What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-14 compared with 2022-08-15 · 275 added, 306 removed, 899 unchanged (39% of the section changed)

4 unchanged sentences

(Expressed in U.S.

June 30, 2022

September 30, 2022

December 31, 2021

37 unchanged sentences

10,517,754 shares issued;

and 10,471,924 shares outstanding as of June 30, 2022 and December 31, 2021, respectively

and 10,471,924 shares outstanding as of September 30, 2022 and December 31, 2021, respectively

Treasury stock;

45,830 and 45,830 shares as of June 30, 2022 and December 31, 2021 at cost

45,830 and 45,830 shares as of September 30, 2022 and December 31, 2021 at cost

Additional paid-in capital

13 unchanged sentences

(Expressed in U.S.

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

Three-Month Period Ended September 30,

Nine -Month Period Ended September 30,

OPERATING INCOME (EXPENSE)

14 unchanged sentences

( 8,150,769 )

Other operating expense

Other operating income (loss)

Total operating income (expense)

3 unchanged sentences

( 32,727,178 )

PROFIT (LOSS) FROM OPERATIONS

( 2,382,809 )

( 5,664,233 )

INCOME(LOSS) FROM OPERATIONS

OTHER INCOME (EXPENSE)

1 unchanged sentence

Interest income

Other (income) expenses

INCOME(LOSS) BEFORE TAXES

( 2,346,740 )

( 5,592,573 )

( 1,249,621 )

( 1,345,316 )

NET PROFIT (LOSS)

INCOME TAX EXPENSE

( 3,010,967 )

( 1,750,283 )

COMPREHENSIVE Profit (LOSS)

NET Profit (LOSS)

( 4,356,283 )

( 1,363,054 )

NET INCOME(LOSS)

COMPREHENSIVE LOSS:

NET INCOME(LOSS)

OTHER COMPREHENSIVE LOSS

- Foreign currency translation adjustments

1 unchanged sentence

( 1,272,449 )

COMPREHENSIVE Profit (LOSS)

( 30,774,686 )

COMPREHENSIVE INCOME(LOSS)

$ ( 6,962,896 )

$ ( 18,025,458 )

Earnings (LOSS) PER SHARE:

INCOME(LOSS) PER SHARE:

BASIC AND DILUTED

4 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’

SIX-MONTH PERIOD ENDED JUNE 30, 2022

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2022

(Expressed in U.S.

1 unchanged sentence

unappropriated

BALANCE AT MARCH 31, 2022 (Unaudited)

$ ( 510,329 )

$ 100,569,159

$ 150,343,692

$ 288,068,305

BALANCE AT JUNE 30, 2022 ( Una udited)

Restricted shares

Translation adjustment

( 16,393,444 )

Net profit (loss) for three-month period ended June 30, 2022

BALANCE AT JUNE 30, 2022 (Unaudited)

$ ( 510,329 )

$ 100,569,159

$ 154,245,486

$ ( 2,985,581 )

$ 275,576,655

Net income for three-month period ended September 30, 2022

BALANCE AT SEPTEMBER 30, 2022 (Unaudited)

comprehensive

unappropriated

BALANCE AT MARCH 31, 2021 (Unaudited)

$ ( 510,329 )

$ 148,886,232

$ 272,337,459

BALANCE AT JUNE 30, 2021 ( Una udited)

Restricted shares

Translation adjustment

Net profit (loss) for three-month period ended June 30, 2021

( 2,703,220 )

BALANCE AT JUNE 30, 2021 (Unaudited)

$ ( 510,329 )

$ 100,569,160

$ 146,183,012

$ 278,102,555

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

BALANCE AT SEPTEMBER 30, 2021 (Unaudited)

comprehensive

1 unchanged sentence

BALANCE AT DECEMBER 31, 2021 (Audited)

$ ( 510,329 )

$ 100,569,159

$ 150,463,638

$ 286,639,217

Restricted shares

Translation adjustment

( 14,844,410 )

Net profit (loss) for six-month period ended June 30, 2022

BALANCE AT JUNE 30, 2022 (Unaudited)

$ ( 510,329 )

$ 100,569,159

$ 154,245,486

$ ( 2,985,581 )

$ 275,576,655

Net income for nine-month period ended September 30, 2022

BALANCE AT SEPTEMBER 30, 2022 (Unaudited)

comprehensive

1 unchanged sentence

BALANCE AT DECEMBER 31, 2020 (Audited)

$ ( 510,329 )

$ 151,388,356

$ 277,024,273

Restricted shares

Translation adjustment

Net profit (loss) for six-month period ended June 30, 2021

( 5,205,344 )

BALANCE AT JUNE 30, 2021 (Unaudited)

$ ( 510,329 )

$ 100,569,160

$ 146,183,012

$ 278,102,555

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

BALANCE AT SEPTEMBER 30, 2021 (Unaudited)

See accompanying notes to the condensed consolidated financial statements.

7 unchanged sentences

(Expressed in U.S.

Six-Month Period Ended June 30,

Nine-Month Period Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

Net income(loss)

$ ( 5,205,344 )

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

Interest on finance lease obligation

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

Depreciation and amortization

2 unchanged sentences

Common stock issued for services

Issuance of stock options to employee

Changes in assets and liabilities:

Accounts receivable

( 6,890,373 )

Prepayments and deposits

4 unchanged sentences

Taxes payable

Prepaid land leases

Operating lease

( 1,073,677 )

Net cash provided by (used in) by operating activities

17 unchanged sentences

Cash paid during the periods for:

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

Cash paid for income taxes

Cash paid for interest

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

(Expressed in U.S.

1 unchanged sentence

of Presentation and Consolidation

The accompanying audited consolidated financial

The accompanying unaudited consolidated financial

statements have been prepared by Gulf Resources, Inc.

9 unchanged sentences

All material intercompany transactions have been eliminated on consolidation.

Nature of Business

The Company manufactures and trades bromine through

48 unchanged sentences

commenced commercial production on May 6, 2020.

The Company received an oral notification from the government for its Factory No.

permits the Factory No.

8 to resume production in August 2022.

The Company expects that the Factory No.

8 will generate revenue in the

fourth quarter 2022.

The Company is still waiting for governmental

approval for Factories No.

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 that it will receive permission to open one of these factories in 2022 and perhaps try its best effort to get another in early

Pursuant to the notification issued from the government

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

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.

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.

Pursuant to the notification issued from

the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 28, 2021 to February

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.

2022, Shouguang Hengde Salt Industry Co.

32 unchanged sentences

The Company is working with its existing suppliers and may identify new suppliers so that it can complete construction of its

factory based on the delivery.

factory based on accelerated delivery.

Currently, the Company can not estimate when construction will be completed and production can

4 unchanged sentences

of $ 45,584,344 and $ 45,584,344 , which were recorded in the prepaid land leases and property, plant and equipment in the consolidated balance

sheets as of June 30, 2022 and December 31, 2021.

The Company does not believe the delay in opening the factory will materially impact

the overall cost of the project.

sheets as of September 30, 2022 and December 31, 2021.

The Company does not believe the delay in opening the factory will materially

impact the overall cost of the project.

(iii) Natural Gas Segment

16 unchanged sentences

for Doubtful Accounts

As of June 30, 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 and six-month periods ended June 30, 2022 and 2021.

As of September 30, 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 and nine-month periods ended September 30, 2022 and 2021.

(d) Concentration

of Credit Risk

The Company is exposed to credit risk in the normal

course of business, primarily related to accounts receivable and cash and cash equivalents.

Substantially all of the Company’s cash

and cash equivalents are maintained with financial institutions in the PRC, namely, Industrial and Commercial Bank of China Limited, China

Merchants Bank Company Limited and Sichuan Rural Credit Union, which are not insured or otherwise protected.

The Company is exposed to credit risk in the

normal course of business, primarily related to accounts receivable and cash and cash equivalents.

Substantially all of the

Company’s cash and cash equivalents are maintained with financial institutions in the PRC, namely, Industrial and Commercial

Bank of China Limited, China Merchants Bank Company Limited and Sichuan Rural Credit Union, which are not insured or otherwise

The Company placed $ 92,638,278

and $ 95,767,263 with these institutions as of June 30, 2022 and December 31, 2021, respectively.

The Company has not experienced

any losses in such accounts in the PRC.

and $ 95,767,263 with

these institutions as of September 30, 2022 and December 31, 2021, respectively.

The Company has not experienced any

losses in such accounts in the PRC.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

(Expressed in U.S.

26 unchanged sentences

Furniture, fixtures and equipment

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.

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

Producing oil and gas properties are depreciated

14 unchanged sentences

The Company’s

contributions totaled $ 145,512 and $ 220,968 for the three-month period ended June 30, 2022 and 2021, respectively, and totaled $ 346,777

and $ 467,590 for the six-month period ended June 30, 2022 and 2021, respectively.

contributions totaled $ 141,996 and $ 186,074 for the three-month period ended September 30, 2022 and 2021, respectively, and totaled $ 488,773

and $ 653,664 for the nine-month period ended September 30, 2022 and 2021, respectively.

Net revenue is net of discount and value added

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 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 six months period ended June

For the three and nine months period ended September

30, 2022 and 2021, the Company determined that there were no events or circumstances indicating possible impairment of its long-lived

8 unchanged sentences

stock options were greater than the market price of the common stock.

The Company had no outstanding options in the three month periods

ending June 30, 2021 and 2022.

It had no options outstanding in the six months period ending June 30,2022.

In the six month period ending

June 30,2021, it had 31,352 options outstanding.

Because the Company has a net loss during this period, the options were anti-dilutive.

Anti-dilutive common stock equivalents which were excluded from

the calculation of number of dilutive common stock equivalents amounted to 0 and 0 shares for the three-month period ended September 30,

2022 and 2021, respectively, and amounted to 0 and 20,901 shares for the nine-month period ended September 30, 2022 and 2021, 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.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 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 income.

The statement of income

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

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.

Gains or losses resulting from transactions in currencies

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

other than the functional currencies are recognized in net loss 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.

(n) Stock-based

(n) Stock-based Compensation

Stock-based awards issued to employees are recorded

30 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 profit (loss).

tax in the consolidated statement of income (loss).

Accounting Pronouncements

Recent accounting pronouncements adopted

There were no recent accounting pronouncements adopted during the six

months ended June 30, 2022.

There were no recent accounting pronouncements adopted during the nine

months ended September 30, 2022.

Recently Issued Accounting Pronouncements Not

7 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

(Expressed in U.S.

2 unchanged sentences

Inventories - Schedule of Inventories, Current

September 30,

Raw materials

Finished goods

Inventory, net

There was no allowance for slow-moving inventories

as of June 30, 2022 and 2021.

as of September 30, 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 June 30 2022

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

2022 and December 31, 2021.

As of June 30, 2022, the prepaid land lease increased to $ 9,862,218 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 completed and

placed in service.

As of September 30, 2022, the prepaid land lease increased to $ 9,329,586 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 completed

and placed in service.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

(Expressed in U.S.

3 unchanged sentences

Schedule of Property, Plant and Equipment

September 30,

Mineral rights

13 unchanged sentences

The aggregate carrying

values of these properties situated on parcels of the land are $ 16,193,695 and $ 17,911,910 as at June 30, 2022 and December 31, 2021,

values of these properties situated on parcels of the land are $ 14,943,968 and $ 17,911,910 as at September 30, 2022 and December 31,

2021, respectively.

During the three-month period ended June 30,

During the three-month period ended September 30, 2022, depreciation

and amortization expense totaled $ 5,982,055 of which $ 1,523,855 , $ 165,992 and $ 4,292,208 were recorded in direct labor and factory overheads

incurred during plant shutdown , administrative expenses and cost of net

During the same period in 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 revenue .

During the nine-month period ended September

30, 2022 , depreciation and amortization expense totaled $ 16,255,069

of which $ 1,532,788 ,

and $ 3,567,899 were

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

During the six-month period ended June 30, 2022, depreciation and amortization expense totaled $ 10,273,014 ,

of which $ 3,293,856 , $ 1,368,395 and $ 5,610,763 were recorded in direct labor and factory overheads incurred during plant shutdown,

of which $ 4,817,711 , $ 1,534,387 and $ 9,902,971 were recorded in direct labor and factory overheads incurred during plant

shutdown , administrative expenses and cost of net revenue .

During the same period of 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 three-month period ended June 30, 2021,

depreciation and amortization expense totaled $ 4,119,073 of which $ 758,445 , $ 163,868 and $ 3,196,760 were recorded in direct labor and

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

During the six-month period ended June

30, 2021, depreciation and amortization expense totaled $ 8,222,022 , of which $ 2,575,227 , $ 327,101 and $ 5,319,694 were recorded in direct

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

5 – FINANCE LEASE RIGHT-OF-USE ASSETS

NOTE 5 – FINANCE LEASE RIGHT-OF-USE ASSETS

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

2 unchanged sentences

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 six months period ended June

30, 2022, depreciation and amortization expense totaled $ 1,401 and $ 2,860 , respectively, which was recorded in direct labor and factory

overheads incurred during plant shutdown.

During the three and six months period ended June

30, 2021, depreciation and amortization expense totaled $ 1,434 and $ 2,862 , respectively, which was recorded in direct labor and factory

overheads incurred during plant shutdown.

During the three and nine months period

ended September 30, 2022, depreciation and amortization expense totaled $ 1,356 and $ 4,216 , respectively, which was recorded in

direct labor and factory overheads incurred during plant shutdown.

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.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

(Expressed in U.S.

6 – OPERATING LEASE RIGHT – OF USE ASSETS

As of June 30, 2022, the total operating lease

ROU assets was $ 8,886,582 .

The total operating lease cost for the six-month

period ended June 30, 2022 and 2021 was $ 506,537 and $ 481,295 .

As of September 30, 2022, the total operating

lease ROU assets was $ 8,208,368 .

The total operating lease cost for the nine-month

period ended September 30, 2022 and 2021 was $ 746,731 and $ 721,994 .

The Company has the rights to use certain parcels

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

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 $ 9,774,975 as at June 30, 2022.

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 $ 9,103,495 as at September 30, 2022.

NOTE 7 – ACCOUNTS PAYABLE, OTHER PAYABLE

4 unchanged sentences

Expenses - Schedule of Accounts Payable and Accrued Liabilities

September 30,

Accounts payable

3 unchanged sentences

Accrued expense-others

NOTE 8 – RELATED PARTY

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 $ 92,956 for five years from January 1, 2018 to December 31, 2022.

associated with this agreement for the three and six months ended June 30, 2021 was approximately $ 23,239 and $ 47,807 .

The expense associated

with this agreement for the three and six months ended June 30, 2021 was approximately $ 24,144 and $ 47,878 .

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 $ 87,871

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

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

ended September 30, 2022 was approximately $ 21,968 and $ 69,775 .

The expense associated with this agreement for the three and nine

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

NOTE 8 – RELATED PARTY TRANSACTIONS –

5 unchanged sentences

Chief Operating Officer

September 30,

Amount due to related parties:

2 unchanged sentences

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

9 – TAXES PAYABLE

September 30,

Land use tax payable

6 unchanged sentences

Lease - Schedule of Finance Leased Liabilities

September 30,

Interest rate

3 unchanged sentences

Interest expenses from capital lease obligations

amounted to $ 36,074 and $ 35,659 for the three-month period ended June 30, 2022 and 2021, respectively, which were charged to the condensed

consolidated statement of income (loss).

Interest expenses from capital lease obligations amounted to $ 69,696 and $ 71,197 for the six-month

period ended June 30, 2022 and 2021, respectively, which were charged to the condensed consolidated statement of income (loss).

amounted to $ 23,934 and $ 32,015 for the three-month period ended September 30, 2022 and 2021, respectively, which were charged to the

condensed consolidated statement of income (loss).

Interest expenses from capital lease obligations amounted to $ 93,630 and $ 103,212 for

the nine-month period ended September 30, 2022 and 2021, respectively, which were charged to the condensed consolidated statement of income

The components of operating lease liabilities

1 unchanged sentence

Lease - Schedule of Operating Leased Liabilities

September 30,

Interest rate

3 unchanged sentences

The weighted average remaining operating lease

term at June 30, 2022 was 20 years and the weighted average discounts rate was 4.89 %.

Lease payments for the three-month period ended

June 30, 2022 and 2021, respectively, were $ 565,917 and $ 575,242 .

Lease payments for the six-month period ended June 30, 2022 and 2021,

respectively, were $ 823,796 and $ 780,193 .

term at September 3 0 , 2022 was 20 years and the weighted average discounts

rate was 4.89 %.

Lease payments for the three-month period ended September 30, 2022 and 2021, respectively, were $ 64,896 and $ 68,467 .

payments for the nine-month period ended September 30, 2022 and 2021, respectively, were $ 888,692 and $ 848,660 .

Maturities of lease liabilities were as follows:

14 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

(Expressed in U.S.

24 unchanged sentences

reserve balance falling below 25% of the registered capital.

The Statutory Common Reserve Fund as of June 30, 2022 for SCHC, SYCI, SHSI,

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

The Statutory Common Reserve Fund as of September 30, 2022 for SCHC, SYCI,

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

NOTE 12 – STOCK-BASED COMPENSATION

6 unchanged sentences

of the 2007 Plan and applicable award agreement.

As of June 30, 2022, the number of shares of the Company’s common stock available

As of September 30, 2022, the number of shares of the Company’s common stock available

for grant of awards under the 2019 Plan was 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 June 30, 2022 and 2021,

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

During the three and six months ended June 30, 2022, there were no

options granted to employees or non-employees.

The following table summarizes all Company stock

option transactions between January 1, 2022 and June 30, 2022.

For the three months ended September 30, 2022

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

During the three and nine months ended September 30, 2022, there were

no options granted to employees or non-employees.

The following table summarizes all Company

stock option transactions between January 1, 2022 and September 30, 2022.

Stock-Based Compensation - Schedule of Stock

8 unchanged sentences

Expired during the period

Balance, June 30, 2022

Stock Options Outstanding and Exercisable

Balance, September 30, 2022

Stock Options and Warrants Outstanding and Exercisable

Weighted Average

Outstanding at June 30, 2022

Outstanding at September 30, 2022

Exercise Prices

2 unchanged sentences

The aggregate intrinsic value of options outstanding and exercisable

as of June 30, 2022 was $ 0 .

During the three and six months ended June 30,

as of September 30, 2022 was $ 0 .

During the three and nine months ended September

30, 2022 and 2021, there were no options exercised.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

(Expressed in U.S.

2 unchanged sentences

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

United States (“US”)

States (“US”)

United States

3 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 six-month periods ended June 30, 2022 and 2021, and management believes that its earnings are permanently

income for the three-month and nine-month periods ended September 30, 2022 and 2021, and management believes that its earnings are permanently

invested in the PRC.

British Virgin Islands (“BVI”)

Virgin Islands (“BVI”)

Upper Class Group Limited, a subsidiary of Gulf

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 six-month periods ended June 30, 2022

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

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 six-month periods

ended June 30, 2022 and 2021.

The applicable statutory tax rates for the three-month and six-month periods ended June 30, 2022

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, 2022 and 2021.

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

30, 2022 and 2021 are 16.5 %.

2 unchanged sentences

DCHC in the PRC is charged at 25 % of the assessable profits.

The operating subsidiaries SCHC is a wholly foreign-owned enterprises (“FIE”) , SYCI , DCHC, and SHSI are incorporated in

the PRC and are subject to PRC Local Income Tax Law.

The PRC tax losses may be

carried forward to be utilized against future taxable profit for ten years for High-tech enterprises and small and medium-sized enterprises

of science and technology and for five years for other companies.

Tax losses of the operating subsidiaries of the Company may be carried

forward for five years.

The operating subsidiaries SCHC is a wholly foreign-owned enterprises

(“FIE”), SYCI, DCHC, and SHSI are incorporated in the PRC and are subject to PRC Local Income Tax Law.

The PRC tax losses

may be carried forward to be utilized against future taxable profit for ten years for High-tech enterprises and small and medium-sized

enterprises of science and technology and for five years for other companies.

Tax losses of the operating subsidiaries of the Company

may be carried forward for five years.

On February 22, 2008, the Ministry of Finance

3 unchanged sentences

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

As of June 30, 2022 and December 31, 2021, the

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

$ 137,684,848 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

Accordingly, as of June 30, 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 June 30, 2022 and December 31, 2021, the

unrecognized WHT were $ 5,869,416 and $ 5,932,051 , respectively.

As of September 30, 2022 and December 31, 2021,

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

are $ 141,095,736 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 September 30, 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 September 30, 2022

and December 31, 2021, the unrecognized WHT are $ 6,095,470 and $ 5,932,051 , respectively.

The Company’s income tax returns are subject

15 unchanged sentences

Income Taxes - Schedule of Components of Income Tax Expense Benefit

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

Three-Month Period Ended

September 30,

Nine-Month Period Ended

September 30,

Current taxes – PRC

Deferred taxes

Change in valuation allowance

( 3,010,967 )

( 1,750,283 )

( 4,356,283 )

( 1,363,054 )

Tax Expense Benefit

$ ( 3,010,967 )

$ ( 1,750,283 )

$ ( 4,356,283 )

$ ( 1,363,054 )

Significant components of the Company’s

deferred tax assets and liabilities at June 30, 2022 and December 31, 2021 are as follows:

deferred tax assets and liabilities at September 30, 2022 and December 31, 2021 are as follows:

Income Taxes - Schedule of Deferred

Tax Assets and Liabilities

September 30,

Deferred tax liabilities

9 unchanged sentences

The increase in valuation allowance for the three-month

period ended June 30, 2022 is $ 11,523 .

period ended September 30, 2022 is $ 0 .

The increase in valuation allowance for the three-month

period ended June 30, 2021 is $ 144,890 .

The increase in valuation allowance for the six-month

period ended June 30, 2022 is $ 34,176 .

The increase in valuation allowance for the six-month

period ended June 30, 2021 is $ 57,926 .

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

The increase in valuation allowance for the nine-month

period ended September 30, 2022 is $ 34,176 .

The increase in valuation allowance for the nine-month

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

There were no unrecognized tax benefits and accrual

for uncertain tax positions as of June 30, 2022 and December 31, 2021 and no amounts accrued for penalties and interest for the three

and six months ended June 30, 2022 and 2021.

for uncertain tax positions as of September 30, 2022 and December 31, 2021 and no amounts accrued for penalties and interest for the three

and nine months ended September 30, 2022 and 2021.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

(Expressed in U.S.

8 unchanged sentences

All the customers are located in PRC.

September 30, 2022

(external customers)

(intersegment)

Income(loss) from operations before income tax benefit

Income tax benefit (expense)

( 1,320,295 )

( 1,249,621 )

Income (loss) from operations after

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

Income tax benefit(expense)

Income (loss) from operations after income tax benefit

Depreciation and amortization

Capital expenditures

September 30, 2021

(external customers)

1 unchanged sentence

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

( 3,682,445 )

( 2,382,809 )

Income tax benefit(expense)

Income (loss) from operations after

income tax benefit (expense)

( 3,682,445 )

( 2,739,289 )

Income (loss) from operations after income tax benefit

Depreciation and amortization

2 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 each respective segment through April 2022.

split by reference to the average selling price and production volume of the respective segment until April 2022.

Commencing May 2022,

costs were assigned to the two subsidiaries (SCHC and SHSI) by independent accounting.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

(Expressed in U.S.

NOTE 14 – BUSINESS SEGMENTS – Continued

September 30, 2022

(external customers)

2 unchanged sentences

Income tax benefit(expense)

( 1,662,456 )

( 1,345,316 )

Loss from operations after income tax benefit (expense)

Income (loss) from operations after income tax benefit

Depreciation and amortization

Capital expenditures

September 30, 2021

(external customers)

(intersegment)

Income (loss) from operations before income tax benefit

( 1,588,020 )

( 1,487,781 )

( 1,790,770 )

( 3,873,463 )

( 5,664,233 )

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

Income tax benefit(expense)

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

( 1,190,554 )

( 1,144,190 )

( 1,403,541 )

( 3,873,463 )

( 5,277,004 )

Income (loss) from operations after income tax benefit

Depreciation and amortization

2 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 until April 2022.

split by reference to the average selling price and production volume of each respective segment through April 2022.

Commencing May 2022,

costs were assigned to the two subsidiaries (SCHC and SHSI) by independent accounting.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

(Expressed in U.S.

NOTE 14 – BUSINESS SEGMENTS – Continued

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

Three-Month Period Ended

September 30,

Nine-Month Period Ended

September 30,

Reconciliations

Total segment operating Income (loss)

$ ( 1,790,770 )

Corporate costs

( 3,378,774 )

( 3,279,313 )

Unrealized gain on translation of intercompany balance

Income (loss) from operations

( 2,382,809 )

( 5,664,233 )

Other income, net of expense

Income (loss) before taxes

$ ( 2,346,740 )

$ ( 5,592,573 )

The following table shows the major customer(s)

(10% or more) for the three-month period ended June 30, 2022.

(10% or more) for the three-month period ended September 30, 2022.

Business Segments - Schedule of

1 unchanged sentence

Chemical Products

Percentage of Total Revenue (%)

Percentage of

Shandong Morui Chemical Company Limited

Shandong Brother Technology Limited

Shouguang Weidong Chemical Company Limited

Shandong Brother Technology Limited

The following table shows the major customer(s)

(10% or more) for the six-month period ended June 30, 2022.

(10% or more) for the nine-month period ended September 30, 2022.

Chemical Products

1 unchanged sentence

Shandong Morui Chemical Company Limited

Shandong Brother Technology 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 June 30, 2021.

Chemical Products

Percentage of Total Revenue (%)

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

Percentage of

Shandong Morui Chemical Company Limited

2 unchanged sentences

The following table shows the major customer(s)

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

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

Chemical Products

4 unchanged sentences

15 – CUSTOMER CONCENTRATION

During the six-month period ended June 30, 2022,

the Company sold 52.9 % of its products to its top five customers, respectively.

As of June 30, 2022, amounts due from these customers

were $ 5,166,271 .

During the six-month period ended June 30, 2021,

the Company sold 66.4 % of its products to its top five customers, respectively.

As of June 30, 2021, amounts due from these customers

were $ 2,878,885 .

NOTE 16 – MAJOR SUPPLIERS

During the six-month period ended June 30, 2022

During the nine-month period ended September

30, 2022, the Company sold 52.9 %

of its products to its top five customers.

As of September 30, 2022, amounts due from these customers were $ 6,095,578 .

During the nine-month period ended September 30,

2021, the Company sold 76.9 % of its products to its top five customers.

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

$ 11,280,670 .

16 – MAJOR SUPPLIERS

During the nine-month period ended September

30, 2022 the Company purchased 100 % of its raw materials from its top five suppliers.

As of June 30, 2022, amounts due to those suppliers

were $ 594,208 .

During the six-month period ended June 30, 2021

As of September 30, 2022, amounts due

to those suppliers were $ 219,646 .

During the nine-month period ended September 30,

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

As of June 30, 2021, amounts due to those suppliers

were $ 412,601 .

As of September 30, 2021, amounts due to

those suppliers were $ 653,102 .

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 June 30, 2022 and December

There were no material unrecognized financial assets and liabilities as of September 30, 2022

and December 31, 2021.

NOTE 18 – CAPITAL COMMITMENT AND OTHER SERVICE

1 unchanged sentence

The following table sets forth the Company’s

contractual obligations as of June 30, 2022:

contractual obligations as of September 30, 2022:

Capital Commitment and Other Service

6 unchanged sentences

the next 25 to 36 months

NOTE 19 – LOSS CONTINGENCIES

19 – LOSS CONTINGENCIES

Settled Litigation

74 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 June 30, 2022.

the Company believes that it is not necessary to accrue for any estimated losses or impairment as of September 30, 2022.

NOTE 20 – SUBSEQUENT EVENT

Subsequent Event

On October 7, 2022.

The Company issued a total

of 200,000 shares of common stock to its executive officers, directors , staff and consultant under the Company’s equity incentive

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