Broo Limited advised that its' wholly owned subsidiary, Broo Exports Pty Ltd. (Broo Exports) has terminated the Distribution Agreement entered into with Beijing Jihua Information Consultant Ltd. (Beijing Jihua). In November 2017, Broo Exports entered into a Distribution Agreement with Beijing Jihua, granting them exclusive distribution rights in China of the Broo Premium Lager beer products (Distribution Agreement). The Company considers that Beijing Jihua is in default of the Distribution Agreement for its failure to make payment to Broo Exports of minimum royalty payments payable in respect of the first 3-year period of the term of the Distribution Agreement and which became due and payable in December 2020. The Company sent a letter to Beijing Jihua on 18 December 2020 advising them to remedy the default and make payment of the royalty payments owing within a period of 14 days from the date of such letter. Beijing Jihua has failed to make payment of the royalty payments that are payable to Broo Exports and has not remedied their breach of the Distribution Agreement within the requisite deadline. Under the terms of the Distribution Agreement, Broo Exports has a right to terminate the Distribution Agreement for Beijing Jihua's failure to remedy a default within 14 days of notice. The Company has exercised this contractual termination right and notified Beijing Jihua that it has terminated the Distribution Agreement with immediate effect. The Company will be reviewing its legal position against Beijing Jihua arising from the termination of the Distribution Agreement and shall determine an appropriate course of action in the circumstances to enforce its legal rights.