UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 Or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ | --- | --- | |----------------------------------------------------------------------------------------------------------------------------------- ...

Financial Data and Key Metrics Changes - In fiscal year 2018, the company reported net revenues of approximately $2.59 million, a decline of 98% compared to the previous year [6] - The company incurred a loss from operations of approximately $83.55 million and a net loss of $69.96 million, equivalent to $1.49 per share [6] - The comprehensive loss, including foreign exchange tax adjustments, was $88.6 million [6] - As of December 31, 2018, the company had $179 million in cash, equating to $3.82 per share, and shareholders' equity was $293.85 million, or $6.27 per share [7] Business Line Data and Key Metrics Changes - Major costs in 2018 included approximately $15.8 million for enhancement works in protection shells for crude salt fields and $17.8 million for building new extraction wells [8] - The company spent over $8 million on cleanup after a typhoon that impacted its facilities [10] Market Data and Key Metrics Changes - The closure of bromine facilities nationally has led to extremely high bromine prices, which the company expects to benefit from once its facilities reopen [13] - The weakness of the Chinese RMB against the US dollar has made imports more expensive, potentially benefiting local producers [13] Company Strategy and Development Direction - The company plans to focus on higher profit margin businesses, such as pharmaceutical chemicals, with the new chemical factory [14] - The company is budgeting around $28 million for capital expenditures to improve its wells in 2019 [12] - The management believes that competition has been reduced and expects core businesses to have higher margins than in the past [15] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the future, despite the challenges faced in 2018, and believes that the company will emerge stronger and more profitable [15] - The management is focused on getting approvals to reopen all factories as quickly as possible and is considering acquisitions if opportunities arise [22] Other Important Information - The company has maintained its workforce during the plant closures to retain skilled workers and assist in cleanup efforts [30] - The company has incurred significant impairment losses related to property, plant, and equipment due to the closures and environmental issues [8] Q&A Session Summary Question: Has all the work on bromine factories been completed? - The work has basically been completed, but there may be additional requirements from the government before reopening [17] Question: Have project approvals been received? - The company has not received project approvals yet but expects to seek them soon [17] Question: Are all seven factories at the same stage of reopening? - All seven factories are at about the same stage, but approvals may come in tranches [18] Question: What is the expectation for ramping up production? - The company expects approvals by the end of March or early April and plans to ramp up production quickly thereafter [18] Question: What is the status of the new chemical production facility? - The company has purchased land and is waiting for final environmental protection assessment approval to begin construction [23] Question: What is the expected capacity of the new factory? - The capacity will be somewhat lower than the original factories, but efficiency and profit margins are expected to improve [24] Question: What is the status of natural gas trial production? - The company is producing 3,000 cubic meters per day and expects this number to increase [26] Question: What is the plan for drilling a second well? - The decision to drill a second well will depend on the ramp-up of the first well [27] Question: What is the status of negotiations for land related to closed factories? - The company is negotiating for compensation related to lead payments and agreements for the closed factories [22] Question: Has the chairman considered buying shares? - The chairman has not changed his mind and continues to work on strategies for purchasing shares [29]

Financial Performance - In the fiscal year ended December 31, 2018, the net revenue for the bromine segment was $0 due to the closure of all plants for rectification and improvement since September 1, 2017[47]. - Sales to the three largest crude salt customers in 2018 aggregated $1,981,573, representing 100% of total net revenue from crude salt sales[48]. - The Company has ongoing policies to ensure sales are made to credit-worthy customers, with no accounts receivable reported for the year ended December 31, 2018[45]. Capital Expenditures and Investments - The company incurred $16,243,677 in rectification and improvements of plant and equipment for bromine and crude salt factories in the fiscal year ended December 31, 2018, with a cumulative total of $34,182,329 since the beginning[25]. - The Company expects to incur approximately $28 million in capital expenditure for building new extraction wells in 2019[59]. - The relocation of chemical production plants is estimated to cost approximately $60 million, with $10,925,081 capitalized in construction work in progress as of December 31, 2018[60]. - The company has entered into contracts for building new extraction wells for bromine facilities totaling approximately $40 million, with about $12 million paid in 2018[26]. - The company has secured land for a new chemical factory, with total construction costs estimated at approximately $60 million[31]. Operational Changes and Challenges - An impairment charge of $27,966,050 was recorded for the chemical segment in the year ended December 31, 2018, due to uncertainties in demand and regulatory approvals[33]. - The company wrote off a net book value of $18,644,473 for the demolition of three bromine factories as of December 31, 2018[28]. - The company is focused on obtaining necessary approvals to resume production and may consider future acquisition opportunities in the bromine segment[30]. Workforce and Employee Benefits - The Company has a total of approximately 699 full-time employees as of December 31, 2018, with 64% employed by SCHC and DCHC, and 35% by SYCI[71]. - The Company purchased social insurance for almost all employees, with expenses related to social insurance amounting to approximately $1,216,096 for fiscal year 2018[72]. Subsidiary and Expansion Plans - The company has established a new subsidiary, Daying County Haoyuan Chemical Company Limited, with registered capital of RMB50,000,000 to explore natural gas and brine resources[21]. - The company plans to continue acquiring smaller scaled and unlicensed bromine producers to expand its operations[36]. Production Capacity - The annual production capacity for SYCI's old factories was over 26,000 tons for oil and gas field exploration products, over 5,000 tons for papermaking-related chemical products, and over 6,800 tons for materials used for human and animal antibiotics[43]. Project Updates - The Company completed the first brine water and natural gas well field construction in Sichuan Province, commencing trial production in January 2019[32]. - The Company completed the first brine water and natural gas well field construction in Sichuan Province and commenced trial production in January 2019[56].