What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-14 compared with 2023-05-15 · 463 added, 317 removed, 793 unchanged (50% of the section changed)

4 unchanged sentences

(Expressed in U.S.

March 31, 2023

June 30, 2023

December 31, 2022

39 unchanged sentences

10,717,754 shares issued;

and 10,431,924 shares outstanding as of March 31, 2023 and December 31, 2022

and 10,431,924 shares outstanding as of June 30, 2023 and December 31, 2022, respectively

Treasury stock;

285,830 shares as of March 31, 2023 and December 31, 2022 at cost

285,830 shares as of June 30, 2023 and December 31, 2022 at cost

( 1,372,673 )

3 unchanged sentences

Retained earnings appropriated

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

( 23,154,780 )

7 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND

COMPREHENSIVE LOSS

(Expressed in U.S.

Three-Month Period Ended

OPERATING EXPENSE

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

OPERATING INCOME (EXPENSE)

Cost of net revenue

1 unchanged sentence

( 8,101,120 )

( 14,090,516 )

( 12,651,088 )

Sales, marketing and other operating expenses

2 unchanged sentences

( 1,927,297 )

( 3,464,265 )

( 4,111,888 )

General and administrative expenses

( 1,503,376 )

Other operating expense

( 2,799,590 )

Other operating income (expense)

Total operating income (expense)

1 unchanged sentence

( 10,602,551 )

LOSS FROM OPERATIONS

( 19,026,445 )

( 19,598,375 )

PROFIT (LOSS) FROM OPERATIONS

( 1,718,656 )

OTHER INCOME (EXPENSE)

1 unchanged sentence

Interest income

LOSS BEFORE INCOME TAXES

INCOME TAX (EXPENSE) BENEFIT

Income (Loss) before taxes

( 1,632,818 )

INCOME TAX BENEFIT (EXPENSE)

( 1,249,621 )

COMPREHENSIVE LOSS:

( 1,345,316 )

NET PROFIT (LOSS)

$ ( 681,816 )

OTHER COMPREHENSIVE INCOME

$ ( 1,239,563 )

COMPREHENSIVE PROFIT (LOSS)

NET PROFIT (LOSS)

$ ( 681,816 )

$ ( 1,239,563 )

- Foreign currency translation adjustments

COMPREHENSIVE INCOME (LOSS)

BASIC AND DILUTED LOSS PER SHARE

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES:

( 13,906,993 )

( 16,393,444 )

( 10,127,491 )

( 14,844,410 )

COMPREHENSIVE PROFIT (LOSS)

$ ( 14,588,809 )

$ ( 12,491,650 )

$ ( 11,367,054 )

$ ( 11,062,562 )

EARNINGS (LOSS) PER SHARE:

BASIC AND DILUTED

WEIGHTED AVERAGE NUMBER OF SHARES:

BASIC AND DILUTED

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

THREE-MONTH PERIOD ENDED MARCH 31, 2023 AND 2022

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’

SIX-MONTH PERIOD ENDED JUNE 30, 2023

(Expressed in U.S.

1 unchanged sentence

unappropriated

BALANCE AT DECEMBER 31, 2022 (Audited)

BALANCE AT MARCH 31, 2023 (Unaudited)

( 1,372,673 )

3 unchanged sentences

Translation adjustment

Net loss for three-month period ended March 31, 2023

( 13,906,993 )

Net loss for three-month period

ended June 30, 2023

BALANCE AT JUNE 30, , 2023(Unaudited)

( 1,372,673 )

$ 156,849,972

$ ( 23,154,780 )

$ 260,251,151

comprehensive

unappropriated

BALANCE AT MARCH 31, 2022 (Unaudited)

3 unchanged sentences

$ 288,068,305

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

comprehensive

6 unchanged sentences

Translation adjustment

Net loss for three-month period ended March 31, 2022

BALANCE AT MARCH 31, 2022 (Unaudited)

( 10,127,491 )

Net loss for six-month period

ended June 30, , 2023

( 1,239,563 )

BALANCE AT JUNE 30, 2023(Unaudited)

( 1,372,673 )

$ 156,849,972

$ ( 23,154,780 )

$ 260,251,151

comprehensive

unappropriated

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

$ ( 510,329 )

$ 100,569,159

$ 154,245,486

$ ( 2,985,581 )

$ 275,576,655

See accompanying notes to the condensed consolidated financial statements.

7 unchanged sentences

(Expressed in U.S.

Three-Month Period Ended March 31,

Six-Month Period Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

$ ( 557,747 )

Net Income (Loss)

$ ( 1,239,563 )

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

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

Amortization on capital lease obligation

5 unchanged sentences

Prepayments and deposits

( 2,790,331 )

Other receivables

Accounts and Other payable and accrued expenses

( 1,518,073 )

Taxes payable

Operating leases

Operating lease

( 1,073,677 )

Net cash provided by operating activities

Net cash provided by (used in) by operating activities

CASH FLOWS USED IN INVESTING ACTIVITIES

Purchase of property, plant and equipment

( 33,217,987 )

Net cash used in investing activities

( 33,217,987 )

CASH FLOWS USED IN FINANCING ACTIVITIES

Repayment of finance lease obligation

Net cash used in financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

( 3,648,129 )

( 1,642,327 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

( 16,651,832 )

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD

1 unchanged sentence

$ 115,273,479

$ 105,661,999

GULF RESOURCES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Expressed in U.S.

Years Ended March 31,

Years Ended June 30,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

7 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

JUNE 30, 2023

(Expressed in U.S.

10 unchanged sentences

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

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

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

Hengde Salt Industry Co.

All material intercompany transactions have been eliminated on consolidation.

of the Business

The Company manufactures and trades bromine through

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

its wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited (“SCHC”);

manufactures and trades crude salt

through its wholly-owned subsidiary, SHSI;

and manufactures chemical products for use in the oil industry, pesticides, paper manufacturing

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

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

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

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

DCHC’s business commenced trial operation in January 2019 but suspended

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

and manufactures chemical products for use in

the oil industry, pesticides, paper manufacturing industry and for human and animal antibiotics through its wholly-owned subsidiary, Shouguang

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

DCHC was established

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

DCHC commenced trial operation

in January 2019 but temporarily suspended its production in May 2019 as required by the government to obtain project approval (see Note

On March 11, 2020, the World Health Organization

(WHO) officially declared COVID-19 a pandemic.

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

Company’s operations and financial position is uncertain.

While not fully quantifiable, the Company believes this situation did

not have a material adverse impact on its operating results in the year of 2021.

In 2022, COVID may have a slightly larger impact.

government is conducting frequent unannounced inspections, somewhat disrupting production.

In addition, the Company believes the focus

on COVID may have slightly delayed the approval process for one or more of the closed factories.

The virus outbreak and resulting supply

chain issues has impacted the overall Chinese economy and thus impacted demand from end customers.

It has delayed the delivery of machinery

and other equipment for the Yuxin Chemical factory causing a postponement in its completion and opening.

The Company believes the virus

outbreak has delayed the finalization of the Sichuan Province environmental plan, causing a further delay for the Company’s project

in Sichuan Province.

The Company believes COVID-19 pandemic did not have a material adverse impact on its operating

results in the year of 2021.

The Company believes that COVID-19 may have a slightly larger impact on the Company’s operating results

in the year of 2022.

The government is conducting frequent unannounced inspections, somewhat disrupting the Company’s production.

In addition, the Company believes governmental focus on COVID-19 control may have slightly delayed the approval process for one or more

of the closed factories.

The COVID-19 outbreak and resulting supply chain issues impacted the overall Chinese economy and thus impacted

demand from end customers.

As a result, it has caused the delay of the delivery of machinery and other equipment for the Yuxin Chemical

factory, which resulted in delay of the factory’s completion and opening.

The Company believes the virus outbreak has delayed the

finalization of the Sichuan Province environmental plan, causing a further delay for the Company’s project in Sichuan Province.

(i) Bromine and Crude Salt Segments

3 unchanged sentences

In April 2019, Factory No.1, and Factory No.7 resumed operation.

On November 25, 2019, the government of Shouguang

City issued a notice ordering all bromine facilities in Shouguang City, including the Company’s bromine facilities, including Factory

On November 25, 2019, the government of

Shouguang City issued a notice ordering all bromine facilities in Shouguang City, including the Company’s bromine facilities, including

1 and Factory No.

7, to temporarily stop production from December 16, 2019 to February 10, 2020.

Subsequently, due to the coronavirus

outbreak in China, the local government ordered those bromine facilities to postpone the commencement of production.

Subsequently, the

Company received an approval dated February 27, 2020 issued by the local governmental authority allowing the Company to resume production

Subsequently, due to the

COVID-19 outbreak in China, the local government ordered those bromine facilities to postpone the commencement of production.

Subsequently,

the Company received an approval dated February 27, 2020 issued by the local governmental authority allowing the Company to resume production

after the winter temporary closure.

1 unchanged sentence

dated March 5, 2020 allowing the Company to resume production at its bromine factories No.

4, No.7 and No.

9 in order to meet the

needs of bromide products for epidemic prevention and control (the “March 2020 Approval”).

The Company’s Factories No.

9 in order to meet

the needs of bromide products for epidemic prevention and control (the “March 2020 Approval”).

The Company’s Factories

7 commenced trial production in mid- March 2020 and commercial production on April 3, 2020 and its Factories No.

1 unchanged sentence

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

permits the Factory No.

which permits the Factory No.

8 to resume production in August 2022.

5 unchanged sentences

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

Pursuant to the notification from the government

of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 10, 2022 until February 1, 2023 8:00

Pursuant to the notification from the

government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 10, 2022 until February 1,

2023 8:00 AM China Time.

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

period and reopened the operating bromine and crude salt factories in February2023.

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

the aforesaid period and reopened the operating bromine and crude salt factories in February 2023.

(ii) Chemical Segment

20 unchanged sentences

On February 22, 2022, the Company announced that discussions with the government have convinced

management that the electricity restrictions are being eased.

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

management that the electricity restrictions were eased.

Accordingly, the Company contacted its suppliers and expect to have the remainder

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

The COVID restrictions and resulting national and international supply

chain issues as well as permitting issues have caused delays in receiving some previously ordered machinery and equipment.

is working with its existing suppliers and may identify new suppliers so that it can complete construction of its factory based on accelerated

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

The Company estimates this relocation process will cost approximately

$ 69 million in total.

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

of the new chemical factory, purchase of plant and equipment and construction costs and installation costs incurred for the new chemical

factory in the amount of $ 45,584,344 and $ 45,584,344 , which were recorded in the Property, plant and equipment in the consolidated balance

sheets as of March 31, 2023 and December 31, 2022.

On March 23, 2023, the Company issued a

press release detailing the delays in the opening of our Yuxin chemical factory due to COVID and stricter government regulations.

noted in the press release, the Company believes that once all of the equipment is delivered, it will take 3 to 4 months to get

them installed.

After installation, the testing process is anticipated to take 2 to 3 months, after which it will be in a position

to apply for environmental and safety approval.

After we get the approval, it will take us 4 months to conduct trial production, and

then we may start commercial production.

The COVID restrictions and resulting national

and international supply chain issues as well as governmental permit issues have caused delays in receiving some previously ordered machinery

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

of its factory based on accelerated delivery.

Currently, the Company is unable to estimate when the construction can be completed and

the production can begin.

On March 23, 2023, the Company issued

a press release detailing the delays in the opening of our Yuxin chemical factory due to COVID and stricter government regulations.

noted in the press release, the Company believes that once all of the equipment is delivered, it will take 3 to 4 months to install the

After installation, the testing process is anticipated to take 2 to 3 months, after which we will be in a position to apply

for environmental and safety approval.

After we have obtained environmental and safety approval, it will take us 4 months to conduct trial

production, and then we may start commercial production.

On July 26, 2023, the Company announced

that the delivery of the remaining equipment for its Yuxin chemical factory has been temporarily delayed and to review its chemical products

The Company believes this relocation process will

cost approximately $ 69 million in total.

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

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

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, 2023 and December 31, 2022.

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

the overall cost of the project.

(iii) Natural Gas Segment

In January 2017, the Company completed the

first 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.

Until these approvals have been received, the Company has had 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 the governmental planning has been finalized.

In January 2017, the Company completed the first

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

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 the governmental planning has

been finalized.

for Doubtful Accounts

We make estimates of the uncollectibility

of accounts receivable, especially analyzing accounts receivable and historical bad debts, customer concentrations, customer credit-worthiness,

current economic trends and changes in customer payment terms, when evaluating the adequacy of the allowance for doubtful accounts.

evaluations are undertaken for all major sale transactions before shipment is authorized.

On a quarterly basis, we evaluate aged items

in the accounts receivable aging report and provide an allowance in an amount we deem adequate for doubtful accounts.

If management were

to make different judgments or utilize different estimates, material differences in the amount of our reported operating expenses could

estimates of the uncollectibility of accounts receivable, especially analyzing accounts receivable and historical bad debts, customer

concentrations, customer credit-worthiness, current economic trends and changes in customer payment terms, when evaluating the adequacy

of the allowance for doubtful accounts.

Credit evaluations are undertaken for all major sale transactions before shipment is authorized.

On a quarterly basis, we evaluate aged items in the accounts receivable aging report and provide an allowance in an amount we deem adequate

for doubtful accounts.

If management were to make different judgments or utilize different estimates, material differences in the amount

of our reported operating expenses could result.

(d) Concentration

6 unchanged sentences

The Company placed $ 115,273,479

and $ 108,226,214 with these institutions as of March 31, 2023 and December 31, 2022, respectively.

and $ 108,226,214 with these institutions as of June 30, 2023 and December 31, 2022, respectively.

The Company has not experienced

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

JUNE 30, 2023

(Expressed in U.S.

6 unchanged sentences

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

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

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

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

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

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

All other ordinary repair and maintenance

costs are expensed as incurred.

Mineral rights are recorded at cost less accumulated

12 unchanged sentences

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

Motor vehicles

Motor Vehicles

Motor vehicles Motor Vehicles

Furniture, fixtures and equipment

Property, plant and equipment under the

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

Property, plant and equipment under the capital

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

Producing oil and gas properties are depreciated

1 unchanged sentence

Common facilities that are built specifically to service production

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

and gas properties on a pro-rata basis.

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

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

Costs associated with significant development projects

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

depreciation.

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

gas properties on a pro-rata basis.

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

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

Costs associated with significant development projects are

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

(f) Retirement

3 unchanged sentences

The required contributions

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

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

The Company’s

contributions totaled $ 154,184 and $ 201,265 for the three-month periods ended March 31, 2023 and 2022, respectively.

contributions totaled $ 129,539 and $ 145,512 for the three-month period ended June 30, 2023 and 2022, respectively, and totaled $ 283,723

and $ 346,777 for the six-month period ended June 30, 2023 and 2022, respectively.

Net revenue is net of discount and value added

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

JUNE 30, 2023

(Expressed in U.S.

19 unchanged sentences

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

For the three-month period ended March 31, 2023

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

and Diluted Net Income per Share of Common Stock

Basic earnings per common share are based on the

weighted average number of shares outstanding during the periods presented.

For the three and six months period ended June

30, 2023 and 2022, the Company determined that there were no events or circumstances indicating possible impairment of its long-lived

and Diluted Earnings per Share of Common Stock

Basic earnings per common share are based

on the weighted average number of shares outstanding during the periods presented.

Diluted earnings per share are computed using weighted

5 unchanged sentences

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 periods ended March 31,

the calculation of number of dilutive common stock equivalents amounted to 0 and 0 shares for the three-month periods ended June 30, 2023

and 2022, respectively.

Because the Company reported a net loss for the

three-month periods ended March 31, 2023 and 2022, common stock equivalents including stock options and warrants were anti-dilutive, therefore

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

Because the Company reported a net loss

for the three-month periods ended June 30, 2023 and 2022, common stock equivalents including stock options and warrants were anti-dilutive,

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

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

JUNE 30, 2023

(Expressed in U.S.

47 unchanged sentences

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

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

(Expressed in U.S.

NOTE 1 – BASIS OF PRESENTATION AND

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

(n) Stock-based Compensation

(n) Stock-based

Stock-based awards issued to employees are recorded

33 unchanged sentences

Recent accounting pronouncements adopted

There were no recent accounting pronouncements adopted during the three

months ended March 31, 2023.

There were no recent accounting pronouncements adopted during the six

months ended June 30, 2023.

Recently Issued Accounting Pronouncements Not

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments

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

The amendments in this Update affect loans,

debt securities, trade.

2016-13, Financial

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

The amendments in this Update affect

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

The ASU requires

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

For public entities, the amendments are

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

For the Company which

is a smaller reporting company, ASU No.

2019-10 extends the effective dates for two years.

The Company is currently evaluating the effect

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

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

JUNE 30, 2023

(Expressed in U.S.

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES – Continued

receivables, and any other financial assets that have the contractual

right to receive cash.

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

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

those fiscal years.

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

2019-10 extends the effective dates for two years.

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

2 – ACCOUNTS RECEIVABLE, NET

Accounts receivable net consist of:

Accounts Receivable, Net - Schedule of Accounts, Notes, Loans and Financing Receivables

Accounts receivable

1 unchanged sentence

Accounts receivable, net

The overall accounts receivable balance as of March 31, 2023 decreased

by $ 138,297 , as compared to those of December 31, 2022.

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.

The overall accounts receivable balance as of

June 30, 2023 decreased by $ 3,246,756 , as compared to those of December 31, 2022.

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 customer.

NOTE 3 – INVENTORIES

4 unchanged sentences

Inventory, net

The Company recorded impairment

charges for slow moving inventory in the amounts of $ 0 and $ 0 for the three months ended March 31, 2023 and 2022

recorded impairment charges for slow moving inventory in the amounts of $ 0 and $ 0 for the six months ended June 30, 2023 and

NOTE 4 – 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 March 31 2023

The amount paid was recorded as prepaid land leases, net of current portion in the consolidated balance sheet as of June 30 2023

and December 31, 2022.

As of March 31, 2023, the prepaid land lease increased to $ 9,641,075 due to an additional amount paid for stamp

As of June 30, 2023, the prepaid land lease increased to $ 9,185,377 due to an additional amount paid for stamp

duty and related land use rights fees.

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

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

MARCH 31, 2023

JUNE 30, 2023

(Expressed in U.S.

18 unchanged sentences

The aggregate carrying

values of these properties situated on parcels of the land are $ 14,535,866 and $ 14,713,101 as at March 31, 2023 and December 31, 2022,

values of these properties situated on parcels of the land are $ 13,769,401 and $ 14,713,101 as at June 30, 2023 and December 31, 2022,

respectively.

During the three-month period ended March 31,

2023, depreciation and amortization expense totaled $ 5,358,871 , of which $ 1,949,836 , $ 429,955 and $ 2,979,080 were recorded in direct labor

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

During the three-month period ended March 31,

During the three-month period ended June 30, 2023,

depreciation and amortization expense totaled $ 5,235,219 of which $ 791,952 , $ 169,924 and $ 4,273,343 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, 2023, depreciation and amortization expense totaled $ 10,594,090 , of which $ 2,741,788 , $ 599,879 and $ 7,252,423 were recorded in direct

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

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

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

depreciation and amortization expense totaled $ 5,271,395 of which $ 1,532,788 , $ 170,708 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, administrative expenses and cost of net revenue.

NOTE 6 – FINANCE LEASE RIGHT-OF-USE ASSETS

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

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

the following:

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

10 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-month period ended March 31,

2023, depreciation and amortization expense totaled $ 1,353 , which was recorded in direct labor and factory overheads incurred during plant

During the three-month period ended March 31, 2022, depreciation and amortization expense totaled $ 1,459 , which was recorded

in direct labor and factory overheads incurred during plant shutdown.

During the three and six months period ended June

30, 2023, depreciation and amortization expense totaled $ 1,322 and $ 2,675 , respectively, which was recorded in direct labor and factory

overheads incurred during plant shutdown.

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.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

JUNE 30, 2023

(Expressed in U.S.

NOTE 7 – OPERATING LEASE RIGHT-OF USE ASSETS

As of March 31, 2023, the total operating lease

NOTE 7 – OPERATING LEASE RIGHT– OF

As of June 30, 2023, the total operating lease

ROU assets was $ 7,867,371 .

The total operating lease cost for the three-month

period ended March 31, 2023 and 2022 was $ 241,021 and $ 258,398 , respectively.

The total operating lease cost for the six-month

period ended June 30, 2023 and 2022 was $ 476,367 and $ 506,537 .

The Company has the rights to use certain parcels

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

For parcels of

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

The parcels of land of which

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

of $ 9,116,230 as at March 31, 2023.

NOTE 8 – ACCOUNTS AND OTHER PAYABLE AND

ACCRUED EXPENSES

Accounts and other payable and accrued expenses

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 $ 8,528,764 as at June 30, 2023.

NOTE 8 – ACCOUNTS PAYABLE, OTHER PAYABLE

AND ACCRUED EXPENSES

Accounts payable, other payable and accrued expenses

consist of the following:

3 unchanged sentences

Salary payable

Other payable-related party (see Note 8)

Other payable

Accrued expense for construction

Accrued expense-others

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

(Expressed in U.S.

NOTE 9 – RELATED PARTY TRANSACTIONS

6 unchanged sentences

management services for an annual amount of approximately $ 90,785 for five years from January 1, 2023 to December 31, 2027 .

associated with this agreement for the three months ended March 31, 2023 and 2022 was approximately $ 22,696 and $ 24,568 .

associated with this agreement for the three and six months ended June 30, 2023 was approximately $ 21,584 and $ 44,280 .

The expense associated

with this agreement for the three and six months ended June 30, 2022 was approximately $ 23,239 and $ 47,807 .

NOTE 9 – RELATED PARTY TRANSACTIONS –

22 unchanged sentences

Finance lease liability, net of current portion

Interest expenses from a finance lease liability

amounted to $ 28,560 and $ 33,622 for the three-month periods ended March 31, 2023 and 2022, respectively, were charged to the condensed

consolidated statement of loss.

Interest expenses from capital lease obligations

amounted to $ 27,901 and 36,054 for the three-month period ended June 30, 2023 and 2022, respectively, which were charged to the condensed

consolidated statement of income (loss).

Interest expenses from capital lease obligations amounted to $ 56,461 and $ 69,696 for the six-month

period ended June 30, 2023 and 2022, respectively, which were charged to the condensed consolidated statement of income (loss).

The components of operating lease liabilities

6 unchanged sentences

The weighted average remaining operating lease

term at March 31, 2023 was 19 years and the weighted average discounts rate was 4.89 %.

This discount rates used are based on the base

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

Lease payment in the three-months ended March

31, 2023 and 2022 was $ 239,898 and $ 257,879 .

term at June 30, 2023 was 19 years and the weighted average discounts rate was 4.89 %.

Lease payments for the three-month period ended

June 30, 2023 and 2022, respectively, were $ 519,808 and $ 565,917 .

Lease payments for the six-month period ended June 30, 2023 and 2022,

respectively, were $ 759,706 and $ 823,796 .

Maturities of lease liabilities were as follows:

10 unchanged sentences

Amount representing interest

( 5,740,871 )

Present value of net minimum lease payments

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

(Expressed in U.S.

NOTE 12 –– EQUITY

24 unchanged sentences

reserve balance falling below 25% of the registered capital.

The Statutory Common Reserve Fund as of March 31, 2023 for SCHC, SYCI, SHSI,

The Statutory Common Reserve Fund as of June 30, 2023 for SCHC, SYCI, SHSI,

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

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

(Expressed in U.S.

NOTE 13 – TREASURY STOCK

As of March 31, 2023 and December 31, 2022, the

As of June 30, 2023 and December 31, 2022, the

number of treasury stock of the Company was 285,830 and 285,830 , respectively.

7 unchanged sentences

of the 2007 Plan and applicable award agreement.

As of March 31, 2023, the number of shares of the Company’s common stock available

for grant of stock options and issuance under the 2019 Plan was 856,801 shares.

As of June 30, 2023, the number of shares of the Company’s common stock available

for grant of awards under the 2019 Plan was 856,801 shares.

The fair value of each option award is estimated

3 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 March 31, 2023 and

For the three months ended June 30, 2023 and 2022,

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

During the three months ended March 31, 2023, there were no options

issued to employees or non-employees.

During the three and six months ended June 30, 2023, there were no

options granted to employees or non-employees.

The following table summarizes all Company stock

option transactions between January 1, 2023 and March 31, 2023.

option transactions between January 1, 2023 and June 30, 2023.

Stock-Based Compensation - Schedule of Stock

8 unchanged sentences

Expired during the period

Balance, March 31, 2023

Stock Options and Warrants Outstanding and Exercisable

Balance, June 30, 2023

Stock Options Outstanding and Exercisable

Weighted Average

Outstanding at March 31, 2023

Outstanding at June 30, 2023

Exercise Prices

1 unchanged sentence

Outstanding and exercisable

All options exercisable and outstanding at March

All options exercisable and outstanding at June

30, 2023 are fully vested.

As of March 31, 2023 there was no unrecognized compensation cost related to outstanding stock options,

As of June 30, 2023 there was no unrecognized compensation cost related to outstanding stock options,

The aggregate intrinsic value of options outstanding and exercisable

as of March 31, 2023 and 2022 was $ 0 .

as of June 30, 2023 was $ 0 .

During the three and six months ended June 30,

2023 and 2022, there were no options exercised.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

JUNE 30, 2023

(Expressed in U.S.

2 unchanged sentences

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

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

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

States (“US”)

United 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 periods ended March 31, 2023 and 2022, and management believes that its earnings are permanently invested in

Virgin Islands (“BVI”)

income for the three-month and six-month periods ended June 30, 2023 and 2022, and management believes that its earnings are permanently

invested in the PRC.

British 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 periods ended March 31, 2023 and 2022.

Upper Class Group Limited did not generate assessable profit for the three-month and six-month periods ended June 30, 2023

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 periods ended March

31, 2023 and 2022.

The applicable statutory tax rates for the three-month periods ended March 31, 2023 and 2022 are 16.5 %.

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, 2023 and 2022.

The applicable statutory tax rates for the three-month and six-month periods ended June 30, 2023

and 2022 are 16.5 %.

There is no dividend withholding tax in Hong Kong.

Enterprise income tax (“EIT”) for

SCHC, SYCI, SHSI and DCHC in the PRC is charged at 25 % of the assessable profits.

The operating subsidiaries SCHC, SYCI, DCHC, and

SHSI are wholly foreign-owned enterprises (“FIE”) incorporated in the PRC and are subject to PRC Local Income Tax Law.

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.

Enterprise income tax (“EIT”) for SCHC, SYCI, SHSI and

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

The operating subsidiaries SCHC, SYCI, and DCHC are wholly foreign-owned

enterprises (“FIE”) and SHSI 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 March 31, 2023 and December 31, 2022, the

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

As of June 30, 2023 and December 31, 2022, the

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

$ 140,126,435 and $ 147,686,099 , respectively.

1 unchanged sentence

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

Accordingly, as of March 31, 2023 and December 31, 2022, the Company has not recorded any WHT on the cumulative amount of distributable

Accordingly, as of June 30, 2023 and December 31, 2022, the Company has not recorded any WHT on the cumulative amount of distributable

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

As of March 31, 2023 and December 31, 2022, the

unrecognized WHT are $ 6,431,341 and $ 6,406,394 , respectively.

As of June 30, 2023 and December 31, 2022, the

unrecognized WHT were $ 6,063,760 and $ 6,406,394 , respectively.

The Company’s income tax returns are subject

11 unchanged sentences

in every four years.

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

The components of the provision for income tax

benefit (expense) from continuing operations are:

Income Taxes - Schedule of Components of Income Tax Expense Benefit

Three-Month Period Ended March 31,

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

The components of the income tax benefit from

continuing operations are:

- Schedule of Components of Income Tax Expense Benefit

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

Current taxes – PRC

4 unchanged sentences

$ ( 192,699 )

$ ( 393,255 )

Significant components of the Company’s

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

deferred tax assets and liabilities at June 30, 2023 and December 31, 2022 are as follows:

Income Taxes - Schedule of Deferred

11 unchanged sentences

The decrease in valuation allowance for the three-month

period ended March 31, 2023 is $ 206,671 .

period ended June 30, 2023 is $ 13,567 .

The increase in valuation allowance for the three-month

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

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

The decrease in valuation allowance for the six-month

period ended June 30, 2023 is $ 220,238 .

The increase in valuation allowance for the six-month

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

There were no unrecognized tax benefits and accrual

for uncertain tax positions as of March 31, 2023 and December 31, 2022 and no amounts accrued for penalties and interest for the three

months ended March 31, 2023 and 2022.

for uncertain tax positions as of June 30, 2023 and December 31, 2022 and no amounts accrued for penalties and interest for the three

and six months ended June 30, 2023 and 2022.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

(Expressed in U.S.

NOTE 16 – BUSINESS SEGMENTS

11 unchanged sentences

All the customers are located in PRC.

Three-Month Period Ended March 31, 2023

June 30, 2023

(external customers)

(intersegment)

Loss from operations before income benefit

Income tax benefit

Loss from operations after income taxes(benefit)

Income(loss) from operations before income tax benefit

Income tax benefit (expense)

Income (loss) from operations after

income tax benefit (expense)

Depreciation and amortization

Capital expenditures

Three-Month Period Ended March 31, 2022

June 30, 2022

(external customers)

(intersegment)

Loss from operations before income benefit

Income tax benefit

Loss from operations after income taxes(benefit)

Income(loss) from operations before income tax benefit

Income tax benefit (expense)

( 1,320,295 )

( 1,249,621 )

Income (loss) from operations after

income tax benefit (expense)

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.

Commencing May 2022,

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

NOTE 16 – BUSINESS SEGMENTS – Continued

June 30, 2023

(external customers)

(intersegment)

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

( 1,197,201 )

( 1,617,225 )

( 1,718,656 )

Income tax benefit (expense)

Loss from operations after income tax benefit (expense)

( 1,223,970 )

( 1,325,401 )

Depreciation and amortization

Capital expenditures

June 30, 2022

(external customers)

(intersegment)

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

Income tax benefit (expense)

( 1,662,456 )

( 1,345,316 )

Loss from operations after income tax benefit (expense)

Depreciation and amortization

Capital expenditures

* Certain common production overheads, operating

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

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

1 unchanged sentence

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

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

(Expressed in U.S.

NOTE 16 – BUSINESS SEGMENTS – Continued

Three-Month Period Ended March 31,

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

Reconciliations

Total segment operating loss

Total segment operating Income (loss)

$ ( 845,275 )

$ ( 1,617,225 )

Corporate costs

Unrealized gain (loss) on translation of intercompany balance

Loss from operations

Loss before income taxes

Unrealized gain on translation of intercompany balance

Income (loss) from operations

( 1,718,656 )

The following table shows the major customers

(10% or more) for the three-month period ended March 31, 2023.

Other income, net of expense

Income (loss) before taxes

$ ( 874,515 )

$ ( 1,632,818 )

The following table shows the major customer(s)

(10% or more) for the three-month period ended June 30, 2023.

Business Segments - Schedule of

1 unchanged sentence

Chemical Products

Percentage of

Percentage of Total Revenue (%)

Shandong Morui Chemical Company Limited

Shouguang Weidong Chemical Company Limited

Shandong Brother Technology Limited

Shandong Shouguang God Runfa Marine Chemical Company Limited

The following table shows the major customer(s)

(10% or more) for the six-month period ended June 30, 2023.

Chemical Products

Percentage of

Shandong Morui Chemical Company Limited

Shandong Brother Technology Limited

Shouguang Weidong Chemical Company Limited

Shandong Shouguangshen Runfa Marine Chemical Company Limited

The following table shows the major customers

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

The following table shows the major customer(s)

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

Chemical Products

Percentage of Total Revenue (%)

Shandong Morui Chemical Company Limited

Shandong Brother Technology Limited

Shouguang Weidong Chemical Company Limited

The following table shows the major customer(s)

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

Chemical Products

Percentage of

1 unchanged sentence

Shandong Brother Technology Limited

Shouguang Weidong Chemical Company Limited

NOTE 17 – CUSTOMER CONCENTRATION

During the three-month period ended March 31,

2023, the Company sold 64 % of its products to its top five customers.

As of March 31, 2023, amounts due from these customers were $ 3,492,933 .

During the three-month period ended March 31,

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

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

Sale of Products

Product Concentration

During the six-month period ended June 30, 2023,

the Company sold 69.9 % of its products to its top five customers, respectively.

As of June 30, 2023, amounts due from these customers

were $ 1,514,987 .

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 .

NOTE 18 – MAJOR SUPPLIERS

During the three-month period ended March 31,

Purchase of Raw Materials

Supplier Concentration

During the six-month period ended June 30, 2023

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

As of March 31, 2023, amounts due to those

suppliers were $ 411,554 .

During the three-month period ended March 31,

As of June 30, 2023, amounts due to those suppliers

were $ 221,315 .

During the six-month period ended June 30, 2022

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

As of March 31, 2022, amounts due to those

suppliers were $ 623,523 .

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

were $ 594,208 .

NOTE 19 – FAIR VALUE OF FINANCIAL INSTRUMENTS

2 unchanged sentences

nature of these instruments.

There were no material unrecognized financial assets and liabilities as of March 31, 2023 and

December 31, 2022.

There were no material unrecognized financial assets and liabilities as of June 30, 2023 and December

NOTE 20 – CAPITAL COMMITMENT AND OTHER SERVICE

1 unchanged sentence

The following table sets forth the Company’s

contractual obligations as of March 31, 2023:

contractual obligations as of June 30, 2023:

Capital Commitment and Other Service

22 unchanged sentences

2, 9, 7, 4, 8 and 10, respectively, and alleged, among other things, that SCHC had illegally

occupied and used the land in the total area of approximately 52,674 square meters, on which Factory nos.

occupied and used the land in the total area of approximately 52,674 square meter, on which Factory nos.

2, 9, 7, 4, 8 and 10 were built,

65 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 1. Financial Statements