What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-20 compared with 2023-08-14 · 321 added, 284 removed, 972 unchanged (38% of the section changed)

4 unchanged sentences

(Expressed in U.S.

June 30, 2023

September 30, 2023

December 31, 2022

39 unchanged sentences

10,717,754 shares issued;

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

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

Treasury stock;

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

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

( 1,372,673 )

16 unchanged sentences

(Expressed in U.S.

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

Three-Month Period Ended September 30,

Nine -Month Period Ended September 30,

OPERATING INCOME (EXPENSE)

6 unchanged sentences

Direct labor and factory overheads incurred during plant shutdown

( 1,055,529 )

( 1,927,297 )

( 3,464,265 )

( 4,111,888 )

General and administrative expenses

1 unchanged sentence

( 3,384,063 )

Other operating income (expense)

Other operating income (loss)

Total operating income (expense)

3 unchanged sentences

( 30,518,578 )

PROFIT (LOSS) FROM OPERATIONS

INCOME(LOSS) FROM OPERATIONS

( 2,293,288 )

( 4,011,944 )

OTHER INCOME (EXPENSE)

1 unchanged sentence

Interest income

Other (income) expenses

INCOME(LOSS) BEFORE TAXES

( 2,259,321 )

INCOME TAX BENEFIT (EXPENSE)

( 3,892,139 )

( 1,345,316 )

NET PROFIT (LOSS)

INCOME TAX EXPENSE

( 3,010,967 )

( 4,356,283 )

COMPREHENSIVE PROFIT (LOSS)

NET PROFIT (LOSS)

NET INCOME(LOSS)

$ ( 1,775,797 )

$ ( 3,015,360 )

- Foreign currency translation adjustments

COMPREHENSIVE LOSS:

NET INCOME(LOSS)

$ ( 1,775,797 )

$ ( 3,015,360 )

OTHER COMPREHENSIVE LOSS

- Foreign currency translation adjustments

( 15,930,276 )

( 7,879,513 )

COMPREHENSIVE PROFIT (LOSS)

( 30,774,686 )

COMPREHENSIVE INCOME(LOSS)

$ ( 6,962,896 )

1 unchanged sentence

$ ( 18,025,458 )

EARNINGS (LOSS) PER SHARE:

INCOME(LOSS) PER SHARE:

BASIC AND DILUTED

4 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’

SIX-MONTH PERIOD ENDED JUNE 30, 2023

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023

(Expressed in U.S.

1 unchanged sentence

unappropriated

BALANCE AT MARCH 31, 2023 (Unaudited)

BALANCE AT JUNE 30, 2023 ( Una udited)

( 1,372,673 )

2 unchanged sentences

$ 260,251,151

Restricted shares

Translation adjustment

Net income for three-month period ended September 30, 2023

( 1,775,797 )

Net loss for three-month period

ended June 30, 2023

BALANCE AT JUNE 30, , 2023(Unaudited)

BALANCE AT SEPTEMBER 30, 2023 (Unaudited)

( 1,372,673 )

4 unchanged sentences

unappropriated

BALANCE AT MARCH 31, 2022 (Unaudited)

BALANCE AT JUNE 30, 2022 ( Una udited)

$ ( 510,329 )

2 unchanged sentences

$ ( 2,985,581 )

$ 275,576,655

Restricted shares

2 unchanged sentences

( 15,930,276 )

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

BALANCE AT JUNE 30, 2022 (Unaudited)

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

BALANCE AT SEPTEMBER 30, 2022 (Unaudited)

$ ( 510,329 )

10 unchanged sentences

$ 271,618,205

Restricted shares

Translation adjustment

1 unchanged sentence

( 7,879,513 )

Net loss for six-month period

ended June 30, , 2023

Net income for nine-month period ended September 30,

( 3,015,360 )

BALANCE AT JUNE 30, 2023(Unaudited)

BALANCE AT SEPTEMBER 30, 2023 (Unaudited)

( 1,372,673 )

13 unchanged sentences

( 30,774,686 )

Net profit (loss) for six-month

period ended June 30, 2022

BALANCE AT JUNE 30, 2022

Net income for nine-month period ended September 30,

BALANCE AT SEPTEMBER 30, 2022 (Unaudited)

$ ( 510,329 )

3 unchanged sentences

$ 268,613,759

See accompanying notes to the condensed consolidated financial statements.

Treasury Stock

2 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

See accompanying notes to the condensed consolidated financial statements.

GULF RESOURCES, INC.

2 unchanged sentences

(Expressed in U.S.

Six-Month Period Ended June 30,

Nine-Month Period Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

$ ( 3,015,360 )

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

Amortization on capital lease obligation

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

Amortization on capital lease

Depreciation and amortization

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

Unrealized exchange gain on translation of inter-company balances

Deferred tax asset

( 1,002,511 )

Common stock issued for services

Issuance of stock options to employee

Changes in assets and liabilities:

5 unchanged sentences

( 1,503,845 )

Retention payable

Taxes payable

Prepaid land leases

Operating lease

( 1,073,677 )

Net cash provided by (used in) by operating activities

2 unchanged sentences

( 15,197,648 )

( 33,217,987 )

Net cash used in investing activities

( 15,197,648 )

( 33,217,987 )

CASH FLOWS USED IN FINANCING ACTIVITIES

3 unchanged sentences

( 6,728,107 )

( 1,642,327 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

( 4,451,237 )

( 3,128,985 )

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD

1 unchanged sentence

$ 103,774,977

Years Ended June 30,

Periods Ended September 30,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the year for:

Cash paid during the period for:

Paid for taxes

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

SEPTEMBER 30, 2023

(Expressed in U.S.

1 unchanged sentence

of Presentation and Consolidation

The accompanying audited consolidated financial

The accompanying unaudited consolidated financial

statements have been prepared by Gulf Resources, Inc.

9 unchanged sentences

All material intercompany transactions have been eliminated on consolidation.

Nature of Business

The Company manufactures and trades bromine through

7 unchanged sentences

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

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)).

On March 11, 2020, the World Health Organization

(WHO) officially declared COVID-19 a pandemic.

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.

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.

(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

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

1 and Factory No.

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

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

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

after the winter temporary closure.

1 unchanged sentence

dated March 5, 2020 allowing the Company to resume production at its bromine 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

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.

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.

which permits the Factory No.

permits the Factory No.

8 to resume production in August 2022.

The Company expects that the Factory No.

8 will generate revenue in the

fourth quarter 2022.

The Company is still waiting for governmental

41 unchanged sentences

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.

a press release detailing the delays in the opening of its 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.

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

to apply for environmental and safety approval.

After the Company has obtained environmental and safety approval, it will take us 4 months

to conduct trial production, and then the Company 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

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

chemical products strategy.

The Company believes the relocation process will

cost approximately $ 69 million in total.

2 unchanged sentences

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

sheets as of June 30, 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.

sheets as of September 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

16 unchanged sentences

for Doubtful Accounts

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.

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.

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 $ 103,774,977

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

The Company has not experienced

any losses in such accounts in the PRC.

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

The Company has not

experienced any losses in such accounts in the PRC.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

SEPTEMBER 30, 2023

(Expressed in U.S.

44 unchanged sentences

The Company’s

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.

contributions totaled $ 121,941 and $ 141,996 for the three-month period ended September 30, 2023 and 2022, respectively, and totaled $ 405,664

and $ 488,773 for the nine-month period ended September 30, 2023 and 2022, respectively.

Net revenue is net of discount and value added

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

SEPTEMBER 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 and six months period ended June

For the three and nine months period ended September

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

9 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 June 30, 2023

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

30, 2023 and 2022, respectively.

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,

for the three-month periods ended September 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.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

SEPTEMBER 30, 2023

(Expressed in U.S.

12 unchanged sentences

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

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

The statement of income

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

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

The statement of loss and

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

Gains or losses resulting from transactions in currencies

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

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

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

28 unchanged sentences

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

(n) Stock-based

(n) Stock-based Compensation

Stock-based awards issued to employees are recorded

30 unchanged sentences

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

tax in the consolidated statement of profit (loss).

tax in the consolidated statement of income (loss).

Accounting Pronouncements

Recent accounting pronouncements adopted

There were no recent accounting pronouncements adopted during the six

months ended June 30, 2023.

There were no recent accounting pronouncements adopted during the nine

months ended September 30, 2023.

Recently Issued Accounting Pronouncements Not

16 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

SEPTEMBER 30, 2023

(Expressed in U.S.

2 – ACCOUNTS RECEIVABLE, NET

NOTE 2 – ACCOUNTS RECEIVABLE, NET

Accounts receivable net consist of:

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

September 30,

Accounts receivable

2 unchanged sentences

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.

September 30, 2023 decreased by $ 3,213,048 , 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.

2 unchanged sentences

Inventories - Schedule of Inventories, Current

September 30,

Raw materials

1 unchanged sentence

Inventory, net

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

The inventory valuation allowance, representing

a write-down of inventory, was $ 92,165 and $ 0 as of as of September 30, 2023 and 2022.

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 June 30 2023

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

2023 and December 31, 2022.

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 completed and

placed in service.

As of September 30, 2023, the prepaid land lease increased to $ 9,254,124 due to an additional amount paid

for stamp duty and related land use rights fees.

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

and placed in service.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

SEPTEMBER 30, 2023

(Expressed in U.S.

3 unchanged sentences

Schedule of Property, Plant and Equipment

September 30,

Mineral rights

13 unchanged sentences

The aggregate carrying

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

values of these properties situated on parcels of the land are $ 13,636,724 and $ 14,713,101 as at September 30, 2023 and December 31,

2022, respectively.

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.

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.

During the three-month period ended September 30, 2023, depreciation

and amortization expense totaled $ 4,787,568 of which $ 760,400 , $ 166,042 and $ 3,861,126 were recorded in direct labor and factory overheads

incurred during plant shutdown , administrative expenses and cost of net

During the nine-month period ended September 30, 2023 , depreciation

and amortization expense totaled $ 15,381,658 of which $ 3,502,188 , $ 765,921 and $ 11,113,549 were recorded in direct labor and factory overheads

incurred during plant shutdown , administrative expenses and cost of net

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

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

incurred during plant shutdown , administrative expenses and cost of net

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

and amortization expense totaled $ 16,255,069 of which $ 4,817,711 , $ 1,534,387 and $ 9,902,971 were recorded in direct labor and factory

overheads incurred during plant shutdown , administrative expenses and

cost of net revenue .

The Company has

commenced a flood prevention initiative.

The Company’s strategy involves the renovation of the channels of four major rivers within

its mining area, encompassing the tributary of the Mihe River.

The aim is to prevent flooding that could harm the wells, aqueducts, and

crude salt pans at the Company’s plant.

The projected expenditure for this initiative amounts to $ 50,497,652 .

As of September 30,

2023, the Company disbursed $ 15,149,296 for the initial phase of this project.

NOTE 6 – FINANCE LEASE RIGHT-OF-USE ASSETS

3 unchanged sentences

Plant and Equipment Under Finance Leases

September 30,

Buildings Buildings

2 unchanged sentences

( 2,115,747 )

Net book value

3 unchanged sentences

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

During the three and six months period ended June

30, 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.

During the three and nine months period

ended September 30, 2023, depreciation and amortization expense totaled $ 1,291 and $ 3,966 , respectively, which was recorded in

direct labor and factory overheads incurred during plant shutdown.

During the three and nine months period

ended September 30, 2022, depreciation and amortization expense totaled $ 1,356

and $ 4,216 , respectively, which was recorded in direct labor and factory overheads incurred during plant shutdown.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

SEPTEMBER 30, 2023

(Expressed in U.S.

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 six-month

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

As of September 30, 2023, the total operating

lease ROU assets was $ 7,668,554 .

The total operating lease cost for the nine-month

period ended September 30, 2023 and 2022 was $ 706,033 and $ 746,731 .

The Company has the rights to use certain parcels

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

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

The parcels of

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

carrying value of $ 8,528,764 as at June 30, 2023.

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

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

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

carrying value of $ 8,452,893 as at September 30, 2023.

NOTE 8 – ACCOUNTS PAYABLE, OTHER PAYABLE

4 unchanged sentences

Expenses - Schedule of Accounts Payable and Accrued Liabilities

September 30,

Accounts payable

4 unchanged sentences

NOTE 9– RELATED PARTY TRANSACTIONS

On September 25, 2012, the Company purchased five

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

(the “Seller”)

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

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

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

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

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 .

On September 25, 2012, the Company purchased

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

“Seller”) at a cost of approximately $ 5.7

million in cash, of which Mr.

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

equity interest in the Seller.

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

party, to provide property management services for an annual amount of approximately $ 90,785

years from January 1, 2023 to December 31, 2027 .

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

ended September 30, 2023 was approximately $ 21,748 and $ 66,028 .

The expense associated with this agreement for the three and nine

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

NOTE 8 – RELATED PARTY TRANSACTIONS –

5 unchanged sentences

Chief Operating Officer

September 30,

Amount due to related parties:

3 unchanged sentences

NOTE 10– TAXES PAYABLE

September 30,

Land use tax payable

Value added tax and other taxes payable

Land use tax payable

NOTE 11 – LEASE LIABILITIES-FINANCE AND

OPERATING LEASE

NOTE 11 – LEASE LIABILITIES-FINANCE AND OPERATING

The components of finance lease liabilities were

1 unchanged sentence

Lease - Schedule of Finance Leased Liabilities

September 30,

Interest rate

3 unchanged sentences

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).

amounted to $ 23,791 and $ 23,934 for the three-month period ended September 30, 2023 and 2022, respectively, which were charged to the

condensed consolidated statement of income (loss).

Interest expenses from capital lease obligations amounted to $ 80,252 and $ 93,630 for

the nine-month period ended September 30, 2023 and 2022, respectively, which were charged to the condensed consolidated statement of income

The components of operating lease liabilities

1 unchanged sentence

Lease - Schedule of Operating Leased Liabilities

September 30,

Interest rate

3 unchanged sentences

The weighted average remaining operating lease

term at June 30, 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 .

term at September 3 0 , 2023 was 19 years and the weighted average discounts

rate was 4.89 %.

Lease payments for the three-month period ended September 30, 2023 and 2022, respectively, were $ 64,866 and $ 64,896 .

payments for the nine-month period ended September 30, 2023 and 2022, respectively, were $ 824,572 and $ 888,692 .

Maturities of lease liabilities were as follows:

10 unchanged sentences

Amount representing interest

( 5,740,871 )

Present value of net minimum lease payments

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

SEPTEMBER 30, 2023

(Expressed in U.S.

25 unchanged sentences

reserve balance falling below 25% of the registered capital.

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.

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

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

NOTE 13 – TREASURY STOCK

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

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

As of September 30, 2023 and December 31, 2022,

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

NOTE 14 – STOCK-BASED COMPENSATION

6 unchanged sentences

of the 2007 Plan and applicable award agreement.

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

As of September 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.

4 unchanged sentences

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

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

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

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 June 30, 2023.

For the three months ended September 30, 2023

and 2022, total compensation costs for options issued recorded in the consolidated statement of loss were $ 0 .

During the three and nine months ended September 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 September 30, 2023.

Stock-Based Compensation - Schedule of Stock

8 unchanged sentences

Expired during the period

Balance, June 30, 2023

Stock Options Outstanding and Exercisable

Balance, September 30, 2023

Stock Options and Warrants Outstanding and Exercisable

Weighted Average

Outstanding at June 30, 2023

Outstanding at September 30, 2023

Exercise Prices

1 unchanged sentence

Outstanding and exercisable

All options exercisable and outstanding at June

All options exercisable and outstanding at September

30, 2023 are fully vested.

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

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

The aggregate intrinsic value of options outstanding and exercisable

as of June 30, 2023 was $ 0 .

During the three and six months ended June 30,

as of September 30, 2023 was $ 0 .

During the three and nine months ended September

30, 2023 and 2022, there were no options exercised.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

SEPTEMBER 30, 2023

(Expressed in U.S.

2 unchanged sentences

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

United States (“US”)

States (“US”)

United States

3 unchanged sentences

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

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

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

invested in the PRC.

British Virgin Islands (“BVI”)

Virgin Islands (“BVI”)

Upper Class Group Limited, a subsidiary of Gulf

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

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

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

2023 and 2022.

HKJI, a subsidiary of Upper Class Group Limited, was

1 unchanged sentence

from Hong Kong.

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

ended June 30, 2023 and 2022.

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

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

ended September 30, 2023 and 2022.

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

30, 2023 and 2022 are 16.5 %.

2 unchanged sentences

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.

The operating subsidiaries SCHC is a wholly foreign-owned enterprises

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

The PRC tax losses

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

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

Tax losses of the operating subsidiaries of the Company

may be carried forward for five years.

On February 22, 2008, the Ministry of Finance

3 unchanged sentences

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

As of June 30, 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.

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

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

Accordingly, as of June 30, 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 June 30, 2023 and December 31, 2022, the

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

As of September 30, 2023 and December 31, 2022,

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

are $ 138,933,575 and $ 147,686,099 , respectively.

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

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

foreseeable future.

Accordingly, as of September 30, 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 September 30, 2023

and December 31, 2022, the unrecognized WHT are $ 5,996,965 and $ 6,406,394 , respectively.

The Company’s income tax returns are subject

15 unchanged sentences

- Schedule of Components of Income Tax Expense Benefit

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

Three-Month Period Ended September 30,

Nine-Month Period Ended September 30,

Current taxes – PRC

Deferred tax – PRC entities

Deferred taxes – US entity

Change in valuation allowance

( 3,010,967 )

( 4,356,283 )

Income Tax (Expense) Benefit

2 unchanged sentences

Significant components of the Company’s

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

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

Income Taxes - Schedule of Deferred

Tax Assets and Liabilities

September 30,

Deferred tax liabilities

9 unchanged sentences

The decrease in valuation allowance for the three-month

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

period ended September 30, 2023 is $ 12,974 .

The increase in valuation allowance for the three-month

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 .

period ended September 30, 2022 is $ 0 .

The decrease in valuation allowance for the nine-month

period ended September 30, 2023 is $ 233,212 .

The increase in valuation allowance for the nine-month

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

There were no unrecognized tax benefits and accrual

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.

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

and nine months ended September 30, 2023 and 2022.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

SEPTEMBER 30, 2023

(Expressed in U.S.

NOTE 16 – BUSINESS SEGMENTS

The Company has four reportable segments:

crude salt, chemical products and natural gas.

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

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

An operating segment’s performance is primarily

6 unchanged sentences

All the customers are located in PRC.

June 30, 2023

September 30, 2023

(external customers)

1 unchanged sentence

Income(loss) from operations before income tax benefit

( 2,143,203 )

( 2,035,988 )

( 2,293,288 )

Income tax benefit (expense)

3 unchanged sentences

Capital expenditures

June 30, 2022

September 30, 2022

(external customers)

(intersegment)

Income(loss) from operations before income tax benefit

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

Income tax benefit(expense)

2 unchanged sentences

( 3,010,967 )

Income (loss) from operations after

income tax benefit (expense)

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.

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

Commencing May 2022,

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

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

(Expressed in U.S.

NOTE 16 – BUSINESS SEGMENTS – Continued

June 30, 2023

September 30, 2023

(external customers)

(intersegment)

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

( 1,197,201 )

Income(loss) from operations before income tax benefit

( 3,340,404 )

( 1,231,302 )

Income tax benefit (expense)

Loss from operations after income tax benefit (expense)

( 3,653,213 )

( 4,011,944 )

Income tax benefit (expense)

Income (loss) from operations after

income tax benefit (expense)

Depreciation and amortization

Capital expenditures

June 30, 2022

September 30, 2022

(external customers)

1 unchanged sentence

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

( 1,436,443 )

Income tax benefit(expense)

2 unchanged sentences

( 4,356,283 )

Loss from operations after income tax benefit (expense)

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 the respective segment until April 2022.

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

Commencing May 2022,

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

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

(Expressed in U.S.

NOTE 16 – BUSINESS SEGMENTS – Continued

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

Three-Month Period Ended September 30,

Nine-Month Period Ended September 30,

Reconciliations

6 unchanged sentences

( 2,293,288 )

( 4,011,944 )

Other income, net of expense

3 unchanged sentences

The following table shows the major customer(s)

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

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

Business Segments - Schedule of

1 unchanged sentence

Chemical Products

Percentage of Total Revenue (%)

Percentage of

Shandong Brother Technology Limited

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

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

Shandong Morui Chemical Company Limited

3 unchanged sentences

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 (%)

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

Shandong Morui Chemical Company Limited

Shandong Brother Technology Limited

Shouguang Weidong Chemical Company Limited

Shandong Brother Technology Limited

The following table shows the major customer(s)

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

Chemical Products

Percentage of

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

Shandong Morui Chemical Company Limited

Shandong Brother Technology Limited

Shouguang Weidong Chemical Company Limited

Shandong Brother Technology Limited

NOTE 17– CUSTOMER CONCENTRATION

1 unchanged sentence

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 .

During the nine-month period ended September 30,

2023, the Company sold 68.4 % of its products to its top five customers.

As of September 30, 2023, amounts due from these customers were

$ 1,485,777 .

During the nine-month period ended September 30,

2022, the Company sold 52.9 % of its products to its top five customers.

As of September 30, 2022, amounts due from these customers were

$ 6,095,578 .

NOTE 18– MAJOR SUPPLIERS

1 unchanged sentence

Supplier Concentration

During the six-month period ended June 30, 2023

During the nine-month period ended September 30,

2023 the Company purchased 100 % of its raw materials from its top five suppliers.

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

were $ 221,315 .

During the six-month period ended June 30, 2022

As of September 30, 2023, amounts due to

those suppliers were $ 229,260 .

During the nine-month period ended September 30,

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

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

were $ 594,208 .

As of September 30, 2022, amounts due to

those suppliers were $ 219,646 .

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 June 30, 2023 and December

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

and December 31, 2022.

NOTE 20 – CAPITAL COMMITMENT AND OTHER SERVICE

1 unchanged sentence

The following table sets forth the Company’s

contractual obligations as of June 30, 2023:

contractual obligations as of September 30, 2023:

Capital Commitment and Other Service

65 unchanged sentences

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

389 Zhi Yi, dated

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

Production of

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

of Factory No.

7 was allowed to resume in April 2019.

16 unchanged sentences

In view of the above facts and circumstances,

the Company believes that it is not necessary to accrue for any estimated losses or impairment as of March 31, 2023.

the Company believes that it is not necessary to accrue for any estimated losses or impairment as of September 30, 2023.

NOTE 22 - SUBSEQUENT EVENT

1 unchanged sentence

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