Greetings. Welcome to Gulf Resources 2020 Annual and Fourth Quarter Earnings Conference. [Operator Instructions] Please note that this conference is being recorded. At this time, I'll turn the conference over to Helen Xu. Helen, you may now begin.

Thank you, operator. Good morning, ladies and gentlemen, and good evening to all those of you for joining us from China, and we'd like to welcome all of you to Gulf Resources Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. My name is Helen, the IR Director. Our CEO of the company, Mr. Xiaobin Liu, will also join this call today. I'd like to remind you to all of our listeners that in this call, certain management statements during the call will contain forward-looking statements. Forward-looking information about Gulf Resources Incorporation and its subsidiaries, business and products within the meaning of Rule 175 on the Securities Act of 1973 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. Actual results may differ from those discussed today taking into account a number of risk factors including, but not limited to, the general economic and the business condition within the PRC, the risks associated with COVID-19 pandemic outbreak, future product development and production capabilities, shipment to end customers, market acceptance of new and existing products, additional competition from existing and new competition from the bromine and the other oilfield and chemicals, changing technology, the ability to make future branding bromine assets and the various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by the cautionary statement and the risk factors detailed with the company's reports filed with the SEC. Gulf Resources assumes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Accordingly, our company believes that expectations reflected in those forward-looking statements are reasonable, and there can be no assurance of such will prove to be correct. In addition, any reference to the company's future performance represents the management's estimates as of today, the 9th of April 2021. For those of you unable to listen to the entire court at this time, a replay will be available on the company's website. The call is also accessible through the webcast, and the link is accessible through our website. So please look at our press release issued earlier for the details. So before we review the fourth quarter and the full year, which I believe have covered all of the questions from the company investors and shareholders, I'd like to turn the call over to Mr. Liu, for some introductory comments. Mr. Liu, [Foreign Language].

Yes. Hi. [Foreign Language]

[Interpreted] Thank you, Helen. The past 3 years have been extremely difficult for our company. We had to comply with all the new government regulations, which required us to rectify all of our bromine factories and contract a new chemical plant. Then shortly after the first of our bromine and crude salt facilities open, we were hit by the most destructive typhoon in Chinese history. This has not only forced us to rebuild our bromine and crude salt facilities and drill new wells and aqueducts, it also forced the government to implement full control as another environmental element. Then we had to face the COVID pandemic.

[Foreign Language]

[Interpreted] Now after 3 years, we have finally reported a profitable quarter and generated positive cash flow from operations. We did this just for bromine and crude salt factories in seasonally slow period because of cold temperatures and in a quarter in which the government forced an early closure for environmental reasons.

[Foreign Language]

[Interpreted] As we look to the future, we are becoming increasingly optimistic. The Chinese economy is recovering. Bromine prices continue to increase and our opportunity costs as many of our smaller competitors will never be able to reopen. We also expect to resume the approvals for the rest bromine and crude salt factories in the second half of 2021. However, there is no assurance that we will be able to get the approvals necessary to operate those factories from government. The construction of our new chemical factory is on schedule. We expect this actually will make higher net profit margin as the company plans to focus more on the higher margin pharmaceutical intermediate products. The company is optimistic about its project in Sichuan province. And plans to proceed with its application for the natural gas and brine projects, approval with related government requirements after the government planning has been finalized.

[Foreign Language]

[Interpreted] Okay. In the past 2 years, we have spent over $60 million on property, plant and equipment, yet our balance sheet still in excellent shape. We have over $94 million in cash and no debt. Although the closure for Chinese New Year will impact our first quarter, we believe we will be able to generate profits and cash flow in future quarters. Now let me turn the call back to Helen to review the fourth quarter and the fiscal year 2020 results. Thank you, Mr. Liu. So now let's look at the fourth quarter 2020 results first. In the fourth quarter, Gulf Resources had revenues of approximately $11.8 million. Cost of revenues were $6.7 million. Total expense were approximately $7.97 million. We earned a profit of $808,000 before taxes. Our loss for the 12 months was 4% less than our loss for the 9 months meaning that we earned 4% in the fourth quarter 2020. These results also include approximately $1.3 million of direct labor and factory overheads incurred during the planned shutdown. Meaning, they were attributable to operations that was not yet open. If this total is added back to our income, our operating businesses earned approximately $2.2 million during the fourth quarter. Further, our operating factories had to close on December 25, 2020, for environmental reasons. Meaning, we lost 1 week of operations. Our bromine business earned $3.5 million in the quarter. This was offset by a loss of approximately $527,000 in crude salt. As we have noted, crude salt business is normally weak in the winter because it is difficult to mine crude salt when temperatures are low. Our chemical and natural gas business, which were not in operation, which generated losses of $106,000 and $54,000, respectively. In the fourth quarter, we generated cash from operations…

[Operator Instructions] Our first question is coming from the line [ Matt Waring ] of [indiscernible] Research.

You say the factory will have higher margins, the chemical factor will have higher margins. But will the factory have higher revenues as well?

[Foreign Language]

[Foreign Language]

We feel responsible and we feel that, yes, we will focus on higher [indiscernible] products. We will have higher net profit margins.

Okay. So you'll have higher net profit margins?

Yes.

And then -- okay. And then the other question is, I know the company -- you just said the company is focusing on rebuilding factories before buying back shares and anything, but is the company allowed to buy back shares? I know a while ago, you guys weren't allowed to buy back shares. Are you allowed to now?

I think we didn't say very clearly what we will do, but we said that once the company will consider how it can utilize the free cash flow to benefit the shareholders in the future.

Okay. Yes. But are you just -- are you allowed to buy back shares?

Okay. Okay. Thank you. I will ask, again. [Foreign Language]

[Foreign Language]

[Interpreted] Okay. So as we said that as all our factories included new chemical factories opened, we should be in a position. And because we need the free cash to -- from these chemical factories for natural gas and for our bromine factories to be back on operation. And at this point, we did not submit our application yet to the government for this shares buyback. So we are not confirmed about your answer based on current government policy, yes.

Our next question comes from the line of [ John Rolls ], a private investor.

Yes. Congratulations on returning to profitability.

Thank you.

Is there any timetable for decision to build additional wells at the Sichuan Province?

[Foreign Language]

[Foreign Language]

[Interpreted] John, here is the response from Mr. Liu that because now the company is still waiting the government to finish its plans. Because the Sichuan Province government is doing its first round mining resources planning for the whole province, once the government finish its plan, then the company can continue with its application and submit its application for -- to government department for their approval. After that, then we can have a most specific and clear timetable on the company's plan. So now we cannot provide really like specific timetable until government finishes their jobs first.

You seem to be in a similar position with regard to your unopened factories that you're waiting for the government or the province to make...

Yes.

Are there any -- they're...

No, it's not a decision -- it's not a decision. It's like we are doing the planning for the whole province regarding its mining resources and land resource.

Yes. Usually, there's some schedule for the government to make a decision. You don't have such a schedule?

Just wait a minute, I have to check with Mr. Liu. [Foreign Language]

[Foreign Language]

[Interpreted] Okay. So -- based on our understanding, the plan is in this year, 2021, the cities and accounts are submitting their plans to provincial governments in Sichuan Province and by this year, 2021. And when the Sichuan provincial governments may finish their plan by beginning of the year 2022, and at that time, the company may submit its application for further approval and further wells at that time.

Our next question is from the line [ Charlie Cheever ] of [ Cheever Partners ].

Yes, my question is, what is the development plan for the natural gas? Will you try to develop that on your own? Or will you bring in one of the SOEs as partners to develop it? And then the second question is, would you consider spinning out the natural gas into a separate company?

[Foreign Language]

[Foreign Language]

[Interpreted] Okay. So this is a really long-term planning. The company may consider partnership with other enterprises or state-owned enterprise or separate with natural gas projects as a separate company in long-term strategy. But the most important thing, we think, we have to do now is after government finished its plan, then company gets the approval and -- first, have new more wells approvals as well. After this, company will have more bargaining power when its in discussion with other like companies still in the -- considering partnership or separate this natural gas into a new company.

Next question is from the line of [ Kim Ming Jin ], a Private Investor.

I've been a shareholder for the past 10 years on and off. My question is that what measures the company is planning to take in order to meet the most stringent requirement for auditing by Security and Exchange Commissions?

Sorry, [ Kim ], I think I did not get you clearly. Do you mind, just repeat your question?

Yes. What is the company's long-term or short-term plan in order to meet the most stringent requirement, auditing requirement set by Security and Exchange Commissions? That's the most concern matter from the shareholder point of view.

Okay. Do you mind, I just repeat your question. So you mean what's the company's long-term and short-term plan to make it compliant with the SEC rules on the mix of the company?

Yes.

Okay.

But if we do have a -- sorry, go ahead.

Okay. Thank you. [Foreign Language]

[Foreign Language]

But that didn't directly answer my question. Your CEO, Mr. Liu, mentioned that is how he is trying to do to increase the shareholders' value. But does he understand the requirement of the Securities and Exchange Commission?

[Foreign Language]

[Foreign Language]

[Interpreted] Okay. So first, hello?

I'm listening. Yes.

Okay. Okay. So here is your response from Mr. Liu that firstly, of course, the company operating business had to be operating well. So every -- like he mentioned, every business segment back and increased the shares. Of course, this is what we want to do best for our investors. Then, of course, we will follow the SEC rule strictly and do our filing time -- on time, and then we use always continue learning in order to continually satisfy the requirements by SEC and NASDAQ. Of course, this whole process helped by the company legal counsel and monitored by the company's auditor.

What message are you going to pass on to the investors? I know some friends, Chinese friends, they're all kind of concerned about whether the company is meeting the strengthening requirement of the Security and Exchange Commission. The concern that the requirement is not -- I mean, the matter is not taken up to the satisfaction of the SEC, and then the company will be delisted, all their investment will be lost. That's the most concern of the investors. Some of them already sold shares. I'm one of the few that have not sold my shares.

Okay. [Foreign Language]

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[Interpreted] Okay. So for the fairness to our all listeners, I just want to have a brief translation between Mr. Liu and [ Mr. Kim ]. Firstly, they were talking about when the company's bromine actually comes back in its operation, what the size it will be? And Mr. Liu said that when our rest bromine companies and the crude salt companies stacking operation, it will be 2 out of 3 as compared to the beginning of -- before the factories shutdown. And by the next year, the company can do this and achieve this target. Chemical factory will be starting its production almost like full production as a trial production by the end of next -- full production by the end of next year. And then [ Mr. Kim ] asked about why the bromine and the chemical product prices are increasing in China, what are the reason for this? Mr. Liu explained that there are several reasons. The first reason because China economy is recovering and there is -- with more bromine and basic chemical materials. Second reason, there are less competitors because for the rectification there, some bromine factories, chemical factories were shut down before. And the total production currently in this industry had decreased. Third, the basic chemical product materials are increasing in China now. Then [ Mr. Kim ] asked about if the bromine price company selling totally based on company size or not. Mr. Liu responds that it does not possibly totally depends on the company. The bromine price are still determined by the market demand. Then last question for [ Mr. Kim ]. He asked about the market share of bromine owned by Gulf Resources in the bromine industry. Last year, there are 4 to 5 percentage of bromine. They are percentage is the market by Gulf Resources. By the -- when the bromine factory and crude salt factory are back on operation, the year after next year, its market share may achieve 6 to 7 percentage. This is a brief translation between Mr. Liu and [ Mr. Kim ] for your information.

There are no additional questions at this time, Ms. Xu.

Okay. Thank you. [Foreign Language]

[Foreign Language]

Thank you. That's all for today. Thank you for the call. You have good night, and enjoy the day.

Thank you. This will conclude today's conference.

Thank you.

You're welcome, and you may disconnect your lines at this time. Thank you for your participation.

Thank you.