What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 210 added, 244 removed, 393 unchanged (54% of the section changed)

83 unchanged sentences

approval for factories No.

8, and No.10.

The Company expects to receive approval to open one of these factories in 2022 and perhaps

try its best effort to get another one in early 2023.

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.

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

38 unchanged sentences

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

statements and the information presented below as of and for the year ended June 30, 2022.

The following discussion should be read

in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

statements and the information presented below as of and for the period ended September 30, 2022.

The following 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

9 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 six-month

periods ended June 30, 2022 and 2021.

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

periods ended September 30, 2022 and 2021.

Comparison of the Three-Month Period Ended

June 30, 2022 and 2021

September 30, 2022 and 2021

Three-Month Period

Ended June 30, 2022

Ended September 30, 2022

Three-Month Period

Ended June 30, 2021

Ended September 30, 2021

Percent Change

Increase/ (Decrease)

Cost of net revenue

2 unchanged sentences

General and administrative expenses

Other operating income(loss)

Income(Loss) from operations

2 unchanged sentences

Net income(loss)

below shows the changes in net revenue in the respective segment of the Company for the three-month period ended June 30, 2022 as compared

to the same period in 2021:

below shows the changes in net revenue in the respective segment of the Company for the three-month period ended September 30, 2022 as

compared to the same period in 2021:

Net Revenue by Segment

2 unchanged sentences

Percent Change

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

of Net Revenue

Chemical Products

Bromine and crude salt segments

Three-Month Period Ended

Percentage Change

Bromine and crude salt segments

product sold in tonnes

June 30, 2022

June 30, 2021

Increase (Decrease)

September 30,

Bromine segment

For the three-month periods ended June 30, 2022 and 2021, the net revenue

for the bromine segment was $13,893,809 and $10,025,438, respectively.

The increase of the net revenue of bromine was due to an increase

in selling prices of bromine in the second quarter of 2022.

During the second quarter of 2022, in order to control COVID, the government

made a series of unannounced inspections of our bromine and crude salt facilities.

These inspections caused the Company to shut and then

reopen its facilities.

During the second quarter of 2021, the government made an inspection that also caused the Company to close and

reopen its facilities.

However, the Company believes the inspections in the second quarter of 2022 had a far more significant impact on

production than did those in the second quarter of 2021.

For the three-month periods ended September 30, 2022 and 2021, the

net revenue for the bromine segment was $19,845,773 and $14,913,004, respectively.

The increase of net revenue of bromine was mainly due

to the 6% increase in tonnes sold and a 26% increase in average selling price of bromine.

The average selling price of bromine in the second quarter was $7,474

compared to $5,556 of the second quarter previous year.

compared to $5,938 of the third quarter previous year.

Crude salt segment

For the three-month periods ended June 30, 2022 and 2021, the net revenue

for the crude salt was $1,817,904 and $1,122,570, respectively.

The increase of net revenue of crude salt was mainly due to the 10% increase

in tonnes sold and a 47% increase in average selling price of crude salt.

During the second quarter of 2022, in order to control COVID,

the government made a series of unannounced inspections of our bromine and crude salt facilities.

These inspections caused the Company

to shut and then reopen its facilities.

During the second quarter of 2021, the government made an inspection that also caused the Company

to close and reopen its facilities.

However, the Company believes the inspections in the second quarter of 2022 had a far more significant

impact on production than did those in the second quarter of 2021.

For the three-month periods ended September 30,

2022 and 2021, the net revenue for the crude salt was $2,934,707 and $2,840,665, respectively.

The increase of net revenue of crude salt

was mainly due to the 3% increase in tonnes sold.

Chemical products segment

For the three-month periods ended June 30, 2022

For the three-month periods ended September 30,

2022 and 2021, 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 three-month period ended June 30, 2022

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

The average selling price of bromine in t he

third qu arter was $7,474 compared to $5,938 of the third quarter previous year.

Cost of Net Revenue

3 unchanged sentences

Three-Month Period Ended

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

Chemical Products

7 unchanged sentences

Annual Production Capacity (in tonnes)

Three-month period ended June 30, 2021

Three-month period ended June 30, 2022

Variance of the three-month period ended June 30, 2022 and 2021

Three-month period ended September 30, 2021

Three-month period ended September 30, 2022

Variance of the three-month period ended September 30, 2022 and 2021

(i) Utilization ratio is calculated based on the

2 unchanged sentences

Our utilization ratio was 34% for the three-month

period ended June 30, 2022, the same as compared to the three-month period ended June 30, 2021.

period ended September 30, 2022 compared to 32% recorded for the three-month period ended September 30, 2021.

Bromine segment

For the three-month period ended June 30, 2022,

the cost of net revenue for the bromine segment was $6,865,832.

The increase of $1,312,339 in cost of net revenue for the bromine segment

was primarily due to an increase in manufacturing unit overhead, which was mainly due to the split between the bromine and crude salt

businesses in May 2022.

For the three-month period ended June 30, 2021,

For the three-month period ended September 30,

2022, the bromine segment had a net cost of revenue of $7,362,103.

The $762,126 increase

in cost of net revenue for the bromine segment was primarily due to an increase in manufacturing unit overhead, which was mainly

due to the split between the bromine and crude salt businesses in May 2022.

For the three-month period ended September 30,

2021 the cost of net revenue for the bromine segment was $6,599,977.

Crude salt segment

For the three-month period ended June 30, 2022

For the three-month period ended September 30,

2022 the cost of net revenue for the crude salt segment was $1,043,260.

The reason for the decrease is that there is no further cost split

with bromine segment , because the Company started independent accounting by each subsidiary since May 2022 for SCHC and SHSI.

For the three-month period ended June 30, 2021

The lower cost was mainly due to the split between the bromine

and crude salt businesses in may 2022

For the three-month period ended September 30,

2021 the cost of net revenue for the crude salt segment was $1,597,720.

1 unchanged sentence

Cost of net revenue for our chemical products

segment for the three-month period ended June 30, 2022 and 2021 was $0.

segment for the three-month period ended September 30, 2022 and 2021 was $0.

Natural gas segment

Cost of net revenue for our natural gas segment

for the three-month period ended June 30, 2022 and 2021 was $0.

for the three-month period ended September 30, 2022 and 2021 was $331 and 0.

Gross Profit.

Gross profit was $14,457,101,

or 48%, of net revenue for the three-month period ended June 30, 2022, representing an increase of $3,378,360, as compared to a gross

or 63%, of net revenue for three-month period ended September 30, 2022, representing an increase of $4,901,129, as compared to a gross

profit of $9,555,972, or 54%, of net revenue for the same period in 2021.

3 unchanged sentences

Three-Month Period Ended

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

Profit Margin

4 unchanged sentences

Bromine segment

For the three-month period ended June 30, 2022,

For the three-month period ended September 30,

2022, the gross profit margin for our bromine segment was 63%.

This 6% increase was due to the increase in the selling price of bromine sold

in the second quarter of 2022.

For the three-month period ended June 30, 2021,

This 7% increase was due to the increase in the selling price and volume

of bromine sold in the third quarter of 2022.

For the three-month period ended September 30,

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

Crude salt segment

For the three-month period ended June 30, 2022,

For the three-month period ended September 30,

2022, the gross profit margin for our crude salt segment was 64%.

The increase of net revenue of crude salt was mainly due to the 10% increase

in tonnes sold and a 47% increase in average selling price of crude salt.

For the three-month period ended June 30, 2021,

the gross loss margin for our crude salt segment was 21%.

The swing from a loss to a profit was due to an increase in volume and selling

price as well as the new accounting which shifted some costs away from crude salt to bromine

The increase of net revenue of crude salt

were mainly due to the 3% increase in tonnes sold and the reallocation of costs.

For the three-month period ended September 30, 2021, the gross profit

margin for our crude salt segment was 44%

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 $1,927,297 and $1,394,717 incurred for the three-month period end June 30, 2022 and 2021, respectively, were that of the factories

that have not resumed operations in the three-month periods ended June 30, 2022 and 2021.

of $1,910,318 and $1,229,058 incurred for the three-month period end September 30, 2022 and 2021, respectively, were that of the factories

that have not resumed operations in the three-month periods ended September 30, 2022 and 2021.

On September 1, 2017, the Company received notification

6 unchanged sentences

As a result, direct labor and factory overhead costs (including depreciation

of plant and machinery) in the amount of $1,927,297 and $1,394,717 incurred for the three-month periods ended June 30, 2022 and 2021,

of plant and machinery) in the amount of $1,910,318 and $1,229,058 incurred for the three-month periods ended September 30, 2022 and 2021,

respectively, of factories that have not resumed production were presented as part of the operating expense.

Corporate Costs

Corporate costs declined to $67,987 from $3,193,107.

In the second quarter of 2021, we incurred $3,133,140 in corporate charges for the stock grants to management.

Income (loss) from Operations income

from operations was $5,109,163 for the three-month period ended June 30, 2022, compared to loss from operations of $2,382,809 in the same

period in 2021.

Income (loss) from Operations by Segment

from operations was $11,942,592 for the three-month period ended September 30, 2022, compared to loss of $7,097,975 in the same period

Loss from Operations by Segment

Three-Month Period Ended

June 30, 2022

September 30, 2022

Three-Month Period Ended

June 30, 2021

September 30, 2021

Chemical Products

1 unchanged sentence

Corporate costs

Unrealized gain on translation of Intercompany balance

Unrealized gain (loss) on translation of Intercompany balance

Income (loss) from operations

$ (2,382,809 )

Bromine segment

Income from operations from our bromine segment

was $5,325,541 for the three-month period ended June 30, 2022, compared to income from operations of $2,682,233 in the same period in

This increase was due to a 39% increase in average selling price of bromine, slightly offset by increased expense allocation commencing

Income from operations from our bromine segment was $10,552,343 for

the three-month period ended September 30, 2022, compared to income from operations of $6,909,542 in the same period in 2021.The increase

of net revenue of crude salt was mainly due to the 6% increase in tonnes sold and a 26% increase in average selling price of bromine partially

offset by a change in allocation of costs between bromine and crude salt

Crude salt segment

Income from operations from our crude salt segment

was $142,968 for the three-month period ended June 30, 2022, compared to loss from operations of $578,435 in the same period in 2021.

This increase in income from operation was due to a 10% increase in tonnes sold, a 47% increase in average selling price of crude salt,

and a reallocation of some expenses commencing May 2022.

was $1,876,161 for the three-month period ended September 30, 2022, compared to income from operations of $561,373 in the same period

This increase in income from operation was due to a 3% increase in tonnes sold as well as a change in allocation of costs between

bromine and crude salt.

Chemical products segment

Loss from operations from our chemical products

segment was $475,201 for the three-month period ended June 30, 2022, compared to loss from operations of $741,312 in the same period in

segment was $447,960 for the three-month period ended September 30, 2022, compared to loss from operations of $535,047 in the same period

Natural gas segment

Loss from operations from our natural gas segment

was $61,699 for the three -month period ended June 30, 2022, compared to a loss from operations of $62,850 in the same period in 2021.

Income from operations from our natural gas segment

was $19,500 for the three -month period ended September 30, 2022, compared to a loss of $49,295in the same period in 2021.

Other Income, Net Other income,

net of $42,252 represented bank interest income, net of capital lease interest expense for the three-month period ended June 30, 2022,

an increase of $6,1831 (or approximately 17%) as compared to the same period in 2021.

Corporate Costs

Corporate costs declined to $67,987 from $3,193,107.

In the second quarter of 2021, we incurred approximately $3.1 million in corporate charges for the stock grants to management.

net of $35,755 represented bank interest income, net of capital lease interest expense for the three -month period ended September 30,

2022, an decrease of $10,168 as compared to the same period in 2021.

Net Income (loss) Net income was

$3,901,794 for the three-month period ended June 30, 2022, compared to a net loss of $2,703,220 in the same period in 2021.

$8,967,380 for the three-month period ended September 30, 2021, compared to a net income of $5,393,615 in the same period in 2021.

Net Income Per Share

For the three months ended June 30, 2022, net

income per share was $0.37 compared to a loss of $0.26 in the period ending June 30, 2021.

There were 10,471,924 shares outstanding compared

to 10,469,477 shares.

For the three months ended September 30, 2022,

net income per share was $0.86 compared to an income of $0.52 in the period ending September 30, 2021.

There were 10,471,924 shares outstanding

compared to 10,469,477 shares.

Foreign Currency Translation Adjustment

For the three months ending June 30, 2022, the

Company had a negative foreign currency translation adjustment of $16,393,444 versus a positive adjustment of $5,334,236 in the previous

The cause of this currency translation adjustment was due to an approximate 6.1% decline of the RMB vs.

This adjustment

impacts all balance sheet translations into U.S.

Comparison of the Six-Month Period Ended

June 30, 2022 and 2021

Six-Month Period

Ended June 30, 2022

Six-Month Period

Ended June 30, 2021

For the three months ending September 30, 2022,

the Company had a negative foreign currency translation adjustment of $ 15,930,276 versus a positive adjustment of $1,272,449 in the previous

This adjustment impacts all balance sheet translations into U.S.

Comparison of the Nine-Month Period Ended

September 30, 2022 and 2021

Nine-Month Period

Ended September 30, 2022

Nine-Month Period

Ended September 30, 2021

Percent Change

2 unchanged sentences

Direct labor and factory overheads incurred during plant shutdown

Other operating expense

Other operating loss

General and administrative expenses

1 unchanged sentence

Income(Loss) before taxes

Income (loss) tax benefit

Income tax benefit (expense)

Net income(loss)

below shows the changes in net revenue in the respective segment of the Company for the six-month period ended June 30, 2022 as compared

to the same period in 2021:

below shows the changes in net revenue in the respective segment of the Company for the nine-month period ended September 30, 2022 as

compared to the same period in 2021:

Net Revenue by Segment

Six-Month Period Ended

Nine-Month Period Ended

Percent Increase

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

of Net Revenue

1 unchanged sentence

Bromine and crude salt segments

Six-Month Period Ended

Nine-Month Period Ended

Percentage Change

product sold in tonnes

June 30, 2022

June 30, 20210

September 30, 2022

September 30, 2021

Bromine (excluding volume sold to SYCI)

1 unchanged sentence

Net revenue from our bromine segment increased

to $22,019,825 for the six-month period ended June 30, 2022 compared to $14,836,428 for the same period in 2021 due to the higher selling

price of bromine.

to $41,865,598 for the nine-month period ended September 30, 2022 compared to $29,749,432 for the same period in 2021 respectively, due

to the higher selling price and selling quantity.

Crude salt segment

Net revenue from our crude salt segment increased

to $2,571,948 for the six-month period ended June 30, 2022 compared $1,570,823 for the same period in 2021 due to the higher selling price

of crude salt.

to $5,506,655 for the nine-month period ended September 30, 2022 compared $4,411,488 for the same period in 2021, respectively, due to

the higher selling price and selling quantity.

Chemical products segment

For the six-month period ended June 30, 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.

For the nine-month period ended September 30,

2022 and 2021, 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 six-month period ended June 30, 2022 and

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

For the nine-month period ended September 30,

2022 and 2021, the net revenue for the natural gas was $132,993 and $0.

Cost of Net Revenue

Cost of Net Revenue by Segment

Six-Month Period Ended

June 30, 2022

June 30, 2021

Nine-Month Period Ended

September 30, 2022

September 30, 2021

Chemical Products

7 unchanged sentences

Annual Production Capacity (in tonnes)

Six-month period ended June 30, 2021

Six-month period ended June 30, 2022

Variance of the six-month period ended June 30, 2022 and 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.

Nine-month period ended September 30, 2021

Nine-month period ended September 30, 2022

Variance of the nine-month period ended September 30, 2022 and 2021

Bromine segment

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

For the nine-month period ended September 30,

2022 the cost of net revenue for the bromine segment was $18,148,260.

This $1,718,618 increase was mainly because that some expenses have no

longer been split between bromine and crude salt segments since May 2022 SHSI started the crude salt sales.

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

$2,176,785 of this increase was mainly due to the new allocation

of costs between bromine and crude salt since the creation of SHSI in since May 2022.

For the nine-month period ended September 30,

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

Crude salt segment

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

the cost of net revenue for the crude salt segment was $1,864,848.

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

For the nine-month period ended September 30,

2022 the cost of net revenue for the crude salt segment was $2,908,108.

The cost of net revenue for our crude salt segment for the nine-month

period ended September 30, 2021 was $3,323,385.

The reason for the decrease is that there is that

2 unchanged sentences

Cost of net revenue for our natural gas segment

for the six-month period ended June 30, 2022 and 2021 was $83 and $0, respectively.

for the nine-month period ended September 30, 2022 and 2021 was $414 and $0.

Gross Profit.

Gross profit was $26,448,464,

or 49%, of net revenue for six-month period ended June 30, 2022 compared to $5,310,088, or 32%, of net revenue for the same period in

or 56%, of net revenue for nine-month period ended September 30, 2022 compared to $14,866,060, or 44%, of net revenue for the same period

Gross Profit (Loss) by Segment

% Point Change

Six-Month Period Ended

June 30, 2022

June 30, 2021

Nine-Month Period Ended

September 30, 2022

September 30, 2021

Profit Margin

4 unchanged sentences

Bromine segment

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

For the nine-month period ended September 30,

2022, the gross profit margin for our bromine segment was 57%.

This 12% increase was primarily due to the higher selling price.

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

This 11% increase was due to the higher selling price and selling quantity.

For the nine-month period ended September 30,

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

Crude salt segment

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

For the nine-month period ended September 30,

2022, the gross profit margin for our crude salt segment was 47%.

The increase of net revenue of crude salt was mainly due to the 65% increase

in average selling price of crude salt as well as the change in accounting related to the creation of SHSI,

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

gross loss margin for our crude salt segment was 29%.

The increase of net revenue of crude salt was mainly due to the 24%

increase in average selling price of crude salt as well as the change in accounting related to the creation of SHSI,

For the nine-month period ended September 30,

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

Chemical products segment

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

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

As a result, there were no chemical products for sale for the six-month period ended June 30, 2022.

For the nine-month period ended September 30,

2022, the gross profit margin for our chemical segment was 0% due to the closure of our plant..

As a result of the closure, there were

no chemical products for sale for the nine-month period ended September 30, 2022.

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 $4,111,888 and $4,008,200 incurred for the six-month period end June 30, 2022 and 2021, respectively, were for factories that have

not resumed production in the six-month periods ended June 30, 2022 and 2021.

of $6,022,206 and $5,237,258 incurred for the nine-month period end September 30, 2022 and 2021, respectively, were for factories that

have not resumed production in the nine-month periods ended September 30, 2022 and 2021.

General and Administrative Expenses.

General and administrative expenses were $2,799,590 for the six-month period ended June 30, 2022, a decrease of $4,141,361 (or 60%) as

compared to $6,940,951 for the same period in 2021, the major reason for this was due to the cost of approximately $3.1 million for stock

grants in the second quarter of year 2021.

General and administrative expenses were $3,384,063 for the nine-month period ended September 30, 2022, a decrease of $4,766,706 (or 59%)

as compared to $8,150,769 for the same period in 2021, the major reason for this was due to the cost of approximately $3.1 million for

stock grants in the second quarter of year 2021 .

Income (Loss) from Operations.

from operations was $5,044,076 for the six-month period ended June 30, 2022, compared to a loss from operations of $5,664,23 in the same

period in 2021.

from operations was $16,986,668 for the nine-month period ended September 30, 2022, compared to an income of $1,433,742 in the same period

Income(Loss) from Operations by Segment

Six-Month Period Ended

June 30, 2022

Six-Month Period Ended

June 30, 2021

Nine-Month Period Ended

September 30, 2022

Nine-Month Period Ended

September 30, 2021

Chemical Products

5 unchanged sentences

Income from operations from our bromine segment

was $6,674,375 for the six-month period ended June 30, 2022, compared to an income from operations of $1,402,668 in the same period in

The increase in income was primarily due to a 39% increase in average selling price partially offset by additional cost allocations

from the new divisional structure.

was $17,226,718 for the nine-month period ended September 30, 2022, compared to an income of $8,312,210 in the same period in 2021.

increase in income was primarily due to a 36% increase in average selling price partially offset by additional cost allocations from the

new divisional structure.

Crude salt segment

Loss from operations from our crude salt segment

was $378,953 for the six-month period ended June 30, 2022, compared to a loss from operations of $1,588,020 in the same period in 2021.

The reason for this was due to cost allocations from the new divisional structure.

Income from operations from our crude salt segment

was $1,497,208 for the nine-month period ended September 30, 2022, compared to a loss of $1,026,647 in the same period in 2021.

for this was due to cost allocations from the new divisional structure.

Chemical products segment

Loss from operations from our chemical products

segment was $988,483 for the six-month period ended June 30, 2022, compared to a loss from operations of $1,487,781 in the same period

segment was $1,436,443 for the nine-month period ended September 30, 2022, compared to a loss of $2,022,828 in the same period in 2021.

Natural gas segment

Loss from operations from our natural gas segment

was $88,438 for the six-month period ended June 30, 2022, compared to a loss from operations of $117,637 in the same period in 2021.

was $68,938 for the nine-month period ended September 30, 2022, compared to a loss of $166,932 in the same period in 2021.

Other Income, Net.

Other income,

net of $83,088 represented bank interest income, net of capital lease interest expense for the six -month period ended June 30, 2022,

a decrease of $11,428 (or approximately 16%) as compared to the same period in 2021.

net of $118,843 represented bank interest income, net of capital lease interest expense for the nine -month period ended September 30,

2022, an increase of $1,260 (or approximately 1%) as compared to the same period in 2021.

Net Income (Loss).

Net income was

$3,781,848 for the six-month period ended June 30, 2022, compared to a net loss of $5,205,344 in the same period in 2021.

2021 includes approximately $3.1 million in charges for share grants to management.

$12,749,228 for the nine-month period ended September 30, 2022, compared to a net income of $188,271 in the same period in 2021.

Net Income Per Share

For the six months ended June 30, 2022, net income

per share was $0.36 compared to a loss of $0.50 in the period ending June 30, 2021.

There were 10,471,924 shares outstanding compared

to 10,469,477 shares.

For the nine months ended September 30, 2022,

net income per share was $1.22 compared to a income of $0.02 in the period ending September 30, 2021.

There were 10,471,924 shares outstanding

compared to 10,469,477 shares.

Foreign Currency Translation Adjustment

For the six months ending June 30, 2022, the Company

had a negative foreign currency translation adjustment of $14,844,410 versus a positive adjustment of $3,149,546 in the previous year.

The cause of this currency translation adjustment was due to an approximate 6.1% decline of the RMB vs.

This adjustment impacts

all balance sheet translations into U.S.

For the nine months ending September 30, 2022,

the Company had a negative foreign currency translation adjustment of $30,774,686 versus a positive adjustment of $1,877,097 in the previous

This adjustment impacts all balance sheet translations into U.S.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2022, cash and cash equivalents

As of September 30, 2022, cash and cash equivalents

were $92,638,278 as compared to $95,767,263 as of December 31, 2021.

1 unchanged sentence

Statement of Cash Flows

Six-Month Period Ended June 30,

Nine-Month Period Ended September 30,

Net cash (used in) provided by operating activities

3 unchanged sentences

Effects of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

$ (3,128,985 )

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

For the nine-month period ended September 30,

2022, we met our working capital and capital investment requirements by using cash on hand.

Net Cash (used in) Provided by Operating Activities

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

cash flow provided by operating activities of approximately $18.5 million was mainly due to a net income of $3.8 million, a decrease in

accounts receivable of $4.68 million, an increase in accounts payable of $2.2 million, an increase in deferred taxes of $1.3 million,

During the nine-month period ended September 30,

2022, cash flow provided by operating activities of approximately $37 million was mainly due to a net income of $12.75 million, a decrease

in accounts receivable of $3.45 million, an increase in accounts payable of $1.55 million, an decrease in deferred taxes of $3.8 million,

and a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $16.3 million, offset by increases

in operating leases, and prepayments.

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

cash flow provided by operating activities of approximately $7.02 million was mainly due to a net loss of $5.2 million offset by depreciation

and amortization of $8.2 million, stock awards charges of $3.1 million, a decrease in accounts receivable of $1.8 million, and other charges.

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.

Accounts receivable

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a major impact on our overall liquidity.

The following table presents the aging analysis of our accounts receivable as of June 30, 2022

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

2022 and December 31, 2021.

June 30, 2022

September 30, 2022

December 31, 2021

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The overall accounts receivable balance as of

June 30, 2022 decreased by $5,223,405, 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.

September 30, 2022 decreased by $4,530,156, 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.

allowance for doubtful accounts for the three-month and six-month periods ended June 30, 2022 is required.

No allowance for doubtful accounts for the three-month and nine-month periods ended September 30, 2022 is required.

Our inventory consists of the following:

June 30, 2022

September 30, 2022

December 31, 2021

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Finished goods

The net inventory level as of June 30, 2022 decreased

by $119,403 (or 17%), as compared to the net inventory level as of December 31, 2021.

Raw materials increased by $24,782 as of June

The net inventory level as of September 30, 2022

decreased by $87,150, as compared to the net inventory level as of December 31, 2021.

Raw materials decreased by $20,461 as of September

30, 2022 as compared to December 31, 2021.

Our finished goods decreased by $66,689 as of

June 30, 2022 as compared to December 31, 2021.

September 30, 2022 as compared to December 31, 2021.

Net Cash Used in Investing Activities

For the six-month period ended June 30,

2022, we used approximately $33.2 million to acquire property, plant and equipment, which mainly include the cost for bromi ne

wells, aqueducts and the installation of high and low voltage lines for bromine Wells.

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

we used approximately $5.8 million to acquire property, plant and equipment, primarily for our chemical plant.

For the nine-month period ended September 30,

2022, we used approximately $33.2 million to acquire property, plant and equipment, which mainly includes the cost for bromine wells,

aqueducts and the installation of high and low voltage lines for bromine Wells.

For the nine-month period ended September 30,

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

Net Cash Used in Financing Activities

For the six-month period ended June 30, 2022 and

2021, we used $0.3 million to fulfil finance lease obligations.

For the nine-month period ended September 30,

2022 and 2021, we used $0.3 million to repay finance lease obligations.

We believe that our available funds and cash flows

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next twelve (12) months.

We had available cash of approximately $79 million

at June 30, 2022, all which is in highly liquid current deposits earning no or little interest.

We do not anticipate paying cash dividends

in the foreseeable future.

We had available cash of approximately $92.64

million at September 30, 2022, all of which is in highly liquid current deposits earning no or little interest.

We do not anticipate paying

cash dividends in the foreseeable future.

We intend to continue to focus our efforts on the activities of SCHC,

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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 June 30, 2022 is provided in the notes to our consolidated financial

information regarding our contractual obligations and commitments at September 30, 2022 is provided in the notes to our consolidated financial

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

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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