As a result of the following factors, we are unlikely to meet our earlier management targets for sales

of RMB3 billion and net profit of RMB300 million for FY2008:

1. Lower sales and profit during the Beijing Olympics 2008 period due to (i) the transportation

restrictions for dangerous chemical products placed by the PRC government in major

cities in the PRC; and (ii) the shut-down of chemical plants around the Beijing region

(including some of our customers) where the Olympic games were held; and

2. A sharp decrease in demand and selling prices for our products from September 2008 due

to abnormal, global economic forces and financial turmoil leading to a slow-down in the