What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-13 compared with 2021-11-15 · 363 added, 525 removed, 718 unchanged (55% of the section changed)

4 unchanged sentences

(Expressed in U.S.

September 30, 2021

March 31, 2022

December 31, 2021

Current Assets

$ 105,661,999

Accounts receivable

14 unchanged sentences

Current Liabilities

Accounts , other payable and accrued expenses

Payable and accrued expenses

Taxes payable-current

Amount due to a related party

Finance lease liability, current portion

15 unchanged sentences

80,000,000 shares authorized;

10,515,307 and 10,043,307 shares issued;

10,469,477 and 9,997,477 shares outstanding as of September 30, 2021 and December 31, 2020, respectively

10,517,754 shares issued;

and 10,471,924 shares outstanding as of March 31 31, 2022 and December 31, 2021

Treasury stock;

45,830 and 45,830 shares as of September 30, 2021 and December 31, 2020 at cost

45,830 shares as of March 31, 2022 and December 31, 2021 at cost

Additional paid-in capital

1 unchanged sentence

Retained earnings appropriated

Accumulated other comprehensive loss

Accumulated other comprehensive income

Total Stockholders’ Equity

5 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND

COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

INCOME (LOSS)

(Expressed in U.S.

Three-Month Period Ended September 30,

Nine -Month Period Ended September 30,

OPERATING INCOME (EXPENSE)

Three-Month Period Ended

OPERATING EXPENSE

Cost of net revenue

1 unchanged sentence

( 4,181,389 )

( 19,294,860 )

( 12,694,271 )

Sales, marketing and other operating expenses

2 unchanged sentences

( 2,613,483 )

( 5,237,258 )

( 6,886,215 )

General and administrative expenses

1 unchanged sentence

( 1,736,250 )

( 8,150,769 )

( 7,297,010 )

Other operating income (loss)

Other operating expense

Total operating expense

1 unchanged sentence

( 8,540,667 )

( 32,727,178 )

( 26,922,137 )

INCOME(LOSS) FROM OPERATIONS

( 2,733,818 )

LOSS FROM OPERATIONS

( 3,281,424 )

2 unchanged sentences

Interest income

Other (income) expenses

INCOME(LOSS) BEFORE TAXES

( 2,695,256 )

LOSS BEFORE TAXES

( 3,245,833 )

2 unchanged sentences

$ ( 2,502,124 )

NET INCOME(LOSS)

$ ( 2,912,581 )

$ ( 8,696,959 )

COMPREHENSIVE LOSS:

NET INCOME(LOSS)

$ ( 119,946 )

5 unchanged sentences

$ ( 4,686,814 )

INCOME(LOSS) PER SHARE:

LOSS PER SHARE:

BASIC AND DILUTED

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2021

THREE-MONTH PERIOD ENDED MARCH 31, 2022 AND 2021

(Expressed in U.S.

1 unchanged sentence

unappropriated

Treasury Stock

Additional Paid-In Capital

Retained Earnings Unappropriated

Accumulated Other Comprehensive Income(Loss)

BALANCE AT JUNE 30, 2021 ( Una udited)

Restricted shares

Translation adjustment

Net income for three-month period ended September 30, 2021

BALANCE AT SEPTEMBER 30, 2021 (Unaudited)

comprehensive

unappropriated

BALANCE AT JUNE 30, 2020 ( Una udited)

BALANCE AT DECEMBER 31, 2021 (Audited)

$ ( 510,329 )

2 unchanged sentences

$ 286,639,217

Restricted shares issued for services

Translation adjustment

Net loss for three-month period ended September 30, 2020

( 2,912,581 )

BALANCE AT SEPTEMBER 30, 2020 (Unaudited)

Net loss for three-month period

ended March 31, 2022

BALANCE AT MARCH 31, 2022

$ ( 510,329 )

5 unchanged sentences

BALANCE AT DECEMBER 31, 2020 (Audited)

Restricted shares

Translation adjustment

Net income for nine-month period ended September 30, 2021

BALANCE AT SEPTEMBER 30, 2021 (Unaudited)

comprehensive

unappropriated

BALANCE AT DECEMBER 31, 2019 (Audited)

$ ( 510,329 )

1 unchanged sentence

$ 277,024,273

$ 263,107,100

Restricted shares issued for services

Translation adjustment

Net loss for nine-month period ended September 30, 2020

( 2,184,690 )

BALANCE AT SEPTEMBER 30, 2020 (Unaudited)

Net loss for three-month period

ended March 31, 2021

( 2,502,124 )

BALANCE AT MARCH 31, 2021

$ ( 510,329 )

$ 148,886,232

$ 272,337,459

See accompanying notes to the condensed consolidated financial statements.

Treasury Stock

Additional Paid-In Capital

Retained Earnings Unappropriated

Accumulated Other Comprehensive Income (Loss)

GULF RESOURCES, INC.

2 unchanged sentences

(Expressed in U.S.

Nine-Month Period Ended September 30,

Three-Month Period Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Net income(loss)

$ ( 119,946 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Interest on finance lease obligation

$ ( 2,502,124 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Interest on capital lease obligation

Depreciation and amortization

Unrealized exchange gain on translation of inter-company balances

Unrealized exchange (gain) loss on translation of inter-company balances

Deferred tax asset

( 1,712,229 )

Common stock issued for services

Issuance of stock options to employee

Changes in assets and liabilities

Accounts receivable

( 6,890,373 )

( 2,273,999 )

Prepayments and deposits

( 2,744,904 )

Other receivables

3 unchanged sentences

Prepaid land leases

Operating lease

Net cash provided by (used in) by operating activities

Operating leases

( 1,258,066 )

Net cash provided by operating activities

CASH FLOWS USED IN INVESTING ACTIVITIES

Purchase of property, plant and equipment

( 8,560,152 )

( 9,860,142 )

Net cash used in investing activities

( 8,560,152 )

( 9,860,142 )

CASH FLOWS USED IN FINANCING ACTIVITIES

Repayment of finance lease obligation

Net cash used in financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

( 4,678,174 )

EFFECTS OF EXCHANGE RATE CHANGES

ON CASH AND CASH EQUIVALENTS

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD

CASH AND CASH EQUIVALENTS - END OF PERIOD

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the periods for:

Operating right-of-use assets obtained in exchange for lease obligations

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

$ 105,661,999

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

(Expressed in U.S.

1 unchanged sentence

of Presentation and Consolidation

The accompanying condensed financial statements

have been prepared by Gulf Resources, Inc.

(“Gulf Resources”).

a Nevada corporation and its subsidiaries (collectively, the

“Company”), without audit, in accordance with the instructions to Form 10-Q and, therefore, do not necessarily include all

information and footnotes necessary for a fair statement of its financial position, results of operations and cash flows in accordance

with accounting principles generally accepted in the United States (“US GAAP”).

In the opinion of management, the unaudited financial

information for the three and nine months ended September 30, 2021 presented reflects all adjustments,

which are only normal and recurring, necessary for a fair statement of results of operations, financial position and cash flows.

condensed financial statements should be read in conjunction with the financial statements included in the Company’s Annual Report

on Form 10-K for the fiscal year ended December 31, 2020.

Operating results for the interim periods are not necessarily indicative of

operating results for an entire fiscal year.

The preparation of financial statements in conformity

with US GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the financial statements

and accompanying disclosures.

Although these estimates are based on management’s best knowledge of current events and actions that

the Company may undertake in the future, actual results may be different from the estimates.

The Company also exercises judgments in the

preparation of these condensed financial statements in certain areas, including classification of leases and related party transactions.

The accompanying audited consolidated financial

statements have been prepared by Gulf Resources, Inc.

(“Gulf Resources”), a Nevada corporation and its subsidiaries (collectively,

the “Company”).

The consolidated financial statements include

2 unchanged sentences

Virgin Islands, which owns 100% of Hong Kong Jiaxing Industrial Limited, a company incorporated in Hong Kong (“HKJI”).

owns 100% of Shouguang City Haoyuan Chemical Company Limited ("SCHC") which owns 100% of Shouguang Yuxin Chemical Industry Co.,

Limited (“SYCI”) and Daying County Haoyuan Chemical Company Limited (“DCHC”).

owns 100% of Shouguang City Haoyuan Chemical Company Limited (“SCHC”) which owns 100% of Shouguang Yuxin Chemical Industry

Co., Limited (“SYCI”) and Daying County Haoyuan Chemical Company Limited (“DCHC”).

All material intercompany

transactions have been eliminated on consolidation.

Nature of Business

of the Business

The Company manufactures and trades bromine and

crude salt through its wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited ("SCHC"), which is also planning

to engage in seawater desalination technology research and service and to handle the import and export of goods and technologies within

the scope permitted by the State.

The Company also manufactures chemical products for use in the oil industry, pesticides, paper manufacturing

industry and for human and animal antibiotics through its wholly-owned subsidiary, Shouguang Yuxin Chemical Industry Co., Limited ("SYCI")

in the People’s Republic of China (“PRC”).

DCHC was established to further explore and develop natural gas and brine

resources (including bromine and crude salt) in the PRC.

DCHC commenced trial operation in January 2019 but suspended production temporarily

in May 2019 as required by the government to obtain project approval (see Note 1 (b) (iii) below).

On March 11, 2020, the World Health Organization

(WHO) officially declared COVID-19 a pandemic.

The duration and intensity of the impact of the COVID-19 and resulting disruption to the

Company’s operations and financial position is uncertain.

While our operations are currently not materially affected, it is unknown

whether or how they may be affected if such a pandemic persists for an extended period.

While not yet quantifiable, the Company believes

this situation did not have a material adverse impact on its operating results in the first quarter of 2021 and will continue to assess

the financial impact.

The virus outbreak slightly delayed the commencement of the operations for Factory No.1, No.4, No.7, No.9, and it

may also delay the approval for the remaining three factories include No.2, No.8 and No.10.

It is, however, still unclear how the pandemic

will evolve going forward, and we cannot assure you whether the COVID-19 pandemic will bring about significant negative impact on our

business operations, financial condition and operating results, including but not limited to negative impact to our total revenues.

crude salt through its wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited (“SCHC”) and manufactures

chemical products for use in the oil industry, pesticides, paper manufacturing industry and for human and animal antibiotics through its

wholly-owned subsidiary, Shouguang Yuxin Chemical Industry Co., Limited (“SYCI”) in the People’s Republic of China (“PRC”).

DCHC was established to further explore and develop natural gas and brine resources (including bromine and crude salt) in the PRC.

business commenced trial operation in January 2019 but suspended production temporarily in May 2019 as required by the government to obtain

project approval (see Note 1 (b)(iii)).

On March 11, 2020, the World Health Organization (WHO) officially declared

COVID-19 a pandemic.

The duration and intensity of the impact of the COVID-19 and resulting disruption to the Company’s operations

and financial position is uncertain.

While our operations are currently not materially affected, it is unknown whether or how they may

be affected if such a pandemic persists for an extended period.

While not yet quantifiable, the Company believes this situation did not

have a material adverse impact on its operating results in the year of 2021 and will continue to assess the financial impact.

outbreak slightly delayed the commencement of the operations for Factory No.1, No.4, No.7, No.9, and it may also delay the approval for

the remaining three factories No.2, No.8 and No.10.

(i) Bromine and Crude Salt Segments

20 unchanged sentences

commenced commercial production on May 6, 2020.

Pursuant to the notification issued on November

24, 2020 from the government of Shouguang City, all bromine facilities in Shouguang City had to be temporarily closed from December 25,

2020 until February 19, 2021 8:00 AM China Time.

To comply with such notification, the Company temporarily stopped production at its bromine

facilities in factory No.

9 during the aforesaid period and commenced production as scheduled on February 19,

The company is still waiting for governmental approval for factories

#2, #8, and #10.

To our knowledge, the government is currently completing its planning process for all mining areas including that for

prevention of flood.

As a result, we may be required to make some modifications to our current wells and aqueducts prior to commencement

of operations of these factories to satisfy the local government's requirements.

Nevertheless, the Company expects to receive approval

to open at least one and potentially more of its closed factories in 2022.

Pursuant to the notification issued from the government

of Shouguang City, all bromine facilities in Shouguang City had to be temporarily closed from December 28, 2021 until February 21, 2022.

To comply with such notification, the Company had temporarily stopped production at its bromine facilities during the aforesaid period

and resumed production as scheduled on February 21, 2022.

(ii) Chemical Segment

8 unchanged sentences

which do not comply with the requirements of the safety and environmental protection regulations will be ordered to shut down.

In December 2017, the Company secured from the

government the land use rights for its chemical plants located at the Bohai Park and in June 2018, the Company presented a completed construction

design draft and other related documents to the local authorities for approval.

In January 2020, the Company obtained the environmental

protection assessment approval performed by the government of Shouguang City, Shandong Province for the proposed new Yuxin chemical factory.

With this approval, the Company is permitted to construct the new chemical factory and began the construction in the second quarter of

The Company believes this relocation process will

cost approximately $ 64 million in total.

The Company incurred relocation costs comprising prepaid land lease, professional fees related

to the design of the new chemical factory, and progress payment and deposit for the construction of the new factory building in the amount

of $ 43,566,920 and $ 33,496,295 , which were recorded in the prepaid land leases and property, plant and equipment in the consolidated balance

sheets as of September 30, 2021 and December 31, 2020.

In December 2017, the Company secured from the government the land

use rights for its chemical plants located at the Bohai Park and in June 2018, the Company presented a completed construction design draft

and other related documents to the local authorities for approval.

In January 2020, the Company received the environmental protection

approval by the government of Shouguang City, Shandong Province for the proposed Yuxin Chemical factory.

The Company began the construction

on its new chemical facilities located at Bohai Marine Fine Chemical Industrial Park in June 2020 and basically completed the civil works

by end of June 2021.

15, 2021, the company announced due to the supply chain issues as well as the electric restrictions in China,

the delivery of some equipment, the equipment installation and testing and beginning trial production at the chemical factory had been

On February 22, 2022, the company announced that discussions with the government have convinced management that the electricity

restrictions are being eased.

Accordingly, the Company has contacted its suppliers and will have the remainder of the equipment produced

and delivered, so the Company can complete installation and begin testing and trial production.

The Company estimates this relocation process

will cost approximately $ 69 million in total.

The Company incurred relocation costs comprising prepaid land lease, professional fees

related to the design of the new chemical factory, purchase of plant and equipment and construction costs and installation costs incurred

for the new chemical factory in the amount of $ 45,584,344 and $ 45,584,344 , which were recorded in the Property, plant and equipment in

the consolidated balance sheets as of March 31, 2022 and December 31, 2021.

(iii) Natural Gas Segment

12 unchanged sentences

The Company plans to proceed with

its applications for the natural gas and brine project approvals with related government departments until after the governmental planning

has been finalized the land and resource planning for Sichuan Province.

its applications for the natural gas and brine project approvals with related government departments until the governmental planning has

been finalized.

for Doubtful Accounts

As of September 30, 2021 and December 31, 2020,

there were no allowances for doubtful accounts.

No allowances for doubtful accounts were charged to the condensed consolidated statements

of loss for the three-month and nine-month periods ended September 30, 2021 and 2020.

As of March 31, 2022 and December 31, 2021, there

were no allowances for doubtful accounts.

No allowances for doubtful accounts were charged to the condensed consolidated statements of

loss for the three-month periods ended March 31, 2022 and 2021.

(d) Concentration

6 unchanged sentences

The Company placed $ 105,661,999

and $ 94,222,538 with these institutions as of September 30, 2021 and December 31, 2020, respectively.

and $ 95,767,263 with these institutions as of March 31, 2022 and December 31, 2021, respectively.

The Company has not experienced

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

(Expressed in U.S.

6 unchanged sentences

Expenditures for new facilities or equipment, and major expenditures for betterment

of existing facilities or equipment are capitalized and depreciated, when available for intended use, using the straight-line method at

rates sufficient to depreciate such costs less 5% residual value over the estimated productive lives.

All other ordinary repair and maintenance

costs are expensed as incurred.

of existing facilities or equipment are capitalized and depreciated using the straight-line method at rates sufficient to depreciate such

costs less 5% residual value over the estimated productive lives.

All other ordinary repair and maintenance costs are expensed as incurred.

Mineral rights are recorded at cost less accumulated

12 unchanged sentences

Plant and machinery (including protective shells, transmission channels and ducts)

Motor vehicles Motor Vehicles

Motor vehicles

Motor Vehicles

Furniture, fixtures and equipment

Property, plant and equipment under the finance

lease are depreciated over their expected useful lives on the same basis as owned assets, or where shorter, the term of the lease, which

Property, plant and equipment under the capital

lease are depreciated over their expected useful lives on the same basis as owned assets, or where shorter, the term of the lease.

Producing oil and gas properties are depreciated

1 unchanged sentence

Common facilities that are built specifically to service production

directly attributed to designate oil and gas properties are depreciated based on the proved developed reserves of the respective oil and

gas properties on a pro-rata basis.

Common facilities that are not built specifically to service identified oil and gas properties are

depreciated using the straight-line method over their estimated useful lives.

Costs associated with significant development projects are

not depreciated until commercial production commences and the reserves related to those costs are excluded from the calculation of depreciation.

directly attributed to designated oil and gas properties are depreciated based on the proved developed reserves of the respective oil

and gas properties on a pro-rata basis.

Common facilities that are not built specifically to service identified oil and gas properties

are depreciated using the straight-line method over their estimated useful lives.

Costs associated with significant development projects

are not depreciated until commercial production commences and the reserves related to those costs are excluded from the calculation of

depreciation.

(f) Retirement

3 unchanged sentences

The required contributions

under the retirement plans are charged to the condensed consolidated statement of loss on an accrual basis when they are due.

under the retirement plans are charged to the condensed consolidated statement of income on an accrual basis when they are due.

The Company’s

contributions totaled $ 186,074 and $ 52,325 for the three-month period ended September 30, 2021 and 2020, respectively, and totaled $ 653,664

and $ 236,271 for the nine-month period ended September 30, 2021 and 2020, respectively.

contributions totaled $ 201,265 and $ 246,622 for the three-month periods ended March 31, 2022 and 2021, respectively.

Net revenue is net of discount and value added

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

(Expressed in U.S.

19 unchanged sentences

their estimated salvage value in connection with the decision to dispose of such assets.

For the three and nine months period ended September

30, 2021 and 2020, the Company determined that there were no events or circumstances indicating possible impairment of its long-lived

and Diluted Earnings per Share of Common Stock

For the three-month period ended March 31, 2022

and 2021, the Company determined that there were no events or circumstances indicating possible additional impairment of its long-lived

and Diluted Net Income per Share of Common Stock

Basic earnings per common share are based on the

7 unchanged sentences

Anti-dilutive common stock equivalents which were excluded from

the calculation of number of dilutive common stock equivalents amounted to 0 and 36,443 shares for the three-month period ended September

30, 2021 and 2020, respectively, and amounted to 20,901 and 74,864 shares for the nine-month period ended September 30, 2021 and 2020,

respectively.

These awards could be dilutive in the future if the market price of the common stock increases and is greater than the exercise

price of these awards.

the calculation of number of dilutive common stock equivalents amounted to 0 and 62,704 shares for the three-month periods ended March

31, 2022 and 2021, respectively.

Because the Company reported a net loss for the

three-month periods ended March 31, 2022 and 2021, common stock equivalents including stock options and warrants were anti-dilutive, therefore

the amounts reported for basic and diluted loss per share were the same.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

(Expressed in U.S.

12 unchanged sentences

Adjustments resulting from the translation of the balance sheets of the Company’s

PRC subsidiaries are recorded in stockholders’ equity as part of accumulated other comprehensive loss.

The statement of loss and

comprehensive loss is translated at average rate during the reporting period.

PRC subsidiaries are recorded in stockholders’ equity as part of accumulated other comprehensive income.

The statement of income

and comprehensive income is translated at average rate during the reporting period.

Gains or losses resulting from transactions in currencies

other than the functional currencies are recognized in net loss for the reporting periods as part of general and administrative expense.

other than the functional currencies are recognized in net income for the reporting periods as part of general and administrative expense.

The statement of cash flows is translated at average rate during the reporting period, with the exception of the consideration paid for

28 unchanged sentences

ROU assets and liabilities arising from lease arrangements with lease term of twelve months or less.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(Expressed in U.S.

NOTE 1 – BASIS OF PRESENTATION AND

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

(n) Stock-based Compensation

31 unchanged sentences

Interests and penalties associated with unrecognized tax benefits are included within the (benefit from) provision for income

tax in the consolidated statement of income (loss).

tax in the consolidated statement of profit (loss).

Accounting Pronouncements

Recent accounting pronouncements adopted

There were no recent accounting pronouncements adopted during the nine

months ended September 30, 2021.

There were no recent accounting pronouncements adopted during the three

months ended March 31, 2022.

Recently Issued Accounting Pronouncements Not

In June 2016, the FASB issued ASU No.

Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.

The amendments in this

Update affect loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash.

The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets.

For public entities,

the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

For the Company which is a smaller reporting company, ASU No.

2019-10 extends the effective dates for two years.

The Company is currently

evaluating the effect of this on the condensed consolidated financial statements and related disclosure.

2016-13, Financial Instruments

– Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.

The amendments in this Update affect loans,

debt securities, trade.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

(Expressed in U.S.

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES – Continued

receivables, and any other financial assets that have the contractual

right to receive cash.

The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets.

For public entities, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within

those fiscal years.

For the Company which is a smaller reporting company, ASU No.

2019-10 extends the effective dates for two years.

Company is currently evaluating the effect of this on the condensed consolidated financial statements and related disclosure.

NOTE 2 – INVENTORIES

5 unchanged sentences

There was no allowance for slow-moving inventories

as of September 30, 2021 and 2020.

as of March 31, 2022 and 2021.

NOTE 3 – PREPAID LAND LEASES

18 unchanged sentences

The lease term expires on August 12,

The amount paid was recorded as prepaid land leases, net of current portion in the consolidated balance sheet as of September 30

The amount paid was recorded as prepaid land leases, net of current portion in the consolidated balance sheet as of March 31 2022

and December 31, 2021.

As of September 30, 2021, the prepaid land lease increased to $ 10,194,743 due to an additional amount paid

for stamp duty and related land use rights fees.

Amortization of this prepaid land lease will commence when the chemical factory is built

and placed in service.

In June 2021, the civil works had basically been completed for its

new chemical factory.

But due to the recent supply chain issues as well as the electric restrictions , the delivery of some equipment

,the installation, timing of testing and beginning trial production at the chemical factory will be delayed.

At this time, the Company

is not in a position to determine the extent of the delays, but it will keep shareholders advised.

As of March 31, 2022, the prepaid land lease increased to $ 10,419,032 due to an additional amount paid for stamp

duty and related land use rights fees.

Amortization of this prepaid land lease will commence when the chemical factory is built and placed

In June 2020, the construction of the new chemical

factory commenced and is expected to complete around June 2021.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

(Expressed in U.S.

1 unchanged sentence

Property, plant and equipment, net consist of the following:

Property, Plant and Equipment, Net - Schedule of Property, Plant

and Equipment

September 30,

Property, Plant and Equipment, Net -

Schedule of Property, Plant and Equipment

Mineral rights

6 unchanged sentences

( 123,229,974 )

( 18,641,596 )

Net book value

5 unchanged sentences

The aggregate carrying

values of these properties situated on parcels of the land are $ 18,061,432 and $ 19,302,600 as at September 30, 2021 and December 31,

values of these properties situated on parcels of the land are $ 17,526,711 and $ 17,911,910 as at March 31, 2022 and December 31, 2021,

respectively.

During the three-month period ended September 30, 2021, depreciation

and amortization expense totaled $ 4,090,343 of which $ 730,729 , $ 167,761 and $ 3,191,853 were recorded in direct labor and factory overheads

incurred during plant shutdown , administrative expenses and cost of net

During the same period in 2020, depreciation and amortization

expense totaled $ 4,347,139 of which $ 1,025,344 , $ 203,149 and $ 3,118,646 were recorded in direct labor and factory overheads incurred during

plant shutdown , administrative expenses and cost of net revenue .

During the nine-month period ended September 30,

2021 , depreciation and amortization expense totaled $ 12,312,345 of which

$ 3,305,955 , $ 494,862 and $ 8,511,528 were recorded in direct labor and factory overheads incurred during plant shutdown ,

administrative expenses and cost of net revenue .

During the same period

of 2020 , depreciation and amortization expense totaled $ 11,903,728 of which

$ 4,771,228 , $ 602,968 and $ 6,529,532 were recorded in direct labor and factory overheads incurred during plant shutdown ,

administrative expenses and cost of net revenue .

During the three-month period ended March 31,

2022, depreciation and amortization expense totaled $ 5,001,619 , of which $ 1,761,068 , $ 1,197,687 and $ 2,042,864 were recorded in direct

labor and factory overheads incurred during plant shutdown, administrative expenses and cost of net revenue, respectively.

During the three-month period ended March 31,

2021, depreciation and amortization expense totaled $ 4,102,929 , of which $ 1,816,782 , $ 163,233 and $ 2,122,914 were recorded in direct

labor and factory overheads incurred during plant shutdown, administrative expenses and cost of net revenue, respectively.

NOTE 5 – FINANCE LEASE RIGHT-OF-USE ASSETS

Property, plant and equipment under finance leases, net consist of

the following:

Property, plant and equipment under finance lease, net consist of the

Finance Lease Right-Of-Use Assets - Schedule of Property,

Plant and Equipment Under Finance Leases

September 30,

Buildings Buildings

8 unchanged sentences

certificates over these buildings as the Company could not obtain land use rights certificates on the underlying parcels of land.

During the three and nine months period

ended September 30, 2021, depreciation and amortization expense totaled $ 1,431

and $ 4,293 , respectively, which was recorded in direct labor and factory overheads incurred during plant shutdown.

During the three and nine months period

ended September 30, 2020, depreciation and amortization expense totaled $ 1,339

and $ 3,974 , respectively, which was recorded in direct labor and factory overheads incurred during plant shutdown.

During the three-month period ended March 31,

2022, depreciation and amortization expense totaled $ 1,459 , which was recorded in direct labor and factory overheads incurred during plant

During the three-month period ended March 31, 2021, depreciation and amortization expense totaled $ 1,428 , which was recorded

in direct labor and factory overheads incurred during plant shutdown.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

(Expressed in U.S.

NOTE 6 – OPERATING LEASE RIGHT–OF

As of September 30, 2021, the total operating

lease ROU assets was $ 8,328,584 .

The total operating lease cost for the three-month period ended September 30, 2021 and 2020 was $ 240,699

and $ 211,242 .

The total operating lease cost for the nine-month

period ended September 30, 2021 and 2020 was $ 721,994 and $ 647,351 .

NOTE 6 – OPERATING LEASE RIGHT-OF USE ASSETS

As of March 31, 2022, the total operating lease

ROU assets was $ 9,562,685 .

The total operating lease cost for the three-month

period ended March 31, 2022 and 2021 was $ 258,398 and $ 240,150 , respectively.

The Company has the rights to use certain parcels

of land located in Shouguang, the PRC, through lease agreements signed with local townships or the government authority (See Note 3).

For parcels of land that are collectively owned by local townships, the Company cannot obtain land use rights certificates.

of land of which the Company cannot obtain land use rights certificates covers a total of approximately 38.6 square kilometers of aggregate

carrying value of $ 7,973,128 as at September 30, 2021.

NOTE 7 – ACCOUNTS PAYABLE, OTHER PAYABLE

AND ACCRUED EXPENSES

Accounts payable, other payable and accrued expenses

of land located in Shouguang, the PRC, through lease agreements signed with local townships or the government authority.

For parcels of

land that are collectively owned by local townships, the Company cannot obtain land use rights certificates.

The parcels of land of which

the Company cannot obtain land use rights certificates covers a total of approximately 38.6 square kilometers of aggregate carrying value

of $ 10,486,921 as at March 31, 2022.

NOTE 7 – ACCOUNTS AND OTHER PAYABLE AND

ACCRUED EXPENSES

Accounts and other payable and accrued expenses

consist of the following:

Accounts Payable, Other Payable and Accrued

Accounts and Other Payable and Accrued

Expenses - Schedule of Accounts Payable and Accrued Liabilities

September 30,

Accounts payable

Salary payable

Social security insurance contribution payable

Other payable-related party (see Note 8)

Deposit on subscription of a subsidiary’s share

Accrued expense-construction

Accrued expense for construction

Accrued expense-others

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(Expressed in U.S.

NOTE 8 – RELATED PARTY TRANSACTIONS

On September 25, 2012, the Company purchased

five floors of a commercial building in the PRC, through SYCI, from Shandong Shouguang Vegetable Seed Industry Group Co., Ltd.

“Seller”) at a cost of approximately $ 5.7

million in cash, of which Mr.

Ming Yang, the Chairman of the Company, had a 99 %

equity interest in the Seller.

During the first quarter of 2018, the Company entered into an agreement with the Seller, a related

party, to provide property management services for an annual amount of approximately $ 96,194

years from January 1, 2018 to December 31, 2022 .

The expense associated with this agreement for the three and nine months

ended September 30, 2021 was approximately $ 24,048 and $ 71,926 .

The expense associated with this agreement for the three and nine

months ended September 30, 2020 was approximately $ 22,902 and $ 66,945 .

On September 25, 2012, the Company purchased five

floors of a commercial building in the PRC, through SYCI, from Shandong Shouguang Vegetable Seed Industry Group Co., Ltd.

(the “Seller”)

at a cost of approximately $ 5.7 million in cash, of which Mr.

Ming Yang, the Chairman of the Company, had a 99 % equity interest in the

During the first quarter of 2018, the Company entered into an agreement with the Seller, a related party, to provide property

management services for an annual amount of approximately $ 98,271 for five years from January 1, 2018 to December 31, 2022 .

associated with this agreement for the three months ended March 31, 2022 and 2021 was approximately $ 24,568 and $ 23,735 .

NOTE 8 – RELATED PARTY TRANSACTIONS –

Related parties

Name of related parties

Chairman Of the Board

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer

Amount due to related parties:

Considering that the Company has not performed

well in recent years, the Company and its executive officers mutually agreed and to returned all, or a portion of their cash compensation

earned for their services with the Company, which may be considered for future compensation should the Company improve its results of

NOTE 9 – TAXES PAYABLE

September 30,

Land use tax payable

1 unchanged sentence

Land use tax payable

NOTE 10 – LEASE LIABILITIES-FINANCE AND OPERATING

10 – LEASE LIABILITIES-FINANCE AND OPERATING LEASE

The components of finance lease liabilities were

1 unchanged sentence

Lease - Schedule of Finance Leased Liabilities

September 30,

Interest rate

2 unchanged sentences

Finance lease liability, net of current portion

Interest expenses from capital lease obligations

amounted to $ 32,015 and $ 32,211 for the three-month period ended September 30, 2021 and 2020, respectively, which were charged to the

condensed consolidated statement of income (loss).

Interest expenses from capital lease obligations amounted to $ 103,212 and $ 102,220

for the nine-month period ended September 30, 2021 and 2020, respectively, which were charged to the condensed consolidated statement

of income (loss).

The remaining finance lease term at September 30, 2021 was 10 years.

Interest expenses from a finance lease liability

amounted to $ 33,622 and $ 35,538 for the three-month periods ended March 31, 2022 and 2021, respectively, were charged to the condensed

consolidated statement of loss.

The components of operating lease liabilities

Lease Liabilities-Finance and

Operating Lease - Schedule of Operating Leased Liabilities

September 30,

Lease Liabilities - Finance and Operating

Lease - Schedule of Operating Leased Liabilities

Interest rate

3 unchanged sentences

The weighted average remaining operating lease

term at September 3 0 , 2021 was 21 years and the weighted average discounts

rate was 4.89 %.

Lease payments for the three-month period ended September 30, 2021 and 2020, respectively, were $ 68,467 and $ 60,987 .

payments for the nine-month period ended September 30, 2021 and 2020, respectively, were $ 848,660 and $ 765,288 .

term at March 31, 2022 was 20 years and the weighted average discounts rate was 4.89 %.

This discount rates used are based on the base

rate quoted by the People's Bank of China and vary with the remaining term of the lease.

Lease payment in the three-months ended March

31, 2022 and 2021 was $ 257,879 and $ 204,951 .

Maturities of lease liabilities were as follows:

Lease Liabilities - Finance and Operating

Leases - Schedule of Financing and Operating Lease Maturities

Lease - Schedule of Financing and Operating Lease Maturities

Financial lease

8 unchanged sentences

Present value of net minimum lease payments

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Expressed in U.S.

NOTE 11 – EQUITY

Restricted Shares

A restricted stock award (“RSA”) is an award of common

shares that is subject to certain restrictions during a specified period.

Restricted stock awards are independent of option grants and

are generally subject to forfeiture if employment terminates prior to the release of the restrictions.

The grantee cannot transfer the

shares before the restricted shares vest.

Shares of nonvested restricted stock have the same voting rights as common stock, are entitled

to receive dividends and other distributions thereon and are considered to be currently issued and outstanding.

The Company expenses the

cost of the restricted stock awards, which is determined to be the fair market value of the shares at the date of grant, straight-line

over the period during which the restrictions lapse.

For these purposes, the fair market value of the restricted stock is determined based

on the closing price of the Company's common stock on the grant date.

A restricted stock award (“RSA”) is

an award of common shares that is subject to certain restrictions during a specified period.

Restricted stock awards are independent of

option grants and are generally subject to forfeiture if employment terminates prior to the release of the restrictions.

The grantee cannot

transfer the shares before the restricted shares vest.

Shares of nonvested restricted stock have the same voting rights as common stock,

are entitled to receive dividends and other distributions thereon and are considered to be currently issued and outstanding.

expenses the cost of the restricted stock awards, which is determined to be the fair market value of the shares at the date of grant,

straight-line over the period during which the restrictions lapse.

For these purposes, the fair market value of the restricted stock is

determined based on the closing price of the Company's common stock on the grant date.

Retained Earnings – Appropriated

10 unchanged sentences

reserve balance falling below 25% of the registered capital.

The Statutory Common Reserve Fund as of September 30, 2021 for SCHC, SYCI

and DCHC is 16%, 14% and 0% of its registered capital respectively.

The Statutory Common Reserve Fund as of March 31, 2022 for SCHC, SYCI and

DCHC is 16%, 14% and 0% of its registered capital respectively.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(Expressed in U.S.

NOTE 12 – STOCK-BASED COMPENSATION

6 unchanged sentences

of the 2007 Plan and applicable award agreement.

As of September 30, 2021, the number of shares of the Company’s common stock available

As of March 31, 2022, the number of shares of the Company’s common stock available

for grant of stock options and issuance under the 2019 Plan is 1,056,801 shares.

4 unchanged sentences

on the annualized historical stock price volatility of the Company, and the expected life is based on the historical option exercise pattern.

For the three months ended September 30, 2021

and 2020, total compensation costs for options issued recorded in the consolidated statement of loss were $ 0 .

During the three and nine months ended September 30, 2021, there were

no options granted to employees or non-employees.

The following table summarizes all Company

stock option transactions between January 1, 2021 and September 30, 2021.

For the three months ended March 31, 2022 and

2021, total compensation costs for options issued recorded in the consolidated statement of loss were $ 0 .

During the three months ended March 31, 2022, there were no options

issued to employees or non-employees.

The following table summarizes all Company stock

option transactions between January 1, 2022 and March 31, 2022.

Stock-Based Compensation - Schedule of Stock

5 unchanged sentences

Balance, January 1, 2022

$3.57 - $7.27

Granted during the period

Exercised during the period

Expired during the period

Balance, September 30, 2021

Balance, March 31, 2022

Stock Options and Warrants Outstanding and Exercisable

Weighted Average

Outstanding at September 30, 2021

Outstanding at March 31, 2022

Exercise Prices

2 unchanged sentences

The aggregate intrinsic value of options outstanding and exercisable

as of September 30, 2021 was $ 4,710 .

During the three and nine months ended September

30, 2021 and 2020, there were no options exercised.

as of March 31, 2022 and 2021 was $ 0 and $ 4,710 .

During the three months ended March 31, 2022 and

2021, there were no options exercised.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

(Expressed in U.S.

2 unchanged sentences

of accounting for income taxes in accordance with FASB ASC 740-10.

If it is more likely than not that some portion or all of a deferred

tax asset will not be realized, a valuation allowance is recognized.

States (“US”)

4 unchanged sentences

No provision for the US federal income taxes has been made as the Company had no US taxable

income for the three-month and nine-month periods ended September 30, 2021 and 2020, and management believes that its earnings are permanently

invested in the PRC.

income for the three-month periods ended March 31, 2022 and 2021, and management believes that its earnings are permanently invested in

Virgin Islands (“BVI”)

1 unchanged sentence

Resources, Inc., was incorporated in the BVI and, under the current laws of the BVI, it is not subject to tax on income or capital gain

Upper Class Group Limited did not generate assessable profit for the three-month and nine-month periods ended September 30,

2021 and 2020.

Upper Class Group Limited did not generate assessable profit for the three-month periods ended March 31, 2022 and 2021.

HKJI, a subsidiary of Upper Class Group Limited, was

1 unchanged sentence

from Hong Kong.

No provision for income tax has been made as it has no taxable income for the three-month and nine-month periods

ended September 30, 2021 and 2020.

The applicable statutory tax rates for the three-month and nine-month periods ended September

30, 2021 and 2020 are 16.5 %.

No provision for income tax has been made as it has no taxable income for the three-month periods ended March

31, 2022 and 2021.

The applicable statutory tax rates for the three-month periods ended March 31, 2022 and 2021 are 16.5 %.

There is no dividend withholding tax in Hong Kong.

12 unchanged sentences

January 1, 2008 to its foreign investor(s) shall be subject to WHT at 5% effective tax rate.

As of September 30, 2021 and December 31, 2020,

the accumulated distributable earnings under the Generally Accepted Accounting Principles (GAAP”) of PRC that are subject to WHT

As of March 31, 2022 and December 31, 2021, the accumulated distributable

earnings under the Generally Accepted Accounting Principles (GAAP”) of PRC that are subject to WHT are $ 140,728,940 and $ 140,006,862 ,

respectively.

Since the Company intends to reinvest its earnings to further expand its businesses in mainland China, its foreign invested

enterprises do not intend to declare dividends to their immediate foreign holding companies in the foreseeable future.

Accordingly, as

of March 31, 2022 and December 31, 2021, the Company has not recorded any WHT on the cumulative amount of distributable retained earnings

of its foreign invested enterprises that are subject to WHT in China.

As of March 31, 2022 and December 31, 2021, the unrecognized WHT

are $ 5,963,592 and $ 5,932,051 , respectively.

Since the Company intends to reinvest its earnings to further expand its businesses in

mainland China, its foreign invested enterprises do not intend to declare dividends to their immediate foreign holding companies in the

foreseeable future.

Accordingly, as of September 30, 2021 and December 31, 2020, the Company has not recorded any WHT on the cumulative

amount of distributable retained earnings of its foreign invested enterprises that are subject to WHT in China.

As of September 30, 2021

and December 31, 2020, the unrecognized WHT are $ 5,404,946 and $ 5,288,346 , respectively.

The Company’s income tax returns are subject

11 unchanged sentences

in every four years.

The tax returns for 2014 and 2018 have been examined, and there is no Hong Kong Profits Tax was charged.

The components of the income tax benefit from

continuing operations are:

- Schedule of Components of Income Tax Expense Benefit

Three-Month Period Ended September 30,

Nine-Month Period Ended September 30,

The tax returns for 2014 and 2018 are currently subject to examination.

The components of the provision for income tax

benefit (expense) from continuing operations are:

Income Taxes - Schedule of Components of Income Tax Expense Benefit

Three-Month Period Ended March 31,

Current taxes – PRC

Deferred taxes

( 1,750,283 )

( 1,363,054 )

Deferred tax – PRC entities

Deferred taxes – US entity

Change in valuation allowance

Tax Expense Benefit

$ ( 1,750,283 )

$ ( 217,325 )

$ ( 1,363,054 )

Significant components of the Company’s

deferred tax assets and liabilities at September 30, 2021 and December 31, 2020 are as follows:

deferred tax assets and liabilities at March 31, 2022 and December 31, 2021 are as follows:

Income Taxes - Schedule of Deferred

Tax Assets and Liabilities

September 30,

Deferred tax liabilities

Deferred tax assets:

Impairment on property, plant and equipment

Impairment on prepaid land lease

Exploration costs

Compensation costs of unexercised stock options

Miscellaneous

PRC tax losses

6 unchanged sentences

The increase in valuation allowance for the three-month

period ended September 30, 2021 is $ 13,366 .

The increase in valuation allowance for the three-month

period ended September 30, 2020 is $ 971,844 .

The increase in valuation allowance for the nine-month

period ended September 30, 2021 is $ 71,292 .

The increase in valuation allowance for the nine-month

period ended September 30, 2020 is $ 782,697 .

period ended March 31, 2022 is $ 22,653 .

The decrease in valuation allowance for the three-month

period ended March 31, 2021 is $ 86,964 .

There were no unrecognized tax benefits and accrual

for uncertain tax positions as of September 30, 2021 and December 31, 2020 and no amounts accrued for penalties and interest for the three

and nine months ended September 30, 2021 and 2020.

for uncertain tax positions as of March 31, 2022 and December 31, 2021 and no amounts accrued for penalties and interest for the three

months ended March 31, 2022 and 2021.

NOTE 14 – BUSINESS SEGMENTS

The Company has four reportable segments:

crude salt, chemical products and natural gas.

The reportable segments are consistent with how management views the markets served by

the Company and the financial information that is reviewed by its chief operating decision maker.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

(Expressed in U.S.

NOTE 14 – BUSINESS SEGMENTS

NOTE 14 – BUSINESS SEGMENTS – Continued

An operating segment’s performance is primarily

3 unchanged sentences

are related to functional areas such as accounting, treasury, information technology, legal, human resources, and internal audit.

Company believes that segment operating income, as defined above, is an appropriate measure for evaluating the

operating performance of its segments.

Company believes that segment operating income, as defined above, is an appropriate measure for evaluating the operating performance of

its segments.

All the customers are located in PRC.

September 30, 2021

(external customers)

(intersegment)

Income(loss) from operations before income tax benefit (expense)

Income tax benefit(expense)

( 1,730,425 )

( 1,750,283 )

Income (loss) from operations after income tax benefit (expense)

Depreciation and amortization

Capital expenditures

September 30, 2020

(external customers)

(intersegment)

Income(loss) from operations before income tax benefit (expense)

( 3,489,875 )

( 2,733,818 )

Income tax benefit (expense)

Income (loss) from operations after income tax benefit (expense)

( 3,489,875 )

( 2,951,143 )

Depreciation and amortization

Capital expenditures

* Certain common production overheads, operating

and administrative expenses and asset items (mainly cash and certain office equipment) of bromine and crude salt segments in SCHC were

split by reference to the average selling price and production volume of respective segment.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Expressed in U.S.

NOTE 14 – BUSINESS SEGMENTS – Continued

September 30, 2021

Three-Month Period Ended March 31, 2022

(external customers)

(intersegment)

Income(loss) from operations before income tax benefit (expense)

( 1,026,647 )

( 2,022,828 )

( 3,662,061 )

Income tax benefit(expense)

( 2,084,253 )

( 1,363,054 )

Income (loss) from operations after income tax benefit (expense)

( 1,558,505 )

( 3,662,061 )

Loss from operations before income benefit

Income tax benefit

Loss from operations after income taxes(benefit)

Depreciation and amortization

Capital expenditures

September 30, 2020

Three-Month Period Ended March 31, 2021

(external customers)

(intersegment)

Loss from operations before income tax benefit (expense)

( 2,383,260 )

( 2,609,332 )

( 2,038,938 )

( 7,182,196 )

( 3,340,603 )

( 10,522,799 )

Income tax benefit (expense)

Loss from operations after income tax benefit (expense)

Loss from operations before income benefit

( 1,279,565 )

2 unchanged sentences

( 3,281,424 )

Income tax benefit

Loss from operations after income taxes(benefit)

( 2,346,697 )

4 unchanged sentences

and administrative expenses and asset items (mainly cash and certain office equipment) of bromine and crude salt segments in SCHC were

split by reference to the average selling price and production volume of the respective segment.

split by reference to the average selling price and production volume of respective segment.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

(Expressed in U.S.

NOTE 14 – BUSINESS SEGMENTS – Continued

Three-Month Period Ended September 30,

Nine-Month Period Ended September 30,

Three-Month Period Ended March 31,

Reconciliations

Total segment operating income (loss)

$ ( 7,182,196 )

Total segment operating loss

Corporate costs

( 2,459,213 )

( 3,378,774 )

Unrealized gain (loss) on translation of intercompany balance

( 1,030,662 )

Loss from operations

( 2,733,818 )

( 10,522,799 )

Other income, net of expense

Loss before taxes

$ ( 2,695,256 )

$ ( 10,408,710 )

The following table shows the major customer(s)

(10% or more) for the three-month period ended September 30, 2021.

Loss before income taxes

The following table shows the major customers

(10% or more) for the three-month period ended March 31, 2022.

Business Segments - Schedule of

3 unchanged sentences

Shandong Morui Chemical Company Limited

Shouguang Weidong Chemical Company Limited

Shandong Brother Technology Limited

The following table shows the major customer(s)

(10% or more) for the nine-month period ended September 30, 2021.

Shandong Morui Chemical Company Limited

Shouguang Weidong Chemical Company Limited

Shandong Brother Technology Limited

The following table shows the major customer(s)

(10% or more) for the three-month period ended September 30, 2020.

Shandong Morui Chemical Company Limited

Shandong Brother Technology Limited

Shouguang Weidong Chemical Company Limited

Dongying Bomeite Chemical Company Limited

Shandong Shouguang Shenrunfa Ocean Chemical Company Limited

The following table shows the major customer(s)

(10% or more) for the nine-month period ended September 30, 2020.

The following table shows the major customers

(10% or more) for the three-month period ended March 31, 2021.

Chemical Products

1 unchanged sentence

Shandong Morui Chemical Company Limited

Shandong Brother Technology Limited

Shouguang Weidong Chemical Company Limited

Dongying Bomeite Chemical Company Limited

Shandong Brother Technology Limited

Shandong Shouguang Shenrunfa Ocean Chemical Company Limited

NOTE 15– CUSTOMER CONCENTRATION

During the nine-month period ended September 30,

Dongying Bomeite Chemical Company Limited

15 – CUSTOMER CONCENTRATION

During the three-month period ended March 31,

2022, the Company sold 49 % of its products to its top five customers.

As of September 30, 2021, amounts due from these customers were

$ 11,280,670 .

During the nine-month period ended September 30,

As of March 31, 2022, amounts due from these customers were $ 7,115,008 .

During the three-month period ended March 31,

2021, the Company sold 74.5 % of its products to its top five customers.

As of September 30, 2020, amounts due from these customers were

$ 5,869,884 .

As of March 31, 2021, amounts due from these customers were $ 3,571,150 .

NOTE 16 – MAJOR SUPPLIERS

During the nine-month period ended September 30,

During the three-month period ended March 31,

2022, the Company purchased 100 % of its raw materials from its top five suppliers.

As of September 30, 2021, amounts due to

those suppliers were $ 653,102 .

During the nine-month period ended September 30,

As of March 31, 2022, amounts due to those

suppliers were $ 623,523 .

During the three-month period ended March 31,

2021, the Company purchased 100 % of its raw materials from its top five suppliers.

As of September 30, 2020, amounts due to

those suppliers were $ 610,816 .

As of March 31, 2021, amounts due to those

suppliers were $ 1,040,950 .

NOTE 17 – FAIR VALUE OF FINANCIAL INSTRUMENTS

2 unchanged sentences

nature of these instruments.

There were no material unrecognized financial assets and liabilities as of September 30, 2021

and December 31, 2020.

There were no material unrecognized financial assets and liabilities as of March 31, 2022 and

December 31, 2021.

NOTE 18 – CAPITAL COMMITMENT AND OTHER SERVICE

CONTRACTUAL OBLIGATIONS

The Company has no purchase commitments as of

March 31, 2022.

The following table sets forth the Company’s

contractual obligations as of September 30, 2021:

contractual obligations as of March 31, 2022:

Capital Commitment and Other Service

6 unchanged sentences

the next 25 to 36 months

NOTE 19 – LOSS CONTINGENCIES

19 – LOSS CONTINGENCIES

Settled Litigation

44 unchanged sentences

waiting for approval from the higher authority.

The Company is in the process of resolving the

issues in connection with SCHC’s land use and planning diligently.

The Company has been in discussions closely with the local government

authorities with the help from Shouguang City Bromine Association to seek reliefs and, based on verbal confirmation by local government

authorities, believes the administrative penalties imposed by the Bureau according to the Written Decisions are being re-assessed by local

government authorities and may be revoked.

Pursuant to a Written Application dated October 28, 2019 addressed to the Court by the Bureau,

the Bureau withdrew its application for the enforcement proceedings regarding the administrative penalty imposed on Factory No.

The Company is in the process of resolving

the issues in connection with SCHC’s land use and planning diligently.

The Company has been in discussions closely with the

local government authorities with the help from Shouguang City Bromine Association to seek reliefs and, based on verbal confirmation

by local government authorities, believes the administrative penalties imposed by the Bureau according to the Written Decisions are

being re-assessed by local government authorities and may be revoked.

Pursuant to a Written Application dated October 28, 2019

addressed to the Court by the Bureau, the Bureau withdrew its application for the enforcement proceedings regarding the

administrative penalty imposed on Factory No.

7, Factory No.

8 and Factory No.

Pursuant to a written decisions of administrative ruling captioned (2019) Lu 0783 Xing Shen No.

389 Zhi Yi, dated

November 25, 2020, the Court orders to terminate the enforcement of the case captioned (2019) Lu 0783 Xing Shen No.

Production of

Pursuant to a written decisions of administrative

ruling captioned (2019) Lu 0783 Xing Shen No.

389 Zhi Yi, dated November 25, 2020, the Court orders to terminate the enforcement of

the case captioned (2019) Lu 0783 Xing Shen No.

Production of Factory No.

7 was allowed to resume in April 2019.

The Company received a notification from the Shouguang City Government in February

2019 informing the Company that Factory No.

received a notification from the Shouguang City Government in February 2019 informing the Company that Factory No.

9 have passed inspection and were approved to resume operation

13 unchanged sentences

In view of the above facts and circumstances,

the Company believes that it is not necessary to accrue for any estimated losses or impairment as of September 30, 2021.

the Company believes that it is not necessary to accrue for any estimated losses or impairment as of March 31, 2022.

NOTE 20 - SUBSEQUENT EVENT

On October 20,2021 , the company updated investors

on the impact of issues in the world and Chinese economy on its business operations.

Bromine prices

have risen substantially throughout the world and even more substantially in China.

In the world market, shipping issues have disrupted

As a result, China has been unable to import its normal share of bromine.

With the shortage in supply and demand, prices of

bromine have soared to the highest levels ever recorded.

raw material price increases are lower than the bromine price increase, we believe this type of pricing should be good for our Fourth

Quarter 2021 profitability.

has no idea how long the current shortages will last, however, we will keep shareholders informed of any changes we have seen.

and Chinese economies have been impacted by supply chain issues in many industries including the energy industry.

Shipping shortages have

disrupted delivery of many products throughout the world.

China has also been impacted by shortages of energy.

For example, in some regions

of China, the government have restricted electrical usage, including Shouguang City.

And some businesses under construction have been

restricted from electrical usage in Shouguang City.

The supply chain issues as well as the electric restrictions

have delayed the production and delivery of some equipment to the Company‘s new chemical factory.

In addition, the Company’s

new Yuxin chemical factory has also been restricted from the electrical usage.

This means the installation, timing of testing and beginning

trial production at the chemical factory will be delayed.

At this time, the Company is not in a position to determine the extent of the

delays, but it will keep shareholders advised.

There was a wholly-owned subsidiary, Shouguang

Hengde Salt Industry Co.

LTD, was registered on April, 2022 in Shandong Province, China, for future crude salt production and trading.

At present, this subsidiary does not have any operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements