What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-09-27 compared with 2023-03-31 · 488 added, 379 removed, 1098 unchanged (44% of the section changed)

9 unchanged sentences

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID #2729)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID #1171)

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

3 unchanged sentences

SCHEDULE I – PARENT ONLY FINANCIAL INFORMATION

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

1 unchanged sentence

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheet of Gulf Resources, Inc.

and subsidiaries (collectively the “Company”) as of December 31, 2022 and 2021, and

the related consolidated statements of comprehensive (loss) income, stockholders’ equity, and cash flows for each of the years

in the two year period ended December 31, 2022, the related notes, and financial statement schedule (collectively referred to as the

“consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material

respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows

for each of the years in the two year period ended December 31, 2022, in conformity with accounting principles generally accepted in

the United States of America.

We have audited the accompanying

consolidated balance sheet of Gulf Resources, Inc.

and subsidiaries (collectively the “Company”) as of December 31, 2023,

and the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows for the year ended

December 31, 2023, the related notes, and financial statement schedule (collectively referred to as the “consolidated financial

statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position

of the Company as of December 31, 2023, and the results of its operations and its cash flows for each of the years in the year ended December

31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we

engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

These consolidated financial statements

are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance

with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were

we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

1 unchanged sentence

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide

a reasonable basis for our opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides

a reasonable basis for our opinion.

Our audit included performing

procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing

procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit

provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below

are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated

to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters does not alter

in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Property, plant and equipment, net

We determined that the Company’s property,

plant and equipment was a critical audit matter based on the principal considerations that property, plant, and equipment was very significant

proportion of the Company’s total assets.

The challenges with general economic and political environment present challenges in

determining that carrying value of such assets are subject to significant estimation and the use judgment.

Plant and equipment may be

purchased and placed into service at varying times, and their ability to contribute to the generation of cash flows is impacted by multiple

factors, including the time for installation, demand for the Company’s products, and the availability of working capital and raw

The audit engagement team addressed this critical accounting matter by reviewing the Company’s accounting policies,

and perform extended procedures including physical inspection, corroborated with enquiry, examination of contracts, review of global

economic conditions and the Company’s own forecast for demand, review of movement of inventories and the liquidity of the Company,

vouching of a sample of purchases, and performing independent analysis that included recalculation of depreciation and impairment testing.

The engagement team’s testing provided adequate evidence to support our audit opinion and to mitigate the risk of material misstatement

to an acceptable level.

The accounts that are affected by this critical audit matter is property plant and equipment, and the related

depreciation that is allocated into cost of sales, and impairment expense, if any.

Certified Public Accountants

We have served as the Company’s auditor since 2021.

San Mateo, CA

March 31, 2023

The critical audit matters communicated

below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to

be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters

does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the

critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they

Property, plant and equipment,

As described in Note 1 to the

consolidated financial statements, property, plant and equipment consisted of facilities for products, mineral rights, constructions in

process and producing oil and gas properties.

The Company reviews the economic benefits associated with the item purchased periodically.

Once the Company determine the likelihood of economic benefits associated is probable, the item would be recognized as an asset.

We identified determining carrying

amount of property, plant and equipment as a critical audit matter due to the material balance on the balance sheet and significant judgement

and assumptions were used by the Management regarding the timing and ability to contribute to the generation of cash flows, which in turn

led to a high degree of auditor judgement, subjectivity and effort in performing procedures and evaluating audit evidence relating to

Management’s assessment of the carrying amount.

The primary procedures we performed

to address this critical audit matter included the following:

- Reviewed the Company’s accounting policies, assumptions and estimates.

- Physical inspection.

- Examined contracts.

- Performed independent analysis for impairment testing.

/s/ GGF CPA LTD

We have served as the Company’s

auditor since 2024.

Guangzhou, Guangdong, China

September 27, 2024

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders of

Resources, Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheet of Gulf Resources, Inc.

and subsidiaries (collectively the “Company”)

as of December 31, 2022 and 2021, and the related consolidated statements of comprehensive (loss) income, stockholders’ equity,

and cash flows for each of the years in the two year period ended December 31, 2022, the related notes, and financial statement schedule

(collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements

present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its

operations and its cash flows for each of the years in the two year period ended December 31, 2022, in conformity with accounting principles

generally accepted in the United States of America.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due

to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due

to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that

were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material

to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication

of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we

are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts

or disclosures to which they relate.

plant and equipment, net

determined that the Company’s property, plant and equipment was a critical audit matter based on the principal considerations that

property, plant, and equipment was very significant proportion of the Company’s total assets.

The challenges with general economic

and political environment present challenges in determining that carrying value of such assets are subject to significant estimation and

the use judgment.

Plant and equipment may be purchased and placed into service at varying times, and their ability to contribute to the

generation of cash flows is impacted by multiple factors, including the time for installation, demand for the Company’s products,

and the availability of working capital and raw materials.

The audit engagement team addressed this critical accounting matter by reviewing

the Company’s accounting policies, and perform extended procedures including physical inspection, corroborated with enquiry, examination

of contracts, review of global economic conditions and the Company’s own forecast for demand, review of movement of inventories

and the liquidity of the Company, vouching of a sample of purchases, and performing independent analysis that included recalculation of

depreciation and impairment testing.

The engagement team’s testing provided adequate evidence to support our audit opinion and to

mitigate the risk of material misstatement to an acceptable level.

The accounts that are affected by this critical audit matter is property

plant and equipment, and the related depreciation that is allocated into cost of sales, and impairment expense, if any.

Public Accountants

have served as the Company’s auditor since 2021.

GULF RESOURCES, INC.

24 unchanged sentences

Taxes payable-current

Amount due to a related Party

Advance from customer

Amount due to related parties

Finance lease liability, current portion

18 unchanged sentences

Treasury stock;

285,830 and 45,830 shares as of December 31, 2022 and 2021 at cost

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

( 1,372,673 )

Additional paid-in capital

1 unchanged sentence

Retained earnings appropriated

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

( 18,053,269 )

( 13,027,289 )

Total Stockholders’ Equity

7 unchanged sentences

CONSOLIDATED STATEMENTS OF

COMPREHENSIVE (LOSS) INCOME

COMPREHENSIVE INCOME (LOSS)

(Expressed in U.S.

13 unchanged sentences

( 2,850,059 )

Total operating income (expense)

Total operating costs and expense

( 41,934,515 )

1 unchanged sentence

INCOME FROM OPERATIONS

( 11,890,725 )

OTHER INCOME (EXPENSE)

1 unchanged sentence

Interest income

Other (income) expenses

Expenditure on water pollution treatment

( 46,510,856 )

INCOME BEFORE INCOME TAXES

( 58,256,662 )

INCOME TAX EXPENSE

1 unchanged sentence

( 6,586,985 )

NET INCOME (LOSS)

NET (LOSS)/INCOME

$ ( 61,795,279 )

COMPREHENSIVE INCOME (LOSS):

NET INCOME (LOSS)

NET (LOSS)/INCOME

$ ( 61,795,279 )

2 unchanged sentences

( 5,025,980 )

( 24,886,118 )

TOTAL COMPREHENSIVE (LOSS) INCOME

$ ( 66,821,259 )

$ ( 14,826,668 )

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE

14 unchanged sentences

$ 150,463,638

$ 286,639,217

Restricted shares issued for services

Repurchase stocks

Currency translation adjustment

( 24,886,118 )

Net loss for year ended December 31, 2022

13 unchanged sentences

Restricted shares issued for services

Repurchase stocks

Currency translation adjustment

2 unchanged sentences

Net loss for year ended December 31, 2023

BALANCE AT DECEMBER 31, 2022

( 61,795,279 )

BALANCE AT DECEMBER 31, 2023

( 1,372,673 )

$ ( 18,053,269 )

The accompanying notes are an integral part of

these consolidated financial statements.

$ 205,248,296

Treasury Stock

2 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

The accompanying notes are an integral part of

these consolidated financial statements.

GULF RESOURCES, INC.

11 unchanged sentences

Stock-based compensation expense

Shares issued from treasury stock for services

Bad debt expense

Impairment of inventory

Amortization of right-of-use asset

Changes in assets and liabilities

Accounts receivable

( 7,749,127 )

Prepayment and deposits

( 4,268,797 )

Advance from customers

Other receivables

Accounts and Other payable and accrued expenses

Amount due to a related Party

Amount due to related parties

Taxes payable

Prepaid land leases

Operating lease

Lease liabilities

Net cash provided by operating activities

( 32,751,851 )

CASH FLOWS FROM INVESTING ACTIVITIES

1 unchanged sentence

( 37,560,932 )

( 30,093,140 )

Net cash used in investing activities

( 37,560,932 )

( 30,093,140 )

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of finance lease obligation

Repayment of finance leases obligation

Net cash used in financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

( 2,982,659 )

NET DECREASE IN CASH AND CASH EQUIVALENTS

( 36,002,320 )

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR

10 unchanged sentences

Interest on finance lease obligation

Paid for Flood Prevention Project

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

22 unchanged sentences

(b) Nature of Business

The Company manufactures and trades bromine through

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)).

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 our operations are currently not materially affected, it is unknown whether or how they may

be affected if such a pandemic persists for an extended period.

While not yet quantifiable, the Company believes this situation did not

have a material adverse impact on its operating results in the year of 2021 and will continue to assess the financial impact.

outbreak slightly delayed the commencement of the operations for Factory No.1, No.4, No.7, No.9.

We received approval to open factory

The Company manufactures and trades bromine

through 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)).

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 our operations are currently not materially affected, it is unknown

whether or how they may be affected if such a pandemic persists for an extended period.

While not yet quantifiable, the Company believes

this situation did not have a material adverse impact on its operating results in the year of 2021 and will continue to assess the financial

The virus outbreak slightly delayed the commencement of the operations for Factory No.1, No.4, No.7, No.9.

We received approval

to open factory No.

COVID has still delayed the approval for factories N0.2 and No.10.

4 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 Factory No.

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

after the winter temporary closure.

Further, the Company received another approval from the Shouguang Yangkou People’s Government

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

Subsequently,

due to the coronavirus outbreak in China, the local government ordered those bromine facilities to postpone the commencement of

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.

Further, the Company received another approval from

the Shouguang Yangkou People’s Government 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”).

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.

7 commenced trial production in mid March 2020 and

commercial production on April 3, 2020 and its Factories No.

9 commenced commercial production on May 6, 2020.

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

permits the Factory No.

8 to resume production in August 2022.

And Factory No.

8 started contribute revenue in the fourth quarter 2022.

The Company is still waiting for governmental

approval for Factories No.

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

areas including that for prevention of flood.

As a result, we may be required to make some modifications to our current wells and aqueducts

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

received verbal notification from the government regarding Factory No.

8, allowing it to recommence production in August 2022.

8 began contributing revenue in the fourth quarter 2022.

The Company is awaiting governmental approval

for Factories No.

To our knowledge, the government is finalizing plans for all mining areas, including flood prevention

As a result, we may be required to make certain modifications to our existing wells and aqueducts prior to commencement of

operations of these factories in order to satisfy the local government's requirements.

Pursuant to the notification from the government

50 unchanged sentences

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 payments and deposits 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, prepayments and deposits and property, plant and

equipment in the consolidated balance sheets as of December 31, 2022 and 2021.

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

related to the design of the new chemical factory, and progress payments and deposits 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, prepayments and deposits and property,

plant and equipment in the consolidated balance sheets as of December 31, 2023 and 2022.

(iii) Natural Gas Segment

55 unchanged sentences

an allowance may be required.

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

there were no allowances for doubtful accounts.

No allowances for doubtful accounts were charged to the consolidated statements of comprehensive

(loss) income for years ended December 31, 2022 and 2021.

As of December 31, 2023 and December 31, 2022, the provision for doubtful

debts was $ 25,060 and $ 25,047 .

The provision for doubtful accounts in the consolidated statements of consolidated (loss) income for the

years ended December 31, 2023 is $ 431 .

(f) Concentration of Credit Risk

4 unchanged sentences

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

The Company placed $ 108,226,214

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

The Company placed $ 72,223,894 and

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

The Company has not experienced any

145 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 years ended December 31, 2022 and 2021,

respectively.

These awards could be dilutive in the future if the market price of the common stock increases and is greater than the exercise

price of these awards.

the calculation of number of dilutive common stock equivalents amounted to 0 and 0 shares for the years ended December

31, 2023 and 2022, respectively.

These awards could be dilutive in the future if the market price of the common stock increases and is

greater than the exercise price of these awards.

(o) Reporting Currency and Translation

10 unchanged sentences

OF SIGNIFICANT ACCOUNTING POLICIES – Continued

As such, the Company uses the “current rate

method” to translate its PRC operations from RMB into USD, as required under FASB ASC 830 “Foreign Currency Matters”.

The assets and liabilities of its PRC operations are translated into USD using the rate of exchange prevailing at the balance sheet date.

As such, the Company uses the “current rate method” to translate its PRC operations from RMB into USD, as required under FASB

ASC 830 “Foreign Currency Matters”.

The assets and liabilities of its PRC operations are translated into USD using the rate

of exchange prevailing at the balance sheet date.

The capital accounts are translated at the historical rate.

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 (loss).

The statement of

comprehensive income (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 loss for the reporting periods as part of general and administrative

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

paid for the acquisition of business which is translated at historical rates.

(p) Foreign Operations

All of the Company’s operations and assets

are located in PRC.

The Company may be adversely affected by possible political or economic events in this country.

effect of these factors cannot be accurately predicted.

(q) Revenue Recognition

Net revenue is net of discount and value added tax

and comprises the sale of bromine, crude salt and chemical products.

Revenue is recognized at a point time when the control of the promised

goods is transferred to the customers in an amount that reflects the consideration that the Company expects to receive from the customers

in exchange for those goods.

The acknowledgement of receipt of goods by the customers is when control of the product is deemed to be transferred.

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 (loss).

The statement of comprehensive income (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 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 the acquisition of business which is translated at historical rates.

(p) Revenue Recognition

Net revenue is net of discount and value added tax and comprises the sale of bromine, crude salt and chemical products.

Revenue is recognized

at a point time when the control of the promised goods is transferred to the customers in an amount that reflects the consideration that

the Company expects to receive from the customers in exchange for those goods.

The acknowledgement of receipt of goods by the customers

is when control of the product is deemed to be transferred.

Invoicing occurs upon acknowledgement of receipt of the goods by the customers.

Customers have no rights to return the goods upon acknowledgement

of receipt of goods.

Customers typically pay after the Company delivers and transfers the products to them in accordance to terms set

forth in their contract.

Revenue from contracts with customers is disaggregated in Note 15.

(r) Income Taxes

Customers have no rights to return the goods upon acknowledgement of receipt of goods.

Customers typically pay after the Company delivers

and transfers the products to them in accordance to terms set forth in their contract.

Revenue from contracts with customers is disaggregated

(q) Income Taxes

The Company accounts for income taxes in accordance

13 unchanged sentences

tax in the consolidated statement of comprehensive income (loss).

(s) Exploration Costs

(r) Exploration Costs

Exploration costs, which included the cost of

18 unchanged sentences

periodically for impairment.

(s) Fair Value Measurement

The Company applies Accounting Standards Codification

(“ASC”) Topic 820, Fair Value Measurements and Disclosures which defines fair value, establishes a framework for measuring

fair value and expands financial statement disclosure requirements for fair value measurements.

ASC Topic 820 defines fair value as the price

that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly

transaction between market participants in the principal or most advantageous market for the asset or liability.

ASC Topic 820 specifies

a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable.

The hierarchy is as follows:

Level 1 inputs to the valuation

methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology

include quoted prices for identical or similar assets and liabilities in active markets or in inactive markets, and inputs that are observable

for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 inputs to the valuation

methodology are unobservable and significant to the fair value.

The carrying amounts of the Company’s

financial instruments approximate their fair values because of their short-term nature.

The Company’s financial instruments

include cash, accounts receivable, amounts due to related parties, accounts payable and other current payables.

There were no

material unrecognized financial assets and liabilities as of December 31, 2023 and 2022.

(t) Loss Contingencies

9 unchanged sentences

The Company accounts for stock-based compensation

under the provisions of FASB ASC 718, Compensation Stock Compensation, which requires the measurement and recognition of compensation

expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date.

The Company estimates

the fair value of stock-based awards on the date of grant using the Black-Scholes model.

The value of the portion of the award that is

ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.

In June 2018,

the FASB issued ASU No.

2018-07, Compensation - Stock Compensation (Topic 7 I8), Improvements to Nonemployee Share-Based

Payment Accounting.

The amendments in this Update expand the scope of Topic 718 to include share-based payment transactions for acquiring

goods and services from nonemployees.

Prior to this Update, Topic 718 applied only to share-based transactions to employees.

with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic

718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered

or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.

under the provisions of FASB ASC 718, Compensation Stock Compensation, which requires the measurement and recognition

of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date.

Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model.

The value of the portion of

the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.

In June 2018, the FASB issued ASU No.

201807, Compensation - Stock Compensation (Topic 7 I8), Improvements

to Nonemployee Share-Based Payment Accounting.

The amendments in this Update expand the scope of Topic 718 to include share-based

payment transactions for acquiring goods and services from nonemployees.

Prior to this Update, Topic 718 applied only to share-based transactions

to employees.

Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards

within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when

the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the

instruments have been satisfied.

The Company has elected to account for the forfeiture of stock-based awards as they occur.

5 unchanged sentences

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 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.

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 will adopt this standard beginning

January 1, 2023.

The Company is currently evaluating the effect of the adoption of this standard on the consolidated financial statements

and related disclosures.

The Company will adopt

this standard beginning January 1, 2023.

The Company is currently evaluating the effect of the adoption of this standard on the consolidated

financial statements and related disclosures.

GULF RESOURCES, INC.

3 unchanged sentences

(Expressed in U.S.

2 – ACCOUNTS RECEIVABLE, NET

NOTE 2 – ACCOUNTS RECEIVABLE, NET

Accounts receivable

1 unchanged sentence

Accounts receivable, net

The overall accounts receivable balance as of December

31, 2022 decreased by $ 9,162,641 , as compared to those of December 31, 2021.

We have policies in place to ensure that sales

are made to customers with an appropriate credit history.

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

The overall accounts receivable

balance as of December 31, 2023 decreased by $ 497,470 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

NOTE 3 – INVENTORIES

4 unchanged sentences

Inventory, net

The Company recorded impairment charges for slow moving

inventory in the amounts of $ 24,745 and $ 0 for the years ended December 31, 2022 and 2021.

The Company recorded impairment charges for slow

moving inventory in the amounts of $ 230,776 and $ 24,745 for the years ended December 31, 2023 and 2022.

NOTE 4 – PREPAID LAND LEASES

4 unchanged sentences

The lease term ranges from ten to fifty years.

the lease contracts were paid in one lump sum upfront and some are paid annually at the beginning of each anniversary date.

have no purchase option at the end of the lease term and were classified as operating leases prior to and as of January 1, 2019 when the

new lease standard was adopted.

Some of the lease contracts were paid in one lump sum upfront and some are paid annually at the beginning of each anniversary date.

leases have no purchase option at the end of the lease term and were classified as operating leases prior to and as of January 1, 2019

when the new lease standard was adopted.

Prior to January 2019, the prepaid land lease was amortized on a straight line basis.

11 unchanged sentences

31 2023 and 2022.

As of December 31, 2022, the prepaid land lease increased to $ 9,508,001 due to an additional amount paid for stamp duty

and related land use rights fees.

As of December 31, 2023, the prepaid land lease increased to $ 9,342,176 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

11 unchanged sentences

Plant and machinery

Motor vehicles

Furniture, fixtures and office equipment

Motor vehicles

Construction in process

5 unchanged sentences

$ 149,916,766

The Company has certain buildings and salt pans

erected on parcels of land located in Shouguang, PRC, and such parcels of land are collectively owned by local townships or the government

The Company has certain buildings

and salt pans erected on parcels of land located in Shouguang, PRC, and such parcels of land are collectively owned by local townships

or the government authority.

The Company has not been able to obtain property ownership certificates over these buildings and salt pans.

The aggregate carrying

values of these properties situated on parcels of the land are $ 14,713,101 and $ 17,911,910 as at December 31, 2022 and December 31, 2021,

respectively.

The aggregate carrying values of these properties situated on parcels of the land are $ 8,346,742 and $ 14,713,101 as at December 31, 2023

and December 31, 2022, respectively.

During the year ended December 31, 2023, depreciation

and amortization expense totaled $ 26,770,097 of which $ 14,507,140 , $ 1,777,989 and $ 10,484,968 were recorded in direct labor and factory

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

and amortization expense totaled $ 27,064,404 of which $ 15,626,277 , $ 4,113,962 and $ 7,324,165 were recorded in direct labor

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

During the year ended December 31, 2022, depreciation

and amortization expense totaled $ 20,537,682 of which $ 8,318,487 , $ 644,349 and $ 11,574,846 were recorded in direct labor and factory overheads

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

NOTE 6 – FINANCE LEASE RIGHT-OF-USE ASSETS

and amortization expense totaled $ 26,770,097 of which $ 14,507,140 , $ 1,777,989 and $ 10,484,968 were recorded in direct labor

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

NOTE 6 – FINANCE LEASE RIGHT-OF-USE

Property, plant and equipment under finance leases,

6 unchanged sentences

( 2,115,747 )

( 2,305,478 )

Net book value

8 unchanged sentences

NOTE 7 – OPERATING LEASE RIGHT–OF-USE

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.

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 29.8 square

kilometers with an aggregate operating lease right-of-use assets amount of $ 7,923,071 as at December 31, 2023.

As of December 31, 2023, the total operating lease

2 unchanged sentences

December 31, 2023 and 2022 was $ 887,603 and $ 978,356 .

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 (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 with an

aggregate operating lease right-of-use assets amount of $ 9,140,777 as at December 31, 2022.

NOTE 8 – PAYABLE AND ACCRUED EXPENSES

5 unchanged sentences

Social security insurance contribution payable

Other payable-related party (see Note 8)

Deposit on subscription of a subsidiary’s share

Other payable-related party

Accrued expense for construction

Accrued expense-others

Accrued expense-others mainly

include the quality guarantee of water conservancy projects of $ 2,557,982 and others.

NOTE 9 – RELATED PARTY TRANSACTIONS

3 unchanged sentences

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 that time.

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 $ 89,574 for five years from January 1, 2018 to December 31, 2022 .

expense associated with this agreement for the year ended December 31, 2022 was $ 92,168 .

The expense associated with this agreement for

the year ended December 31, 2021 was $ 96,390 .

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

in the Seller that time.

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

The expense associated with this agreement for the year ended December 31, 2023 was $ 88,049 .

The expense associated with this

agreement for the year ended December 31, 2022 was $ 92,168 .

NOTE 9 – RELATED PARTY TRANSACTIONS –

6 unchanged sentences

Amount due to related parties:

Considering that the Company has not performed

well in recent years, the Company and its executive officers mutually agreed and returned all or a portion of their cash compensation

earned for their services with the Company in year 2021, which may be considering pay back later when business improves.

The Company repurchased 80,000

shares respectively, valued from each of CEO Xiaobin Liu, COO Naihui Miao, and CFO Min Li in a privately negotiated transaction

based on the closing price of the stock of $ 3.5931

per share on Wednesday, November 30, 2022.

The Company repurchased 80,000 shares

respectively, valued from each of CEO Xiaobin Liu, COO Naihui Miao, and CFO Min Li in a privately negotiated transaction based on the

closing price of the stock of $ 3.5931 per

share on November 30, 2022.

NOTE 10 – TAXES PAYABLE

21 unchanged sentences

The weighted average remaining operating lease

term at December 31, 2022 was 19.3 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 payments for the years ended

December 31, 2022 and 2021, respectively, were $ 888,692 and $ 848,660 .

term at December 31, 2023 was 18.3 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 payments for the

years ended December 31, 2023 and 2022, respectively, were $ 824,572 and $ 888,692 .

Maturities of lease liabilities were as follows:

26 unchanged sentences

During the year ended December 31, 2023, the Company

granted in the aggregate, 200,000 restricted shares of common stock to a consultant, the company's directors, officers and an employee.

granted in the aggregate, 295,000 restricted shares of common stock to a consultant, the company's directors, officers and an

The restricted shares award were granted under the 2019 Omnibus Equity Incentive Plan (See Note 14) and vested immediately.

The fair value

of the award on the date of grant was $ 668,000 which was expensed in full during the year ended December 31, 2022.

The fair value of the award on the date of grant was $ 451,350 which was expensed in full during the year ended December 31, 2023.

Retained Earnings - Appropriated

2 unchanged sentences

tax to the following reserve:

Statutory Common Reserve Funds

SCHC, SYCI, SHSI and DCHC are required each year

to transfer at least 10% of the profit after tax as reported under the PRC statutory financial statements to the Statutory Common Reserve

Funds until the balance reaches 50% of the registered share capital.

This reserve can be used to make up any loss incurred

or to increase share capital.

Except for the reduction of losses incurred, any other application should not result in this

reserve balance falling below 25% of the registered capital.

The Statutory Common Reserve Fund as of December 31, 2022 for SCHC, SYCI,

SHSI, and DCHC is 17%, 14%, 0% and 0% of its registered capital, respectively.

Statutory Reserve

SCHC, SYCI, SHSI and DCHC are required each

year to transfer at least 10% of the profit after tax as reported under the PRC statutory financial statements to the Statutory

Reserve until the balance reaches 50% of the registered share capital.

This reserve can be used to make up any loss

incurred or to increase share capital.

Except for the reduction of losses incurred, any other application should not

result in this reserve balance falling below 25% of the registered capital.

As at 31 December 2023, GULF RESOURCES 'statutory

provident fund stood at $26.67 million.

NOTE 13 – TREASURY STOCK

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

2021, the number of treasury stock of the Company was 285,830

respectively.

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

NOTE 14 – STOCK-BASED COMPENSATION

Pursuant to the Company’s 2019 Omnibus Equity

Incentive Plan adopted and approved in 2019 (“2019 Plan”), awards under the 2019 Plan is limited in the aggregate to 2,068,398

shares of our common stock, inclusive of the awards that were previously issued and outstanding under the Company’s 2007 Equity

Incentive Plan, as amended (the “2007 Plan”).

Upon adoption and approval of the 2019 Plan, the 2007 Plan was frozen, no new

awards will be granted under the 2007 Plan, and outstanding awards under the 2007 Plan will continue to be governed by the terms and condition

of the 2007 Plan and applicable award agreement.

Incentive Plan adopted and approved in 2019 (“2019 Plan”), awards under the 2019 Plan is limited in the aggregate to 2,068,398 shares

of our common stock, inclusive of the awards that were previously issued and outstanding under the Company’s 2007 Equity Incentive

Plan, as amended (the “2007 Plan”).

Upon adoption and approval of the 2019 Plan, the 2007 Plan was frozen, no new awards will

be granted under the 2007 Plan, and outstanding awards under the 2007 Plan will continue to be governed by the terms and condition of

the 2007 Plan and applicable award agreement.

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

7 unchanged sentences

total compensation costs for options issued recorded in the consolidated statement of comprehensive income (loss) were $ 0 and $ 0 .

were no related tax benefits as a full valuation allowance was recorded in the years ended December 31, 2022 and 2021.

There were no related tax benefits as a full valuation allowance was recorded in the years ended December 31, 2023 and 2022.

NOTE 14 – STOCK-BASED COMPENSATION –

20 unchanged sentences

and exercisable as of December 31, 2023 and 2022 was $ 0 and $ 0 .

15– EXPENDITURE ON WATER POLLUTION TREATMENT

Expenditure on water pollution treatment

The Company had done the flood prevention

project which involved the renovation of the channels of four major rivers within our mining area, encompassing the tributary of the

The aim is to prevent flooding that could harm the wells, aqueducts and crude salt pans at our plant.

incurred total expense of $ 46,510,856 .

As of December 31, 2023, $ 48,384,711

(inclusive of tax) has been paid, and the remaining 5% guarantee will be paid in June 2024.

NOTE 16 – INCOME TAXES

8 unchanged sentences

States of America Tax laws at a tax rate of 21 %.

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

income for the years ended December 31, 2022 and 2021, and management believes that its earnings are permanently invested in the PRC.

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

US taxable income for the years ended December 31, 2023 and 2022, and management believes that its earnings are permanently invested in

British Virgin Islands (“BVI”)

2 unchanged sentences

Upper Class Group Limited did not generate assessable profit for the years ended December 31, 2023 and 2022.

HKJI, a subsidiary of Upper Class Group Limited, was

incorporated in Hong Kong and is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived

from Hong Kong.

No provision for income tax has been made as it has no taxable income for the years ended December 31, 2022

The applicable statutory tax rates for the years ended December 31, 2022 and 2021 are 16.5 %.

There is no dividend

withholding tax in Hong Kong.

HKJI, a subsidiary of Upper Class Group

Limited, was incorporated in Hong Kong and is subject to Hong Kong taxation on its activities conducted in Hong Kong and income

arising in or derived from Hong Kong.

No provision for income tax has been made as it has no taxable income for the years

ended December 31, 2023 and 2022.

The applicable statutory tax rates for the years ended December 31, 2023 and 2022

There is no dividend withholding tax in Hong Kong.

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

13 unchanged sentences

As of December 31, 2023 and 2022, the accumulated

distributable earnings under the Generally Accepted Accounting Principles (GAAP”) of PRC that are subject to WHT are $ 147,686,099

and $ 140,006,862 , respectively.

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

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

distributable earnings under the Generally Accepted Accounting Principles (GAAP”) of PRC that are subject to WHT are $ 87,160,228 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 December 31, 2023 and December 31, 2022, the Company has not recorded any WHT on the cumulative amount of distributable

20 unchanged sentences

Current taxes – PRC

$ ( 322,890 )

Deferred taxes – PRC entities

1 unchanged sentence

( 6,586,985 )

Deferred taxes –US entity

Change in valuation allowance

Income Tax (Expense) Benefit

Total Income tax (expenses) benefits

$ ( 3,538,617 )

4 unchanged sentences

Tax Assets and Liabilities

Deferred tax liabilities

Deferred tax assets:

Allowance for obsolete and slow-moving inventories

Impairment on property, plant and equipment

Impairment on prepaid land lease

Exploration costs

Compensation costs of unexercised stock options

PRC tax losses

5 unchanged sentences

Net deferred tax asset

tax assets consist of future reversals of existing taxable temporary differences and adequate future taxable income, exclusive of reversing

deductible temporary differences.

As of December 31, 2023 and 2022, valuation allowances were mainly provided against deferred tax assets

caused by exploration costs and net operating loss where it was determined it was more likely than not that the benefits of the deferred

tax assets will not be realized due to their continuous losses.

The increase in valuation allowance for the year

9 unchanged sentences

NOTE 17 – BUSINESS SEGMENTS

An operating segment’s performance is primarily

Operating segment’s performance is primarily

evaluated based on segment operating income, which excludes share-based compensation expense, certain corporate costs and other income

9 unchanged sentences

Loss from operations before income tax expense

( 10,005,755 )

( 1,653,349 )

( 11,105,079 )

( 11,890,725 )

Income tax (expense) benefit

( 3,214,629 )

( 3,538,617 )

Loss from operations after

income tax (expense) benefit

( 13,220,384 )

( 1,653,349 )

( 14,643,696 )

( 15,429,342 )

Depreciation and amortization

4 unchanged sentences

Loss from operations before income tax expense

( 1,953,230 )

( 1,624,041 )

Income tax (expense) benefit

( 6,430,926 )

( 6,586,985 )

Loss from operations after

income tax (expense) benefit

( 1,532,804 )

( 1,624,041 )

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.

* 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.

Reconciliations

Total segment operating Profit (loss)

Corporate costs

$ ( 11,105,079 )

Corporate costs

( 1,060,405 )

1 unchanged sentence

Profit (loss) from operations

( 11,890,725 )

Other income, net of expense

Expenditure on water pollution

( 46,510,856 )

Loss before taxes

$ ( 58,256,662 )

The following table shows the major customers

7 unchanged sentences

Shouguang Weidong Chemical Company Limited

Shandong Shouguang Shenrunfa Marine Chemical Company Limited

The following table shows the major customers

9 unchanged sentences

products to a limited number of customers.

During the year ended December 31, 2022, the Company sold 53.6 % of its products to its top

five customers, respectively.

During the year ended December 31, 2023, the Company sold 61.8 % of its products to its

top five customers, respectively.

As of December 31, 2023, amounts due from these customers were $ 2,082,217 .

1 unchanged sentence

products to a limited number of customers.

During the year ended December 31, 2021, the Company sold 64.8 % of its products to its top

five customers, respectively.

During the year ended December 31, 2022, the Company sold 53.6 % of its products to its

top five customers, respectively.

As of December 31, 2022, amounts due from these customers were $ 3,995,134 .

2 unchanged sentences

During the year ended December 31, 2023, the Company

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

As of December 31, 2022, amounts due to those suppliers were

purchased 100 % of its raw materials from its top four suppliers.

As of December 31, 2023, amounts due to those suppliers

were $ 206,984 .

During the year ended December 31, 2022, the Company

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

As of December 31, 2021, amounts due to those suppliers were

NOTE 19 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values of financial instruments,

which consist of cash, accounts receivable and accounts payable and other payables, approximate their fair values due to the short-term

nature of these instruments.

There were no material unrecognized financial assets and liabilities as of December 31, 2022 and

NOTE 20 – CAPITAL COMMITMENT AND OTHER SERVICE

CONTRACTUAL OBLIGATIONS

The following table sets forth the Company’s

contractual obligations as of December 31, 2022:

Capital Commitment and Other Service

Contractual Obligations - Schedule of Contractual Obligations

Property Management Fees

Capital Expenditure

Payable within:

the next 12 months

the next 13 to 24 months

the next 25 to 36 months

the next 37 to 48 months

the next 49 to 60 months

As of December 31, 2022, amounts due to those suppliers

were $ 57,649 .

NOTE 20 – LOSS CONTINGENCIES

78 unchanged sentences

NOTE 21 - SUBSEQUENT EVENT

The Company has analyzed its operations subsequent

to December 31, 2022 and up through March 31, 2022 which is the date these consolidation financial statements were available to be issued,

except as disclosed below, there are no other material subsequent events to disclose in these consolidated financial statements.

Subsequent Event

Company has analyzed its operations subsequent to December 31, 2023 and up through September 27, 2024 which is the date these consolidation

financial statements were available to be issued, except as disclosed below, there are no other material subsequent events to disclose

in these consolidated financial statements.

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 had temporarily stopped production at its bromine facilities during the aforesaid

period and reopened the operating bromine and crude salt factories in February, 2023 as planned.

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 we 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.

of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 25, 2023 to February 20, 2024.

with such notification, the Company had temporarily stopped production at its bromine facilities during the aforesaid period and reopened

the operating bromine and crude salt factories in February, 2024 as planned.

The Company retired some fixed assets

including aqueducts and wells in June ,2024 for total amount approximately $ 29,169,008 , due to (1) the aqueducts with serious water seepage,

potential damage, and easy to cause environmental pollution;

(2) Wells found with reduced water flow, low brine content and high energy

A wholly owned subsidiary of

the Company entered into acquisition agreements with various sellers, pursuant to which the Company agreed to acquire from the sellers

5 parcels of crude salt fields located in Shouguang city Yangkou town for the total of aggregate price of RMB 280,762,000 (approximately

US$ 38,619,257 based on the exchange rate on July 3, 2024) in June 2024.

Shandong Shouguang Vegetable

Industry Group Co., Ltd.

and Shandong Shouguang Vegetable Seed Group Co., Ltd.

owe RMB15.0 million (Approximate $2.12 million) and RMB10.0

million (Approximate $1.41 million) to Shandong Deepin City Investment Emergency Lending Fund, respectively.

A total of nine companies

and individuals provided guarantee to these loans, including Shouguang Haoyuan Chemical Co., Ltd.

and Shouguang Yuxin Chemical Co., LTD.

However, considering the number of guarantors, the total amount of available fund indicated by Shandong Shouguang Vegetable Industry Group

and legal advice, Gulf Resources believes that this guaranteed loan has limited impact on the company.

GULF RESOURCES, INC.

7 unchanged sentences

Condensed Balance Sheets

Parent Company

As of December 31,

11 unchanged sentences

Other payables and accrued expenses

Amounts due to related Party

Amounts due to related parties

Amounts due to group companies

12 unchanged sentences

Treasury stock;

285,830 and 45,830 shares as of December 31, 2022 and December 31, 2021 at cost

( 1,372,673 )

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

Additional paid-in capital

3 unchanged sentences

( 18,053,269 )

( 13,027,289 )

Total Stockholders’ Equity

10 unchanged sentences

( 1,057,893 )

( 3,572,334 )

OTHER EXPENSES

3 unchanged sentences

( 1,057,893 )

( 3,572,334 )

Equity in net Loss of subsidiaries

( 61,014,900 )

LOSS BEFORE INCOME TAXES

( 61,795,279 )

$ ( 61,795,279 )

Condensed Statements of Cash Flows

50 unchanged sentences

and Financial Disclosure.

Previous Independent Accountants

On June 30, 2021, the Company was notified by

Morison Cogen LLP (“MC”) that the firm resigned as the Company’s independent registered public accounting firm, which

resignation was effective on June 30, 2021.

The audit reports of MC on the financial statements

of the Company as of and for the years ended December 31, 2022 and 2021 did not contain any adverse opinion or disclaimer of opinion,

nor was it qualified or modified as to uncertainty, audit scope, or accounting principles.

There were no disagreements with MC on any matter

of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, from the time of MC’s engagement

up to the date of resignation which disagreements that, if not resolved to MC’s satisfaction, would have caused MC to make reference

in connection with its opinion to the subject matter of the disagreement.

None of “reportable events”, as that term is described

in Item 304(a)(1)(v)(A)-(D)of Regulation S-K occurred within the two fiscal years of the Company ended December 31, 2022 and 2021 and

subsequently up to the date of resignation.

The Company provided MC with a copy of this disclosure

before its filing with the SEC, providing MC with the opportunity to furnish the Company with a letter addressed to the SEC containing

any new information, clarification of the Company’s expression of its views, or the respect in which MC does not agree with the

above statements.

A copy of MC’s letter addressed to the SEC dated July 7, 2021 has been filed as an exhibit to the Company’s

Current Report on Form 8-K filed with the SEC on July 7, 2021.

New Independent Accountants

On July 1, 2021, the Company engaged WWC, P.C.

Certified Public Accountants (“WWC”) to serve as its independent auditor.

The decision to engage WWC as the Company’s

principal independent accountant was approved by the Audit Committee of the Company on July 1, 2021.

During the two fiscal years of the

Company ended December 31, 2020 and 2019, and through the date of WWC’s engagement, the Company did not consult WWC regarding either:

(i) the application of accounting principles to a specified transaction (either completed or proposed), or the type of audit opinion that

might be rendered on the Company’s financial statements;

or (ii) any matter that was either the subject of a “disagreement”

or “reportable event” within the meaning set forth in Regulation S-K, Item 304 (a)(1)(iv) or (a)(1)(v).

On April 16, 2024, WWC, P.C.

Certified Public Accountants (“WWC”)

was dismissed as our independent registered public accounting firm, effective immediately.

The decision to dismiss WWC as the Company’s

principal independent accountant was approved by the Audit Committee of the Board of Directors of the Company on April 16, 2024.

WWC’s reports on our consolidated financial statements for the

fiscal years ended December 31, 2023 and 2022 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or

modified as to uncertainty, audit scope or accounting principles.

During the two most recent fiscal years ended December 31, 2023 and

2022, and the subsequent interim period through April 16, 2024, there were no disagreements with WWC on any matter of accounting principles

or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction

of WWC, would have caused WWC to make reference to the subject matter of the disagreements in connection with its reports on our consolidated

financial statements for such years.

Also during this time, there were no “reportable events,” as defined in Item 304(a)(1)(v)

of Regulation S-K.

We provided WWC with a copy of the above disclosures and requested

that WWC furnish the Company with a letter addressed to the SEC stating whether or not it agrees with the statements made above.

of WWC’s letter dated April 16, 2024 was attached as Exhibit 16.1 to a Current Report on Form 8-K that was filed by us with the

SEC on April 16, 2024.

On April 16, 2024, we engaged GGF CPA LIMITED (“GGF”) as

our independent registered public accounting firm for the fiscal year ending December 31, 2023, effective immediately.

During the fiscal

years ended December 31, 2023 and 2022 and through April 16, 2024, neither we nor anyone on its behalf consulted with GGF regarding (i)

the application of accounting principles to any specified transaction, either completed or proposed or the type of audit opinion that

might be rendered on our consolidated financial statements, and neither a written report nor oral advice was provided to us that GGF concluded

was an important factor considered by us in reaching a decision as to any accounting, auditing, or financial reporting issue, or (ii)

any matter that was either the subject of a “disagreement,” as defined in Item 304(a) (1)(iv) of Regulation S-K, or a “reportable

event,” as defined in Item 304(a)(1)(v) of Regulation S-K.

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-K

Item 8. Financial Statements and Supplementary Data