Chairman's Message

Dear Shareholders and Associates,

The past 3 ½ years have been extremely difficult for our company, our management, our workers, and our shareholders. There are still more steps to take as the government seeks to improve the environment, reduce pollution, and limit the impact of floods and other natural disasters. However, as we enter 2021, we are becoming increasingly optimistic about our current operations and our future opportunities.

Bromine prices have continued to increase. According to Sunsirs Commodity Data Group, the price per tonne of bromine on March27, 2021 was RMB 34555.56. According to data from the China Petroleum and Chemical Industry Association, this represents an increase of 29.7% since last July and 15.4% in the past 12 months. The current price is 106% above its 10-year low and only 1.2% below its 10-year high. At these price levels, our bromine business should be very profitable.

There are still some issues to be resolved before we receive approval to open our remaining facilities. This could require us to acquire additional land for our saltfacilities or build more aqueducts and wells. In addition, the government is continuing to develop new policies that will minimize the impact of future typhoons, like Typhoon Lekima.

At this point, we do not know when the planning will be completed, but we remain optimistic that we will be able to take steps to get our remaining bromine and crude salt facilities open. In addition, we will also consider acquisitions of other bromine facilities or land for salt fields in order to expand our production.

We are making good progress in constructing our new chemical factory. Construction is on schedule and should be completed by the end of the 2ndquarter of 2021. During the 3rdand 4th quarters, we will install and test the new equipment. Trial production should begin at the end of the beginning of the 1stquarter of 2022. This schedule could be slightly impacted if the government enacts another New Year’s shut down, since Chinese New Year is 11 days earlier in 2022

While our new factory will be smaller than those of the previous two factories, the net

Profit margins should be much higher, as we focus on pharmaceutical and other high margin products. We believe total net profits should be able to achieve their previous levels.

We continue to be optimistic about the opportunities for natural gas and brine production in Sichuan Province. We are working with the governments of Tianbao Town, Daying County, and Sichuan Province in China closely, and plan to proceed with its applications for the natural gas and brine project approvals with related government departments after the government has finalized the land and resources planning for Sichuan Province.

We do not know when this process will be completed. We do know that Petro-China made one of the largest natural gas discoveries in the history of China in Tian Bao town, close to our facilities. We also know that bromine concentrations in this area as significantly higher than in Shandong Province. While we wish the planning process would move faster, we are confident that we will ultimately resume natural gas production and also produce brine products.

Despite all of the issues related to environmental planning and the closure of our factories, our balance sheet remains strong. We have large cash balances and no debt. Many of our competitors have not been as fortunate. Many have not had the capital to survive 3 ½ years of closure, conduct rectification, drill new wells, and meet environmental requirements. This likely means that the price of bromine and chemicals will remain elevated and that we should be able to find excellent acquisition opportunities.

I want to extend a special thanks to our management and workers, who have struggled through this difficult period of environmental closures and floods. I also want to thank our shareholders, who have been extremely patient.

As we have said before, we have had no control over the environmental plans of the government or the devastating impact of Typhoon Lekima. However, most of these issues are now behind us. We see a path to opening more facilities, restoring profitability, and providing strong future opportunities for our shareholders, management, and employees.

We look forward to a much brighter future.

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