Liuyang Fireworks Receives Proposal to Privatize

Toronto, Ontario--(Newsfile Corp. - May 11, 2015) - Liuyang Fireworks Limited (TSXV: FWK) ("Liuyang" or the "Company") announced that its board of directors has received an unsolicited non-binding proposal from Great Exploits Development Limited ("Great Exploits"), Better Invention Overseas Limited ("Better Invention") and Bay Tree Enterprises Limited ("Bay Tree", together with Great Exploits and Better Invention, the "Offerors") to acquire all of the outstanding common shares of the Company not owned or controlled by the Offerors for cash consideration of $0.035 per share (the "Transaction Proposal"). The Company has 55,231,617 common shares issued and outstanding, of which 20,241,202 common shares are not expected to be owned or controlled by the Offerors at the time of completion. The consideration offered under the Transaction Proposal represents a premium of approximately 40% over the $0.025 closing price of the Company's shares listed on the TSX Venture Exchange on May 8, 2015. Under the Transaction Proposal, the privatization is to be effected by way of a share consolidation under Bermuda corporate law.

Great Exploits is a company directly owned by Mr. Mingyue Hu, who is a director and the Chairman of the Company. Better Invention is a company directly owned by Mr. Miao Hu, who is a director and the President and Chief Executive Officer of the Company. Bay Tree is a company that is currently being restored. Once restored, Bay Tree will be directly owned by Mr. Peng Peng, who is a former director and Chief Operating Officer of the Company. Great Exploits currently owns, or has control or direction over, 7,026,331 common shares representing approximately 12.7% of the Company's outstanding common shares. Better Invention currently owns, or has control or direction over, 7,024,249 common shares representing approximately 12.7% of the Company's outstanding common shares. Once restored, Bay Tree will own, or have control or direction over, 20,939,835 common shares representing approximately 37.9% of the Company's outstanding common shares.

A special committee of independent directors (the "Special Committee"), comprised of Robert Wilson (Chair), David Lake and John Nelson, will consider and make recommendations regarding the Transaction Proposal. The Special Committee has engaged Evans & Evans, Inc. as its financial advisor and to prepare a valuation report and fairness opinion with respect to the Transaction Proposal. Due to Evans & Evans, Inc.'s previous role with the Company, the Special Committee has also engaged WWC, P.C. as an advisor to assist with financial due diligence and other matters with respect to the valuation. WWC, P.C. is a firm of Certified Public Accountants, with offices in the United States and China, that offers business advisory and consulting services and is experienced with China based companies.

The Company's board of directors was presented with the Transaction Proposal, and established the Special Committee, on March 23, 2015. Since then the Special Committee has reviewed the Transaction Proposal, engaged advisors and conducted preliminary due diligence, including on the Offerors' ability to finance the Transaction Proposal. The Transaction Proposal is subject to a number of conditions including confirmation of financing. Confirmation of financing will be provided by the Offerors, to the Company's satisfaction, prior to the execution of any definitive agreement. Any transaction under the Transaction Proposal would also be subject to a number of conditions, such as receipt of all regulatory and shareholder approvals including the approval of at least a majority of the votes cast by minority shareholders (other than by Mr. Miao Hu and Mr. Mingyue Hu and each of their affiliates and associates and other joint actors) of the Company.

The Company's board of directors has made no determination yet as to the Company's response to the proposal. The Transaction Proposal is non-binding and there is no assurance that any transaction will be completed or, if completed, on the terms as proposed. The Company will provide further updates as material information becomes available.

About Liuyang Fireworks Limited

Liuyang Fireworks Limited is a leading China-based manufacturer of fireworks distributed both domestically and within more than 15 countries in North America, South America and Europe. The Company has more than 17 years of experience in the fireworks industry and is a supplier to the world's top five fireworks wholesalers and retailers. Liuyang's ISO9001-certified manufacturing facilities are located in the Liuyang area of Hunan, China, where more than half of the world's fireworks are produced.

For further information, contact:

Jacky Long
Chief Financial Officer
Liuyang Fireworks Limited
Telephone: 647.350.8818
E-mail: jackylong@farocean.com

Forward-Looking Statements

This news release contains forward-looking statements and information that are based on the beliefs of management and reflect Liuyang's current expectations. When used in this news release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this news release includes information relating to the method of effecting the privatization, the consideration offered by the Offerors for the common shares, and the consideration and recommendation on the Transaction Proposal by the Special Committee. The forward-looking information is based on certain assumptions, which could change materially in the future, including the assumption that the Company is able to effect the privatization using the proposed method, the consideration offered by the Offerors for the common shares is available, and the Special Committee will be able to consider and make a recommendation on the Transaction Proposal. Such statements and information reflect the current view of Liuyang with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the risk that the Transaction Proposal may be withdrawn. These and other risks are further described under "Risk Factors" in the Company's Filing Statement dated May 27, 2009, which is available on SEDAR and may be accessed at www.sedar.com. When relying on Liuyang's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Liuyang has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to above will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE SECURITIES LEGISLATION.

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