What changed in this filing

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Item 1. Legal Proceedings

2022-08-15 compared with 2022-05-13 · 71 added, 4 removed, 10 unchanged (88% of the section changed)

9 unchanged sentences

296 (together, the “Written Decisions”) were served on Shouguang City Haoyuan Chemical Company Limited (“SCHC”)

by the Shouguang City Natural Resources and Planning Bureau (the “Bureau”), naming SCHC as respondent.

For more details and information related to the

Written Decisions, please see “Note 19 – Loss Contingencies, Notes to Condensed Consolidated Financial Statement” contained

in this quarterly report.

by Shouguang City Natural Resources and Planning Bureau (the “Bureau”), naming SCHC as respondent respectively thereof.

Decisions challenged the land use of Factory nos.

2, 9, 7, 4, 8 and 10, respectively, and alleged, among other things, that SCHC had illegally

occupied and used the land in the total area of approximately 52,674 square meters, on which Factory nos.

2, 9, 7, 4, 8 and 10 were built,

respectively.

The Written Decisions ordered SCHC, among other things, to return the land subject to the Written Decisions to its respective

legal owner, restore the land to its original state, and demolish or confiscate all the buildings and facilities thereon and pay monetary

penalty of approximately RMB 1.3 million ($184,000) in the aggregate.

Each of the Written Decisions shall be executed within 15 days upon

serving on SCHC.

Additional interest penalty shall be imposed at a daily rate of 3% in the event that SCHC does not make the monetary

penalty payment in a timely manner.

Subsequently, the Bureau filed enforcement actions to the People’s Court of Shouguang City,

Shandong Province (the “Court”), naming SCHC as enforcement respondent and alleged, among other things, that SCHC failed to

perform its obligations under each of the Written Decisions within the specified timeframe.

The enforcement proceedings sought court orders

to enforce the Written Decisions.

On May 5, 2019, written decisions of administrative ruling captioned (2019) Lu 0783 Xing Shen No.

(2019) Lu 0783 Xing Shen No.

385, (2019) Lu 0783 Xing Shen No.

389, (2019) Lu 0783 Xing Shen No.

390, (2019) Lu 0783 Xing Shen No.

and (2019) Lu 0783 Xing Shen No.

394, respectively (together, the “Court Rulings”) were made by the Court in favor of the

The Court orders, among other relief, to enforce each of the Written Decisions, to return each subject land to its legal owner

and demolish or confiscate the buildings and facilities thereon and restore the land to its original state within 10 days from the service

of the Court Rulings on SCHC.

The Court Rulings became enforceable immediately upon service on SCHC on May 5, 2019.

In the last twenty years, to the Company’s

knowledge, there were no government regulations requiring bromine manufacturers to obtain land use and planning approval document.

such, the Company believes most of the bromine manufacturers in Shouguang City do not have land use and planning approval documents and

lease their land parcels from the village associations.

They are facing the same issues in connection with land use and planning as the

The Company is in the process of resolving the issues in connection

with SCHC’s land use and planning diligently.

The Company has been in discussions regularly with the local government authorities

with the help from Shouguang City Bromine Association to seek reliefs and, based on verbal confirmation by local government authorities,

believes the administrative penalties imposed by the Bureau according to the Written Decisions are being re-assessed by local government

authorities and may be revoked.

Pursuant to a Written Application dated October 28, 2019 addressed to the Court by the Bureau, the Bureau

withdrew its application for the enforcement proceedings regarding the administrative penalty imposed on Factory No.

7, Factory No.

and Factory No.10.

Pursuant to a written decisions of administrative ruling captioned (2019) Lu 0783 Xing Shen No.

389 Zhi Yi, dated November

25, 2020, the Court orders to terminate the enforcement of the case captioned (2019) Lu 0783 Xing Shen No.

Production of Factory

7 was allowed to resume in April 2019.

The Company received a notification from the Shouguang City Government in February 2019 informing

the Company that Factory No.

9 have passed inspection and were approved to resume operation.

In addition, on August 28, 2019, the People’s

Government of Shandong Province, issued a regulation titled “Investment Project Management Requirements of Chemical Companies in

Shandong Province” permitting the construction of facilities on existing sites or infrastructure of bromine manufacturing and other

chemical industry-related types of projects (clause 11 of section 3).

The Company believes that the goal of the government is to standardize

and regulate the industry and not to demolish the facilities or penalize the manufacturers.

As of the date of this report, the Company

has not been notified by the local government that it will take any measure to enforce the administrative penalties.

Based on information

known to date, the Company believes that it is remote that the Written Decisions or Court Rulings will be enforced within the expected

timeframe and a material penalty or costs and expenses against the Company will result.

However, there can be no assurance that there

will not be any further enforcement action, the occurrence of which may result in further liabilities, penalties and operational disruption.

This information has been omitted based on the Company’s status

as a smaller reporting company.

Unregistered Sale of Equity Securities and Use of Proceeds

Defaults Upon Senior Securities

Mine Safety Disclosures

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings