GLOSSARY OF TECHNICAL TERMS

To facilitate a better understanding of our business, the following glossary provides a description of some technical terms and abbreviations used in this annual report. The terms and their assigned meanings may not correspond to standard industry or common meanings or usages of these terms, as the case may be.

FORWARD-LOOKING STATEMENTS

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; and any statements regarding future economic conditions or performance, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. Potential risks and uncertainties include, among other things, the possibility that we may not be able to maintain or increase our net revenues and profits due to our failure to anticipate consumer preferencesmarket demand and develop new menswear products, our failure to execute our business expansion plan, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, uncertainties related to China’s legal system and economic, political and social events in China, a general economic downturn, a downturn in the securities markets, and other risks and uncertainties which are generally set forth under Item 3 “Key information—D. Risk Factors” and elsewhere in this report.

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

PART I

A. Directors and Senior ManagementNot applicable.

Our directors and executive officers immediately following the consummation of the Business Combination are as follows:

Below is a summary of the business experience of each of our executive officers and directors:

Xin Chao has over 10 years of experience in the fine chemical industry. From 1999 to 2000, Mr. Chao worked as a sales manager at Sinopec International Corporation where he was actively involved in international trading matters. From 2000 to 2002, he worked at Lianshui County Zhengxin Chemical Co., Ltd. as the general manager in charge of the entire business operations of the company. Subsequently, in August 2002 and August 2003, Mr. Chao co-founded (i) Danyang Beijiate Materials Trading (“Beijiate Materials”) and (ii) Danyang Beijiate Chemicals Co., Ltd. (“Beijiate Chemicals”) respectively, where he was responsible for the daily operations of both Beijiate Materials and Beijiate Chemicals. Mr. Chao co-found Jiangsu Delta, and he was the general manager of Jiangsu Delta when it was incorporated as a wholly foreign-owned enterprise on 15 June 2007. Mr. Chao subsequently acquired the entire equity interest in Jiangsu Delta from S&S International through Hong Kong Huilong International Investment Limited (formerly known as Hong Kong Zhengxin International Investment Limited) (which was controlled by Mr. Chao) on 13 April 2008. Since its incorporation, Mr.Chao has been actively involved in the operations and management of Jiangsu Delta. Mr. Xin Chao graduated from Nanjing University with a Bachelor’s Degree in International Trading.

Hong Yan has been serving as the chief financial officer of Delta Advanced Materials Limited since May 2011. He is responsible for the preparation of all financial statements as well as for reviewing and developing effective financial policies and control procedures for Delta. From 1997 to 2002, Mr Yan was the Assistant Manager in the Financial Advisory Services Department of KPMG Shanghai, where he was responsible for carrying out statutory audits, rendering an in depth understanding of the International Financial Reporting Standards. From 2002 to 2004, Mr Yan served as the Financial Controller of Hartcourt Companies Inc, where he supervised the company’s accounts department. Hartcourt Companies Inc, which is listed on the US Stock Exchange, distributes computer hardware and peripherals made by Samsung Electronics in Shanghai. From 2004 to 2006, he assumed the position of Vice President of Finance of Sancon Resources Recovery Inc, an environmental service and waste management company that operates recycling facilities in China and Australia, where he was responsible for overseeing the financial and accounting matters of the company, as well as liaising with and reporting to the US Securities and Exchange Commission in relation to compliance issues. Sancon Resources Recovery Inc is also listed on the US Stock Exchange. From 2006 to 2011, Mr Yan served as the managing partner of Shanghai KRC Business Consulting Co., Ltd., a consultancy on audit, tax and advisory services which he co-founded and still co-owns. Mr. Yan graduated with a Bachelor’s Degree in Accounting and a Masters of Business Administration, both from Shanghai Jiao Tong University and is a member of the Chinese Institute of Certified Public Accountants.

Changguang Wu has been with Delta as its Executive Director since 2007 and has been actively involved in the daily operations of Delta since its establishment in 2007. From 1989 to 1992, Mr. Wu was a loan officer of People’s Bank of Danyang City. From 1992 to 2002, he worked as a chief planner at Danyang City Trust and Investment Co., Ltd. Subsequently, in August 2002 and August 2003, Mr. Wu co-founded (i) Danyang Beijiate Materials Trading (“Beijiate Materials”) and (ii) Danyang Beijiate Chemicals Co., Ltd. (“Beijiate Chemicals”) respectively with Mr. Xin Chao, where he was mainly responsible for the management of both Beijiate Materials and Beijiate Chemicals. While he was involved in the management of Beijiate Materials and Beijiate Chemicals, he was also the general manager of Danyang Liansheng Chemicals Co., Ltd. (“Liansheng Chemicals”). He officially left Liansheng Chemicals and joined the Target Group in November 2007. Mr. Wu graduated from Banking School of Jiangsu in 1989 with a diploma in Economic Management.

David Chi-Ping Chow is currently the General Manager for China at Interclients LLC and a partner at Shanghai China Bay Partners. Mr. Chow is a United States Certified Public Accountant and an American Certified Tax Practitioner. He has 27 years of experience in financial planning, corporate internal control and audit, strategic planning and implementation. Mr. Chow previously has worked as the Chief Financial Officer for China at General Mills and Haagen-Dazs, Xian Janssen Pharmaceutical (a subsidiary of Johnson & Johnson group), respectively. He was the Chief Financial Officer for Greater China of Pillsbury and Haagen-Dazs, the Chief Financial Officer for China and Vice-President of Supply Chain for Nabisco. He was a partner of Speakman & Price public accounting firm and a financial analyst of Motorola. Mr. Chow graduated with a Bachelor in Accounting from Santa Clara University, California. He also received management training from Columbia University and Northwestern University.

Richard Liu has over twenty years’ experience in business and legal practice. He is a partner and director of securities investment section of Shanghai Huiye Law Firm since December 12, 2006. He was a legal assistant at Baker& McKenzie’s Shanghai office from May 2004 through October 2006. Prior to that, he was Senior Consultant of Overseas Consulting department, Shanghai Foreign Service Company from June 2001 to April 2004. He received his bachelor’s degree in law from the Art College of Shanghai University.

George Kaufman is a Managing Director of Investment Banking with Chardan Capital Markets, LLC, a New York based investment bank. Mr. Kaufman is a director of Prime Acquisition Corp., a company that owns and operates office, commercial and industrial properties in Italy and is focused on building a portfolio of high-yield assets primarily in Europe. Mr. Kaufman founded Detroit Coffee Company, LLC, a national roaster, wholesaler and retail distributor of high-end specialty coffees, in January 2002 and currently serves as its chief executive officer. Mr. Kaufman received a Bachelor of Arts degree in Economics from the University of Vermont in 1999.

B. Advisors

Forbes Hare acts as the BVI counsel to us. Sichenzia Ross Friedman Ference LLP acts as United States counsel to us.

C. Auditors

From the Company’s inception through the consummation of the Business Combination, Marcum LLP, an independent registered public accounting firm, 750 Third Avenue, New York, NY 10017, has acted as the Company’s independent registered public accounting firm.

A. Offer Statistics

Not applicable.

B. Method and Expected Timetable

A. Selected Financial Data

Selected Financial Data of CIS

The following selected consolidated financial data other than selected operating data, have been derived from CIS’ audited financial statementspresent the results for the yearfive fiscal years ended October 31,and as of June 30, 2016, 2015, 2014, 2013 the period from November 28, 2011 (Inception) to October 31, 2012 and from CIS’ unaudited financial statements2012. Our historical results do not necessarily indicate results expected for the six months ended April 30, 2014.any future periods. The financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America (��U.S. GAAP”).

Selected Financial Data of Delta

Following the Acquisition, Delta is considered to be our predecessor for accounting purposes, as further described in Item 18 of this report. The following table presents selected consolidated financial data regarding Delta’s business. Itbelow should be read in conjunction with itsour consolidated financial statements and related notes contained elsewhere in this report and the information under Item 5 “Operatingthereto, “Item 5. Operating and Financial Review and Prospects.” The selected consolidated statementProspects” below, and the other information contained in this Form 20-F.

Exchange Rate Information

We conduct our business in China and substantially all of income dataour revenues are denominated in Renminbi. However, periodic reports will be expressed in U.S. dollars using the then current exchange rates. This annual report contains translations of Renminbi amounts into U.S. dollars at specified rates solely for the fiscal years ended June 30, 2014, 2013 and 2012,convenience of the reader. No representation is made that the Renminbi amounts referred to in this annual report could have been or could be converted into U.S. dollars at any particular rate or at all. On November 11, 2016, the daily exchange rate reported at wwww.usforex.com was RMB6.8127 to US$1.00.

The following table sets forth information concerning exchange rates between the Renminbi and the selected consolidated balance sheet data as of June 30, 2014, 2013 and 2012 have been derived from Delta’s audited consolidated financial statements that are included in this report in Item 18, beginning on page F-1. Selected financial dataU.S. dollar for the fiscal years ended June 30, 2011 and 2010 below is derived from unaudited financial statements of Delta for the specified periods.periods indicated.

Delta’s consolidated financial statements were prepared and presented in accordance with U.S. GAAP and presented in U.S. dollars. The selected financial data information is only a summary and should be read in conjunction with the historical consolidated financial statements and related notes contained elsewhere herein. The financial statements contained elsewhere fully represent our financial condition and operations; however, they are not indicative of our future performance.

Source: http://www.usforex.com/forex-tools/historical-rate-tools/

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

You should carefully consider the following risk factors in addition to the other information included or incorporated by reference in this report, including matters addressed in the section entitled “Forward-Looking Statements”. We caution you not to place undue reliance on the forward-looking statements contained in this report, which speak only as of the date hereof.

The risks and uncertainties described below include all of the material risks applicable to us; however they are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations or the Business Combination.operations.

Risk Factors RelatingRisks related to DeltaOur Business

Delta isWe are subject to the PRC's environmental protection measures.

Delta’sOur business activities produce certain pollutants such as waste water and waste gas, during the production process. The PRC has in recent years tightened its environmental protection measures to be more in line with steps taken by developed countries.

Under the PRC Environmental Protection Law, any enterprise which discharges pollutants is required to be registered with the relevant PRC governmental departments and to obtain a pollutant discharge permit. Any such enterprise is also required to have waste water, waste gas, solid waste and noise pollution treatment facilities that meet the relevant environmental standards and to have the pollutants treated before discharge. The provincial and municipal governments of provinces, autonomous regions and municipalities may also set their own guidelines for the discharge of pollutants within their own provinces or districts.

On October 20, 2012, Jiangsu Delta obtained the Pollutant Discharge Permit of Zhenjiang issued by the Environment Protection Agency of Dantu District, Zhenjiang City for discharge of the key production wastes, including inter alia, ammonia, nitrogen, toteltotal phosphorus, petroleum waste, benzene, toluene, dimethylbenzene, chlorobenzene, soot, hydrochloric acid, hydrochloric acid, maleic anhydride and sulphursulfur dioxide. Such discharges must be made in compliance with national environmental regulation. The Pollutant Discharge Permit is valid from October 20, 2012May, 2015 to October 19, 2015,May, 2018, after which it will be due for renewal.

Additionally, itsour facilities may be subject to periodic and annual environmental inspections. Penalties may be imposed for the discharge of pollutants that fail to meet relevant environmental standards. The relevant governmental authorities may refuse to issue or renew a pollutant discharge permit if an enterprise fails environmental inspections and in cases of severe violation of environmental standards, are also empowered to shut down any enterprise that causes substantial environmental problems.

There is no assurance that the current PRC environmental protection laws and regulations will not be amended in the future. In June 2012, as the local environmental protection criteria were amended where more stringent standards were introduced by the relevant local authorities, Jiangsu Delta’s production activities were temporarily suspended for approximately 45 days to enhance its waste water treatment facilities in order to meet the revised standards. In July 2012, Jiangsu Delta was certified to have satisfied the new criteria and re-commencedwas allowed to re-commence its operations. If more stringent environmental protection laws and regulations are introduced in the future, incident as such might happen again andJiangsu Delta may again need to cease operations to adapt to any proposed new standards, which we may cause us to utilize significant financial and/or other resources to ensure compliance, which willwould result in an increase in itsour operating costs and have an adverse effect on itsour profitability and prospects.

Furthermore, if Delta iswe are unable to comply with such stringent environmental protection standards, penalties (including fines and/or shutdown of processing facilities) may be imposed on it,us, which in turn may adversely affect itsour financial performance.

Delta dependsWe depend on itsour key personnel for continued success.

Delta believes itsWe believe our success to date can largely be attributed to the contributions, expertise and experience of itsour key management team, which is headed by its Executiveour Chairman and Chief Executive Officer, Xin Chao. He is responsible for identifying business opportunities and implementing overall business strategies to achieve itsour corporate goals.

Delta’sOur key management team also includes Xin Chao, Changguang Wu, Changguang,Jianmin Xia, Jianmin, Ming Chao and Hong Yan.Hongming Dong. The continued success itsof our business is therefore dependent, to a large extent, on itsour ability to retain the services of itsour directors and executive officers. Each of Chao Xin, Wu Changguang and Ming Chao has more than 1315 years of experience in the fine chemical and/or related industries. The loss of the services of itsour key personnel without a suitable and timely replacement, or the inability to attract and retain other qualified personnel, could adversely affect itsour operations and hence, itsour financial results.

Delta isWe are subject to fluctuations in the prices of principal raw materials in itsour operations.

The key components and raw materials used in Delta’sour production and manufacturing processes are Toluene, Chlorine, Benzene, Styrenetoluene, chlorine, benzene, styrene and Phthalic Anhydride, Maleic Anhydride, Propylenephthalic anhydride, maleic anhydride, propylene glycol and Ethyleneethylene diglycol which in aggregate constituted approximately 80%75% of itsour total cost of sales. As these materials constitute key components of itsour manufacturing processes, any fluctuation in the prices of such raw materials which may in turn have an impact on itsour production costs. In line with industry practice, Deltawe do not have long-term supply contracts with itsour suppliers. A shortage of any key raw materials or components could limit itsour production, and is likely to increase the costs of itsour products, thereby depressing the margins for itsour products. Further, although Delta produceswe produce a number of intermediary materials such as MA, PCT and OCT in-house for the production of PCT/OCT downstream products and UPR products, there can be no assurance that Deltawe will be able to continue to do so in a cost-effective manner.

There is no assurance that Deltawe will be able to obtain an adequate supply of key raw materials at competitive prices. Market prices of such raw materials may also be volatile due to factors beyond itsour control, such factors include, inter alia, general economic conditions, changes in the level of global demand and the availability of supply. Any substantial increase in the prices of these raw materials is likely to have a material adverse impact on itsour production costs. In the event of any significant increase in the cost of such raw materials, and should Deltawe be unable to pass on such costs to itsour customers on a timely basis, itsour business, profitability and financial performance will be adversely affected.

Delta isWe are vulnerable to fluctuations in the prices of itsour products.

Delta isWe are subject to fluctuations in demand for itsour products and services due to a variety of factors, including general economic conditions, competition, product obsolescence, shifts in buying patterns, financial difficulties and budget constraints of itsour actual and potential customers and other factors. Some of itsour products may experience great price fluctuation.

While such factors may, in some periods, increase product sales, fluctuations in demand can also negatively impact itsin product sales. If demand for itsour products declines or the prices of itsour products decline because of general economic conditions or for other reasons, itsour revenues and gross margin could be adversely affected.

DeltaWe may be affected by disruptions to itsour processing facilities.

Delta’sOur processing facilities are located at Zhenjiang City, Jiangsu Province, the PRC. The production facilities are subject to operational risks, such as industrial accidents, which could cause personal injury or loss of human life, the breakdown or failure of equipment, power supplies or processes, performance below expected levels of output or efficiency, obsolescence, labor disputes, natural disasters and the need to comply with relevant regulatory and requirements. From time to time, Deltawe may need to carry out planned shutdowns of itsour processing plants for routine maintenance, statutory inspections and testing and may need to shut down various plants for capacity expansions and equipment upgrades. In addition, due to the nature of itsour business, and despite compliance with requisite safety requirements and standards, the production process is still subject to operational risks, including discharges or releases of hazardous substances, exposure to contamination and leakages from other factories and operations in the vicinity. These operational risks may cause personal injury or loss of human life and could result in the imposition of civil and criminal penalties. The occurrence of any of these events could have a material adverse effect on the productivity and profitability of a particular production facility and on itsour business, results of operations and financial condition.

Although Delta haswe have taken precautions to minimize the risk of any significant operational problems at itsour production facilities, there can be no assurance that itsour business, results of operations and financial condition may not be adversely affected by disruptions caused by operational hazards at itsour production facilities, or at other factories and facilities in the vicinity. Moreover, itsour production processes are continuously being modified and updated. As a result of manufacturing process updates and improvements, from time to time, Deltawe may experience shutdowns, and disruptions to the operations.

The occurrence of any of the above events may cause itus to stop or suspend itsour processing operations and Deltawe may not be able to deliver the products to itsour customers on a timely basis, which would have an adverse impact on its business, financial position and profitability.

Delta’sOur insurance coverage may not adequately protect itus against certain operating and other hazards which may have an adverse effect on itsour business.

Delta makesWe make substantial investments in complex manufacturing and production facilities and transportation equipment. Many of the production processes, raw materials and certain finished products are potentially destructive and dangerous in uncontrolled or catastrophic circumstances, including operating hazards, fires and explosions, and natural disasters such as typhoons, floods, earthquakes and major equipment failures for which insurance may not be obtainable at a reasonable cost or at all. Delta maintainsWe maintain insurance policies covering losses due to fire and other calamities. DeltaWe also maintainsmaintain insurance policies for fixed assets, such as vehicles, machineries, facilities and buildings which cover against damage caused by certain accidents and natural disasters. Should an accident or natural disaster occur, it may cause significant property damage, disruption to operations and personal injuries and itsour insurance coverage may be inadequate to cover such loss. Should an uninsured loss or a loss in excess of insured limits occur, Deltawe could suffer from damage to itsour reputation or lose all or a portion of production capacity as well as future revenues anticipated to derive from the relevant facilities. While Delta maintainswe maintain coverage from insurance policies for itsour production facilities which are in line with the industry norms, Deltawe cannot assure you that itsour insurance coverage would be sufficient to cover all itsour potential losses.

Delta’sOur profitability may be affected by a failure to compete effectively in a competitive environment.

Delta operatesWe operate in a highly competitive environment and isare subject to competition from both existing competitors and new market entrants. Rapid technological advances and aggressive pricing strategies by itsour competitors may continue to increase competition. In order to remain competitive, Deltawe must continue to improve itsour materials supply chain, foster production self-sufficiency, upgrade technology and manufacturing process and introduce new products to the market in a timely manner. Delta’sOur ability to do so depends on factors both within and outside of itsour control and may be constrained by the distinct characteristics and production requirements of individual products. There can be no assurance that Deltawe will be able to continue to improve production efficiency and maintain reasonable margins for all of itsour existing products, or that Deltawe will be able to successfully introduce new products that are able to command higher margins. Some of itsour competitors may have superior financial, marketing, manufacturing, research and development and technological resources, greater brand name recognition and larger customer bases than it.

Accordingly, these competitors may have the ability to respond more quickly to new or emerging technologies, adapt more quickly to changes in customer requirements and devote greater resources to the development, promotion and sales of their products and/or services. There is no assurance that Deltawe will be able to continue competing successfully against present and future competitors.

Management of DeltaOur management believes that the important factors to achieving success in itsour industry include maintaining customer loyalty by cultivating long-term customer relationships and maintaining the quality of itsour products and services. If Delta iswe are unable to attain these, Deltawe may lose customers to itsour competitors and this will adversely affect itsour market share. Increased competition may also force itus to lower itsour prices, thus reducing itsour profit margins and affecting itsour financial performance and condition. Such competition may have a material adverse effect on itsour business, financial position and results of operations.

Delta’sOur business may be adversely affected if itsour customers place lower than expected orders.

As is customary in itsour industry, Delta doeswe do not obtain firm and long-term volume purchase commitments from itsour customers. Although Deltawe may from time to time enter into sales agreements with itsour key customers which normally include general terms of sale, specification requirements and pricing policy, such agreements generally do not specify a minimum purchase volume or a specific purchase price. The precise terms for each shipment, such as pricing, product specifications and quantities, are normally confirmed at the time each order is placed.

Accordingly, Delta faceswe face the risk that itsour customers might place lower than expected orders, if at all, or cancel existing plans for orders. Although the customers might be contractually obliged to purchase products on specific terms from itus for particular orders, Deltawe may be unable to or, for other business reasons, choose not to enforce itsour contractual rights if the customers terminate their orders. Cancellations, reductions or instructions to delay production by a significant customer could materially and adversely affect itsour results of operations by reducing itsour sales volume, as well as by possibly causing a delay in the customers’ repayment of itsour expenditures for inventory and resulting in lower utilization of the manufacturing facilities, all of which may result in lower gross margins.

Delta’sOur reputation and business may suffer if Delta failswe fail to manufacture products within the acceptable quality range and optimal production yields.yields, which could cause us to lose customers.

Product quality can be affected by a number of factors, including the level of contaminants in the manufacturing environment, the contamination of raw materials, equipment malfunction, process adjustments made to manufacture new products, interruptions in availability of utilities, deficiencies in quality control and inadequate sample testing. Many of Delta’sour customers require stringent quality requirements in the procurement of their supplies.

Delta hasWe have in place stringent quality control processes as set out in the section “Quality Control” of this repreport and ensure that itsour raw materials, manufacturing systems and processes and products meet the highest standards of quality. If Delta failswe fail to maintain high quality production standards, itsour reputation may suffer and customers may cancel their orders or return their products for replacement, which will materially and adversely affects itsour results of operations and financial condition. In the event we are unable to maintain such stringent quality control, we may be at risk of losing customers.

DeltaWe may be unable to adapt to technological changes and other industry standards.

Delta operatesWe operate in a technologically dependent industry and isare required to quickly adapt to technological changes and industry standards as well as the changing needs of customers. In the event that Delta iswe are unable to keep up with the technological developments and develop new products on time, or if Delta failswe fail to anticipate and adapt to changes in itsour customers’ requirements, itsour current products and technology may face the risk of becoming obsolete and Deltawe would not be able to fully meet itsour customers’ needs. This may then result in a decrease in demand for itsour products and have a negative impact on itsour financial performance.

Delta

We may be exposed to risk of infringement of itsour intellectual property rights.

Delta reliesWe rely primarily on patent, trademark, trade secret, copyright law and other contractual restrictions to protect itsour intellectual property. Nevertheless, these afford only limited protection and the actions Deltawe may take to protect itsour intellectual property rights may not be adequate. Third parties may infringe or misappropriate itsour proprietary technologies or other intellectual property rights, which could have a material adverse effect on itsour business, financial condition, results of operations and prospects. As of the date of this Offer to Purchase, Delta owns fivereport, we own nine patents in the PRC in respect of UPR production and isare in the midst of applying for sevenfour more patents.

Although Delta’sour senior management personnel would, under the relevant PRC laws relating to duties of directors or the terms of their employment contracts, have a general duty of confidentiality, there is no assurance that there will be no unauthorisedunauthorized disclosure of itsour trade secrets or other proprietary information. In the event that there is a leakage of such trade secrets or proprietary information to itsour competitors and other third parties, it may limit itsour ability to maintain itsour competitive edge and to grow itsour business.

Further, as Delta haswe have not yet received patent protection for some of itsour proprietary information, there is no assurance that Deltawe will obtain adequate remedies in the event of an unauthorisedunauthorized disclosure of the proprietary information to itsour competitors or other third parties. Should there be a loss of proprietary information, itsour operations, financial position and prospects may be adversely affected.

DeltaWe may not be able to ensure the successful implementation of itsour future plans and strategies.

As set out in the section entitled “Strategies and Future Plans”, Delta intendsWe intend to inter alia, expand its production capacity and product lines as well as itsand our distribution network. Such initiatives involve various risks including but not limited to the investment costs in establishing a distribution network within the PRC, setting up of new production facilities and offices and working capital requirements. There is no assurance that such future plans can be successfully implemented as the successful execution of such future plans will depend on several factors, some of which are not within itsour control, such as retaining and recruiting qualified and skilled staff, and the continued demand for itsour products by itsour customers. Failure to implement any part of itsour future plans or executing such plan costs effectively, may lead to a material adverse change in itsour operating environment or affect itsour ability to respond to market or industry changes, which may, in turn, adversely affect itsour business and financial results.

Delta isWe are exposed to the credit risks of itsour customers.

Delta’sOur business and financial results are dependent on the credit worthiness of itsour customers and this risk increases with, inter alia, the customer’s proportion of purchases from it. Deltaus. We usually offers itsoffer our customers credit terms of up to 120 days. Although there has not been any material collection problem for trade receivables or any other allowance for doubtful debts during the past three fiscal years, there is no assurance that Deltawe will not encounter bad debt problems in the future. Should Deltawe experience any unexpected delay or difficulty in collections from itsour customers, itsour cash flow and financial results may be adversely affected.

In addition, any deterioration in the financial position of itsour customers may materially affect itsour profits and cash flow as these customers may default on their payments to it. Deltaus. We cannot assure you that such defaults will not increase in the future or that Deltawe will not experience cash flow problems as a result of such defaults. Should these develop into actual events, itsour business and financial results will be adversely affected.

DeltaWe may require additional funding for future growth.

Delta’sOur business and the nature of the industry in which Delta operates maywe operate will require itus to make substantial capital expenditures in terms of both plants, equipment and operations and for research and development capabilities. In particular, Deltawe may expand itsour production capacity in certain of itsour production facilities to cater to the expected increase in demand. These capital expenditures will be spent in advance of any additional sales to be generated by new or upgraded production facilities as a result of these expenditures. There is a risk that Deltawe may in the future incur operating losses if itsour net operating revenue does not adequately recover itsour capital expenditures.

In connection with itsour business strategy, Delta haswe have continued to make regular capital investments and expenditures. Delta expectsWe expect to incur further capital expenditures for FY2015the fiscal year 2017 in connection with the construction and the expansion of production facilities.

The additional funding and capital expenditures is expected to be funded from proceeds from existing cash balances and credit lines, cash inflow from operations and existing and future bank borrowing. However, in the event of adverse market conditions in the future or changes in itsour growth, manufacturing process, product technologies, prices of machinery and equipment or interest rates, itsour actual expenditures may exceed itsour planned expenditures and Deltawe may not have sufficient sources of liquidity to effect the current operational plan and would need to secure additional financing from external sources. Delta’sOur failure to obtain any required financing could impair itsour ability to both serve itsour existing clients base and develop new clients and could result in both a decrease in revenue and an increase in itsour loss.

To the extent that Delta requireswe require financing, itwe would intend to seek funding for itsour capital needs through the issuance of debt, preferred stock, common equity, loan guarantees, or a combination of these types of instruments. DeltaWe may also seek to obtain financing through a private placement or a public offering, a consequence of which could include the sale or issuance of stock to third parties. To the extent additional funding is required, Deltawe cannot assure you that it will be able to get additional financing on any terms acceptable to it,us, and, if it is able to raise funds, it may be necessary for itus to sell itsour securities at a price which is at a significant discount from the market price and on other terms which may be disadvantageous to it.us. In connection with any such financing, Deltawe may be required to provide registration rights to the investors. The price and terms of any financing which would be available to itus could result in the issuance of a significant number of shares. If Delta iswe are required to issue a significant number of shares, stockholders could suffer substantial dilution.

Delta isWe are dependent on itsour “DELTA” brand.

Delta reliesWe rely on itsour “DELTA” brand in the marketing and distribution of itsour products. Delta believesWe believe that it haswe have built significant goodwill in itsour brand in terms of the quality of products and services and it is widely recognized by the fine chemical industry in the PRC. Delta considers itsWe consider our “DELTA” brand to be vital in promoting product recognition and customer loyalty. Hence, if there are any major defects in itsour products or adverse publicity on itsour brand, the goodwill in itsour brand will be adversely affected and itsour customers may lose confidence in itsour products. This will adversely affect itsour sales of products, hence affecting itsour business and financial performance.

In order to protect itsour trademark, Delta haswe have applied to register itsour “DELTA” label as a trademark in the PRC. Delta reliesWe rely on PRC trademark laws but there is no assurance that this means of protecting itsour trademark will be effective or that itsour competitors will not adopt product names or trademarks that are similar to that of ours. Delta isWe are also vulnerable to attempts by third parties to pass off their products as ours by using itsour trademark. Adequate protection of itsour intellectual property is important to itsour business. Although Deltawe may take legal action against those who infringe itsour intellectual property rights, it may need to incur substantial time and resources and there is no assurance that Deltawe will be able to stop or prevent such infringement completely. Unauthorized use of itsour trademarks could adversely affect itsour performance and business reputation. Should such counterfeit products be of inferior quality, the goodwill in itsour brand may be eroded. Hence, itsour business and financial performance will be adversely affected if Delta iswe are unable to protect itsour intellectual property rights effectively.

Defective or non-compliant products may lead to significant liability and exposure to negative publicity which would adversely affect Delta’sour business and profits.

Delta’sOur products are sold mainly to manufacturers. Although Delta haswe have not faced any adverse claims or complaints regarding itsour products to-date,to date, there can be no assurance that itsour products will not cause personal injury or health complications onto users. Further, in the event that itsour products are defective or non-compliant with specifications, Deltawe may be liable to complaints, lawsuits and claims from itsour customers which in turn could generate negative publicity and materially and adversely affect itsour business and financial condition. Any successful product liability claim against itus may adversely affect itsour business and reputation. A product liability claim, even without merit, could result in itus incurring significant expenses and expending substantial time and efforts of itsour management in defending such a claim. Even if Delta iswe are able to successfully defend any such claim, there can be no assurance that itsour customers will not lose confidence in itsour products, thereby affecting itsour business and reputation.

Additional Risk Factors

Defective or non-compliant products may lead to Considersignificant liability exposure as the company does not maintain product liability insurance coverage.

In the event our products are defective or non-compliant with specifications, we may be liable to complaints, lawsuits and claims from our customers, which could result in liability claims. We do not maintain any product liability insurance coverage to offset any such liability and, as a result, any such claims could potentially lead to significant losses in the event of an adverseclaim or complaint concerning our products.

Because Delta’sour contracts are individual purchase orders and not long-term agreements, the results of itsour operations can vary significantly from quarter to quarter.

DeltaWe currently doesdo not have any long-term contracts with itsour customers for itsour products. While Delta doeswe do not depend on any single customer for a significant portion of itsour revenues, there is a risk that existing customers will elect not to do business with itus in the future or will experience financial difficulties. There is also a risk that itsour customers will attempt to impose new or additional requirements on it that reduce the profitability of those customers for us. If Delta doeswe do not develop relationships with new customers, Deltawe may not be able to increase, or even maintain, itsour revenue, and itsour financial condition, results of operations, business and/or prospects may be materially adversely affected.

Our top customer accounts for approximately 20% of our total orders and the loss of our top customer would negatively affect our business.

Our top customer accounts for approximately 20% of our overall business. If we lose our top customer without finding a new customer or customers, this could result in a significant loss of revenue to our business.

Our top supplier accounts for approximately 35% of our total goods required for the products we develop and the loss of this supplier could cause significant disruption in our supply chain and the development of our products.

Our largest supplier accounts for approximately 35% of the total raw materials we require to produce our products. In the event we lose this supplier for any reason, there can be no assurance that there will not be a significant disruption in the supply of raw materials to our business or that we would be able to locate alternative suppliers of materials of comparable quality at an acceptable price, or at all. Identifying a suitable supplier is an involved process that requires us to become satisfied with their quality control, responsiveness and service, financial stability and labor and other ethical practices. Any delays, interruption or increased costs in the supply of materials could have an adverse effect on our ability to meet customer demand for our products and result in lower net revenue and income from operations both in the short and long-term.

Potential claims alleging infringement of third party’s intellectual property by Deltaus could harm itsour ability to compete and result in significant expense to itus and loss of significant rights.

From time to time, third parties may assert patent, copyright, trademark and other intellectual property rights to technologies that are important to Delta’sour business. Any claims that itsour products or processes, whether in relation to the specific circumstances set out above or otherwise, infringe the intellectual property rights of others, regardless of the merit or resolution of such claims, could cause itus to incur significant costs in responding to, defending, and resolving such claims, and may divert the efforts and attention of itsour management and technical personnel away from the business. As a result of such intellectual property infringement claims, Deltawe could be required or otherwise decide it is appropriate to pay third-party infringement claims; discontinue manufacturing, using, or selling particular products subject to infringement claims; discontinue using the technology or processes subject to infringement claims; develop other technology not subject to infringement claims, which could be time-consuming and costly or may not be possible; and/or license technology from the third-party claiming infringement, which license may not be available on commercially reasonable terms. The occurrence of any of the foregoing could result in unexpected expenses or require itus to recognize an impairment of itsour assets, which would reduce the value of the assets and increase expenses. In addition, if Delta alterswe alter or discontinue the production of affected items, itsour revenue could be negatively impacted.

Risks Relating to Doing Business in the PRC

Delta’sOur subsidiaries, main operations and assets are located in the PRC. Shareholders may not be accorded the same rights and protection that would be accorded under the US law. In addition, it would be difficult to enforce a U.S. judgment against itsour PRC subsidiaries and itsour officers and directors.

Delta’sThe Company is a holding company and all of our operations and assets are held in overseas subsidiaries. Our PRC subsidiaries, Jiangsu Delta Jiangsu Zhengxin R&D, Jiangsu Logistic and Binhai Deda were established in the PRC, and their main operations and assets are located in the PRC. Delta’sOur PRC subsidiaries, main operations and assets are therefore subject to the relevant laws and regulations of the PRC. In addition, a majority of itsour officers and directors are non-residents of the U.S.,United States and substantially all their assets are located outside the U.S.United States. As a result, it could be more difficult for investors to effect service of process in the U.S.,United States, or to enforce a judgment obtained in the U.S.United States against any of itsour PRC subsidiaries or any of these persons.

Delta’sOur business is subject to certain PRC laws and regulations.

Delta’sOur business and operations in the PRC are subject to government rules and regulations, including environmental, working safety, road transportation and health regulations. Any changes in such government regulations may have a negative impact on itsour business.

Breaches or non-compliance with these PRC laws and regulations may result in the suspension, withdrawal or termination of itsour business licenses or permits, or the imposition of penalties, by the relevant authorities. Delta’sOur PRC subsidiaries’ business licenceslicenses are also granted for a finite period and any extension thereof is subject to the approval of the relevant authorities. Any suspension, withdrawal, termination or refusal to extend itsour PRC subsidiaries’ business licenses or permits would cause the cessation of production of certain or all of itsour products, and this would adversely affect itsour PRC subsidiaries’ business, financial performance and prospects.

Uncertainty in the PRC legal system may make it difficult for Deltaus to predict the outcome of any disputes that itwe may be involved in.

The PRC legal system is based on the PRC Constitution and is made up of written laws, regulations, circulars and directives. The PRC government is still in the process of developing its legal system, so as to meet the needs of investors and to encourage foreign investment. As the PRC economy is generally developing at a faster pace than its legal system, some degree of uncertainty exists in connection with whether and how existing laws and regulations will apply to certain events or circumstances.

Some of the laws and regulations, and the interpretation, implementation and enforcement thereof, are still subject to policy changes. There is no assurance that the introduction of new laws, changes to existing laws and the interpretation or application thereof or the delays in obtaining approvals from the relevant authorities will not have an adverse impact on Delta’sour PRC subsidiaries’ business, financial performance and prospects.

Further, precedents on the interpretation, implementation and enforcement of the PRC laws and regulations are limited, and unlike other common law countries such as the United States, decisions on precedent cases are not binding on lower courts. As such, the outcome of dispute resolutions may not be consistent or predictable as in the other more developed jurisdictions and it may be difficult to obtain swift or equitable enforcement of the laws in the PRC, or obtain enforcement of judgment by a court of another jurisdiction.

New rules on mergers and acquisitions of domestic enterprise by foreign investors.

In particular, on August 8, 2006, Ministry of Commerce (“MOC”), China Security and Regulatory Commission (“CSRC”), State Administration of Foreign Exchange (“SAFE”) and State Administration for Industry and Commerce of the PRC (“SAIC”), State Administration for Taxation (“SAT”) and National Development and Reform Commission (“NDRC”) promulgated the Provisions on the Mergers and Acquisitions of Domestic Enterprise by Foreign Investors (“M&A Regulations” or “Provision 10”), which came into effect on September 8, 2006 and was revised on June 22, 2009 by MOC. The Provision 10 was supplemented by the Provisions on indirect issuance of securities overseas by a domestic enterprise or overseas listing of its securities for trading issued by CSRC on by the Guidelines on Domestic Enterprises indirectly issuing securities overseas or listing and trading their securities overseas ("CSRC Guidelines") issued by the CSRC on September 21, 2006.

In the opinion of Delta’sour PRC Counsel, Jingtian & Gongcheng, based on its understanding of current PRC laws and regulations, Provision 10 does not apply to each of Jiangsu Delta acquisition by Zhengxin International, Jiangsu Delta acquisition by Delta and Zhengxin R&D acquisition by Jiangsu Delta (collectively the “PRC Acquisitions”), and hence the PRC Acquisitions are not subject to the MOC’s approval.

However, there is no assurance that the relevant Chinese government agency, including the CSRC, would reach the same conclusion as theour PRC Counsel. If the CSRC or any other Chinese regulatory bodies subsequently determine that Delta needswe need to obtain the CSRC approval for theour acquisition of PRC subsidiaries, of Delta, Deltawe may face regulatory actions or other sanctions from the CSRC or other Chinese regulatory bodies. This may have a material adverse impact on Delta’sour business, financial condition, results of operations, remittance of profits as well as the trading prices of itsour shares.

Failure of Delta’sour PRC resident shareholders to comply with regulations on foreign exchange registration of overseas investment by PRC residents could cause itus to lose itsour ability to contribute capital to itsour PRC subsidiaries and remit profits out of the PRC as dividends.

The Notice on Relevant Issues Concerning Foreign Exchange Administration for Domestic Residents to Engage in Overseas Financing and Round Trip Investment via Overseas Special Purpose Vehicles (“Circular 75”), issued by the SAFE and effective on November 1, 2005, regulates the foreign exchange matters in relation to the use of a “special purpose vehicle” by PRC residents to seek offshore equity financing and conduct a “round trip investment” in China. Under Circular 75, a “special purpose vehicle” refers to an offshore entity directly established or indirectly controlled by PRC resident natural or legal persons (“PRC residents”) for the purpose of seeking offshore equity financing using assets or interests owned by such PRC residents in onshore companies, while “round trip investment” refers to the direct investment in China by such PRC residents through the “special purpose vehicles,” including, without limitation, establishing foreign-invested enterprises and using such foreign-invested enterprises to purchase or control onshore assets through contractual arrangements. Circular 75 requires that, before establishing or controlling a “special purpose vehicle”, PRC residents and PRC entities are required to complete a foreign exchange registration with the competent local branches of the SAFE for their overseas investments. After the completion of a round-trip investment or the overseas equity financing, the PRC residents are required to go through foreign exchange registration alteration formalities of overseas investment in respect of net assets of special purpose vehicles that such PRC residents hold and the variation thereof.

In addition, an amendment to the registration is required if there is a material change in the “special purpose vehicle,” such as increase or reduction of share capital and transfer of shares. Failure to comply with the registration procedures set forth in Circular 75 may result in restrictions on the foreign exchange activities of the relevant foreign-invested enterprises, including the payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate and the capital inflow from the offshore parent, and may also subject the relevant PRC residents to penalties under PRC foreign exchange administration regulations.

Delta hasWe have requested itsour current PRC resident shareholders and/or beneficial owners to disclose whether they or their shareholders or beneficial owners fall within the scope of the Circular 75 and urges PRC residents to register with the local SAFE branch as required under the Circular 75. Delta’sOur affiliates subject to the SAFE registration requirements, including Mr. Xin Chao Mr. Hong Yan and Mr. Lei Shen, have informed it that they have made their initial registrations with SAFE dated June 5, 2013. The failure of itsour PRC resident shareholders and/or beneficial owners to timely amend their SAFE registrations pursuant to the Circular 75 or the failure of itsour future shareholders and/or beneficial owners who are PRC residents to comply with the registration requirement set forth in the Circular 75 may subject such shareholders, beneficial owners and/or itsour PRC subsidiaries to fines and legal sanctions. Any such failure may also limit itsour ability to contribute additional capital into itsour PRC subsidiaries, limit itsour PRC subsidiaries’ ability to distribute dividends to itus or otherwise adversely affect itsour business.

The PRC government could restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents itus from obtaining sufficient foreign currency to satisfy itsour currency demands, Deltawe may not be able to pay certain expenses as they come due or may restrict which limit the payment of dividends from the Company.

Delta’sOur results and financial conditions are highly susceptible to changes in the PRC’s political, economic and social conditions as itsour revenue is currently wholly derived from itsour operations in the PRC.

Since 1978, the PRC government has undertaken various reforms of its economic systems. Such reforms have resulted in economic growth for the PRC in the last three decades. However, many of the reforms are unprecedented or experimental, and are expected to be refined and modified from time to time. Other political, economic and social factors may also lead to further readjustment of the reform measures. This refinement and adjustment process may consequently have a material impact on itsour operations in the PRC or a material adverse impact on itsour financial performance. Delta’sOur results and financial condition may be adversely affected by changes in the PRC’s political, economic and social conditions and by changes in policies of the PRC government or changes in laws, regulations or the interpretation or implementation thereof.

Dividends payable to Deltaus by itsour PRC subsidiaries may be subject to PRC withholding taxes, dividends distributed to itsour non-PRC investors and gains realized by itsour non-PRC shareholders from the transfer of its sharesour securities may be subject to PRC withholding taxes under the EITEnterprise Income Tax Law.

The Enterprise Income Tax Law (“EIT LawLaw”) imposes a 10% withholding income tax on dividends generated on or after January 1, 2008 and distributed by a resident enterprise to its foreign investors, if such foreign investors are considered as non-resident enterprises without any establishment or place of business within China or if the received dividends have no connection with such foreign investors’ establishment or place of business within China, unless such foreign investors’ jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. The British Virgin Islands, where Delta iswe are incorporated, does not have such tax treaty with China. According to the Arrangement between Mainland of China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income in August 2006, dividends paid by a foreign invested enterprise, or FIE, to its foreign investors in Hong Kong will be subject to withholding tax at a preferential rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the FIE). The State Administration of Taxation further promulgated a circular, or Circular 601, on October 27, 2009, which provides that tax treaty benefits will be denied to “conduit” or shell companies without business substance and that a beneficial ownership analysis will be used based on a “substance-over-form” principle to determine whether or not to grant the tax treaty benefits. Delta’sOur subsidiaries in China are directly invested in and held by a Hong Kong registered entity. If Delta iswe are regarded as a non-resident enterprise and itsour Hong Kong entity regarded as resident enterprise, then itsour Hong Kong entity may be required to pay a 10% withholding tax on any dividends payable to it. If itsour Hong Kong entity is regarded as non-resident enterprises, then itsour subsidiaries in China will be required to pay a 5% withholding tax for any dividends payable to itsour Hong Kong entities provided that specific conditions are met. However, it is still unclear at this stage whether Circular 601 applies to dividends from itsour PRC subsidiaries paid to itsour Hong Kong subsidiary and if itsour Hong Kong subsidiary were not considered as “beneficial owners” of any dividends from itsour PRC subsidiaries, the dividends payable to itsour Hong Kong subsidiary would be subject to withholding tax at a rate of 10%. In either case, the amount of funds available to it,us, including the payment of dividends to itsour shareholders, could be materially reduced. In addition, because there remains uncertainty regarding the concept of “the place of de facto management body,” if Delta iswe are regarded as a resident enterprise, under the EIT Law, any dividends to be distributed by itus to itsour non-PRC shareholders will be subject to PRC withholding tax. DeltaWe also cannot guarantee that any gains realized by such non-PRC shareholders from the transfer of itsour shares will not be subject to PRC withholding tax. If Delta iswe are required under the EIT Law to withhold PRC income tax on its dividends payable to itsour non-PRC shareholders or any gains realized by itsour non-PRC shareholders from transfer of itsour shares, their investment in itsour shares may be materially and adversely affected.

DeltaWe may be subject to a significant withholding tax should equity transfers by itsour non-resident enterprises be determined to have been done without a reasonable business purpose.

In December 2009, the State Administration of Tax in China issued a circular on strengthening the management of proceeds from equity transfers by non-resident enterprises and requires foreign entities to report indirect sales of resident enterprises. If the existence of the overseas intermediary holding company is disregarded due to lack of reasonable business purpose or substance, gains on such sale are subject to PRC withholding tax. Due to limited guidance and implementation history of the circular, significant judgment is required in determining the existence of a reasonable business purpose by considering multiple factors, such as the form and substance of the arrangement, time of establishment of the foreign entity, relationship between each step of the arrangement, relationship between each component of the arrangement, implementation of the arrangement and the changes in the financial position of all parties involved in the transaction. Although Delta believeswe believe that itsour transactions during all the periods presented would be determined to have reasonable business purposes, should this not be the case, the Companywe would be subject to a significant withholding tax that could materially and adversely impact itsour financial position, results of operations and cash flows.

Uncertainty in the interpretation of PRC tax regulations may have a negative impact on Delta’sour business operations, itsour acquisition or restructuring strategy or the value of itsour investment in it.

Pursuant to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698, issued by the State Administration of Taxation in December 2009, with retroactive effect from January 1, 2008, where a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by disposition of the equity interests of an overseas non-public holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate of less than 12.5% or (ii) does not impose income tax on foreign income of its residents, the non-resident enterprise, being the transferor, must report to the competent tax authority of the PRC resident enterprise this Indirect Transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC withholding tax at a rate of up to 10%. SAT Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.

On March 28, 2011, the State Administration of Taxation released SAT Public Notice (2011) No. 24, or SAT Public Notice 24, to clarify several issues related to Circular 698. SAT Public Notice 24 became effective on April 1, 2011. According to SAT Public Notice 24, the term “effective tax rate” refers to the effective tax rate on the gain derived from disposition of the equity interests of an overseas holding company; and the term “does not impose income tax” refers to the cases where the gain derived from disposition of the equity interests of an overseas holding company is not subject to income tax in the country/region where the overseas holding company is a resident.

There is uncertainty as to the application of SAT Circular 698. For example, while the term “Indirect Transfer” is not clearly defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. Moreover, the relevant authority has not yet promulgated any formal provisions or made any formal declaration as to the process and format for reporting an Indirect Transfer to the competent tax authority of the relevant PRC resident enterprise. In addition, there are no formal declarations with regard to how to determine whether a foreign investor has adopted an abusive arrangement in order to reduce, avoid or defer PRC tax. SAT Circular 698 may be determined by the tax authorities to be applicable to previous investments by non-resident investors in its company, if any of such transactions were determined by the tax authorities to lack reasonable commercial purpose. As a result, Deltawe and itsour existing non-resident investors may be at risk of being taxed under SAT Circular 698 and may be required to expend valuable resources to comply with SAT Circular 698 or to establish that Deltawe should not be taxed under SAT Circular 698, which may have a material adverse effect on itsour financial condition and results of operations or such non-resident investors’ investments in it. Deltaus. We have conducted and may conduct transactions involving itsour corporate structure. DeltaWe cannot assure you that the PRC tax authorities will not, at their discretion, adjust any capital gains and impose tax return filing obligations on itus or require itus to provide assistance for the investigation of PRC tax authorities with respect thereto. Any PRC tax imposed on a transfer of itsour shares or any adjustment of such gains would cause itus to incur additional costs and may have a negative impact on the value of your investment in it.us.

PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent itus from using the proceeds from the offerings of any securities to make loans or additional capital contributions to itsour PRC operating subsidiaries.

As an offshore holding company, itsour ability to make loans or additional capital contributions to itsour PRC operating subsidiaries is subject to PRC regulations and approvals. These regulations and approvals may delay or prevent itus from using the proceeds Deltawe received in the past or will receive in the future from the offerings of securities to make loans or additional capital contributions to itsour PRC operating subsidiaries, and impair itsour ability to fund and expand itsour business which may adversely affect itsour business, financial condition and result of operations.

For example, the SAFE promulgated the Circular on the Relevant Operating Issues concerning Administration Improvement of Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or Circular 142, on August 29, 2008. Under Circular 142, registered capital of a foreign-invested company settled in RMB converted from foreign currencies may only be used within the business scope approved by the applicable governmental authority and may not be used for equity investments in the PRC. In addition, foreign-invested companies may not change how they use such capital without the SAFE’s approval, and may not in any case use such capital to repay RMB loans if they have not used the proceeds of such loans. Furthermore, the SAFE promulgated a circular on November 9, 2010, or Circular 59, which requires the authenticity of settlement of net proceeds from offshore offerings to be closely examined and the net proceeds to be settled in the manner described in the offering documents. In addition, to strengthen Circular 142, on November 9, 2011, the SAFE promulgated the Circular on Further Clarifying and Regulating Relevant Issues Concerning the Administration of Foreign Exchange under Capital Account, or Circular 45, which prohibits a foreign invested company from converting its registered capital in foreign exchange currency into RMB for the purpose of making domestic equity investments, granting entrusted loans, repaying inter-company loans, and repaying bank loans that have been transferred to a third party. Circular 142, Circular 59 and Circular 45 may significantly limit Delta’sour ability to transfer the net proceeds from offerings of itsour securities or any future offering to itsour PRC subsidiaries and convert the net proceeds into RMB, which may adversely affect itsour liquidity and itsour ability to fund and expand itsour business in the PRC.

Currency fluctuations and restrictions on currency exchange may adversely affect Delta’sour business, including limiting itsour ability to convert RMB into foreign currencies and, if RMB were to decline in value, reducing itsour revenues and profits in U.S. dollar terms.

Delta’sOur reporting currency is the U.S. dollar and itsour operations in China use RMB as functional currencies. The majority of itsour revenues derived and expenses incurred are in Chinese RMB with a relatively small amount in U.S. dollars. Delta isWe are subject to the effects of exchange rate fluctuations with respect to any of these currencies. For example, the value of the RMB depends to a large extent on Chinese government policies and China’s domestic and international economic and political developments, as well as supply and demand in the local market. Starting July 2005, the Chinese government changed its policy of pegging the value of the RMB to the U.S. dollar. Under the new policy, the RMB has fluctuated within a narrow and managed band against a basket of certain foreign currencies. It is possible that the Chinese government will adopt a more flexible currency policy, which could result in more significant fluctuations of the RMB against the U.S. dollar.

The income statements of Delta’sour China operations are translated into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currency-denominated transactions results in reduced revenues, operating expenses and net income for itsour non-U.S. operations. Similarly, to the extent the U.S. dollar weakens against foreign currencies, the translation of RMB denominated transactions results in increased revenues, operating expenses and net income for itsour non-U.S. operations. Delta isWe are also exposed to foreign exchange rate fluctuations as Delta convertswe convert the financial statements of itsour non-U.S. subsidiaries into U.S. dollars in consolidation. If there is a change in foreign currency exchange rates, the conversion of the non-U.S. subsidiaries’ financial statements into U.S. dollars will lead to a translation gain or loss which is recorded as a component of other comprehensive income. Delta hasWe have not entered into agreements or purchased instruments to hedge itsour exchange rate risks, although Deltawe may do so in the future. The availability and effectiveness of any hedging transaction may be limited and Deltawe may not be able to successfully hedge itsour exchange rate risks.

Although Chinese governmental policies were introduced in 1996 to allow the convertibility of RMB into foreign currency for current account items, conversion of RMB into foreign exchange for most of the capital items, such as foreign direct investment, loans or securities, requires the approval of the State Administration of Foreign Exchange, or SAFE. These approvals, however, do not guarantee the availability of foreign currency. DeltaWe cannot be sure that Deltawe will be able to obtain all required conversion approvals for itsour operations or that Chinese regulatory authorities will not impose greater restrictions on the convertibility of RMB in the future. Because a significant amount of itsour future revenues may beare in the form of RMB, itsour inability to obtain the requisite approvals or any future restrictions on currency exchanges could limit itsour ability to utilize revenue generated in RMB to fund itsour business activities outside China, or to repay non-RMB-denominated obligations, including itsour debt obligations, which would have a material adverse effect on itsour financial condition and results of operations.

Restrictions on paying dividends or making other payments to Delta bind itsus by our subsidiaries in China.

Delta isWe are a holding company and do not have any assets or conduct any business operations in China other than itsour investments in itsour subsidiaries in China. As a result, if itsour non-China operations require cash from China, Deltawe would depend on dividend payments from itsour subsidiaries in China. DeltaWe cannot make any assurance that itwe can continue to receive payments from itsour subsidiaries in China. In addition, under Chinese law, itsour subsidiaries are only allowed to pay dividends to itus out of their distributable earnings, if any, as determined in accordance with Chinese accounting standards and regulations. Moreover, Delta’sour Chinese subsidiaries are required to set aside at least 10% of their respective after-tax profit each year, if any, to fund certain mandated reserve funds, unless these reserves have reached 50% of their registered capital. These reserve funds are not payable or distributable as cash dividends. For Chinese subsidiaries with after-tax profits for the periods presented, the difference between after-tax profits as calculated under PRC accounting standards and U.S. GAAP relates primarily to share-based compensation expenses and intangible assets amortization expenses, which are not pushed down to itsour subsidiaries under PRC accounting standards. In addition, under the EIT Law and its implementing Rules, dividends generated from itsour PRC subsidiaries after January 1, 2008 and payable to their immediate holding company incorporated in Hong Kong generally will be subject to a withholding tax rate of 10% (unless the PRC tax authorities determine that itsour Hong Kong subsidiary is a resident enterprise). If certain conditions and requirements under the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income entered into between Hong Kong and the PRC and other related PRC laws and regulations are met, the withholding rate could be reduced to 5%.

The Chinese government also imposes controls on the convertibility of RMB into foreign currencies and the remittance of currency out of China in certain cases. Delta hasWe have experienced and may continue to experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency. If Deltawe or any of itsour subsidiaries are unable to receive substantially all of the economic benefits from itsour operations through these contractual or dividend arrangements, Deltawe may be unable to effectively finance itsour operations or pay dividends on itsour ordinary shares.

PRC laws and regulations establish more complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for Deltaus to pursue growth through acquisitions in China.

A number of PRC laws and regulations, including the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors adopted by six PRC regulatory agencies in 2006, or the M&A Rules, the Antimonopoly Law, and the Rules of Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated by the Ministry of Commerce in August 2011, or the Security Review Rules, have established procedures and requirements that are expected to make merger and acquisition activities in China by foreign investors more time consuming and complex. These include requirements in some instances that the Ministry of Commerce be notified in advance of any change of control transaction in which a foreign investor takes control of a PRC domestic enterprise, or that the approval from the Ministry of Commerce be obtained in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies. PRC laws and regulations also require certain merger and acquisition transactions to be subject to merger control review or security review.

The Security Review Rules were formulated to implement the Notice of the General Office of the State Council on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, also known as Circular 6, which was promulgated in 2011. Under these rules, a security review is required for mergers and acquisitions by foreign investors having “national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises have “national security” concerns. In addition, when deciding whether a specific merger or acquisition of a domestic enterprise by foreign investors is subject to the security review, the Ministry of Commerce will look into the substance and actual impact of the transaction. The Security Review Rules further prohibits foreign investors from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions.

There is no requirement for foreign investors in those mergers and acquisitions transactions already completed prior to the promulgation of Circular 6 to submit such transactions to the Ministry of Commerce for security review. As Delta haswe have already obtained the “de facto control” over itsour affiliated PRC entities prior to the effectiveness of these rules, Delta doeswe do not believe Delta iswe are required to submit itsour existing contractual arrangements to the Ministry of Commerce for security review.

However, as these rules are relatively new and there is a lack of clear statutory interpretation on the implementation of the same, there is no assurance that the Ministry of Commerce will not apply these national security review-related rules to the acquisition of equity interest in itsour PRC subsidiaries. If Delta iswe are found to be in violation of the Security Review Rules and other PRC laws and regulations with respect to the merger and acquisition activities in China, or fail to obtain any of the required approvals, the relevant regulatory authorities would have broad discretion in dealing with such violation, including levying fines, confiscating itsour income, revoking itsour PRC subsidiaries’ business or operating licenses, requiring itus to restructure or unwind the relevant ownership structure or operations. Any of these actions could cause significant disruption to itsour business operations and may materially and adversely affect itsour business, financial condition and results of operations. Further, if the business of any target company that Delta planswe plan to acquire falls into the ambit of security review, itwe may not be able to successfully acquire such company either by equity or asset acquisition, capital contribution or through any contractual arrangement. DeltaWe may grow itsour business in part by acquiring other companies operating in itsour industry. Complying with the requirements of the relevant regulations to complete such transactions could be time consuming, and any required approval processes, including approval from the Ministry of Commerce, may delay or inhibit itsour ability to complete such transactions, which could affect itsour ability to expand itsour business or maintain itsour market share.

The PRC Labor Contract Law and its implementing rules may adversely affect itsour business and results of operations.

The PRC Labor Contract Law became effective and was implemented on January 1, 2008. The PRC Labor Contract Law has reinforced the protection for employees who, under the PRC Labor Contract Law, have the right, among others, to have written labor contracts, to enter into labor contracts with no fixed terms under certain circumstances, to receive overtime wages and to terminate or alter terms in labor contracts. Furthermore, the PRC Labor Contract Law establishes additional restrictions and increases the costs involved with dismissing employees. As the PRC Labor Contract Law is relatively new, there remains significant uncertainty as to its interpretation and application by the PRC Government. In the event that Delta decideswe decide to significantly reduce itsour workforce, the PRC Labor Contract Law could adversely affect itsour ability to do so in a timely and cost effective manner, and itsour results of operations could be adversely affected. In addition, for employees whose contracts include non-competition terms, the Labor Contract Law requires itus to pay monthly compensation after such employment is terminated, which will increase itsour operating expenses.

Failure by Delta’sour PRC shareholders or beneficial owners to make required foreign exchange filings and registrations may prevent Deltaus from distributing dividends and expose Deltaus to liabilities under the PRC laws.

The Circular on Relevant Issues concerning Foreign Exchange Administration of Overseas Investment and Financing and Return Investments Conducted by Domestic Residents through Overseas Special Purpose Vehicles (“SAFE Circular No. 37”), which was promulgated by SAFE and became effective on July 14, 2014, requires a PRC individual resident (“PRC Resident”) to register with the local SAFE branch before he or she contributes assets or equity interests in an overseas special purpose vehicle (“Offshore SPV”) that is directly established or controlled by the PRC Resident for the purpose of conducting investment or financing. Following the initial registration, the PRC Resident is also required to register with the local SAFE branch for any major change in respect of the Offshore SPV, including, among other things, any major change of a PRC Resident shareholder, name or term of operation of the Offshore SPV, or any increase or reduction of the Offshore SPV’s registered capital, share transfer or swap, merger or division. Failure to comply with the registration procedures of SAFE Circular No. 37 may result in penalties and sanctions, including the imposition of restrictions on the ability of the Offshore SPV’s PRC subsidiary to distribute dividends to its overseas parent.

Our existing PRC Resident shareholders and beneficial owners of Delta currently are subject to the registration procedures under SAFE Circular No. 37. However, as SAFE Circular No. 37 was recently promulgated, it is unclear how this regulation and any future regulation concerning offshore or cross-border transactions will be interpreted, amended or implemented by the relevant government authorities. It cannot be predicted that how these regulations will affect Delta’sour business operations or future strategies. Any failure by Delta’sour PRC Resident shareholders or beneficial owners to make the updates with SAFE may subject the relevant PRC Resident shareholders or beneficial owners to penalties, restrict Delta’sour overseas or cross-border investment activities, limit Deltaour PRC subsidiaries’ ability to make distributions or pay dividends, or affect itsour ownership structure and capital inflow from itsour offshore subsidiaries. As such, Delta’sour business, financial condition, results of operations and liquidity as well as itsour ability to pay dividends or make other distributions to itsour shareholders may be materially and adversely affected.

We may not be able to adequately protect our intellectual property rights, and any failure to protect our intellectual property rights could adversely affect our revenues and competitive position.

We believe that trademarks, trade secrets, patents, copyrights, and other intellectual property we use are important to our business. We rely on a combination of trademark, copyright, patent and trade secret protection laws in China and other jurisdictions, as well as confidentiality procedures and contractual provisions to protect our intellectual property and our brand. We have invested significant resources to develop our own intellectual property and acquire licenses to use and distribute the intellectual property of others. A failure to maintain or protect these rights could harm our business. In addition, any unauthorized use of our intellectual property by third parties may adversely affect our current and future revenues and our reputation.

The validity, enforceability and scope of protection available under intellectual property laws in the PRC are uncertain and still evolving. Implementation and enforcement of PRC intellectual property-related laws have historically been deficient and ineffective. Accordingly, protection of intellectual property rights in the PRC may not be as effective as in the United States or other western countries. Furthermore, policing unauthorized use of proprietary technology is difficult and expensive, and we may need to resort to litigation to enforce or defend patents issued to us or our other intellectual property or to determine the enforceability, scope and validity of our proprietary rights or those of others. Such litigation and an adverse determination in any such litigation, if any, could result in substantial costs and diversion of resources and management attention.

There are defects in Delta’sour titles of or rights to use itsour properties.

Delta hasWe have not received the record of completion acceptance from the relevant authority for itsour facilities used in itsour production and storage (“Properties”). Delta doesWe do not have valid title or right to the said Properties. Any dispute or claim in relation to the title to the Properties, including any litigation involving allegations of illegal or unauthorized use of the Properties, may materially and adversely affect Delta’sour operations, financial condition, reputation and future growth. However, we are in the process of applying to the relevant authority to obtain the completion acceptance for the Properties.

DeltaOne of our subsidiaries is manufacturing certain products that are beyond its business scope.

Jiangsu Delta has been producing UPR, which is beyond the business scope of Jiangsu Delta. As a result, Jiangsu Delta may be imposed penaltypenalized and, as a result, the business license of Jiangsu Delta may be revoked by relevant authority. However, Jiangsu Delta is applying to relevant authority to enlarge its business scope to include production of UPR. In the event that such approval is not obtained, Jiangsu Delta will have to suspend production of UPR, which might adversely affect theour financial prospect and results of operation of Delta.operation.

DeltaOne of our subsidiaries is conducting certain business that is beyond its approved production capacity.

Jiangsu Delta is producing 30,000 tons of PCT/OCT series and downstream products per annum, which are beyond the approved annual production capacity of 10,000 tons. As a result, Jiangsu Delta might be imposedface a penalty of RMB 500,000 to RMB 1,000,000 by the relevant governmental authority. However, Jiangsu Delta is applyinghas applied to relevant authority to increase Jiangsu Delta’s annual approved production capacity to 30,000 tons. In the event that such application is denied, Jiangsu Delta will have to reduce its actual production under the approved capacity. As a result, Delta’sour production might not keep up with the demand of itsour customers, which may adversely affect Delta’sour revenue and financial conditions.

Risks Relating to CIS’Our Securities

While CIS believesThe market price of our ordinary shares is volatile, leading to the possibility of its value being depressed at a time when you want to sell your holdings.

The market price of our ordinary shares and warrants is volatile, and this volatility may continue. Numerous factors, many of which are beyond our control, may cause the market price of our ordinary shares to fluctuate significantly. These factors include:

Securities class action litigation is often instituted against companies following periods of volatility in their share price. This type of litigation could result in substantial costs to us and divert our management’s attention and resources. Moreover, securities markets may from time to time experience significant price and volume fluctuations for reasons unrelated to operating performance of particular companies. For example, in July 2008, the securities markets in the United States, China and other jurisdictions experienced the largest decline in share prices since September 2001. These market fluctuations may adversely affect the price of our ordinary shares, warrants and other interests in our company at a time when you want to sell your interest in us.

If we fail to comply with the continued listing requirements of NASDAQ, we would face possible delisting, which would result in a limited public market for our shares and make obtaining future debt or equity financing more difficult for us.

Our ordinary shares are traded and listed on the NASDAQ Capital Market under the symbol “DELT” and our warrants are traded and listed on the NASDAQ Capital Market under the symbol “DELTW.” The ordinary shares and warrants may be delisted if we fail to maintain certain listing requirements of the Nasdaq Stock Market, or NASDAQ.

On April 1, 2016, we received a letter from the Listing Qualifications staff of The Nasdaq Stock Market (“NASDAQ”) notifying us that for the preceding 30 consecutive business days our ordinary share did not maintain a minimum closing bid price of at least $1.00 per share as required by Nasdaq Listing Rule 5550(a)(2). We have a grace period of 180 calendar days, or until September 26, 2016, to regain compliance with the minimum closing bid price requirement for continued listing. On July 6, 2016, NASDAQ notified the Company that it has regained compliance since the bid price of the Company’s ordinary shares closed at or above $1.00 per share for the last 10 business days, from June 21, 2016 to July 5, 2016.

If we fail to comply with the requirements for continued listing on The NASDAQ Capital Market again in the future, we cannot assure you that we will be able to regain compliance. If our securities lose their status on The NASDAQ Capital Market, our securities would likely trade in the over-the-counter market. If our securities were to trade on the over-the-counter market, selling our securities could be more difficult because smaller quantities of securities would likely be bought and sold, transactions could be delayed, and security analysts’ coverage of us may be reduced. In addition, in the event our securities are delisted, broker-dealers have certain regulatory burdens imposed upon them, which may discourage broker-dealers from effecting transactions in our securities, further limiting the liquidity of our securities. These factors could result in lower prices and larger spreads in the bid and ask prices for our securities. Such delisting from The NASDAQ Capital Market and continued or further declines in our share price could also greatly impair our ability to raise additional necessary capital through equity or debt financing, and could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or other transactions.

While we believe that we currently hashave adequate internal control procedures in place, CIS iswe are still exposed to potential risks from legislation requiring companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act of 2002.

Under the supervision and with the participation of itsour management, CIS haswe have evaluated itsour internal controls systems in order to allow management to report on the system and process evaluation and testing required in an effort to comply with the management certification and auditor attestation requirements of Section 404. As a result, CIS haswe have incurred additional expenses and a diversion of management’s time.

If CIS failswe fail to maintain effective internal control over financial reporting in the future, a material misstatement of itsour financial statements may not be prevented or detected on a timely basis. In addition, CISwe may not be able to conclude on an ongoing basis that CIS haswe have effective internal control over financial reporting in accordance with Section 404. This could in turn result in the loss of investor confidence in the reliability of itsour financial statements and negatively impact the trading price of itsour shares. Furthermore, if CIS iswe are not able to continue to meet the requirements of Section 404 in a timely manner or with adequate compliance, Deltawe might be subject to sanctions or investigation by regulatory authorities, such as the SEC or the NASDAQ. Any such action could adversely affect itsour financial results and the market price of itsour ordinary shares.shares and warrants.

As a foreign private issuer, CIS haswe have limited reporting requirements under the Securities Exchange Act of 1934, which makes itus less transparent than a United States issuer.

As a foreign private issuer, the rules and regulations under the Exchange Act provide itus with certain exemptions from the reporting obligations of United States issuers. CIS isWe are exempt from the rules prescribing the furnishing and content of proxy statements, and itsour officers, directors and principal stockholders are exempt from the reporting and short-swing profit recovery provisions. Also, CIS iswe are not required to publish financial statements as frequently, as promptly or containing the same information as United States companies. The result is that CISwe will be less transparent than a U.S. issuer.

CISAs a foreign private issuer, we are not subject to certain NASDAQ corporate governance rules applicable to public companies organized in the United States.

We rely on a provision in the NASDAQ Stock Market’s Listed Company Manual that allows us to follow BVI law with regard to certain aspects of corporate governance. This allows us to follow certain corporate governance practices that differ in significant respects from the corporate governance requirements applicable to U.S. companies listed on the NASDAQ Stock Market.

For example, we are exempt from regulations of the NASDAQ Stock Market that require listed companies organized in the United States to:

As a foreign private issuer, we are permitted to follow home country practice in lieu of the above requirements. Accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are subject to these NASDAQ Stock Market requirements.

We are an “emerging growth company” and may not be subject to requirements that other public companies are subject to, which could harm investor confidence in us and our securities.

We are an “emerging growth company” as defined in the Jumpstart Our Business Act of 2012, or the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies, including an exemption from the requirement to comply with the auditor attestation requirements of Section 404 and an exemption from the requirement to adopt and comply with new or revised accounting standards at the same time as other public companies. We will remain an emerging growth company until the earliest of (a) the last day of our fiscal year during which we have total annual gross revenues of at least US$1.0 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering; (c) the date on which we have, during the previous three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which would occur if the market value of our ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter.

The JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we will elect to “opt out” of this provision and, as a result, we will comply with any new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

If some investors find our securities less attractive because we may rely on these exemptions, there may be a less active trading market for our securities and their price may be more volatile.

We may be classified as a passive foreign investment company for United States federal income tax purposes, which could result in adverse United States federal income tax consequences to U.S. Holders.

Based on the market price of itsour ordinary shares, the value of itsour assets, and the composition of itsour assets and income, CIS doeswe do not believe that it waswe were a passive foreign investment company (a “PFIC”) for United States federal income tax purposes for itsour taxable year ended June 30, 20142016 and CIS doeswe do not expect to be one for itsour taxable year ending June 30, 20152017 or to become one in the foreseeable future. Nevertheless, the application of the PFIC rules is subject to ambiguity in several respects and, in addition, CISwe must make a separate determination each year as to whether CIS iswe are a PFIC (after the close of each taxable year). Accordingly, CISwe cannot assure you that CISwe will not be a PFIC for the current or any other taxable year. Moreover, although we do not believe we would be treated as a PFIC, we have not engaged any U.S. tax advisers to determine our PFIC status. In addition, if you owned our ordinary shares at any time prior to our acquisition of Elite, you may be considered to own stock of a PFIC by virtue of the fact that we may have been a PFIC during the period prior to our acquisition of Elite, unless you made certain elections to opt out of PFIC treatment, as described in Item 10. E. – “Taxation – U.S. Federal Income Taxation.”

A non-United States corporation, such as its company,us, will be classified as a PFIC for United States federal income tax purposes for any taxable year, if either (1) 75% or more of its gross income for such year consists of certain types of “passive” income, or (2) 50% or more of its average quarterly assets as determined on the basis of fair market value during such year produce or are held for the production of passive income. Because there are uncertainties in the application of the relevant rules and PFIC status is a fact-intensive determination made on an annual basis, no assurance can be given with respect to itsour PFIC status for the current or any other taxable year.

If CIS iswe are characterized as a PFIC for any year, a U.S. holder may incur significantly increased United States income tax on gain recognized on the sale or other disposition of itsour ordinary shares and on the receipt of distributions on its notes orour ordinary shares to the extent such gain or distribution is treated as an “excess distribution” under the United States federal income tax rules.

CIS did not obtain a fairness opinion from an independent investment banking firm as to the fair market value of Delta.

The fair market value of Delta was determined by its board of directors based upon an analysis conducted by them (which may include an analysis of actual and potential sales, earnings, cash flow and/or book value), and CIS did not obtain an opinion from an unaffiliated, independent investment banking firm. CIS’s shareholders must, therefore, rely solely on the judgment of its board of directors with respect to the determination of the fair market value of its initial acquisition transaction.

CIS hasWe have outstanding exercisable securities that may dilute your holdings.

CIS’sOur outstanding exercisable securities may adversely affect the market price of itsour shares.

As of the date of this report, we have issued and outstanding securities exercisable into 9,060,0006,735,570 ordinary shares (warrants for the purchase of 8,500,0006,175,570 shares and a unit purchase option for 280,000 shares and warrants to purchase 280,000 shares). The sale or possibility of sale of the shares underlying these securities could have an adverse effect on the market price for its securities or its ability to obtain future financing. If and to the extent these securities are converted or exercised, you may experience dilution to your holdings.

We have outstanding a dividend payable of $35,000,000, the payment of which would be given preference ahead of our ordinary shareholders in the event of liquidation.

We presently have an outstanding dividend payable of $35,000,000. On September 13, 2014, the directors of Delta approved a resolution for a cash dividends distribution of $35,000,000. According to the resolution, the dividends are to be distributed to Mr. Yan Hong, Mr. Shen Lei and Mr. Chao Xin (together, the “Dividend Recipients”) in accordance with their respective percentage shareholdings in Delta as follows: (i) $392,000 to Mr. Yan Hong; (ii) $392,000 to Mr. Shen Lei; and (iii) $34,216,000 to Mr. Chao Xin. As at June 30, 2016, the dividends were not paid.

One ofCIS’s ourstockholders holds a significant percentage of itsour outstanding voting securities.

Mr. Xin Chao, who is our Chief Executive Officer and Chairman of the Board, directly or indirectly owns approximately 34.27%25% of our outstanding voting securities. As a result, he possesses significant influence, giving him the ability, among other things, to elect a majority of its Board of Directors and to authorize or prevent proposed significant corporate transactions. His ownership and control may also have the effect of delaying or preventing a future change in control, impeding a merger, consolidation, takeover or other business combination or discourage a potential acquirer from making a tender offer, all of which may prevent it from implementing its business strategies.

Additional Risk factorsRelating to ConsiderBritish Virgin Islands

Rights of shareholders under British Virgin Islands law differ from those under United States law, and, accordingly, CIS’sour shareholders may have fewer protections.

CIS’sOur corporate affairs are governed by itsour Memorandum and Articles of Association, the BVI Business Companies Act, 2004 (as amended, the “BVI Act”) and the common law of the British Virgin Islands. The rights of shareholders to take legal action against itsour directors, actions by minority shareholders and the fiduciary responsibilities of itsour directors under British Virgin Islands law are to a large extent governed by the common law of the British Virgin Islands and by the BVI Act. The common law of the British Virgin Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the British Virgin Islands. The rights of itsour shareholders and the fiduciary responsibilities of itsour directors under British Virgin Islands law are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, the British Virgin Islands has a less developed body of securities laws as compared to the United States, and some states (such as Delaware) have more fully developed and judicially interpreted bodies of corporate law. As a result of the foregoing, holders of itsour ordinary shares may have more difficulty in protecting their interests through actions against itsour management, directors or major shareholders than they would as shareholders of a U.S. company.

The laws of the British Virgin Islands provide limited protection for minority shareholders, so minority shareholders will have limited or no recourse if they are dissatisfied with the conduct of CIS’sour affairs.

Under the laws of the British Virgin Islands, there is limited statutory law for the protection of minority shareholders other than the provisions of the BVI Act dealing with shareholder. The principal protection under statutory law is that shareholders may bring an action to enforce the constituent documents of a British Virgin Islands company and are entitled to have the affairs of the company conducted in accordance with the BVI Act and the memorandum and articles of association of the company. As such, if those who control the company have persistently disregarded the requirements of the BVI Act or the provisions of the company’s memorandum and articles of association, then the courts will likely grant relief. Generally, the areas in which the courts will intervene are the following: (i) an act complained of which is outside the scope of the authorized business or is illegal or not capable of ratification by the majority; (ii) acts that constitute fraud on the minority where the wrongdoers control the company; (iii) acts that infringe on the personal rights of the shareholders, such as the right to vote; and (iv) acts where the company has not complied with provisions requiring approval of a special or extraordinary majority of shareholders, which are more limited than the rights afforded to minority shareholders under the laws of many states in the United States.

It may be difficult to enforce judgments against CISus or itsour executive officers and directors in jurisdictions outside the United States.

Under itsour Memorandum and Articles of Association, CISas amended, we may indemnify and hold itsour directors harmless against all claims and suits brought against them, subject to limited exceptions. Furthermore, to the extent allowed by law, the rights and obligations among or between it,us, any of itsour current or former directors, officers and employees and any current or former shareholder will be governed exclusively by the laws of the British Virgin Islands and subject to the jurisdiction of the British Virgin Islands courts, unless those rights or obligations do not relate to or arise out of their capacities as such. Although there is doubt as to whether United States courts would enforce these provisions in an action brought in the United States under United States securities laws, these provisions could make judgments obtained outside of the British Virgin Islands more difficult to enforce against itsour assets in the British Virgin Islands or jurisdictions that would apply British Virgin Islands law.

British Virgin Islands companies may not be able to initiate shareholder derivative actions, thereby depriving shareholders of one avenue to protect their interests.

British Virgin Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect of any such action, may result in the rights of shareholders of a British Virgin Islands company being more limited than those of shareholders of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred. The British Virgin Islands courts are also unlikely to recognize or enforce judgments of courts in the United States based on certain liability provisions of United States securities law or to impose liabilities, in original actions brought in the British Virgin Islands, based on certain liability provisions of the United States securities laws that are penal in nature. There is no statutory recognition in the British Virgin Islands of judgments obtained in the United States, although the courts of the British Virgin Islands will generally recognize and enforce the non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. This means that even if shareholders were to sue CISthe Company successfully, they may not be able to recover anything to make up for the losses suffered.

A. History and Development of the Company

CIS wasWe were formed under the name of “CIS Acquisitions Ltd.” on November 28, 2011, under the laws of the British Virgin Islands. We were formed to acquire, through a merger, stock exchange, asset acquisition, stock purchase or similar acquisition transaction, one or more operating businesses. Although we were not limited to a particular geographic region or industry, we intended to focus on operating businesses with primary operations in Russia and Eastern Europe. We had no operations and generated no operating revenues until we completed the acquisition of Elite as more fully discussed below.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act.

Initial Public Offering

On December 21, 2012, we consummated our IPOinitial public offering of 4,000,000 units was consummated at a public offering price of $10.00 per unit, generating gross proceeds of $40,000,000. Each unit consistsconsisted of one callableredeemable Class A Share, par value $0.0001 per share, and one redeemable warrant. Each redeemable warrant included in the units entitlesentitled the holder to purchase one ordinary share at a price of $10.00. Immediately prior to the consummation of the IPO, we completed a private placement of 4,500,000 warrants at a price of $0.75 per warrant, for an aggregate purchase price of $3,375,000, to our founding shareholders and their designees. We sold to the underwriters of the IPO, as additional compensation, an aggregate of 136,000 Class A Shares for $2,720.

A total of $41,600,000, which includesincluded a portion of the $3,375,000 of proceeds from the private placement of warrants to the founding shareholders and their designees, has beenwere placed in trust (the “Trust Account”) pending the completion of our initial acquisition transaction. On March 18, 2012, the ordinary shares and warrants underlying the units sold in the IPO began to trade separately.

Acquisition of Elite

On September 19, 2014, upon closing of a stock purchase agreement dated September 16, 2014, a Stock Purchase Agreement (the “Purchase Agreement”) was entered into by and among CIS,the Company, Elite Ride Limited, a British Virgin Islands corporation (“Elite”), Delta Advanced Materials Limited, a Hong Kong corporation (“Delta”) and the shareholders of Elite (the “Elite Shareholders”).

Acquisition of Elite

Upon the closing of the transaction pursuant to the Purchase Agreement, CIS, we acquired all of the shares held by the shareholders of Elite (the “Acquisition”). Pursuant to the Purchase Agreement, all holders of shares of Elite exchanged their shares of Elite for shares of CIS as more fully described below. As a result, following the Acquisition, the Delta Companies became wholly-owned subsidiaries of CIS.

Acquisition Consideration

The Elite Shareholders of all of the outstanding shares of Elite (the “Elite Shares”) immediately prior to or atin exchange for the time of closing sold, conveyed, transferred, assigned each of their Elite Shares to CIS which issuedissuance to the Elite Shareholders an aggregate of 6,060,000 ordinary shares, of CIS, par value $0.0001 per share (“CIS Common Stock”) as payment for the Elite Shares (the “Purchase Price”). The Purchase Price was paid as follows: (i)which 4,560,000 shares of CIS Common Stock waswere issued at closing; plus (ii) an additionalclosing and 1,500,000 shares of CIS Common Stock was issued and placed(“Earnout Payment Shares”) are held in escrow pursuant to an Escrow Agreement and shallwill be released based upon the meeting of certain net income performance targets as specified in the Purchase Agreement and summarized belowstock purchase agreement (the “Earnout“Acquisition”). Thus far, we have released 500,000 of the Earnout Payment Shares”).Shares as a result of Delta meeting its performance targets for the fiscal year ending June 30, 2015.

The Earnout Payment Shares, if any, will be issuedreleased as follows: (a) 500,000 shares shall be issued if the Company achieves Adjusted Net Income (as defined in the stock purchase agreement) of at least $8 million for the period starting July 1, 2014 and ending June 30, 2015; (b) 500,000 shares shall be issued if the Company achieves Adjusted Net Income of at least $9.2 million for the period starting July 1, 2015 and ending June 30, 2016; (c) 500,000 shares shall be issued if the Company achieves Adjusted Net Income of at least $10.6 million for the period starting July 1, 2016 and ending June 30, 2017 (collectively, the “Net Income Targets”). Further, during the thirteen (13) months post-closing, all material acquisitions made by the Company must be accretive to Company earnings. A “material acquisition” is an acquisition that would, when comparing the most recent annual financial statements of each company, result in a change of 5% or more to the Company’s revenue, net income, total liabilities or total assets. To be “accretive”, an acquisition must be acquired at a P/E ratio that is at a 20% discount to the P/E ratio at which the Company is trading (based on the last sales price) on the day prior to the date that the definitive agreement for the acquisition is signed. The Net Income Targets are to be met on an all-or-nothing basis, and there shall be no partial awards.

Concurrently with the Acquisition, CISwe also issued 500,000 ordinary shares of CIS Common Stock to Kyle Shostak and CIS Acquisition Holding Co. Ltd. (collectively, the “CIS Sponsor”), proportionally in accordance with their ownership in CIS.

Value Rachet

If the 10 trading day volume weighted average price of the CIS Common Stock (the “VWAP”) is lower than $5.00 per share on the principal stock exchange on which such stock is traded on the earlier to occur of (i) the 395th day after the closing and (ii) the 30th day after the SEC declares a registration statement filed by CIS effective during the first 12 months after the closing,  then CIS will issue the CIS Sponsor, proportionally in accordance with their respective share ownership in CIS, an additional number of shares of CIS Common Stock equal to  (i) (a) $5.00 minus the VWAP, divided by the VWAP, multiplied by (ii) the lesser of (a) 1,500,000 and (b) the total number of shares of CIS Common Stock owned by CIS Sponsor on such date. The total number of CIS Common Stock will be reduced by the number of shares CIS Sponsor sells during 13 months post-closing.

Arrangement with Respect to Proceeds of CIS’ Public Warrants and CIS Sponsor Warrants.

CIS hasWe have agreed that in the event that there is any exercise of CIS Public Warrantsthe redeemable warrants which were issued in CIS’ initial public offeringthe IPO or the warrants to purchase CIS Common Stockordinary shares issued to any CIS Sponsor, any proceeds of such exercise shall be paid to certain shareholders of Elite. CISWe will not retain any portion of the proceeds of such exercise.

Call Agreement

CIS and the CIS Sponsor agreed to enterIn addition, we entered into a Call Agreement (the “Call Agreement”) mutually acceptable to CIS, Elite andcall agreement with the CIS Sponsor pursuant to which we were permitted to require the CIS shall be permitted,Sponsor to sell to us up to 1,500,000 ordinary shares at a price of $5.00 per share between the 360^th and 390^th after the closing date. To date, to require the CIS Sponsor to sell to it, at a price of $5.00 per share, up to 1,500,000 shares of CIS Common Stock.

Amendment to CIS Placement WarrantsCompany has not exercised its call options under this agreement.

In connection with the Acquisition, the CIS Sponsorwe amended the 4,500,000 CIS Placement Warrantswarrants owned by the CIS Sponsor to provide that such warrants may be redeemed in the event CIS Common Stock tradesour ordinary shares trade at a price of $17.50 per share for a period of ten (10) consecutive trading days and that such warrants may not be exercised on a cashless basis.

Representations; Covenants

Immediately after the Closing, theclosing, our Board of Directors of CIS consisted of five (5) directors, composed of four (4) nominees designated by Elite, of which at least two (2)one designees shall qualifyqualified as an independent director under the Exchange Act of 1934, as amended (the “Exchange Act”), and the rules of The NASDAQ Stock Market, if applicable, and one (1) nominee designated by CIS, who shall qualifyus qualified as an independent director under the Exchange Act, and the rules of The NASDAQ Stock Market, if applicable.Market. The parties to the Purchase Agreementstock purchase agreement entered into a mutually agreed upon voting agreement relating to nominees to theour Board of Directors of CIS for a period of thirteen (13) months following the closing (the “Voting Agreement”).

Registration Rightsclosing.

CISWe entered into a Registration Rights Agreementregistration rights agreement with the CIS Sponsor and any other such parties with the rights to require CISus to register any securities of CISour securities held by such parties under the Securities Act of 1933, as amended, to terminate suchtheir demand registration rights and grant such parties piggyback registration rights.

No Tender Offer

Due to the short amount of time available before September 21, 2014, CISwe did not conduct a tender offer to redeem publicly traded shares. Instead, CIS willwe elected to redeem all holders of publicly traded shares that have not elected to convert their Series A Shares into Series C Shares, promptlywhich was completed shortly after September 21, 2014.

As a result of the consummation of the Acquisition, Elite became our wholly subsidiary. Elite is the holding company of all the shares of Delta which, at the time of the consummation of the Acquisition, held all the equity interests in the operating subsidiaries in the PRC including Jiangsu Delta, Jiangsu Logistics, Jiangsu Zhengxin R&D and Binhai Deda.

Through Delta, we engaged in the business of producing and distributing organic compound including para-chlorotoluene (“PCT”), ortho-chlorotoluene (“OCT”), PCT/OCT downstream products, unsaturated polyester resin (“UPR”), maleic acid (“MA”) and other by-product chemicals. The end application markets of our products include automotive, pharmaceutical, agrochemical, dye & pigments, aerospace, ceramics, coating-printing, clean energy and food additives. We currently have approximately 260 employees, 30% of whom are highly-qualified experts and technical personnel. We serve nearly 350 clients in various industries.

Following the Acquisition, we changed our name from “CIS Acquisition Ltd.” to “Delta Technology Holdings Limited” to more accurately reflect our current business and operations.

B. Business Overview

History of Delta

FoundedHeadquartered in 2007, Delta isZhenjiang city, Jiangsu province, we are a Hong Kong basedfast-growing fine and specialty chemical manufacturer, primarily engaged in manufacturing and distributerselling of organic compound including para-chlorotoluene (“PCT”), ortho-chlorotoluene (“OCT”), PCT/OCT downstream products, unsaturated polyester resin (“UPR”), maleic acid (“MA”) and other by-product chemicals. In its fiscal year ending June 30, 2014, Delta posted revenue of approximately $175.3 millionchemicals and net income of approximately $7.0 million. Including a foreign currency adjustment, Delta's comprehensive income was approximately $8.5 million in that period. Delta has approximately 300 employees, 25% of whom are highly-qualified expertsdistributing fine and technical personnel. Delta serves more than 380 clients inspecialty chemicals to end application markets including automotive, pharmaceutical, agrochemical, dye & pigments, aerospace, ceramics, coating-printing, clean energy and food additives industries.additives.

We collaborate with reputable universities, such as the East China Normal University in order to secure our position as a market leader. We also closely monitor the market for development, trends and technological innovations and solicit customer feedback so as to keep abreast with market demands and industrial development.

As at the date of this report, we have a diversified clientele with more than 350 customers based either in domestic or overseas market. Approximately 90% of our sales are to domestic customers based in Jiangsu province, Anhui province, Zhejiang province, Hubei province, Guangdong province and Chongqing Metropolitan, and the rest of its products are exported via distributors or trading companies to countries outside the PRC which include but not limited to India, Brazil, Japan, European Union member countries and America.

Our revenue for the fiscal years ended June 30, 2014, 2015 and 2016 were approximately $175 million, $202 million and $53 million, respectively, and our profit before tax for the fiscal years ended June 30, 2014, 2015 and 2016 were $9.4 million, $15.9 million and loss before tax of $7.6 million, respectively. The decrease in revenue for the year ended June 30, 2016 was a result of decreased demand for our products in the PRC.

History of Delta’sOur Subsidiaries

On June 15, 2007, JiangsuElite Ride Limited

Elite owns 100% of the ordinary shares of Delta and was established by S&S International Investment Holding (HK)formed solely in contemplation of the Acquisition. It has not commenced any operations, has only nominal assets and has no liabilities or contingent liabilities, nor any outstanding commitments other than as set forth herein. Elite has not incurred any obligations, engaged in any business activities or entered into any agreements or arrangements with any third parties other than as set forth herein.

Delta

Delta, formerly China Deltachem Holdings Limited, (“S&S International”), awas incorporated in Hong Kong basedas an investment holding company ason June 17, 2010. Delta acquired Jiangsu Delta for a wholly foreign-owned enterprise (with an initial registered capitalconsideration of US$42$28.8 million which was later reduced to US$ 28.8 million) located in Zhenjiang City, Jiangsu Province, the PRC.

Pursuantpursuant to a share transfersale and purchase agreement entered into on April 13, 2008, Mr. Xin Chao acquired the entire equity interest in Jiangsudated May 20, 2010 by and between Delta from S&S International throughand Zhengxin International Investment Limited, a Hong Kong corporation (“Zhengxin International”) and becamecurrently holds the controller ofentire equity interest in Jiangsu Delta since then. On May 21, 2008, the acquisition of Jiangsu Delta by Zhengxin International was approved by the Jiangsu Foreign Trade and Economic Cooperation Department in accordance with “The Approval of Alteration of Equities in and Amendment of the Articles of Association of Jiangsu Yantze River Delta Fine Chemical Co, Ltd.” issued by the same authority.Delta.

Jiangsu Delta commenced its commercial operations in 2009 with one productions line and approximately 150 employees. It was primarily engaged in the manufacturing and production of fine chemicals such as OCT and PCT as well as their down-steam products with approximately 100 customers.

On May 26, 2011, Delta carried out a bonus share issue, whereby an additional 39,990,000 ordinary shares of Delta were allotted and issued as bonus shares at a price of HK$1.00 each to all the then shareholders of Delta at the ratio in proportion to their existing shareholding percentage, and credited as fully paid up on a capitalization of the reserve of HK$39,990,000 from the capital reserve of Delta. Subsequent to the bonus issue, Delta’s total issued and paid-up share capital increases to HK$40 million, comprising 40 million shares of HK$1.00 each. After the bonus share issue, Delta was owned as to 39,104,000 shares by Mr. Yu Lan (97.76%), 448,000 shares by Mr. Shen Lei (1.12%) and 448,000 shares by Mr. Hong Yan (1.12%). On December 12, 2011, Mr. Yu Lan transferred all of his 39,104,000 shares in Delta to Mr. Xin Chao at a total consideration of HK$67,102,464.

Delta entered into a series of Securities Purchase Agreements dated January 31, 2011, May 16, 2011 and June 30, 2011, respectively, with the funds managed by Korea Investment Partners Co. Ltd. and Kleiner, Perkins, Caufield & Byers (the “Noteholders”), pursuant to which it has issued convertible notes (“Convertible Notes”) for an aggregate principal amount of US$18 million. The Convertible Notes have a compound interest rate of 6.00% per annum if converted into shares and a compound interest rate at maturity of 15.00% if redeemed or liquidated. The principal and interests accrued on such Convertible Notes are convertible in whole or in part into the ordinary shares in Delta, on such terms and subject to the conditions of the Securities Purchase Agreements. On September 13, 2014, each of Mr. Xin Chao, Mr. Shen Lei and Mr. Hong Yan transferred all of their respective shareholdings in Delta to Elite. Elite became the sole shareholder of Delta after the transfer.

On September 15, 2014, Delta entered into a Settlement Deed with the Noteholders pursuant to which all of the outstanding obligations under Convertible Notes were settled. Pursuant to the Settlement Deed, Delta agreed to (i) cause Elite to issue an aggregate of 10,605 Elite Shares20,347 of its shares in consideration for the forgiveness of an aggregate of $3,400,000$8,897,000 of the Convertible Notes due to the Noteholders, and (ii) cause Master Kingdom Holdings Ltd., a British Virgin Islands company (“Master Kingdom”), which is 100% owned 100% by Mr. Xin Chao, the principal shareholder of Elite, to enter into a Novation Deed with each of the Noteholders with respect to the repayment of the balance of the Convertible Notes to the Noteholders. Accordingly, on September 18, 2014, Delta, Master Kingdom and the Noteholders entered in a Novation Deed pursuant to which Master Kingdom agreed to assume and repay the remaining indebtedness due to the Noteholders in the aggregate amount of $19,322,981.28. As a result of the foregoing, Delta has no more Convertible Notes outstanding.

Jiangsu Delta

On June 15, 2007, Jiangsu Delta was established by S&S International Investment Holding (HK) Limited (“S&S International”), a Hong Kong based investment holding company, as a wholly foreign-owned enterprise (with an initial registered capital of US$42 million, which was later reduced to US$ 28.8 million) located in Zhenjiang city, Jiangsu province, the PRC.

Pursuant to a share transfer agreement entered into on April 13, 2008, Mr. Xin Chao acquired the entire equity interest in Jiangsu Delta from S&S International through Zhengxin International and became the controller of Jiangsu Delta since then. On May 21, 2008, the acquisition of Jiangsu Delta by Zhengxin International was approved by the Jiangsu Foreign Trade and Economic Cooperation Department in accordance with “The Approval of Alteration of Equities in and Amendment of the Articles of Association of Jiangsu Yantze River Delta Fine Chemical Co, Ltd.” issued by the same authority.

Jiangsu Delta commenced its commercial operations in 2009 with one production line and approximately 150 employees. It was primarily engaged in the manufacturing and production of fine chemicals such as OCT and PCT as well as their down-steam products with approximately 100 customers.

With a view to expanding its business and catering for the demand of its customers, in 2010, Jiangsu Delta’s principal business scope was expanded to be producing and selling a variety of fine chemicals such as (i) pharmaceutical, pesticide and dye intermediates (mainly including Cis-Anhydride, P-(O) Chlorotoluene, (2, 4 Dichlorotoluene)), (ii) unsaturated polyester resin, (iii) maleic acid and (iv) other by-products chemicals, all of which are mainly used in pharmaceutical and agriculture industries. In addition, during the same period, Delta installed additional production facilities to substantially increase its production capacity from 7,000 tonnes to 25,000 tonnes per annum.

Due to the corporate restructuring effort to consolidate the business of Jiangsu Delta under a pure investment holding entity, pursuant to a sale and purchase agreement dated May 20, 2010 between Zhengxin International and Delta, Jiangsu Delta was acquired by Zhengxing International for a consideration of US$28.8 million.

On August 30, 2010, the acquisition of Jiangsu Delta by Delta was approved by the Jiangsu Foreign Trade and Economic Cooperation Department in accordance with “The Approval of Share Transfer of and Amendment of the Articles of Association of Jiangsu Chang San Jiao Chemical Co., Ltd.” issued by the same authority.

Jiangsu Zhengxin R&D

On August 18, 2012, Zhengxin International and Jiangsu Delta entered into a sale and purchase agreement, pursuant to which the entire equity interest of Jiangsu Zhengxin New Material R&D Co., Limited (“Jiangsu Zhengxin R&D”) was acquired by Jiangsu Delta from Zhengxin International at a consideration of RMB3.3 million. The acquisition of Jiangsu Zhengxin R&D was approved by the Danyang Bureau of Commerce on September 18, 2012 in accordance with “The Approval and Transfer of and the Alteration of Nature of Zhengxin New Material R&D Co., Limited”. On March 12, 2015, we sold Jiangsu Zhengxin R&D to a third party for a total sales price of RMB64,555,386.90 (approximately $10.5 million) as the Company would like to focus on and allocate more resources to the core business.

Jiangsu Logistics

On December 17, 2013, Jiangsu Delta Logistics Co., Ltd (“Jiangsu Logistics”) was established by Jiangsu DetlaDelta with an initial registered capital of RMB 10 million (approximately $1.63 million) located in Dantu District, Zhenjiang City, Jiangsu Province, PRC. We disposed of this property onMarch 20, 2015for RMB 10 million (approximately $1.51 million). As a result of the Company’s disposition of Jiangsu Logistics, we no longer provide the supply chain management for third-party clientele including manufacturers, distributors and retailers of chemical products.

Binhai Deda

On June 8, 2013, Binhai Deda Chemical Co., Ltd (“Binhai Deda”) was established by Jiangsu DetlaDelta with an initial registered capital of RMB 5 million (approximately $814,664) located in Binhai County, Zhenjiang City, Jiangsu Province, PRC.

By June 30, 2014, Delta had established a domestic sales network which covered Jiangsu Province, Anhui Province, Zhengjiang Province, Hubei Province, Guangdong Province and Chongqing Metropolitan with the number of its customers increased to approximately 380. With the expansion in its operations, Delta also increased its headcount to approximately 300 employees.

Elite Ride Limited

Elite owns 100% of the ordinary shares of Delta and was formed solely in contemplation of the Acquisition. It has not commenced any operations, has only nominal assets and has no liabilities or contingent liabilities, nor any outstanding commitments other than as set forth herein. Elite has not incurred any obligations, engaged in any business activities or entered into any agreements or arrangements with any third parties other than as set forth herein. Its principal executive offices are located at 16 Kaifa Avenue, Danyang, Zhenjiang, China, and its telephone number is +86 511-8673-3102.

Business Overview

Headquartered in Zhenjiang City, Jiangsu Province, Delta is a fast-growing fine and specialty chemical manufacturer, primarily engaged in manufacturing and selling of organic compound including para-chlorotoluene (“PCT”), ortho-chlorotoluene (“OCT”), PCT/OCT downstream products, unsaturated polyester resin (“UPR”), maleic acid (“MA”) and other by-product chemicals and distributing fine and specialty chemicals to end application markets including Automotive, Pharmaceutical, Agrochemical, Dye & Pigments, Aerospace, Ceramics, Coating-Printing, Clean Energy and Food Additives.

Delta collaborates with reputable universities, such as the East China Normal University in order to secure its position as a market leader. Delta also closely monitors the market for development, trends and technological innovations and solicit customer feedback so as to keep abreast with market demands and industrial development.

As at the date of this report, Delta has a diversified clientele with more than 380 customers based either in domestic or overseas market. Approximately 90% of its sales are to its domestic customers based in Jiangsu Province, Anhui Province, Zhejiang Province, Hubei Province, Guangdong Province and Chongqing Metropolitan, and the rest of its products are exported via distributors or trading companies to countries outside the PRC which include but not limited to India, Brazil, Japan, European Union member countries and America.

Delta’s revenue for the fiscal years ended June 30, 2012, 2013 and 2014 were approximately $95.6, $124.2 and $175.3 million, respectively, and its profit before tax for the fiscal years ended June 30, 2012, 2013 and 2014 were $14.9, $15.8, and $9.4 million, respectively.

Products

Delta’sOur products can be broadly divided into two major series, namely (i) PCT/OCT and (ii) UPR, which account for approximately 40%8.56% and 27%88.61%, respectively of itsour total revenue in the fiscal year 2014.2016. PCT/OCT together with its downstream products can be widely used in pharmaceuticals, pesticides, dyes and consumables manufacturing industries, whereas UPR is commonly used as (i) renovation materials for bathroom and kitchen, (ii) manufacturing materials for trains, cars, aircrafts and vessels, and (iii) infrastructure materials such as anti-collusion pipes and oil and gas pipelines. UPR is a light weight, relatively wear resistant and highly anti-corrosive material, and its unique features make it a popular replacement material for plastic and steel. In the fiscal year 2013, Delta2016, we sold approximately 40%60% of the PCT/OCT Deltawe produced and Delta consumed the balance as raw materials for the manufacturing of PCT/OCT downstream products ..products.

In addition, Delta manufactureswe manufacture MA, which is an intermediate product in producing UPR. Delta consumesWe consume most of the MA it produceswe produce as a production intermediary. A by-product of the production process of MA is heat energy, which Delta consumeswe consume efficiently for manufacturing itsour PCT/OCT products, where large-scale heat energy is required.

Delta placesWe place great emphasis on the research and development of itsour products to ensure Delta’sour continued success. As of the date of this report, Delta haswe have successfully registered fivenine patents in the PRC in relation to UPR production technologies, and PCT/OCT production technology, and environmental protection equipment technology, and it is also in the process of applying for sevenfour more patents in relation to PCT/OCT and MA productions technologies and production of PCT/OCT environmental protection equipment.

We recently supplied an experimental sample of prothioconazole to a large pesticide manufacturer and trader in India. The Company views India as country with significant growth prospects for our products. At present, our experimental equipment can produce 500kg of prothioconazole per month. We plan to further expand the scale of lab production from medium to large-scale production and are working on the design of industrial mass production of prothioconazole which we anticipate starting in the third quarter of 2017.

Production Process

DeltaWe primarily engagesengage in manufacturing and sale of organic compound including PCT, OCT, UPR, MA and other by-product chemicals. Please see below the production flow diagrams for more details on how PCT/OCT, MA and UPR products are manufactured by it.us.

The business operations model begins with the sourcing of raw materials, which are then delivered to Deltaus and stored in itsour warehouses until being processed in-house in itsour factory:

Delta Supply Chain Management (SCM)

The following diagram illustrates our business model with detailed service proposals in our Supply Chain Management business:

We started the servicing of third party clients in raw material procurement and trading in 2012, with an objective to expand our operations beyond being a conventional manufacturer. During the fiscal years ended June 30, 2012, 2013 and 2014 our revenue were approximately $135,000, $11 Million and $49 Million and our gross profit (loss) was $20,703, $(659,199) and $(330,982), respectively.

In 2013, Jiangsu Delta Logistics Ltd, a wholly-owned subsidiary with business approval in handling dangerous and toxic chemicals was founded, marking our launch of logistics and transportation services.

We have gathered from operating this new business that we shall make good use of our knowledge and experiences in manufacturing, logistics and international trade in the chemical business to act as a service provider in supply chain management for third-party clientele including manufacturers, distributors and retailers of chemical products. We have recently added a business division handling Internet financing to deploy the opportunities in supply chain financing.

Purchase of Raw Materials

The major raw materials which Delta purchaseswe purchase include: Toluene, Chlorine, Benzene, Styrenetoluene, chlorine, benzene, styrene and Phthalic Anhydride.phthalic anhydride. Toluene and Chlorinechlorine are the two major raw materials for the PCT/OCT production. Benzene is the major raw material for MA production. Styrene and Phthalic anhydrideAnhydride are the two major raw materials for UPR production.

Delta sources itsWe source our raw materials from a spread of proximate suppliers, and uses itsuse our own PCT/OCT and MA production as raw materials for PCT/OCT downstream products and UPR products. Most of itsour suppliers are located within the Yangtze River Delta region, and due to the hazardous nature of the raw materials, Delta emphasiseswe emphasize on the need for a short transportation time and the safety requirements.

PCT/OCT raw materials take about one week for delivery on request, while MA raw materials take about three to five days, and UPR raw materials take about seven to ten days.

Delivery and Storage

About 90% of the raw materials Delta useswe use are delivered to itus by the suppliers, (Delta picks up the other 10%), which buy insurance and bear all risks until goods are delivered to itsour warehouses, and the remainder is picked up by itsour employees.

We have on-site warehousing capacity, which allows itus to store up to 6,000 tonnes of liquid or solid chemical materials.

The newly incorporated Jiangsu Logistics own 6 chemical products and trucks for transporting chemicals and is planning to increase its capacity to 6,000 tons.

Manufacturing and Processing

Manufacturing and processing occurs at Delta’sour factory in Zhenjiang, which has an annual production capacity of 30,000 tons of PCT/OCT production and PCT/OCT downstream production, 25,000 tons of MA production and 18,000 tons of UPR production. Please see below the production flow diagrams for the various products for more details on how PCT/OCT, MA and UPR products are manufactured in itsour factory.

(a)          PCT/ OCT

PCT/OCT forms the basic or intermediate products from which down-stream extended products can be further manufactured. Delta’sOur annual capacity for PCT/OCT series are at 30,000 tons, and the factory operates at almost its maximum capacity presently. The simplified production process for the PCT/OCT products is as follows:

Step 1: Chlorination Process

Chorine and Toluene, which form the basic reactants for the production of PCT/OCT, are delivered into the Chlorination Tower for a controlled reaction to take place in the presence of various catalysts. Depending on the temperature and the types of catalyst used, the reaction will produce a mixture of crude products with a certain isomeric ratio of PCT/OCT.

The exhaust is delivered to the Chlorination Tower, cooled and condensed before being treated for safe discharge. The crude product solution is then delivered into the Distillation Tower where the products are isolated and purified.

Step 2: Fractional Distillation

Within the Distillation Tower, the crude reactant product undergoes separation by way of fractional distillation and PCT and OCT are segregated based on their different boiling points, and separately delivered to a PCT Tower and an OCT Tower for storage or packaging as necessary.

Step 3: Further Processing

The isolated, purified compounds can then undergo further value-added treatment pursuant to customisedcustomized treatments to manufacture down-stream derivative products. Delta re-processesWe re-process about 40% of the PCT/OCT products received through the manufacturing process into some 13 different downstream chemical products such as:

(1) 2,4-Dichloro toluene (“2,4DCT”) 2,4

(2) 3,4-Dichloro toluene (“3,4DCT”) 3,4

(3) O-chlorobenzaldehyde

(4) p-chlorobenzaldehyde

(5) 2,4-Dichlorobenzaldehyde 2,4

(6) O-chlorobenzyl chloride

(7) Chlorobenzyl chloride

(8) 2,4-Dichloro-chloride 2,4

(9) O-chlorobenzoic acid

(10) O-Chloro benzonitrile

(11) Chlorobenzonitrile

(12) 2,4-Dichlorobenzonitrile 2,4

(13) 3,4-Dichlorobenzonitrile 3,4

(b)          UPR

Delta’sOur UPR products are high-end resin products. Due to UPR’s combination of unique strengths such as its lightness, toughness, durability, strength and anti-corrosive properties, it is widely used by various industries, like the construction industry, industrial equipment industry, transport industry and the infrastructure industry. Delta’sOur production capacity for UPR was expanded from 9,000 tonnes in May 2010, to 18,000 tonnes annually in December 2010, and the factory operates at almost its maximum capacity presently.2010. The simplified production process for the UPR products is as follows:

Step 1: Reaction

Di-ols and Di-acids, including MA, are the basic reactants for the production of UPR, which is a form of polyester. The reactants are delivered from their storage tanks into a stainless steel reactor for a controlled esterification process in the presence of various catalysts. Depending on the temperature and the types of catalyst used, the reaction will produce a crude mixture of semi-finished product or resin. DeltaWe can customize the qualities and characteristics of the UPR by varying the temperature, ratio and types of chemical reactants or catalysts, which will result in the production of polyesters of different structures.

Step 2: Dilution and Further Procession

The semi-finished product or resin is transported into the Dilution Tank where Styrene and other chemicals are added in a dilution process. The Dilution Tank is linked to a cooling and condensation mechanism which will condense the vapours or exhaust from the Dilution Tank. In the Dilution Tank, the resin can be further adjusted as to viscosity, reactivity and other characteristics through the addition of chemical inhibitors or promoters.

Step 3: Packaging

The final product is then transferred to the storage tanks or sent for packaging.

(c)          MA

MA accounts for 6%3% of Delta’sour total sales volume. Most of the MA produced, i.e. approximately 60%70%, is used for itsour own production of UPR, while about 40%30% will be sold to customers. The oxidation process in the production of MA produces heat which is converted into steam for use in the production of PCT/ OCT and other production areas where steam is needed.

Step 1: Oxidation

Benzene and air are catalysedcatalyzed and oxidisedoxidized through a fixed bed Oxidation Reactor to generate MA vapour.vapor. The MA vapourvapor is condensed and cooled to form MA in liquid form which is delivered to the Crude Anhydride Tank. The vapourvapor is passed through the Absorption Tower for further extraction and isolation.

Step 2: Distillation

The MA solution and vapourvapor which has been absorbed in the absorption tower shall be dissolved and distilled as part of the purification process to extract the finished product. The MA can be delivered to the storage tanks and packaged for sale, or be utilisedutilized for further production and processing.

Delivery or Pick-up by the Customers

Delta deliversWe deliver around 60% of the products sold to the customer sites while customers pick up about 40% of the finished products directly from itsour warehouses. DeltaWe usually usesuse three transportation companies to truck the products to itsour customer sites. The newly incorporated Jiangsu Logistics will be responsible for transporting the chemicals. Delivery typically takes up to one week, although actual time will vary depending on the location of itsour customers.

Production Facilities, Capacity and Utilization

Delta’sOur production facilities are located in Zhenjiang City,city, Jiangsu Province,province, the PRC.

Delta hasWe have three main production lines centered on itsour core products:

DeltaWe may from time to time look into further expansion of itsour existing facilities to improve output capacity.

Quality Control

Delta isWe are committed to providing itsour customers with quality and reliable products. Through itsour corporate quality management system, Delta iswe are committed to ensuring that the products it produceswe produce are of high quality and are able to meet the expectations of itsour customers.

Delta’sOur quality assurance department is currently comprised of 13 quality assurance personnel. They are responsible for overall quality control at every stage of itsour production process and ensure that it is in accordance with itsour quality control guidelines.

Quality Assurance and Safety Processes

Delta conductsWe conduct quality checks on all the products manufactured and oversee the implementation of the quality controls at every stage of itsour production process in line with itsour quality management system. The following quality control procedures have been implemented:

(a)          Establishment of quality control standards

For manufacturing of chemical systems and components and catalysts, Delta haswe have set in place stringent quality control standards to implement strict measures for quality control in the manufacturing. Such standards follow strictly in accordance with the national and industry standards as well as the standards and guidance set in accordance with the ISO 9001 Quality System. DeltaWe also takestake into account customers’ specifications and requirements and quality feedback from itsour previous customers to supplement itsour quality control standards.

For itsour system design, Delta ensureswe ensure the design of every project is carried out in line with (i) the relevant PRC laws and regulations; (ii) the relevant technical specifications and industry standards; and (iii) itsour customers’ requirements.

(b)          Quality control during procurement

Direct materials are purchased only from pre-selected suppliers after evaluation and testing by itsour procurement personnel, quality control personnel and production personnel based on stringent selection criteria such as quality of their raw materials and services, material sources, pricing, accreditations, track record, financial condition and market reputation.

Delta’s

Our quality assurance department will conduct random sample inspection upon receipt of the raw materials. Raw materials that do not meet itsour quality requirements are returned to the suppliers for them to remedy the problems or defects or for exchange. Procurement plans from the various suppliers are subject to review by itsour senior management on an annual basis.basis.

(c)          Quality control during manufacturing process

Quality guidelines are provided to the relevant production workers at each production stage before production commences.

Before the production, incoming direct materials are inspected by way of sampling by itsour quality control personnel to ensure that they are supplied by approved suppliers, and that the quality, grade and quantity of such direct materials conform to its specifications and requirements as well as itsour quality control standards. Direct materials which fail to comply with these specifications will be rejected.

We continuously monitors itsmonitor our manufacturing process and carry out sample-testing at systematic intervals throughout the process to ensure consistency in the quality of the chemical systems and components and catalysts. Delta’sOur quality control personnel and production personnel conduct sample-testing and inspections at the various stages of production to ensure that defective semi-completed products do not proceed to the next stage of the production.

(d)          Quality control on finished products

Delta conductsWe conduct overall inspections and testing on finished products before they are despatcheddispatched to customers. Delta hasWe have implemented a strict sample-based testing system, which is carried out every batch of itsour finished products before they are arranged for packing. For OCT/PCT and MA products, the main criterion to be examined is its degree of purity, whereas for UPR products, the focus is on its shock-resistance and chromaticity. This final stage of inspection is carried out to ensure that the finished products that are packed and delivered conform to the exact specifications of itsour customers. DeltaWe also providesprovide after sales servicing, and will attend to complaints, if any, regarding defects in the products or the services.

To continually improve itsour quality management system, Deltawe will take into account the feedbacks from itsour employees who are involved in each of the quality control processes and feedbacks from these employees or itsour customers.

Certification and Awards

In recognition of itsour quality assurance efforts, Delta waswe were awarded certification of GB/T19001-2008 idt ISO9001:2008 (quality management systems) by China Federation of Logistics Certification Center GB/T24001-2004/ISO14001:2004 (environmental management systems) by China Certification Centre Inc.

For the last three fiscal years and up to the date of this report, Delta haswe have not experienced any material claims from itsour customers for defective or poor quality products, nor has Deltahave we experienced any product liability claims from end users of itsour products. In addition, Delta haswe have not experienced significant amount of return cases for itsour products over the same period.

Research and Development

Delta placesWe place great emphasis on research and development. ItsOur research and development team is headed by itsour Chief Engineer Mr. Yuan HuaizhouLi Yiqiang and supported by about 36 research and development staff. Delta’sOur research team members are required to have at least five (5) years of experience in the research of fine chemical industry as well as a bachelor degree in Chemistrychemistry or chemical engineering or other relevant professional qualifications. All the employees under itsour research and development department are required to execute confidentiality undertakings, which restrict them from revealing any trade secrets and/or know-how with regard to itsour products or technologies involved in itsour production process to itsour competitors for at least three (3) years after termination of their employment.

In-house Research and development activitiesDevelopment Activities

Delta’sOur in-house research and development activities focus mainly on:

Technology Collaborations

Delta collaboratesWe collaborate with technology partners, comprising renowned universities and in the manner as follows:

In 2012, Deltawe entered into discussions for partnership arrangements with a group of professors from East China Normal University to developmentdevelop a joint research and development centre.center. The joint research centre,center, under the name of “Delta Chemical Advanced Materials R&D Centre”, will beCentre,” is located at our facilities in our new 12-storey office building which was completedZhenjiang, Jiangsu Province and is currently in April 2014.operation.

Pursuant to the collaborative arrangement, the university and Delta willwe each contribute around three (3) to five (5) research staff to carry out the research and development operations of the joint research centre.center.

The joint research centre will becenter is equipped with world-class chemical research facilities and product testing equipment. Its research focus will be placed on development of the following products:

Sales and Marketing

Delta’sOur sales and marketing department is headed by itsour Deputy General Manager, Mr Shi Weiping, who has been involved in the chemical industry since 1989 and has experience of approximately 2325 years in the industry in relation to the sales and marketing of chemical products. MrMr. Shi is currently supported by seven sales and marketing personnel who are in charge of the sales for different product categories such as PCT/OCT and MA products and they are dedicated to sales and marketing activities in various areas, ranging from southern, northern and eastern China regions as well as overseas market.

Delta’sOur sales and marketing department is responsible for the sales and marketing functions of its Group,the Company, and its key roles and responsibilities include sourcing for new customers, confirming and collating orders from customers, providing after-sales service, maintaining customer relationships, and ensuring timely payments and delivery of goods/services.

Delta’s

Our sales personnel keep in touch with itsour customers by paying regular visits to them to understand their needs, business development and market policies and to obtain their feedback and suggestions. Following the customer visits, itsour sales personnel will report to MrMr. Shi on a daily basis.

Delta’sOur sales and marketing department is also tasked with formulating and planning itsour marketing strategies and activities which primarily include the following specific marketing activities:

Direct salesSales and marketingMarketing

Direct sales and marketing activities involve regular meetings with and frequent visits to new and existing customers. Through such interactions, Delta iswe are able to promote itsour products, obtain feedback on itsour products, and understand itsour customers’ demands based on the latest developments and trends relating to itsthe chemical industry. In addition, Deltawe may engage in discussions with itsour customers relating to new chemical products in the market and to explore opportunities for business collaboration. This will allow itus to better understand and serve itsour customers.

Further, Deltaour sales and marketing department cooperates with other departments to put in place an effective and systematic procedure for direct sales, arrange promotional activities and to collate customer data and feedback. Delta provides itsWe provide our sales and marketing employees with necessary training to familiarize them with the sales and marketing practice in the industry and how to promote awareness for itsour brand. These employees are also rewarded with incentive remuneration package linked to their sales performance.

Advertisements, Publications and Participation in Industrial Conferences

Delta hasWe have a diversified customer base with more than 380350 customers in China and countries such as India, Brazil, Japan, European Union member countries and America. Due to itsour diversified clientele, itsour sales and marketing efforts are conducted through a variety of channels, including but not limited to websites, billboards and brochures. DeltaWe also participated in various regional and international seminars and exhibitions to showcase and promote itsour products, create and enhance market awareness of itsour brand and products, gain market updates and industry knowledge, establish networks with customers and suppliers, keep abreast of the latest technology and identify latest trends. Delta hasWe have annually, since itsour establishment, participated in related industrial conferences held in the PRC, such as China International Pharmaceuticals Exhibition, China International Fine Chemicals Exhibition and China Import and Export Fair.

Awards and Certificates

As an endorsement of the quality of itsour products and services, Delta haswe have been conferred,inter alia, the following awards or certificates:

Intellectual Property

Patents

As atof the Latest Practicable Date,date of this report, the status of Delta’sour patents and the patent applications in the PRC is as follows:

Patents Granted

Patents Pending

TrademarksTRADEMARKS

As of the date of this report, Delta doeswe do not own any registered trademark. However, Delta haswe have filed applications to the PRC Trademark Bureau in respect of the following trademarks:

Trademark		Class (1)		Application Number		Date of Application		Status		Place of Registration
		1		12218845		March 5, 2013		Pending		The PRC
		1		12218774		March 5, 2013		Pending		The PRC

Trademark		Class (1)		Application Number		Date of Application		Status		Place of Registration
		1		12218845		March 5, 2013		September 14, 2014 – September 13, 2024		The PRC
		1		12218774		March 5, 2013		September 14, 2014 – September 13, 2024		The PRC

Seasonality

DeltaWe generally doesdo not experience any seasonality in itsour business. DeltaWe only experiencesexperience a slight decrease in the number of orders for itsour products during festive seasons, in particular, the Chinese New Year, as many of the factories of itsour customers may be closed.

Staff Training

Delta recognisesWe recognize that itsour employees are an important resource and itwe thus aim to equip itsour staff with the relevant skills and knowledge which will enable them to perform their jobs effectively. Delta hasWe have implemented comprehensive training policies and programmesprograms aimed specifically at improving the skill sets of itsour staff and increasing itsour competitiveness and productivity. Delta’sOur human resource department oversees itsour staff training programmes.programs.

Delta conductsWe conduct training programs for all levels of itsour staff, including those holding management and supervisory positions. In recognition of staff with potential, Deltawe also conductsconduct training programmesprograms to upgrade their skills. Such upgrading programs are conducted on a periodic basis and tailored in accordance with the specific requirements of each department. Delta’sOur internal training programs include:

Delta conductsWe conduct orientation programs for itsour new employees during which they are provided with information on it,the Company, including itsour history, enterprise culture, business concept and employment rules. They are required to undergo operational training sessions so as to familiarisefamiliarize themselves with itsour operational procedures, policies and practices.

Occasionally, Deltawe will invite external professionals or instructors to conduct seminars and talks for employees and management of relevant departments in relation to their respective scope of work.

Delta’sOur staff involved in the manufacturing and production processes are required to undergo in-house operational training sessions so as to familiarize themselves with itsour operational procedures, policies and practices. The production managers and engineers at itsour production facility periodically update and educate itsour production staff on matters relating to itsour production techniques and processes, including compliance with the assurance procedures required under GB/T19001-2008 idt ISO9001:2008 (quality management systems) and other environmental management and quality assurance procedures such as the GB/T24001-2004/ISO14001:2004 requirements.

Upon completion of the various training programs, Delta’sour staff will sit for examinations which may be conducted orally or by written tests. For new employees, upon passing the examinations and tests, they will undergo on-the-job training during which they will learn the specific skills which are relevant for their respective positions. They will only commence work in their respective positions if they have been assessed to be fit for deployment.

Delta’sOur sales and marketing staff were trained on information relating to itsour products, including,inter alia, itsour products’ qualities, characteristics and their applications. They are also constantly updated on market information and market demand of itsour products.

Delta recognizesWe recognize the importance of training itsour staff and developing their skills, as itsour success is largely dependent on the quality and skills of itsour staff. It is itsour policy to maintain a competent work force and Delta iswe are committed to providing training to itsour staff, in order for itus to remain competitive and meet the increasing market demand for high quality products. As itsour staff training is mainly conducted in-house, itsour training expenses in the last three fiscal years have not been significant.

Insurance

Delta hasWe have in place the following insurance policies:

Delta hasWe have in place social insurance for employees of Jiangsu Delta, including fundamental pension insurance and fundamental medical insurance, unemployment insurance, work-related insurance and maternity insurance in respect of which the insurance premium is borne by Deltaus and the employees in a specific proportion governed by the relevant PRC regulations.

Jiangsu Delta has obtained the Social Insurance Registration Certificate issued by the Social Labor Insurance Fund Management Centre of Dantu, Zhenjiang on June 23, 2010 with the effective labor period of 5 years. Jiangsu Delta has passed the annual inspection of 2011.which will expire on October 30, 2020.

According to the relevant PRC laws and local regulations in respect of social insurance contribution, Jiangsu Delta pays social insurance premiums for employees according to the following rate:

To itsour best knowledge, each of Jiangsu Delta and Jiangsu Zhengxin R&D has since its establishment handled the fundamental medical insurance, fundamental pension insurance, unemployment insurance, work-related Injury insurance and maternity insurance for employees according to relevant laws and regulations in the PRC, and neither company has any overdue payment and had been in compliance with applicable PRC social insurance laws and regulations as of the date of this report.

Delta hasWe have all property all-risks insurance for itsour machinery and equipment including machineries, and facilities against damage caused by certain accidents and natural disasters such as fire.

Delta purchasesWe purchase and maintainsmaintain compulsory traffic accident liability insurance for all company-owned motor vehicles.

DeltaWe also purchasespurchase insurance for employer’s liability.

All insurance coverage is obtained at market rates from independent insurance companies.

Major Suppliers

The key components and raw materials used in Delta’sour production and manufacturing processes are comprised mainly of Toluene, Chlorine, Benzene, Styrenetoluene, chlorine, benzene, styrene and Phthalic Anhydride, Maleic Anhydride, Propylenephthalic anhydride, maleic anhydride, propylene glycol and Ethyleneethylene diglycol which in the aggregate constituted approximately 85%75% of itsour total cost of sales.

Delta’sOur suppliers are carefully selected by itsour purchasing department, and are assessed on criteria such as the geographical location, quality of materials supplied, length of business relationship with it,us, as well as their reputation, pricing, reliability, track record, service, punctuality and response time. To facilitate timely purchases of materials, Delta keepswe keep a list of qualified suppliers who have demonstrated reliability in product quality and delivery time as well as pricing competiveness. This list is subject to review by itsour management on an annual basis.

Delta’sOur raw materials are currently sourced from within the PRC and therefore, all of itsour purchases are transacted in RMB. Accordingly, Delta iswe are not subjected to any significant risk in exchange rates fluctuation in the purchase of raw materials.