What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-13 compared with 2021-11-15 · 228 added, 364 removed, 207 unchanged (74% of the section changed)

14 unchanged sentences

events, developments, or changed circumstances, or for any other reason.

We are a holding company which conducts operations

through our wholly-owned China-based subsidiaries.

Our business is conducted and reported in four segments, namely, bromine,

crude salt, chemical products and natural gas.

We are a Nevada holding company which conducts

operations through our wholly-owned China-based subsidiaries.

Our business is conducted and reported in four segments, namely,

bromine, crude salt, chemical products and natural gas.

Through our wholly-owned subsidiary, SCHC, we

8 unchanged sentences

production as well as chlorine alkali production and is widely used in the chemical, food and beverage, and other industries.

also planning to be involved in activities related to seawater desalination, seawater desalination technology research and service and

to handle the import and export of goods and technologies within the scope permitted by the state.

Through our wholly-owned subsidiary, SYCI, we

13 unchanged sentences

The Company also expressed that although it believed its facilities were fully compliant at the time, the Company did not know how its

facilities would fare under the new rules and that the Company expected to have a full understanding of the implications within the next

Teams of inspectors from the government were sent to many provinces to inspect all mining and manufacturing facilities.

local government requested that facilities be closed, so that the facilities can undergo the inspection and analysis in the most efficient

manner by inspectors’ team.

facilities would fare under the new rules.

Teams of inspectors from the government were sent to many provinces to inspect all mining and

manufacturing facilities.

The local government requested that facilities be closed, so that the facilities could undergo the inspection

and analysis in the most efficient manner by inspectors’ team.

As a result, our facilities were closed on September 1, 2017.

7 unchanged sentences

The Shouguang City Bromine Association, on behalf

of all the bromine plants in Shouguang, has started discussions with the local government agencies.

of all the bromine plants in Shouguang, started discussions with the local government agencies.

The local governmental agencies confirmed

3 unchanged sentences

from the local government that it has been coordinating with several government agencies to solve these three outstanding approval issues

in a timely manner and that all the affected bromine plants are not allowed to commence production prior to obtaining those approvals.

In February 2019, the Company received a notification

from the local government of Yangkou County that its Factory No.

9 have passed inspection and can resume operations.

in a timely manner and that all the affected bromine plants willnot be allowed to commence production prior to obtaining those approvals.

In February 2019, the Company received a notification from the local

government of Yangkou County that its Factory No.

9 have passed inspection and were allowed to resume operations.

In April 2019, Factory No.

7 unchanged sentences

With these two approvals, the

Company was allowed to take the steps to resume production at all four bromine factories.

The Company is still waiting for governmental approval for factories

No.2, No.8, and No.10.

To its knowledge, the government is currently completing its planning process for all mining areas due to the requirements

for co-production of bromine and salt , and including that for prevention of flood.

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

determine the approval time until government complete its planning, but it will keep shareholders advised.

On November 24, 2017, the Company received a letter from the People’s

Government of Yangkou County, Shouguang City notifying the Company that due to the new standards and regulations relating to safety production

and environmental pollution, from certain local governmental departments, such as the municipal environmental protection department, the

security supervision department and the fire department, its chemical plants would have to be relocated to a new industrial park called

Bohai Marine Fine Chemical Industry Park.

Chemical companies that were not being asked to move into the park will be permanently closed.

Although our chemical plants were in compliance with regulations, they were also close to a residential area.

As a result, the government

determined we should relocate to the Bohai park.

Since our chemical factories closed, the Company has secured from the government the

land use rights for its chemical plants located at the Bohai Park and presented a completed construction design draft and other related

documents to the local authorities for approval.

On January 6, 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.

Due to the recent 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 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.

Company was allowed to resume production at all four bromine factories.

On December 27, 2021, the Company announced that

the government of Shouguang City ordered the closing of all bromine facilities during the period from December 28, 2021 to February 21,

The Company reopened its four operating bromine and crude salt facilities as planned on February 21, 2022.

The Company is still waiting for governmental

approval for factories No.2, No.8, and No.10.

To its knowledge, the government is currently completing its planning process for all mining

areas including that for prevention of flood.

As a result, the Company 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.

On November 24, 2017, Gulf Resources received

a letter from the People’s Government of Yangkou County, Shouguang City notifying the Company that due to the new standards and

regulations relating to safety production and environmental pollution, from certain local governmental departments, such as the municipal

environmental protection department, the security supervision department and the fire department, its chemical enterprises would have

to be relocated to a new industrial park called Bohai Marine Fine Chemical Industry Park.

Although our chemical companies were

in compliance with regulations, they were also close to a residential area.

As a result, the government determined we should relocate

to the Bohai park.

Chemical companies that are not being asked to move into the park are being permanently closed.

Since our factories

closed, the Company has secured from the government the land use rights for its chemical plant On January 6, 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 due

to the COVID-19 in China.

The construction is expected to take approximately one year, and an additional six months to complete the equipment

installation and testing, Which was delayed due to the supply chain issues as well as the electric restrictions impacted by the Word &

Chinese Economy.

On February 22, 2022, the Company announced that While the Company did not receive a formal notice from the government

regarding the electricity needed for its Yuxin Chemical factory, 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.

In January 2017, the Company completed the first

brine water and natural gas well field construction in Sichuan Province and announced the commencement of trial production.

has been working with Xinan Shiyou Daxue (Southwest Petroleum University) and developed a solution to DHCH’s technical drilling

In resolving the problem, the Company purchased customized equipment for its natural gas project.

The installation of such equipment,

including providing piping and electricity, was completed in July 2018.

The Company has completed the test production at its first natural

gas well in Sichuan Province and has commenced trial production in January 2019.

Later On May 29, 2019, the Company received a verbal

notice from the government of Tianbao Town, Daying County, Sichuan Province, whereby the Company is required to obtain project approval

for its well located in Daying, including the whole natural gas and brine water project, and approvals for safety production inspection,

environmental protection assessment, and to solve the related land issue.

Until these approvals have been received, the Company has to

temporarily halt trial production at its natural gas well in Daying.

In compliance with the Chinese government new policies, the Company

is also required to obtain an exploration license and a mining license for bromine and natural gas, respectively.

Pursuant to the Opinions

of the Ministry of Natural Resources on Several Issues in Promoting the Reform of Mineral Resources Management (Trial) promulgated by

the Ministry of Natural Resources of PRC on January 9, 2020, which came into effect on May 1, 2020, privately owned enterprises are allowed

to participate in the natural gas production.

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.

brine water and natural gas well field construction in Daying located in Sichuan Province and commenced trial production in January 2019.

On May 29, 2019, the Company received a verbal notice from the government of Tianbao Town ,Daying County, Sichuan Province, whereby the

Company is required to obtain project approval for its well located in Daying, including the whole natural gas and brine water project,

and approvals for safety production inspection, environmental protection assessment, and to solve the related land issue.

approvals have been received, the Company has to temporarily halt trial production at its natural gas well in Daying.

In compliance with

the Chinese government new policies, the Company is also required to obtain an exploration license and a mining license for bromine and

natural gas, respectively.

Pursuant to the Opinions of the Ministry of Natural Resources on Several Issues in Promoting the Reform of

Mineral Resources Management (Trial) promulgated by the Ministry of Natural Resources of PRC on January 9, 2020, which came into effect

on May 1, 2020, privately owned enterprises are allowed to participate in the natural gas production.

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.

As a result of our acquisitions of SCHC and SYCI,

our historical consolidated financial statements and the information presented below reflects the accounts of SCHC, SYCI and DCHC, the

condensed consolidated financial statements and the information presented below as of and for the quarter ended March 31, 2021.

our historical consolidated financial statements and the information presented below reflects the accounts of SCHC, SYCI and DCHC,

the consolidated financial statements and the information presented below as of and for the year ended December 31, 2021.

The following

discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto appearing elsewhere in

discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

On January 28, 2020 we completed a 1-for-5 reverse

stock split of our common stock, such that for each five shares outstanding prior to the stock split there was one share outstanding after

the reverse stock split.

All shares of common stock referenced in this report have been adjusted to reflect the stock split

Our current corporate structure chart is set forth in the following

5 unchanged sentences

The following table presents certain information

derived from the condensed consolidated statements of operations, cash flows and stockholders equity for the three-month and nine-month

periods ended September 30, 2021 and 2020.

Comparison of the Three-Month Period Ended

September 30, 2021 and 2020

derived from the condensed consolidated statements of income, cash flows and stockholders’ equity for the three-month periods ended

March 31, 2022 and 2021.

Comparison of the Three-Month Periods Ended

March 31, 2022 and 2021

Three-Month Period

Ended September 30, 2021

Ended March 31, 2022

Three-Month Period

Ended September 30, 2020

Ended March 31, 2021

Percent Change

Cost of net revenue

$ (4,549,968 )

$ (4,181,389 )

Gross profit (loss)

Sales, marketing and other operating expenses

Direct labor and factory overheads incurred during plant shutdown

$ (2,184,591 )

Other operating expense

General and administrative expenses

Other operating income(loss)

Income(Loss) from operations

Income(Loss) before taxes

$ (2,242,501 )

$ (1,736,250 )

Loss from operations

$ (3,281,424 )

Other income, net

Loss before taxes

$ (3,245,833 )

Income tax benefit

Net income(loss)

below shows the changes in net revenue in the respective segment of the Company for the three-month period ended September 30, 2021 as

compared to the same period in 2020:

$ (2,502,124 )

Net revenue The table below

shows the changes in net revenue in the respective segment of the Company for the three-month period ended March 31, 2022 compared to

the same period in 2021:

Net Revenue by Segment

2 unchanged sentences

Percent Change

September 30, 2021

September 30, 2020

of Net Revenue

March 31, 2022

March 31, 2021

Chemical Products

Bromine and crude salt segments

Three-Month Period Ended

Percentage Change

product sold in tonnes

September 30, 2021

September 30, 2020

Increase (Decrease)

Bromine and crude salt segments product sold in tonnes

March 31, 2022

March 31, 2021

Bromine (excluded volume sold to SYCI)

Three-Month Period Ended

Percentage Change

Natural gas segments product sold in cubic metre

March 31, 2022

March 31, 2021

Bromine segment

For the three-month periods ended September 30, 2021 and 2020, the

net revenue for the bromine segment was $14,913,004 and $9,181,747, respectively, due to an increase in selling prices and volume in the

third quarter of 2021.

For the three-month periods ended March 31, 2022

and 2021, the net revenue for the bromine segment was $8,126,015 and $4,810,990.

This increase was due to the 5% increase in tonnes sold

and a 60% increase in average selling price.

Crude salt segment

For the three-month periods ended September 30,

2021 and 2020, the net revenue for the crude salt was $2,840,665 and $1,300,438 mainly due to an increase in selling prices.

For the three-month periods ended March 31, 2022

and 2021, the net revenue for the crude salt was $754,044 and $448,253.

This increase was due to increases in crude salt unit price.

Chemical products segment

For the three-month periods ended September 30,

For the three-month periods ended March 31, 2022

and 2021, the net revenue for the chemical products segment was $0 due to the closure of our chemical factories since September 1, 2017.

As a result of the closure, there were no chemical products for sale for the three-month period ended September 30, 2021.

setting up a new factory in Bohai Park.

As a result there were no chemical products for sale for the three-month period ended March 31, 2022.

Our new chemical factory is under

construction in Bohai Park.

Natural gas segment

For the three-month period ended September 30,

2021 and 2020, the net revenue for the natural gas was $0.

For the three-month period ended March 31, 2022

and 2021, the net revenue for the rental of equipment was $50,678 and $0.

Cost of Net Revenue

3 unchanged sentences

Three-Month Period Ended

September 30, 2021

September 30, 2020

March 31, 2022

March 31, 2021

Chemical Products

Cost of net revenue reflects mainly

the raw materials consumed, the direct salaries and benefits of staff engaged in the production process, electricity, depreciation and

amortization of manufacturing plant and machinery and other manufacturing costs.

the raw materials consumed and the direct salaries and benefits of staff engaged in the production process, electricity, depreciation

and amortization of manufacturing plant and machinery and other manufacturing costs.

Bromine production capacity and utilization

3 unchanged sentences

Annual Production Capacity (in tonnes)

Three-month period ended September 30, 2020

Three-month period ended September 30, 2021

Variance of the three-month period ended September 30, 2021 and 2020

Three-month period ended March 31, 2021

Three-month period ended March 31, 2022

Variance of the three-month periods ended March 31, 2022and 2021

(i) Utilization ratio is calculated based on the

annualized actual production volume in tonnes for the periods divided by the annual production capacity in tonnes of all the seven factories

including those that have not commenced operations.

Our utilization ratio was 32% for the three-month

period ended September 30, 2021 compared to 29% recorded for the three-month period ended September 30, 2020 mainly due to the overall

market environment that has been slowly recovering.

annualized actual production volume in tonnes for the periods divided by the annual production capacity in tonnes.

Bromine segment

For the three-month period ended September 30,

2021, the bromine segment had a net cost of revenue of $6,599,977, representing an increase of $1,028,577 from the prior year period.

The increase of $1,028,577 of cost of revenue was primarily due to an increase in manufacturing unit expenses, which was primarily due

to an increase in unit sales during the three months ended 30 September 2021.

For the three-month period ended June 30, 2020

For the three-month period ended March 31, 2022

the cost of net revenue for the bromine segment was $3,920,325.

For the three-month period ended March 31, 2021

the cost of net revenue for the bromine segment was $3,514,046.

Crude salt segment

For the three-month period ended September 30,

For the three-month period ended March 31, 2022

the cost of net revenue for the crude salt segment was $629,560.

For the three-month period ended September 30,

For the three-month period ended March 31, 2021

the cost of net revenue for the crude salt segment was $667,343.

1 unchanged sentence

Cost of net revenue for our chemical products

segment for the three-month period ended September 30, 2021 and 2020 was $0.

segment for the three-month period ended March 31, 2022 and 2021 was $0.

Natural gas segment

Cost of net revenue for our natural gas segment

for the three-month period ended September 30, 2021 and 2020 was $0.

Gross Profit.

Gross profit was $9,555,972,

or 54%, of net revenue for three-month period ended September 30, 2021, representing an increase of $5,823,842, as compared to a gross

profit of $3,732,130, or 36%, of net revenue for the same period in 2020.

Gross Profit (Loss) by Segment

for the three-month period ended March 31, 2022 and 2021 was $83 and $0.

Gross Profit (Loss) Gross profit

was $4,380,769, or 49%, of net revenue for three-month period ended March 31, 2022 compared to $1,077,854, or 21%, of net revenue for

three-month period ended March 31, 2021.

Profit (Loss) by Segment

% Point Change

1 unchanged sentence

Three-Month Period Ended

Septembe 30, 2021

Septembe 30, 2020

Profit Margin

March 31, 2022

March 31, 2021

Profit (Loss) Margin

Gross Profit Margin

1 unchanged sentence

Chemical Products

Total Gross Profit

Total Gross Profit (Loss)

Bromine segment

For the three-month period ended September 30,

2021, the gross profit margin for our bromine segment was 56%.

This 17% increase was due to the increase in the selling price and volume

of bromine sold in the second quarter of 2021.

For the three-month period ended September 30,

For the three-month period ended March 31, 2022,

the gross profit margin for our bromine segment was 52%.

Crude salt segment

For the three-month period ended September 30,

2021, the gross profit margin for our crude salt segment was 44%.

For the three-month period ended September 30, 2020, the gross profit

margin for our crude salt segment was 9%

This increase was primarily attributable to the higher average selling price

of bromine of $8,082 per ton in the three-month period ended March 31, 2022 compared to $5,039 per ton in the three-month period ended

March 31, 2021

For the three-month period ended March 31, 2021,

the gross loss margin for our bromine segment was 27%.

Crude salt segmen t

For the three-month period ended March 31, 2022,

the gross profit margin for our crude salt segment was 17%, compared to (49%) in three-month period ended March 31, 2021, representing

a 66% increase.

This increase was primarily attributable to the higher average selling price of crude salt of $49 per ton in three-month

period ended March 31, 2022 compared to $22 per ton in three-month period ended March 31, 2021.

For the three-month period ended March 31, 2021,

the gross loss margin for our crude salt segment was 49%.

Direct labor and factory overheads incurred

during plant shutdown The direct labor and factory overhead costs (including depreciation of plant and machinery) in the amount

of $1,229,058 and $1,538,193 incurred for the three-month period end September 30, 2021 and 2020, respectively, were that of the factories

that have not resumed operations in the three-month periods ended September 30, 2021 and 2020.

during plant shutdown On September 1, 2017, the Company received notification from the government of Yangkou County, Shouguang

City of PRC that stated that production at all its bromine and crude salt and chemical factories should be halted with immediate effect

in order for the Company to perform rectification and improvement in accordance with the county’s new safety and environmental protection

requirements.

On November 24, 2017, the Company received a letter from the Government of Yangkou County, Shouguang City notifying the

Company to relocate its two chemical production plants located in the second living area of the Qinghe Oil Extraction Plant to Bohai

As a result, direct labor and factory overhead costs (including depreciation of plant and machinery) in the amount of $2,184,591

and $2,613,483 incurred for the three-month periods ended March 31, 2022 and 2021, respectively, of factories that have not resumed production

were presented as part of the operating expense.

General and Administrative Expenses

and administrative expenses were $1,209,818 for the three-month period ended September 30, 2021, a decrease of $3,702,152 as compared

to $4,911,970 for the same period in 2020.

Income (loss) from Operations income

from operations was $7,097,975 for the three-month period ended September 30, 2021, compared to loss of $2,733,818 in the same period

General and administrative expenses were $2,242,501 for the three-month period ended March 31, 2022, an increase of $506,251 (or 29%)

as compared to $1,736,250 for the same period in 2021.

The increase was mainly due to the unrealized foreign currency transaction loss

on intercompany balance recorded in three-month period ended March 31, 2022 compared to an unrealized foreign currency transaction gain

on intercompany balance recorded in the same period in the previous year.

Loss from Operations Loss from operations

was $65,087 the three-month period ended March 31, 2022, compared to loss from operation of $3,281,424 in the same period in 2021.

Loss from Operations by Segment

Three-Month Period Ended

September 30, 2021

March 31, 2022

Three-Month Period Ended

September 30, 2020

March 31, 2021

Chemical Products

Income(loss) from operations before corporate costs

Corporate costs

Loss from operations before corporate costs

Corporate cost

Unrealized gain (loss) on translation of intercompany balance

Income (loss) from operations

$ (2,733,818 )

Bromine segment

Income from operations from our bromine segment

was $6,909,542 for the three-month period ended September 30, 2021, compared to income from operations of $1,962,262 in the same period

Crude salt segment

Income from operations from our crude salt segment

was $561,373 for the three-month period ended September 30, 2021, compared to loss from operations of $484,278 in the same period in 2020.

Chemical products segment

Loss from operations from our chemical products

segment was $535,047 for the three-month period ended September 30, 2021, compared to loss from operations of $673,377 in the same period

Natural gas segment

Loss from operations from our natural gas segment

was $49,295 for the three -month period ended September 30, 2021, compared to a loss of $53,270 48,550in the same period in 2020.

Other Income, Net Other income,

net of $45,923 represented bank interest income, net of capital lease interest expense for the three -month period ended September 30,

2021, an increase of $7,361 (or approximately 19%) as compared to the same period in 2020.

Net Income (loss) Net income was

$5,393,615 for the three-month period ended September30, 2021, compared to a net loss of $2,912,581 in the same period in 2020.

Effective Tax Rate Our effective

income tax benefit rate for the three-month period ended September 30, 2021 and 2020 were 25% and 8% respectively.

The effective tax rate

for the three-month period ended September 30, 2021 was lower than the PRC statutory income tax rate of 25% mainly due to non-taxable

items in connection with the unrealized exchange gain for the Company off set by non-deductible expense.

Comparison of the Nine-Month Period Ended

September 30, 2021 and 2020

Nine-Month Period

Ended September 30, 2021

Nine-Month Period

Ended September 30, 2020

Percent Change

Cost of net revenue

Sales, marketing and other operating expenses

Direct labor and factory overheads incurred during plant shutdown

Other operating loss

General and administrative expenses

Income(Loss) from operations

Income(Loss) before taxes

Income tax benefit (expense)

Net income(loss)

below shows the changes in net revenue in the respective segment of the Company for the nine-month period ended September 30, 2021 as

compared to the same period in 2020:

Net Revenue by Segment

Nine-Month Period Ended

Percent Increase

September 30, 2021

September 30, 2020

of Net Revenue

Chemical Products

Bromine and crude salt segments

Nine-Month Period Ended

Percentage Change

product sold in tonnes

September 30, 2021

September 30, 2020

Bromine (excluding volume sold to SYCI)

Bromine segment

Net revenue from our bromine segment increased

to $29,749,432 for the nine-month period ended September 30, 2021 compared to $14,131,610 for the same period in 2020 respectively, due

to the higher selling price and selling quantity.

Crude salt segment

Net revenue from our crude salt segment increased

to $4,411,488 for the nine-month period ended September 30, 2021 compared $2,267,728 for the same period in 2020, respectively, due to

the higher selling price and selling quantity.

Chemical products segment

For the nine-month period ended September 30,

2021 and 2020, the net revenue for the chemical products segment was $0 due to the closure of our chemical factories since September 1,

Natural gas segment

For the nine-month period ended September 30,

2021 and 2020, the net revenue for the natural gas was $0.

Cost of Net Revenue

Cost of Net Revenue by Segment

Nine-Month Period Ended

September 30, 2021

September 30, 2020

Chemical Products

Cost of net revenue reflects mainly

the raw materials consumed-direct salaries and benefits of staff engaged in the production process, electricity, depreciation and amortization

of manufacturing plant and machinery and other manufacturing costs.

For the nine-month period ended September 30,

2021 the cost of net revenue for the bromine segment was $15,971,475, and increase of $5,521,016 or 52.8%.

The majority of the increase

was due to an increase in volume of 44.6%.

while the remainder was due to cost increases.

Bromine production capacity and utilization

of our factories

The table below represents the annual capacity

and utilization ratios for all of our bromine producing properties:

Annual Production Capacity (in tonnes)

Nine-month period ended September 30, 2020

Nine-month period ended September 30, 2021

Variance of the nine-month period ended September 30, 2021 and 2020

(i) Utilization ratio is calculated based on the

annualized actual production volume in tonnes for the periods divided by the annual production capacity in tonnes of all the seven factories

including those that have not commenced operations.

Our utilization ratio was 23% for the nine-month

period ended September 30, 2021 compared to 23% recorded for the nine-month period ended September 30, 2020.

Bromine segment

For the nine-month period ended September 30,

2021 the cost of net revenue for the bromine segment was $15,971,475.

This $5,521,016 increase was primarily attributable to the increase

in quantity sold that leads to higher costs.

For the nine-month period ended September 30,

2020 the cost of net revenue for the bromine segment was $10,450,459.

Crude salt segment

For the nine-month period ended September 30,

2021 the cost of net revenue for the crude salt segment was $3,323,385.The cost of net revenue for our crude salt segment for the nine-month

period ended September 30, 2020 was $2,243,812.

Natural gas segment

Cost of net revenue for our natural gas segment

for the nine-month period ended September 30, 2021 and 2020 was $0.

Gross Profit.

Gross profit was $14,866,060,

or 44%, of net revenue for nine-month period ended September 30, 2021 compared to $3,705,067, or 23%, of net revenue for the same period

Gross Profit (Loss) by Segment

% Point Change

Nine-Month Period Ended

September 30, 2021

September 30, 2020

Profit Margin

Gross Profit (loss) Margin

Gross Profit Margin

Chemical Products

Total Gross Profit

Bromine segment

For the nine-month period ended September 30,

2021, the gross profit margin for our bromine segment was 46%.

This 20% increase was due to the higher selling price and selling quantity.

For the nine-month period ended September 30,

2020, the gross profit margin for our bromine segment was 25%.

Crude salt segment

For the nine-month period ended September 30,

2021, the gross profit margin for our crude salt segment was 25%.

For the nine-month period ended September 30,

2020 the gross profit margin for our crude salt segment was 1%.

Chemical products segment

For the nine-month period ended September 30,

2021, the gross profit margin for our chemical segment was 0% due to the closure of our plant and factories to perform rectification and

As a result of the closure, there were no chemical products for sale for the nine-month period ended September 30, 2021.

Direct labor and factory overheads incurred

during plant shutdown The direct labor and factory overhead costs (including depreciation of plant and machinery) in the amount

of $5,237,258 and $6,886,215 incurred for the nine-month period end September 30, 2021 and 2020, respectively, were for factories that

have not resumed production in the nine-month periods ended September 30, 2021 and 2020.

General and Administrative Expenses.

General and administrative expenses were $8,150,769 for the nine-month period ended September 30, 2021, an increase of $853,759 (or 12%)

as compared to $7,297,010 for the same period in 2020.

Income (Loss) from Operations.

from operations was $1,433,742 for the nine-month period ended September 30, 2021, compared to a loss of $10,522,799 in the same period

Income(Loss) from Operations by Segment

Nine-Month Period Ended

September 30, 2021

Nine-Month Period Ended

September 30, 2020

$ (2,383,260 )

Chemical Products

Income (Loss) from operations before corporate costs

Corporate costs

Unrealized gain on translation of intercompany balance

Income (Loss) from operations before taxes

$ (10,522,799 )

Loss from operations

Bromine segment

Income from operations from our bromine segment

was $8,312,210 for the nine-month period ended September 30, 2021, compared to a loss of $2,383,260 in the same period in 2020.

was $1,348,834 for the three-month period ended March 31, 2022, compared to loss from operations of $1,279,565 in the same period in 2021.

This increase was due to the 5% increase in tonnes sold and a 60% increase in average selling price.

Crude salt segment

Loss from operations from our crude salt segment was $1,026,647 for

the nine-month period ended September 30, 2021, compared to a loss of $2,609,332 in the same period in 2020.

Loss from operations from our crude salt segment

was $521,921 for the three-month period ended March 31, 2022, compared to loss from operations of $1,009,585 in the same period in 2021.

This decrease was due to increases in crude salt unit price.

Chemical products segment

Loss from operations from our chemical products

segment was $2,022,828 for the nine-month period ended September 30, 2021, compared to a loss of $2,038,938 in the same period in 2020.

segment was $513,282 for the three-month period ended March 31, 2022, compared to loss from operations of $746,469 in the same period

This decrease was due to fewer employees and therefore fewer wages.

Natural gas segment

Loss from operations from our natural gas segment

was $166,932 for the nine-month period ended September 30, 2021, compared to a loss of $150,666 in the same period in 2020.

Other Income, Net.

Other income,

net of $117,583 represented bank interest income, net of capital lease interest expense for the nine -month period ended September 30,

2021, a decrease of $3,494 (or approximately 3%) as compared to the same period in 2020.

Net Income (Loss).

Net income was

$188,271 for the nine-month period ended September 30, 2021, compared to a net loss of $8,696,959 in the same period in 2020.

was $26,739 for the three -month period ended March 31, 2022, compared to a loss of $54,787 in the same period in 2021.

Other Income Net Other income, net

of $40,836 represented bank interest income, net of finance lease interest expense for the three -month period ended March 31, 2022, an

increase of $5,245 (or approximately 15%) as compared to the same period in 2021.

Net Loss Net loss was $119,946 for

the three-month period ended March 31, 2022, compared to a net loss of $2,502,124 in the same period in 2021.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2021, cash and cash equivalents

As of March 31, 2022, cash and cash equivalents

were $105,661,999 as compared to $95,767,263 as of December 31, 2021.

1 unchanged sentence

Statement of Cash Flows

Nine-Month Period Ended September 30,

Net cash (used in) provided by operating activities

Three-Month Period Ended March 31,

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Effects of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

Net increase(decrease) in cash and cash equivalents

$ 2,476,786 )

For the nine-month period ended September 30,

2021, we met our working capital and capital investment requirements by using cash on hand.

Net Cash (used in) Provided by Operating Activities

During the nine-month period ended September 30,

2021 cash flow provided by operating activities of approximately $11.1 million was mainly due to non-cash adjustments related to depreciation

and amortization of property, plant and equipment, and restricted stock expense offset by a net loss of $12.32 million and an increase

in accounts receivable of $6.89 million.

During the nine-month period ended September 30,

2020 cash flow provided by operating activities of approximately $3.26 million was mainly due to non-cash adjustments related to depreciation

and amortization of property, plant and equipment, and restricted stock expense offset by a net loss of $8.7 million and an increase in

accounts receivable of $2.28 million.

For the three-month period ended March 31, 2022,

we met our working capital and capital investment requirements mainly by using cash on hand.

Net Cash Provided by Operating Activities

During the three -month period ended March 31,

2022, cash flow provided by operating activities of approximately $8.4 million was mainly due to a decrease in accounts receivable of

$3.5 million, and a non-cash adjustment related to depreciation and amortization of property, plant and equipment, reduced by a net loss

of $0.12 million and an adjustment for income tax benefit of $0.1 million.

During the three -month period ended March 31,

2021, cash flow provided by operating activities of approximately $3.3 million was mainly due to a decrease in accounts receivable of

$1.6 million, and a non-cash adjustment related to depreciation and amortization of property, plant and equipment, reduced by a net loss

of $2.5 million and an adjustment for income tax benefit of $0.7 million.

Accounts receivable

1 unchanged sentence

a major impact on our overall liquidity.

The following table presents the aging analysis of our accounts receivable as of September 30,

The following table presents the aging analysis of our accounts receivable as of March 31, 2022

and December 31, 2021.

September 30, 2021

March 31, 2022

December 31, 2021

8 unchanged sentences

The overall accounts receivable balance as of

September 30, 2021 increased by $6,911,318, as compared to those of December 31, 2020.

We have policies in place to ensure that sales

are made to customers with an appropriate credit history.

March 31, 2022 decreased by $3,423,768, as compared to those of December 31, 2021.

We have policies in place to ensure that sales are

made to customers with an appropriate credit history.

We perform ongoing credit evaluation on the financial condition of our customers.

No allowance for doubtful accounts for the three-month and nine-month periods ended September 30, 2021 is required.

No allowance for doubtful accounts for the three-month period ended March 31, 2022 is required.

Our inventory consists of the following:

September 30, 2021

March 31, 2022

December 31, 2021

1 unchanged sentence

Finished goods

The net inventory level as of September 30, 2021

increased by $69,893 (or 17%), as compared to the net inventory level as of December 31, 2020.

Raw materials increased by $49,214 as of September

The net inventory level as of March 31, 2022 decreased

by $175,549 (or 25%), as compared to the net inventory level as of December 31, 2021.

Raw materials increased by $9,578 as of March

31, 2022 as compared to December 31, 2021.

Our finished goods increased by $20,679 as of

September 30, 2021 as compared to December 31, 2020.

Our finished goods decreased by $185,127 as of

March 31, 2022 as compared to December 31, 2021.

Net Cash Used in Investing Activities

For the nine-month period ended September 30,

2021, we used approximately $8.56 million to acquire property, plant and equipment.

For the nine-month period ended September 30,

For the three-month period ended March 31, 2022,

we used approximately $0.4 million to acquire property, plant and equipment.

For the three-month period ended March 31, 2021,

we have no investing activities.

Net Cash Used in Financing Activities

For the nine-month period ended September 30,

2021 and 2020, we used $0.3 million to repay finance lease obligation.

We have no financing activities for the three-month

periods ended March 31, 2022 and 2021.

We believe that our available funds and cash flows

2 unchanged sentences

We had available cash of approximately $105.7

million at September 30, 2021, all which is in highly liquid current deposits which earn no or little interest.

million at March 31, 2022, most of which is in highly liquid current deposits which earn no or little interest.

We do not anticipate paying

16 unchanged sentences

We have no significant contractual obligations

not fully recorded on our consolidated balance sheets or fully disclosed in the notes to our consolidated financial statements.

information regarding our contractual obligations and commitments at September 30, 2021 is provided in the notes to our consolidated financial

See “Notes to Condensed Consolidated Financial Statements, Note 17 – Capital Commitment and Operating Lease Commitments”.

not fully recorded on our condensed consolidated balance sheets or fully disclosed in the notes to our condensed consolidated financial

Additional information regarding our contractual obligations and commitments at March 31, 2022 is provided in the notes to

our condensed consolidated financial statements.

See “Notes to Condensed Consolidated Financial Statements, Note 18– Capital

Commitment and Other Service Contractual Obligations”.

Material Off-Balance Sheet Arrangements

12 unchanged sentences

used by us in the preparation of our financial statements:

accounts receivable and allowance for doubtful accounts, leases, property,

plant and equipment, recoverability of long lived assets, revenue recognition, income taxes, loss contingencies, and stock-based compensation.

These policies and estimates are described in the Company’s 2020 Form 10-K.

accounts receivable and allowance for doubtful accounts, inventories and allowance

for obsolescence, assets retirement obligation, property, plant and equipment, recoverability of long-lived assets, mineral rights, leases,

revenue recognition, income taxes, and loss contingencies.

These policies and estimates are described in the Company’s Form 10-Q

for the three months ended March 31, 2022.

Quantitative and Qualitative Disclosures About Market Risk

3 unchanged sentences

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 2. Management’s Discussion and Analysis