2. Nature of Business

(1) Company profile

Pato Chemical Industry Plc was established on 6 October 1973 to import,
formulate, and distribute pesticide in Thailand. Its registered capital
was at first 1 million baht with total ordinary shares of 1,000 at par
value of 1,000 baht . PATO went public, and changed its name to PATO
CHEMICAL INDUSTRY PUBLIC COMPANY LIMITED in October 1993 then continued
to sell its ordinary stocks for 3,000,000 shares at Bt 55 per share,
valued at Baht 10 per share in July 1995. PATO increased its capital to
Baht 140 million. The company has been listed in the Stock Exchange of
Thailand in August 1995. In April 1997, ANCOM BERHAD Co Ltd a listed
company in Malaysia, has become a major shareholder of 10.50% of the
company’s total ordinary shares. In April 1998 Nissho Iwai Corporation,
Japan took 10% stake of Pato or 1,400,000 shares from minor shareholders
and became 15% or 2,100,000 shares while Nissho Iwai (Thailand) took 5%
stake or 700,000 shares in 2000. Audit committee was appointed in
December 1999. In 2001, Pato has disposed its stake in affiliated
company, Acron Plastic Industry Co.,Ltd. . The common shares of
4,588,077 were sold and transferred to a new investor and left with
531,923 shares which represents 4.93%. Acron has now changed its name to
Plastic Precision Industry Co.,Ltd. with current registered capital of
108 million baht.

Major changes and development

  ----------- --- ---------------------------------------------------------
  January     :   License to be formulator and distributor of Patozine 90
  2003            (Atrazine 90% WG) and Patometyrn 80% WG (Ametryn 80% WG)

  April 2003  :   License to be formulator and distributor of Patotap 50
                  (Cartap Hydrochloride 50% WP)

  June 2003   :   License to be formulator and distributor of Gibto
                  (Giberrellic acid 5% SL)

  August 2003 :   License to be formulator and distributor of Butus 70 EC
                  (Butachlor +Propanil 70% EC)

  October     :   License to be formulator and distributor of Ethephon
  2003            (Ethephon 52% SL) and Hera (Quinalphos 25% EC)

  October     :   Nissho Iwai Corporation of Japan, a major shareholder of
  2003            Pato Chemical Industry Plc currently holding 2.1 million
                  shares representing a 15% stake, informs that the
                  chemical department of Nissho Iwai Corporation and
                  Nichimen Corporation of Japan will merge to form NN
                  Chemical Corporation. The name of shareholder of Pato
                  under Nissho Iwai Corporation will be changed to NN
                  Chemical Corporation accordingly.

  November    :   License to be formulator and distributor of J.I Slug
  2003            (Metaldehyde 20% SC)

  December    :   License to be formulator and distributor of Patosave-85
  2003            (Carbaryl 85% WP)

  December    :   Plastic Precision Industry Co., Ltd. (PPIC), a related
  2003            company of Pato Chemical Industry PCL. (Pato), has
                  successfully made a restructuring agreement with a
                  foreign investor who will subscribe to 4 million newly
                  issued shares at par value of 10 baht per share before
                  April 30, 2004 for the production of extruded PMMA sheets
                  and coating of all types of cast and extruded plastics.
                  In addition, a 60 million baht banking credit facility
                  has been officially approved on December 29, 2003 to
                  support this new project which is expected to start
                  commercial operation in Q3 of 2004. In view of this, Pato
                  is confident that PPIC will have the capability to repay
                  all its outstanding debts. On December30, 2003 Pato has
                  signed an agreement with PPIC to reschedule PPIC’s
                  payment of the total outstanding debt of 30.56 million
                  baht to Pato with a one-year grace period in monthly
                  installments until the obligations are fully settled.
                  Under this agreement, Pato will be granted an option to
                  convert up to 15 million baht of the outstanding debt
                  into equity.
  ----------- --- ---------------------------------------------------------

Development of major shareholders from 31 December 2000 – 31 December
2003

[TABLE]

(2) Pato Chemical Industry Public Co.,Ltd.

The company is the importer, formulator, and distributor of pesticide.

Major Types of Imports

1. Technical Grade (TG): is a concentrated substance with needs
formulation in final product according to the specified formulas.

2. Finished Product (FP): FP is the product ready for use. Most of the
imported FD is in liquid and solid form in large size. Therefore,
repackaging is needed before distribution.

About 80% of the company’s imported products are TG for formulation at
the factory before distribution resulted in lower cost of raw materials
as compared with other competitors who import finished product for
repackaging. TG can be stored for longer period than FP and can be
formulated to the requirements which is more suitable for the
environment. Chemical pesticide in the market can be in many forms e.g.
liquid, power, and tablet for safety and case in moving and storing. In
the production process. the are 2 main ingredients in chemical
pesticide; active and inert ingredients. “Active Ingredients” are
chemical substance called by its chemical names for different uses of
purposes. “Inert Ingredients” are substance to combine with the active
chemical to make it in the forms suitable for different types of uses
such as solvents, carriers, surfactants, emulsifiers, or any other
substance which are added for special purpose called “Special
Additives”.

Shareholders' Structure

a) Trillit

  b) Ancom Berhad Asia Mineral Processing Co.,Ltd.

c) Nissho Iwai Corp.

d) Pojanalai

e) Wesaratchawest

f) ) Choengwiwatkit

a) 0.54% a) 27.24% a) 39.30% a) 32%

b) - b) 10.50% b) - b) -

c) - c) 20.00% c) - c) -

d) 0.54% d) 11.12% d) 12.70% d) 46%

e) - e) 7.94% e) 19.60% e) -

f) 0.27% f) 6.08% f) 15.70% f) -

1.35% 82.88% 87.30% 78%

Pato Chemical Industry Plc. Kentex Properties Co.,Ltd.

Registered Capital Baht 140 Million (Office Space Rental)

4.93%

Plastic Precision Industry Co.,Ltd.

Registered Capital Baht 108 Million Connected transaction such as loan,
bank guarantee, office space rental

(3) Revenue Structure Sales Revenue

+-----------------+-------+------+-----+----+-----+----+-----+----+
|                 | Ope   | Pe   | 2   |    | 2   |    | 2   |    |
|                 | rated | rcen | 001 |    | 002 |    | 003 |    |
|                 | By    | tage |     |    |     |    |     |    |
+-----------------+-------+------+-----+----+-----+----+-----+----+
|                 |       | Of   | Mil | %  | Mil | %  | Mil | %  |
|                 |       | Sh   | B   |    | B   |    | B   |    |
|                 |       | ares | aht |    | aht |    | aht |    |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Local Sales by  |       |      |     |    |     |    |     |    |
| Products        |       |      |     |    |     |    |     |    |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Product Line 1  | PATO  |      |     |    |     |    |     |    |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Insecticide     |       |      | 120 | 2  | 130 | 2  | 171 | 3  |
|                 |       |      | .76 | 6. | .63 | 5. | .51 | 1. |
|                 |       |      |     | 45 |     | 95 |     | 08 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Herbicide       |       |      | 267 | 5  | 292 | 5  | 300 | 5  |
|                 |       |      | .35 | 8. | .51 | 8. | .47 | 4. |
|                 |       |      |     | 55 |     | 10 |     | 45 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Fungicide       |       |      | 21  | 4. | 30  | 6. | 33  | 6. |
|                 |       |      | .26 | 66 | .17 | 00 | .20 | 02 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Acaricide       |       |      | 13  | 3. | 15  | 3. | 17  | 3. |
|                 |       |      | .87 | 04 | .10 | 00 | .03 | 08 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Other           |       |      | 33  | 7. | 35  | 6. | 28  | 5. |
|                 |       |      | .31 | 30 | .01 | 95 | .67 | 19 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Total Local     |       |      | 456 | 10 | 503 | 10 | 550 | 9  |
| Sales           |       |      | .55 | 0. | .42 | 0. | .88 | 9. |
|                 |       |      |     | 00 |     | 00 |     | 82 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Export Sales by |       |      |     |    |     |    |     |    |
| Products        |       |      |     |    |     |    |     |    |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Product Line 1  | PATO  |      |     |    |     |    |     |    |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Insecticide     |       |      | -   | -  | -   | -  | -   | -  |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Herbicide       |       |      | -   | -  | -   | -  | -   | -  |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Fungicide       |       |      | -   | -  | -   | -  | -   | -  |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Acaricide       |       |      | -   | -  | -   | -  | -   | -  |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Other           |       |      | -   | -  | -   | -  | 0   | 0. |
|                 |       |      |     |    |     |    | .98 | 18 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Total Export    |       |      | -   | -  | -   | -  | 0   | 0. |
| sales           |       |      |     |    |     |    | .98 | 18 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Local & Export  |       |      |     |    |     |    |     |    |
| Sales           |       |      |     |    |     |    |     |    |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Product Line 1  | PATO  |      |     |    |     |    |     |    |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Insecticide     |       |      | 120 | 2  | 130 | 2  | 171 | 3  |
|                 |       |      | .76 | 6. | .63 | 5. | .51 | 1. |
|                 |       |      |     | 45 |     | 95 |     | 08 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Herbicide       |       |      | 267 | 5  | 292 | 5  | 300 | 5  |
|                 |       |      | .35 | 8. | .51 | 8. | .47 | 4. |
|                 |       |      |     | 55 |     | 10 |     | 45 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Fungicide       |       |      | 21  | 4. | 30  | 6. | 33  | 6. |
|                 |       |      | .26 | 66 | .17 | 00 | .20 | 02 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Acaricide       |       |      | 13  | 3. | 15  | 3. | 17  | 3. |
|                 |       |      | .87 | 04 | .10 | 00 | .03 | 08 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Other           |       |      | 33  | 7. | 35  | 6. | 29  | 5. |
|                 |       |      | .31 | 30 | .01 | 95 | .65 | 37 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Total Local &   |       |      | 456 | 10 | 503 | 10 | 551 | 10 |
| Export sales    |       |      | .27 | 0. | .42 | 0. | .86 | 0. |
|                 |       |      |     | 00 |     | 00 |     | 00 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Less returned & |       |      | 21  | 4. | 19  | 3. | 23  | 4. |
| Discount        |       |      | .30 | 67 |     | 77 | .11 | 19 |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Net Sales       |       |      | 435 | 9  | 484 | 9  | 528 | 9  |
|                 |       |      | .25 | 7. | .42 | 8. | .75 | 9. |
| Contractor      |       |      |     | 87 |     | 28 |     | 07 |
|                 |       |      | 0   |    | 0   |    | -   |    |
| Other Income    |       |      | .33 | 0. | .27 | 0. |     | -  |
|                 |       |      |     | 07 |     | 05 | 4   |    |
|                 |       |      | 9   |    | 8   |    | .94 | 0. |
|                 |       |      | .16 | 2. | .23 | 1. |     | 93 |
|                 |       |      |     | 06 |     | 67 |     |    |
+-----------------+-------+------+-----+----+-----+----+-----+----+
| Total Revenue   |       |      | 444 | 10 | 492 | 10 | 533 | 10 |
|                 |       |      | .74 | 0. | .92 | 0. | .69 | 0. |
|                 |       |      |     | 00 |     | 00 |     | 00 |
+-----------------+-------+------+-----+----+-----+----+-----+----+