Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures”,
as such term is defined under Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our
Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms,
and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls
and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives and in reaching a reasonable level of assurance our management necessarily
was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have carried out
an evaluation as required by Rule 13a-15(d) under the supervision and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of
December 31, 2023. Based upon their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December
31, 2023, the Company’s disclosure controls and procedures were effective.
41
The Company’s management took all necessary
steps to make its disclosure controls to be more efficient by, including, not limited to, (i) more closely monitoring the application
of the Company’s comprehensive disclosure policy implementing procedures to strengthen disclosure controls, (ii) enhancing the identification,
analysis and control of risks relevant to accurate and timely disclosure, and (iii) ensuring more timely transmission of information and
communication within the organization during 2023. Specifically, (i) the Company held weekly meetings with its business units heads and
investor relations officers to identify and discuss information that may require public disclosure; (ii) the Company’s management
required all business units to report information that may require public disclosure to the Company’s investor relations officers
immediately; (iii) the Company’s management consulted with the Company’s outside securities counsel to the extent they deemed
necessary; (iv) the Company’s management designated the Company’s investor relations officers as disclosure coordinator to
perform functions of collecting information, preparing disclosure, distributing disclosure for review and comment to business units and
obtaining comment from each reviewing person and their confirmation that the portions of such disclosure relevant to such person’s
areas of responsibility were fairly and accurately presented and did not omit any material information required to be disclosed.
(b) Management’s Report on Internal
Control over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).
Internal control over financial reporting refers to the process designed by, or under the supervision of, our principal executive officer
and principal financial officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles, and includes those policies and procedures that:
(1)
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
(2)
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and
(3)
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on the financial statements.
Internal control over financial reporting cannot
provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial
reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from
human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because
of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control
over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is
possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing
and maintaining adequate internal control over financial reporting for the company.
42
Management has used the framework set forth in
the report entitled Internal Control—Integrated Framework published by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework), known as COSO, to evaluate the effectiveness of our internal control over financial reporting.
A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Based on such evaluation,
our CEO and CFO have concluded that, as of December 31, 2023, our internal controls over financial reporting were effective.
This annual report does not include an
attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s
report was not subject to attestation by our registered public accounting firm pursuant to the Dodd Frank Wall Street Reform and
Consumer Protection Act, which permits us to provide only management’s report in this annual report.
(c) Changes in internal controls
Other than as described in (b) above, there were
no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during
our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Item 9B. Other Information.
None .
Item 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections.
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The following table sets forth certain information
about our executive officers and directors as of the date of this Annual Report.
Name
Age
Position/Title
Has served as company director since
Xiaobin Liu
56
Chairman, Chief Executive Officer and Director
March 2009
Naihui Miao
56
Secretary, Chief Operating Officer and Director
January 2006
Min Li
47
Chief Financial Officer
N/A
Yibo Yang
45
Director
November 2023
Yang Zou (1)(3)
53
Independent Director
March 2011
Shengwei Ma (1)(2)
56
Independent Director
December 2019
Shitong Jiang (1)(2)(3)
56
Independent Director
April 2008
Dongshan Wang (2)(3)
58
Independent Director
November 2023
(1) Serves as a member of the Audit Committee.
(2) Serves as a member of the Compensation Committee.
(3) Serves as a member of the Nominating and Corporate
Governance Committee.
43
Xiaobin Liu , Chaiman,Chief Executive
Officer and Director – Mr. Liu has served as Chairman of the Board of Directors of the Company since November 2023. Mr.
Liu was appointed as Chief Executive Officer and Director on March 10, 2009. Mr. Liu joined the Company as Vice President in December
2007. He has served as the Director of Sanya Kangyangnian Health Management Co. LTD since March, 2021. He has served as Chairman of Chengdu
Philosopher's Stone Culture Media Co. LTD since August 2018. He served as Chairman of China Shouguang Vegetable Industry Group (Cayman)
Inc. from 2011 to 2017. He currently serves as a director of China Shouguang Vegetable Industry Group (Cayman) Inc. Before he joined the
Company, Mr. Liu served as project manager of Shenzhen Guangshen Accounting Firm from January 2007 to November 2007; the department manager
of Hainan Zhongou Accounting Firm from January 2003 to December 2006; the CFO (equivalent of Vice President) of Dasheng Real Estate Development
Company, which is the subsidiary of Saige Dasheng Co., Ltd from May 2002 to November 2002; the CFO of Shenzhen Securities Department of
Hainan Saige International Trust Investment Company from May 2000 to August 2004; and the financial manager of Hainan Wanquanyuan Hot
Spring Tourism Development Co., Ltd from 1995 to 2000. During this time, he also was the CFO of Qionghai City Guantang Hotspring Leisure
Center, the CFO of Qionghai City Wanquanhe Agricultural Development Co., Ltd, the CFO of Qionghai Wanquanhe Hotspring Tourist Development
Property Management Co., Ltd, and the CFO of Qionghai Guantangyuzhuang Resort Co., Ltd. Prior to that, Mr. Liu worked in the financial
department of Hainan Jinyuan Industrial Co., Ltd, which is a subsidiary of Chinese Black Metal Limited Company Northwest Branch from 1992
to 1995, and the financial department of Shanxi Aircraft Manufacturing Company from 1988 to 1992. Mr. Liu earned a master degree
from the Economic and Management School at Hong Kong City University.
Naihui
Miao, Secretary, Chief Operating Officer and Director – Since January 2006, Mr. Miao has served as Director
and Secretary and, since July 2009, Chief Operating officer， of the Company and he is in charge of sales, human resource
and business management. From 2005 to 2006, Mr. Miao served as Vice President of Shouguang City Yuxin Chemical Company Limited
as the deputy general manager. From 1991 to 2005, Mr. Miao served as a Manager and then Vice President of Shouguang City Commercial
Trading Center Company Limited. He was the director of Shouguang Business Trade Center since 1986. He has served as Supervisor
of Chengdu Philosopher's Stone Culture Media Co. LTD since August 2018.
Yibo Yang, director – Mr. Yang
has served as a director of the Company since November 2023. Mr. Yang has worked at Shouguang Haoyuan Chemical Co., Ltd. since 2009 and
currently serves as the deputy general manager of Shouguang Haoyuan Chemical Co., Ltd. Mr. Yang is a 18% shareholder of Shandong Haoyuan
Industrial Group. Since December 2020, Mr. Yang has served as the deputy general manager of Shandong Haoyuan Industrial Group. Since July
2023, Mr. Yang has served as the executive director and the managing director for Shouguang City Yuxin Chemical Company Limited. Since
June 2023, Mr. Yang has served as the supervisor of Shandong Caiting Lighting Technology Co., Ltd. Mr. Yang holds a Diploma in economic
management from Shandong University of Technology.
Yang Zou , Independent Director
– Mr. Zou has served as a director of the Company since March 2011. Mr. Zou served as Vice Director of Beijing Zhongtianhuamao
Accounting Firm (General Partnership) from July 1, 2017 to August 2018. He is a Certified Public Accountant of China and holds
the certificate of Certified Internal Auditor. From March 2003 to September 2009, Mr. Zou was chief financial officer of Bohua
Ziguang Zhiye Co., Ltd. From July 2001 to January 2003, Mr. Zou was the audit department manager of financial center of Beijing
Hengji Weiye Electronic Products Co., Ltd., where he was in charge of internal audit, financial budget management, and coordination with
external audit. From July 1999 to June 2001, Mr. Zou was manager of finance and audit department of Zhonglian Online Information Development
Co., Ltd. From September 1993 to June 1999, Mr. Zou had served as assistant auditor, auditor, and head of project audit of Hainan Zhongou
Certified Public Accountants Co., Ltd. From July 1991 to August 1993, Mr. Zou was an accountant of department of finance of Hunan Department
Store Co., Ltd. Mr. Zou graduated from Beijing University with bachelor’s degree in finance.
Shitong Jiang, Independent Director – Mr.
Jiang has served as a director of the Company since April 2008. Mr. Jiang is Chief of the Shouguang City Audit Bureau, Shandong
Province, has been with the Audit bureau since 1990. During his career at the Shouguang City Audit Bureau he has held multiple positions
including, Auditing Officer and Audit Section Deputy Chief. The Shouguang City Audit Bureau is responsible for the independent audit supervision
of the affairs of the government. From 1987 to 1990 Mr. Jiang attended Shandong Financial Institution.
Dongshan Wang, Independent Director – Mr.
Yang has served as a director of the Company since November 2023. Mr. Wang has served as the vice president and the chief financial officer
of Central China Headquarters of Anliang Holding Group since April 2018. Mr. Wang is an International Certified Public accountant, and
he holds a national Chief accountant (CFO) qualification certificate. Mr. Wang graduated from Zhengzhou College of Light Industry majored
in financial management in 1988.
Shengwei Ma , Independent Director
– Mr. Ma has served as a director of the Company since December 2019. Mr. Ma has served as Department Manager of Shouguang
City Urban Construction and Investment Group since March 2012. Mr. Ma holds a Senior Accountant Certificate. Mr. Ma graduated
from Central Broadcasting and Television University with bachelor’s degree in accounting in 2004.
44
Executive Officers and Significant Employees
Min Li, Chief Financial Officer – was
appointed a director of the Company on October 30, 2007 and resigned from the position on June 22, 2009. He has served as Chief
Financial Officer since December 2006 and as Chief Financial Officer for Shouguang City Haoyuan Chemical Company Limited. From 2004 to
2006, Mr. Li served as Manager of Financial and Asset Management Department for Shouguang City Yuxin Chemical Company Limited. From 2000
to 2004, Mr. Li served as Manager of the Accounting Department for the Yang Kou Branch of the China Construction Bank. From
1998 to 1999, Mr Li worked at China Construction Bank Shandong branch and in 2000 Mr. Li worked at the Yangkou Office as the accounting
manager. Mr. Li has a bachelor degree in accounting from Weifang College.
Family Relationships
There are no family relationships among our executive
officers, directors and significant employees.
Involvement in Certain Legal Proceedings
To the best of our knowledge, there have been
no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation
of the ability and integrity of any director, executive officer, promoter or control person of our Company during the past ten years.
Board of Directors
All directors hold office until the next annual
meeting of shareholders and until their successors have been duly elected and qualified. Directors are elected at the annual meetings
to serve for one-year terms. Officers are elected by, and serve at the discretion of, the board of directors. Our board of directors shall
hold meetings on at least a quarterly basis.
As a Nasdaq listed company, we comply with the
NASDAQ Listing Rules with respect to certain corporate governance matters. As a smaller reporting company, under the NASDAQ rules we are
required to maintain a board of directors comprised of a majority of independent directors, and an audit committee of at least three members,
comprised solely of independent directors who also meet the requirements of Rule 10A-3 under the Securities Exchange Act of 1934.
Director Independence
The Board of Directors has determined that
Yang Zou, Shitong Jiang, Dongshan Wang and Shengwei Ma are independent under Rule 5605(a)(2) of the NASDAQ Listing Rules. In making
this determination, our board of directors considered the relationships that each of these non-employee directors has with us and
all other facts and circumstances our board of directors deemed relevant in determining their independence. As required under
applicable NASDAQ rules our independent directors will meet on a regular basis as often as necessary to fulfill their
responsibilities, including at least annually in executive session without the presence of non independent directors and management.
In addition, under applicable rules and regulations, and as determined by the Board, all of the members of the Audit, Compensation,
and Nominating and Corporate Governance Committees are “independent” directors.
45
Board Committees
Our board of directors has established standing
committees in connection with the discharge of its responsibilities. These committees include an Audit Committee, a Compensation Committee
and a Corporate Governance and Nominating Committee. Our board of directors has adopted written charters for each of these committees.
Copies of the charters are available on our website at www.gulfresourcesinc.com. Our board of directors may establish other committees
as it deems necessary or appropriate from time to time.
Board Operations
The positions of principal executive officer and
Chairman of the Board of Company are held by different persons. The Chairman of the Board chairs Board and stockholder meetings
and participates in preparing their agendas. The Chairman of the Board also serves as a focal point for communication between
management and the Board between Board meetings, although there is no restriction on communication between directors and management. The
Company believes that these arrangements afford the directors sufficient resources to supervise management effectively, without being
overly engaged in day-to-day operations.
The Board plays an active role, as well as the
independent committees, in overseeing the management of the Company’s risks. The Board regularly reviews reports from members of
senior management and committees on areas of material risk to the Company, including operational, financial, legal, strategic and regulatory
risks.
Audit Committee
The Board of Directors has standing audit, compensation,
and nominating committees, comprised solely of independent directors. Each committee has a charter, which is available at Company’s
website, www.gulfresourcesinc.com.
Audit Committee
The Audit Committee is responsible for reviewing
the results and scope of the audit, and other services provided by our independent auditors, and reviewing and evaluating our system
of internal controls. Mr. Jiang is the Audit Committee Financial Expert as defined in Item 407(d)(5) of Regulation S-K promulgated under
the Securities Act, and the chair of the Audit Committee. Our Board of Directors has determined that Messrs. Jiang, Zou and Ma are “independent
directors” within the meaning of Rule 10A-3 under the Exchange Act, as determined based upon the criteria for “independence”
set forth in the rules of the NASDAQ Stock Market.
Compensation Committee
The Compensation Committee is responsible for
(a) reviewing and providing recommendations to the Board of Directors on matters relating to employee compensation and benefit plans,
and (b) assisting the Board in determining the compensation of the Chief Executive Officer and making recommendations to the Board with
respect to the compensation of the Chief Financial Officer, other executive officers of the Company and independent directors. Each of
Dongshan Wang, Shitong Jiang and Shengwei Ma are members of the Compensation Committee. The Compensation Committee operates under a written
charter. Mr. Wang is the Chairman of Compensation Committee.
46
Nominating and Corporate Governance Committee
Our Board of Directors established a Nominating
and Corporate Governance Committee in June 2009. The purpose of the Nominating and Corporate Governance Committee is to assist our Board
of Directors in identifying qualified individuals to become board members, in determining the composition of the Board of Directors and
in monitoring the process to assess board effectiveness. Each of Dongshan Wang, Shitong Jiang and Yang Zou are members of the Nominating
and Corporate Governance Committee. The Nominating and Corporate Governance Committee operates under a written charter. Mr. Jiang is the
Chairman of Nominating and Corporate Governance Committee.
Material Changes to the Procedures by which
Security Holders May Recommend Nominees to the Board
We do not currently have a procedure by which
security holders may recommend nominees to the Board.
Director Qualifications
The Company seeks directors with established strong
professional reputations and experience in areas relevant to the strategy and operations of our businesses. The Company also seeks directors
who possess the qualities of integrity and candor, who have strong analytical skills and who are willing to engage management and each
other in a constructive and collaborative fashion, in addition to the ability and commitment to devote time and energy to service on the
Board and its committees. We believe that all of our directors meet the foregoing qualifications.
The Nominating and Corporate Governance Committee
and the Board believe that the leadership skills and other experience of the Board members, as described below, provide the Company with
a range of perspectives and judgment necessary to guide our strategies and monitor their execution.
Xiaobin Liu was appointed as
Chief Executive Officer and Director on March 10, 2009, and as Chairman of the Board of Directors of the Company on November 30, 2023.
Mr. Liu has years of experience in capital markets, financial and business management, and strategic planning and development.
Naihui
Miao Since January 2006, Mr. Miao has served as Director, Secretary and Vice President of the Company. He is in charge of sales,
human resource and business management. Mr. Miao has years of experience in the chemical industry, business operations and management,
and strategic planning and development..
Yibo Yang was elected as a director on November 30, 2023.
Mr. Yang has been in the chemical industry for more than ten years. Mr. Yang is expected to contribute the Board’s vision for the
development of the Company.
Yang Zou was appointed as a Director
on March 2, 2011. Mr. Zou has served as the Vice Director of Beijing Zhongtianhuamao Accounting Firm (General Partnership) since July 1,
2016. He is a Certified Public Accountant and holds the certificate of Certified Internal Auditor. Mr. Zou has extensive experience
in auditing and accounting related matters.
Shitong Jiang was appointed as a Director
on April 23, 2008. Mr. Jiang is Chief of the Shouguang City Audit Bureau, Shandong Province. He has been with the audit bureau
since 1990. Mr. Jiang has many years of auditing and management experience with PRC government departments.
47
Donghshan Wang was elected as a Director
of the Company, and joined the Compensation Committee and the Nominating and Corporate Governance Committee, on November 30,2023. Mr.
Whang has vast experience in management, finance, and accounting related matters.
Shengwei Ma was appointed as a Director
on December 18, 2019. Mr. Ma holds a Senior Accountant Certificate. Mr. Ma has extensive experience in financial, accounting and management
related matters.
Code of Ethics
The Board has adopted a code of ethics applicable
to Company’s directors, officers, and employees. The code of ethics is available at Company’s website, www.gulfresourcesinc.com.
Board Meetings
The Board of Directors and its committees held the following
number of meetings during 2023:
Board of Directors
3
Audit Committee
4
Compensation Committee
1
Nominating Committee
1
48
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange Act of
1934 requires Company’s directors and executive officers and any beneficial owner of more than 10% of any class of Company equity
security to file reports of ownership and changes in ownership with the Securities and Exchange Commission and furnish copies of the reports
to Company. Based solely on the Company’s review of copies of such forms and written representations by the Company’s
executive officers and directors received by it, the Company believes that during 2023, all such reports were filed timely.
Board Diversity Matrix
The table below provides information regarding
certain diversity attributes of our directors as of the date of this Annual Report, with categories as set forth by Nasdaq Listing Rule
5605(f).
Board Diversity Matrix
Total Number of Directors:
7
Part I: Gender Identity
Female
Male
Non-Binary
Did Not Disclose Gender
Directors
7
Part II: Demographic Background
African American or Black
Alaskan Native or American Indian
Asian
7
Hispanic or Latinx
Native Hawaiian or Pacific Islander
White
Two or More Races or Ethnicities
LGBTQ+
Did Not Disclose Demographic Background
We recognize the value of
diversity at the Board level and believe that our Board currently comprises an appropriate mix of background, diversity and expertise.
In particular, our directors, overall, have significant experience in a variety of industries and sectors, including, among others, the
chemical industry, the financial industry, and political operations. Although we have no formal separate written policy, our Nominating
and Corporate Governance Committee is required under its charter to recommend nominees that ensure sufficient diversity of backgrounds
on our Board. We believe that the diversity of our directors enriches our Board by encouraging fresh perspectives and bringing new and
valuable insights to the Board.
Item 11. Executive Compensation
Set forth below is information regarding the compensation
paid during the year ended December 31, 2022 and 2023 to our principal executive officer and principal financial officer, who are collectively
referred to as “named executive officers” elsewhere in this Annual Report.
FISCAL YEAR 2023 COMPENSATION TABLE
Name and Principal Position
Year
Salary ($)
Bonus($)
Stock
Awards($)
Option Awards$(1)
Non-Equity Incentive Plan Compensation ($)
Nonqualified Deferred Compensation Earnings
($)
All Other Compensation ($)
Total ($)
Xiaobin Liu
2022
—
—
66,800
(1)
—
—
—
—
66,800
CEO
2023
—
—
61,200
(1)
—
—
—
—
61,200
Min Li
2022
17,230
—
66,800
(1)
—
—
—
—
84,030
CFO
2023
16,943
—
61,200
(1)
—
—
—
—
78,143
Naihui Miao
2022
17,230
—
66,800
(1)
—
—
—
—
84,030
COO
2023
16,943
—
61,200
(1)
—
—
—
—
78,143
(1) Represents the dollar amount recognized for
financial statement reporting purposes in accordance with Financial Accounting Standards Board Accounting Standards Codification (FASB
ASC) 718 – “Compensation - Stock Compensation.”
Except as disclosed below under the caption “Compensation
of Directors,” we have not paid or accrued any fees to any of our executive directors for serving as a member of our Board of Directors.
We do not have any retirement, pension, profit sharing or insurance or medical reimbursement plans covering our officers and directors.
Our executive officers are reimbursed by us for any out-of-pocket expenses incurred in connection with activities conducted on our behalf.
There is no limit on the amount of these out-of-pocket expenses and there will be no review of the reasonableness of such expenses by
anyone other than our Board of Directors, which includes persons who may seek reimbursement, or a court of competent jurisdiction if such
reimbursement is challenged.
49
Grants of Plan-Based Awards
The Company granted 100,000 shares of our Common
Stock to each of our named executive officers, under Company’s 2019 Omnibus Equity Incentive Plan, as amended, during fiscal year
2023.
FISCAL
YEAR 2023 GRANTS OF PLAN-BASED AWARDS
Estimated
Future Payouts
Under Non-Equity
Incentive Plan Awards
Estimated
Future Payouts
Under Equity Incentive
Plan Awards
All Other Stock Awards: Number
of Shares of
Option Awards: Number of
Securities
Exercise or Base Price of
Grant Date Fair
Value of Stock
Name
Grant
Date
Threshold
Target
Maximum
Threshold
Target
Maximum
Stocks
or Units
Underlying
Options
Option
Award($)
and
Options ($)
Xiaobin
Liu,
CEO
Dec
27,2023
—
—
—
—
—
—
40,000
—
—
61,200
Min
Li,
CFO
Dec
27,2023
—
—
—
—
—
—
40,000
—
—
61,200
Naihui
Miao,
COO
Dec
27,2023
—
—
—
—
—
—
40,000
—
—
61,200
Narrative Discussion
The following employment agreements were entered
into by the Company and the named executive officers:
Xiaobin Liu
The employment agreement for
Xiaobin Liu to serve as Chief Executive Officer of the Company was renewed on June 1, 2022 with a term of three years. Xiaobin Liu is
also a member of the Board of Directors. Pursuant to the agreement, Mr. Liu’s service shall be compensated in the Company's shares
only under the Company’s equity incentive plan.
Min Li
The employment agreement for
Min Li to serve as Chief Financial Officer of the Company was renewed on January 1, 2024 with a term of one year. Pursuant to the agreement,
Mr. Li shall receive annual cash compensation equal to approximately $18,500 subject to changes in the foreign exchange rate and market
conditions and be compensated in the Company’s shares under the Company’s equity incentive plan.
Naihui Miao
The employment agreement for
Naihui Miao to serve as Chief Operating Officer of the Company was renewed on June 1, 2022 with a term of three years. Mr. Miao is also
a member of the Board of Directors. Pursuant to the agreement, Mr. Miao shall receive annual cash compensation equal to approximately
$18,500 subject to changes in the foreign exchange rate and market conditions, and be compensated in the Company’s shares under
the Company’s equity incentive plan.
50
In addition, each of our named executive officers
is entitled to participate in any and all benefit plans from time to time, in effect for employees, along with vacation, sick and holiday
pay in accordance with policies established and in effect from time to time.
Assuming the employment of the Company’s
named executive officers was to be terminated without cause or for good reason or in the event of change in control, as of December 31,
2023, the following individuals would have been entitled to payments in the amounts set forth opposite to their name in the below table:
Name
Cash Payment
Xiaboin Liu
$
0
Min Li
$
0
Naihui Miao
$
0
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth, for each named
executive officer, information regarding unexercised stock options, unvested stock awards, and equity incentive plan awards outstanding
as of December 31, 2023.
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR
END
OPTION AWARDS
STOCK AWARDS
Name
Number of Securities Underlying Unexercised Options
(#) Exercisable
Number of Securities Underlying Unexercised Options
(#) Unexercisable
Equity Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options (#)
Option Exercise Price ($)
Option Expiration Date
Number of Shares or Units of Stock That Have Not Vested
(#)
Market Value of Shares or Units of Stock That Have Not
Vested ($)
Equity Incentive Plan Awards: Number of Unearned Shares,
Units or Other Rights That Have Not Vested (#)
Equity Incentive Plan Awards: Market or Payout Value
of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Xiaobin Liu, CEO
—
—
—
—
—
0
(1)
—
—
—
Min Li, CFO
—
—
—
—
—
0
(1)
—
—
—
Naihui Miao, COO
—
—
—
—
—
0
(1)
—
—
—
(1) Represents the
shares of Common Stock granted, which are subject to the Awardee’s continued service with the Company, the shares of Restricted
Stock shall vest immediately, no longer be subject to restrictions and become transferable pursuant to the terms of the Plan.
51
Option Exercises and Stock Vested
The following table sets forth aggregate information
with respect to each named executive officer regarding the exercise of stock options, stock appreciation rights, and similar instruments
and the vesting of restricted stock, restricted stock units and similar instruments, for fiscal year 2023.
FISCAL YEAR 2023 OPTION EXERCISES AND STOCK VESTED
OPTION AWARDS
STOCK AWARDS
Name
Number of Shares Acquired on Exercise (#)
Value Realized on Exercise ($)
Number of Shares Acquired on Vesting (#)
Value Realized on Vesting ($)
Xiaobin Liu, CEO
—
—
40,000
61,200
Min Li, CFO
—
—
40,000
61,200
Naihui Miao, COO
—
—
40,000
61,200
Compensation Committee Interlocks and Insider
Participation
We are a smaller reporting company as defined
by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Compensation of Directors
The following table sets forth information regarding
compensation of each director, excluding our executive directors, Xiaobin Liu and Naihui Miao, who do not receive compensation in their
capacity as executive directors, for fiscal year 2023.
FISCAL YEAR 2023 DIRECTOR COMPENSATION
Name
Fees Earned or Paid in Cash ($)
Stock
Awards
($)(1)
Option
Awards
$
Non-Equity Incentive Plan Compensation
($)
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)
All Other Compensation
($)
Total ($)
Ming Yang
$
—
—
—
—
—
—
$
—
Yibo Yang
10,049
—
—
—
—
—
10,049
Shitong Jiang
—
1,530
—
—
—
—
1,530
Yang Zou
—
1,530
—
—
—
—
1,530
Tengfei Zhang
—
—
—
—
—
—
—
Shengwei Ma
—
1,530
—
—
—
—
1,530
Dongshan Wang
1,530
1,530
(1) Represents the dollar amount recognized for
financial statement reporting purposes in accordance with FASB ASC 718 – “Compensation – Stock Compensation.”
52
Pursuant to the terms of their director agreements,
each of our independent directors, receive 1,000 shares of our restricted common stock on an annual basis. The grant of restricted common
stock is contingent upon the director’s continued service with the Company. We do not pay any cash compensation to the independent
directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
The following table sets forth certain information regarding beneficial
ownership of Common Stock, as of the date of this annual report, by each of Company’s directors and executive officers; all executive
officers and directors as a group, and each person known to Company to own beneficially more than 5% of Company’s Common Stock.
Except as otherwise noted, the persons identified have sole voting and investment powers with respect to their shares. As of
the date of this annual report, there were 10,726,924 shares of the Company’s Common Stock outstanding.
Name of Beneficial Owner (1)
Number of Shares
Percent of Class
Xiaobin Liu (CEO and Chairman)
58,115
(2
)
*
Yibo Yang (Director)
—
—
Min Li (CFO)
58,115
(2
)
*
Naihui Miao (COO)
58,115
(2
)
*
Shengwei Ma (Director)
2,000
(3
)
*
Yang Zou (Director)
4,000
(4
)
*
Shitong Jiang (Director)
4,000
(5
)
*
Dongshan Wang (Director)
1,000
(6
)
*
All Directors and Executive Officers as a Group (eight persons)
184,345
1.7
%
Wenxiang Yu
1,015,945
(7
)
9.5
%
Shandong Haoyuan Industry Group Ltd.
824,947
(7
)
7.7
%
Ming Yang
1,985,675
(8
)
18.5
%
_____________
* Less than 1%.
(1) The address of each director and executive
officer is c/o Gulf Resources, Inc., Level 11, Vegetable Building, Industrial Park of the East City, Shouguang City, Shandong Province,
262700, the People’s Republic of China.
(2) Consists of 58,115 shares held by each individual.
(3) Consists of 2,000 shares held by Mr. Ma.
(4) Consists of 4,000 shares held by Mr. Zou.
(5) Consists of 4,000 shares held by Mr.
Jiang.
(6) Consists of 1,000 shares held by Mr. Wang.
(7) The address of the shareholder is c/o Gulf
Resources, Inc., Level 11, Vegetable Building, Industrial Park of the East City, Shouguang City, Shandong Province, 262700, the People’s
Republic of China. Chen Yang serves as the General Manager, and owns 82% equity interest, of Shandong Haoyuan Industry Group Ltd.
(8) Consists of 634,770 shares owned by Ming Yang,
1,015,945 shares owned by Ms. Wenxiang Yu, the wife of Mr. Yang, 334,960 shares owned by Mr. Zhi Yang, Mr. Yang’s son. Mr.
Yang disclaims beneficial ownership of the shares owned by his wife and son.
53
Item 13. Certain Relationships and Related Transactions, Director
Independence
Certain Relationships and Related Transactions
Our policy is that a contract or transaction either
between the Company and a director, or between a director and another company in which he is financially interested is not necessarily
void or void-able if the relationship or related party transactions are approved or ratified by the Audit Committee.
For details of the related transactions, see “Notes
to Consolidated Financial Statements, Note 9 – Related Party Transactions” contained in this Annual Report.
Procedures for Approval of Related Party Transactions
Our Board of Directors is charged with reviewing
and approving all potential related party transaction whether or not such transactions exceed $120,000. We have not adopted other procedures
for review, or standards for approval, of such transactions, but instead review them on a case-by-case basis.
Item 14. Principal Accounting Fees and Services
Audit Fees
Our independent
public accounting firm is GGF CPA LTD. , Level 3, Shop 119 No. 20, Jingang Avenue, Nansha District, Guangzhou, Guangdong , PCAOB Auditor
ID 2729 .
The aggregate fees billed to the Company by its
principal accountant for the last two fiscal years were as follows:
Fees
2022
2023
Audit Fees
$
170,000
$
188,000
Audit Related Fees
—
—
Tax Fees
$
5,500
—
All Other Fees
—
—
Total
175,500
188,000
This category
consists of fees for the audit of our annual financial statements, review of the financial statements included in our quarterly reports
on Form 10-Q and services that are normally provided by the independent registered public accountants in connection with statutory and
regulatory filings or engagements for those fiscal years.
Audit Fees
This category consists of fees for the audit of
our annual financial statements, review of the financial statements included in our quarterly reports on Form 10-Q and services that are
normally provided by the independent registered public accountants in connection with statutory and regulatory filings or engagements
for those fiscal years.
54
Audit-Related Fees
This category consists of services by our independent
auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above
under Audit Fees. This category includes accounting consultations on transaction and proposed transaction related matters. There were
no such fees incurred by the Company in the years ended December 31, 2023 and 2022.
Tax Fees
The tax fee of $nil and $5,500 relate to tax compliance
services rendered in each of the years ended December 31, 2023 and 2022.
All Other Fees
There are no other fees to disclose.
Pre-Approval of Services
The Audit Committee appoints the independent accountant
each year and pre-approves the audit services. The Audit Committee chair is authorized to pre-approve specified non-audit services
for fees not exceeding specified amounts, if he promptly advises the other Audit Committee members of such approval.
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) Financial Statements and Schedules
(1)
Financial Statements – The financial statements filed as part of this filing are listed on the index to the Financial Statements and Supplementary Data, Item 8 of Part II, on page F-1.
(2)
Financial Statement Schedules – “Schedule I – Parent Only Financial Information” filed as part of this filing is listed on the Financial Statements and Supplementary Data, Item 8 of Part II, on pages S-1 and S-2. All other financial statement schedules have been omitted because they are not applicable, or the information required is set forth in the Consolidated Financial Statements or related notes thereto.
(b) Exhibit Index
2.1
Agreement and Plan of Merger dated December 10, 2006, among the Registrant, DFAX Acquisition vehicle, Inc., Upper Class Group Limited and the shareholders of UCG, incorporated herein by reference to Exhibit 10 to the Registrant’s Current Report on Form 8-K filed on December 12, 2006.
2.2
Share Exchange Agreement among the Registrant, Upper Class Limited, Shouguang Yuxin Chemical Industry Company Limited and shareholders of Shouguang Yuxin Chemical Industry Company Limited, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 9, 2007.
2.3
Agreement and Plan of Merger dated November 24, 2015, incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on December 1, 2015.
3.1
Articles of Incorporation of Gulf Resources Inc., incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 1, 2015.
3.2
Bylaws of Gulf Resources Inc., incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on December 1, 2015.
3.4
Certificate of Amendment to Articles of Incorporation, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on January 28, 2020.
4.1
Description of Securities, incorporated herein by reference to Exhibit 4.1 to the Registration’s Annual Report on Form 10-K filed on April 14, 2020.
55
10.1
Taiwan Island Ecological Culture City Project Demolition Compensation Agreement for Factory #6, dated November 25, 2016, incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on November 29, 2016.
10.2
Stock Repurchase Agreement dated as of November 30, 2022 by and between the Company and Xiaobin Liu, incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on December 1, 2022.
10.3
Stock Repurchase Agreement dated as of November 30, 2022 by and between the Company and Min Li, incorporated by reference to Exhibit 10.2 to the Registrant’s current report on Form 8-K, filed on December 1, 2022.
10.4
Stock Repurchase Agreement dated as of November 30, 2022 by and between the Company and Naihui Miao, incorporated by reference to Exhibit 10.3 to the Registrant’s current report on Form 8-K, filed on December 1, 2022.
10.5
Crude Salt Field Acquisition Agreement dated as of June 26, 2024, by and between Shouguang Hengde Salt Industry Co. Ltd and Shouguang Qingshuibo Farm Co., LTD., incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on July 2, 2024.
10.6
Crude Salt Field Acquisition Agreement dated as of June 27, 2024, by and between Shouguang Hengde Salt Industry Co. Ltd and Shouguang city Yangkou town Dingjia Zhuangzi village stock economic cooperative, incorporated by reference to Exhibit 10.2 to the Registrant’s current report on Form 8-K, filed on July 2, 2024.
10.7
Crude Salt Field Acquisition Agreement dated as of June 27, 2024, by and between Shouguang Hengde Salt Industry Co. Ltd and Shouguang city Yangkou town Shanjia Zhuangzi village stock economic cooperative, incorporated by reference to Exhibit 10.3 to the Registrant’s current report on Form 8-K, filed on July 2, 2024.
10.8
Crude Salt Field Acquisition Agreement dated as of June 27, 2024, by and between Shouguang Hengde Salt Industry Co. Ltd and Shouguang City Yangkou town Zhengjia Zhuangzi village stock economic cooperative, incorporated by reference to Exhibit 10.4 to the Registrant’s current report on Form 8-K, filed on July 2, 2024.
10.9
Crude Salt Field Acquisition Agreement dated as of June 27, 2024, by and between Shouguang Hengde Salt Industry Co. Ltd and Shouguang city Yangkou town Renjia Zhuangzi village stock economic cooperative, incorporated by reference to Exhibit 10.5 to the Registrant’s current report on Form 8-K, filed on July 2, 2024.
14
Code of Ethics, incorporated herein by reference to Exhibit 14 to the Registrant’ annual report on Form 10-K filed on March 16, 2009.
16.1
Letter from Morison Cogen LLP, dated July 7, 2021, incorporated by reference to Exhibit 16.1 to the Registrant’s current report on Form 8-K, filed on July 7, 2021.
21.1
List of Subsidiaries, incorporated herein by reference to Exhibit 21.1 to the Registrant’s annual report on Form 10-K filed on March 16, 2018.
23.1
Consent of WWC, P.C. Certified Public Accountants, an independent registered public accounting firm.*
23.2
Consent of GGF CPA LIMITED, Certified Public Accountants, an independent registered public accounting firm.*
31.1
Certification pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2
Certification pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
97.1
Clawback Policy*
104
Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document)*
* Filed herewith.
Item 16. Form 10-K Summary.
Not applicable.
56
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d)
of the Securities and Exchange Act, the Company has duly caused this Report to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: September 27, 2024
By:
/s/ Xiaobin Liu
By: Xiaobin Liu
Title: Chief Executive Officer
By:
/s/ Min Li
By: Min Li
Title: Chief Financial Officer
Pursuant to the requirements of the Securities
and Exchange Act of 1934, this Report has been signed below by the following person on behalf of the Company and in the capacities and
on the dates indicated.
SIGNATURE
TITLE
DATE
/s/ Xiaobin Liu
September 27, 2024
Xiaobin Liu
Chief Executive Officer and Director
/s/ Min Li
September 27, 2024
Min Li
Chief Financial Officer
/s/ Yibo Yang
September 27, 2024
Yibo Yang
Director
/s/ Naihui Miao
September 27, 2024
Naihui Miao
Director
/s/ Dongshan Wang
September 27, 2024
Dongshan Wang
Director
/s/ Yang Zou
September 27, 2024
Yang Zou
Director
/s/ Sheng Wei Ma
September 27, 2024
Sheng Wei Ma
Director
/s/ Shi Tong Jiang
September 27, 2024
Shi Tong Jiang
Director
57