What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-10-11 compared with 2023-11-20 · 439 added, 411 removed, 882 unchanged (49% of the section changed)

4 unchanged sentences

(Expressed in U.S.

September 30, 2023

June 30, 2024

December 31, 2023

Current Assets

$ 103,774,977

$ 108,226,214

Accounts receivable

Accounts receivable ,net

Inventories, net

7 unchanged sentences

Prepaid land leases, net of current portion

Deferred tax assets

Deferred tax assets ,net

Total non-current assets

3 unchanged sentences

Current Liabilities

Payable and accrued expenses

Accounts payable and accrued expenses

Taxes payable-current

Amount due to a related party

Advance from customer

Amount due to related parties

Finance lease liability, current portion

16 unchanged sentences

11,012,754 shares issued;

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

and 10,726,924 shares outstanding as of June 30, 2024 and December 31, 2023, respectively

Treasury stock;

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

285,830 shares as of June 30, 2024 and December 31, 2023 at cost

( 1,372,673 )

13 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND

COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE

(Expressed in U.S.

Three-Month Period Ended September 30,

Nine -Month Period Ended September 30,

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

OPERATING INCOME (EXPENSE)

4 unchanged sentences

( 14,090,516 )

Sales, marketing and other operating expenses

Sales and marketing expenses

Direct labor and factory overheads incurred during plant shutdown

( 1,714,503 )

( 1,055,529 )

( 5,449,192 )

( 3,464,265 )

General and administrative expenses

1 unchanged sentence

( 1,503,376 )

Other operating income (loss)

Total operating income (expense)

Other operating income

TOTAL OPERATING COSTS AND EXPENSE

( 7,530,166 )

2 unchanged sentences

( 19,026,445 )

INCOME(LOSS) FROM OPERATIONS

PROFIT (LOSS) FROM OPERATIONS

( 5,146,997 )

( 10,416,416 )

( 1,718,656 )

OTHER INCOME (EXPENSE)

1 unchanged sentence

Interest income

Other (income) expenses

Other expense

( 29,169,008 )

( 29,173,011 )

Income (Loss) before taxes

1 unchanged sentence

( 39,568,220 )

INCOME TAX EXPENSE

( 1,632,818 )

INCOME TAX BENEFIT (EXPENSE)

NET PROFIT (LOSS)

$ ( 33,097,918 )

NET INCOME(LOSS)

$ ( 681,816 )

$ ( 37,090,050 )

COMPREHENSIVE LOSS:

NET INCOME(LOSS)

$ ( 1,239,563 )

COMPREHENSIVE INCOME (LOSS)

NET PROFIT (LOSS)

$ ( 33,097,918 )

OTHER COMPREHENSIVE LOSS

$ ( 681,816 )

$ ( 37,090,050 )

$ ( 1,239,563 )

- Foreign currency translation adjustments

2 unchanged sentences

( 10,127,491 )

COMPREHENSIVE INCOME(LOSS)

TOTAL COMPREHENSIVE (LOSS) INCOME

$ ( 33,947,172 )

1 unchanged sentence

$ ( 38,333,171 )

INCOME(LOSS) PER SHARE:

BASIC AND DILUTED

WEIGHTED AVERAGE NUMBER OF SHARES:

BASIC AND DILUTED

$ ( 11,367,054 )

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’

SIX-MONTH PERIOD ENDED JUNE 30, 2024

(Expressed in U.S.

1 unchanged sentence

unappropriated

BALANCE AT JUNE 30, 2023 ( Una udited)

( 1,372,673 )

BALANCE AT MARCH 31, 2024 (Unaudited)

( 1,372,673 )

1 unchanged sentence

$ 200,862,297

Restricted shares

Translation adjustment

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

( 1,775,797 )

Net loss for three-month period

ended June 30, 2024

( 33,097,918 )

BALANCE AT SEPTEMBER 30, 2023 (Unaudited)

( 33,097,918 )

BALANCE AT JUNE 30, 2024(Unaudited)

( 1,372,673 )

3 unchanged sentences

unappropriated

BALANCE AT JUNE 30, 2022 ( Una udited)

$ ( 510,329 )

BALANCE AT MARCH 31, 2023 (Unaudited)

( 1,372,673 )

2 unchanged sentences

$ 274,839,960

Restricted shares

Translation adjustment

1 unchanged sentence

( 13,906,993 )

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

BALANCE AT SEPTEMBER 30, 2022 (Unaudited)

$ ( 510,329 )

Net loss for three-month period

ended June 30, 2023

BALANCE AT JUNE 30,

2023(Unaudited)

( 1,372,673 )

8 unchanged sentences

$ 205,248,296

$ 271,618,205

Restricted shares

Translation adjustment

1 unchanged sentence

( 1,243,121 )

Net income for nine-month period ended September 30,

( 3,015,360 )

Net loss for six-month period

ended June 30, , 2024

( 37,090,050 )

BALANCE AT SEPTEMBER 30, 2023 (Unaudited)

( 37,090,050 )

BALANCE AT JUNE 30, 2024(Unaudited)

( 1,372,673 )

8 unchanged sentences

$ 271,618,205

Restricted shares

Translation adjustment

1 unchanged sentence

( 10,127,491 )

Net income for nine-month period ended September 30,

BALANCE AT SEPTEMBER 30, 2022 (Unaudited)

Net loss for six-month period

ended June 30, , 2023

( 1,239,563 )

BALANCE AT JUNE 30, 2023(Unaudited)

( 1,372,673 )

1 unchanged sentence

$ ( 23,154,780 )

$ 260,251,151

Treasury Stock

7 unchanged sentences

(Expressed in U.S.

Nine-Month Period Ended September 30,

Six-Month Period Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

$ ( 37,090,050 )

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

$ ( 1,239,563 )

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

Amortization on capital lease

Depreciation and amortization

Unrealized exchange gain on translation of inter-company balances

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

Deferred tax asset

( 2,511,394 )

Common stock issued for services

Issuance of stock options to employee

Amortization of right-of-use asset

Loss on disposal of equipment

Changes in assets and liabilities:

1 unchanged sentence

Prepayments and deposits

( 3,947,311 )

Advance from customers

Other receivables

1 unchanged sentence

( 2,583,610 )

Retention payable

( 1,518,073 )

Amount due to related Parties

Taxes payable

Prepaid land leases

Operating lease

Net cash provided by (used in) by operating activities

CASH FLOWS USED IN INVESTING ACTIVITIES

Net cash (used in) provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment

( 60,526,213 )

( 33,217,987 )

Net cash used in investing activities

( 15,197,648 )

Net cash used in investing

( 60,526,213 )

6 unchanged sentences

( 61,856,355 )

( 3,128,985 )

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD

1 unchanged sentence

$ 115,273,479

Periods Ended September 30,

Years Ended June 30,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the period for:

Cash paid during the six-month period ended June 30, 2024 for:

Paid for taxes

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

JUNE 30, 2024

(Expressed in U.S.

1 unchanged sentence

of Presentation and Consolidation

The accompanying unaudited consolidated financial

The accompanying audited consolidated financial

statements have been prepared by Gulf Resources, Inc.

9 unchanged sentences

All material intercompany transactions have been eliminated on consolidation.

Nature of Business

The Company manufactures and trades bromine through

7 unchanged sentences

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

DCHC’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 not fully quantifiable, the Company believes this situation did

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

In 2022, COVID may have a slightly larger impact.

government is conducting frequent unannounced inspections, somewhat disrupting production.

In addition, the Company believes the focus

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

The virus outbreak and resulting supply

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

It has delayed the delivery of machinery

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

The Company believes the virus

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

in Sichuan Province.

DCHC commenced trial operation

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

On March 11, 2020, the World Health

Organization (WHO) officially declared COVID-19 a pandemic.

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

disruption to the Company’s operations and financial position is uncertain.

While 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.

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.

(i) Bromine and Crude Salt Segments

3 unchanged sentences

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

On November 25, 2019, the government of Shouguang

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

On November 25, 2019, the government

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

facilities, including 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 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.

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.

The Company expects that the Factory No.

8 will generate revenue in the

fourth quarter 2022.

Company received verbal notification from the government regarding Factory No.

8, allowing it to recommence production in August

8 began contributing revenue in the fourth quarter 2022.

The Company is still waiting for governmental

4 unchanged sentences

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

Pursuant to the notification from the

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

Pursuant to the notification from the government

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

AM China Time.

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

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

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.

In April 2022, Shouguang Hengde Salt Industry

Ltd, our subsidiary, was incorporated in Shandong Province, China, for crude salt production and trading.

This subsidiary was created

in response to a new government policy that required bromine and crude salt companies to have separate registrations.

The creation of

this subsidiary and the separation of bromine and crude salt does not impact sales or overall profits.

However, the establishment of this

subsidiary has resulting in a reallocation of costs between bromine and crude salt.

(ii) Chemical Segment

30 unchanged sentences

On March 23, 2023, the Company issued

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

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

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

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

to apply for environmental and safety approval.

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

to conduct trial production, and then the Company may start commercial production.

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

for environmental and safety approval.

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

production, and then we may start commercial production.

On July 26, 2023, the Company announced

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

chemical products strategy.

The Company believes the relocation process will

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

The Company believes this relocation process will

cost approximately $ 69 million in total.

2 unchanged sentences

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

sheets as of September 30, 2023 and December 31, 2022.

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

impact the overall cost of the project.

sheets as of June 30, 2024 and December 31, 2023.

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

the overall cost of the project.

(iii) Natural Gas Segment

In January 2017, the Company completed the first

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

On May 29, 2019, the Company received a verbal notice from the government of Tianbao Town, Daying County, Sichuan Province, whereby

the Company is required to obtain project approval for its well located in Daying, including the whole natural gas and brine water project,

and approvals for safety production inspection, environmental protection assessment, and to solve the related land issue.

approvals have been received, the Company has to temporarily halt trial production at its natural gas well in Daying.

In compliance with

the Chinese government new policies, the Company is also required to obtain an exploration license and a mining license for bromine and

natural gas, respectively.

Pursuant to the Opinions of the Ministry of Natural Resources on Several Issues in Promoting the Reform of

Mineral Resources Management (Trial) promulgated by the Ministry of Natural Resources of PRC on January 9, 2020, which came into effect

on May 1, 2020, privately owned enterprises are allowed to participate in the natural gas production.

The Company plans to proceed with

its applications for the natural gas and brine project approvals with related government departments until the governmental planning has

been finalized.

In January 2017, the Company completed the

first brine water and natural gas well field construction in Daying located in SichuanProvince, China, and commenced trial

production in January 2019.

On May 29, 2019, the Company received a verbal notice from the government of Tianbao Town, Daying

County, Sichuan Province, whereby the Company is required to obtain project approval for its well located in Daying, including the

whole natural gas and brine water project, and approvals for safety production inspection,environmental protection assessment, and

to solve the related land issue.

Until these approvals have been received, the Company has to temporarily halt trial production at

its natural gas well in Daying.

In compliance with the Chinese government new policies, the Company is also required to obtain an

exploration license and a mining license for bromine and natural gas, respectively.

Pursuant to the Opinions of the Ministry of

Natural Resources on Several Issues in Promoting the Reform of Mineral Resources Management(Trial) promulgated by the Ministry of

Natural Resources of PRC on January 9, 2020, which came into effect on May 1, 2020, privately owned enterprises are allowed to

participate in the natural gas production.

The Company plans to proceed with its applications for the natural gas and brine project

approvals with related government departments until the governmental planning has been finalized.

The Company’s consolidated financial

statements have been prepared in accordance with accounting principles generally accepted in the United States of America and this

requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the

consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The Company bases

its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

The most significant accounting estimates with regard to these consolidated financial statements that require the most significant

and subjective judgments include, but are not limited to, useful lives of property, plant and equipment,recoverability of long-lived

assets, determination of impairment losses, assessment of market value of inventories and provision for inventory obsolescence,

allowance for doubtful accounts, recognition and measurement of deferred income taxes, valuation allowance for deferred tax assets,

and assumptions used for the valuation of share based payments.

Accordingly, actual results may differ significantly from these

estimates under different assumptions or conditions.

(d) Cash and Cash Equivalents

Cash and cash equivalents consist of all cash

balances and highly liquid investments with original maturities of three months or less.

Because of short maturity of these

investments, the carrying amounts approximate their fair values.

(e) Allowance

for Doubtful Accounts

8 unchanged sentences

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

(d) Concentration

(f) Concentration

of Credit Risk

5 unchanged sentences

The Company placed $ 10,367,539

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

The Company has not

experienced any losses in such accounts in the PRC.

and $ 72,223,894 with these institutions as of June 30, 2024 and December 31, 2023, respectively.

The Company has not experienced

any losses in such accounts in the PRC.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

JUNE 30, 2024

(Expressed in U.S.

1 unchanged sentence

OF SIGNIFICANT ACCOUNTING POLICIES – Continued

(e) Property,

(g) Property,

Plant and Equipment

33 unchanged sentences

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

(f) Retirement

(h) Retirement

Pursuant to the relevant laws and regulations

4 unchanged sentences

The Company’s

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

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

contributions totaled $ 100,290 and $ 129,539 for the three-month period ended June 30, 2024 and 2023, respectively, and totaled $ 223,413

and $ 283,723 for the six-month period ended June 30, 2024 and 2023, respectively.

Net revenue is net of discount and value added

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

JUNE 30, 2024

(Expressed in U.S.

1 unchanged sentence

OF SIGNIFICANT ACCOUNTING POLICIES – Continued

(h) Recoverability

(j) Recoverability

of Long-lived Assets

15 unchanged sentences

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

For the three and nine months period ended September

For the three and six months period ended June

30, 2024 and 2023, the Company determined that there were no events or circumstances indicating possible impairment of its long-lived

9 unchanged sentences

Anti-dilutive common stock equivalents which were excluded from

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

the calculation of number of dilutive common stock equivalents amounted to 0 and 0 shares for the three-month periods ended June 30, 2024

and 2023, respectively.

Because the Company reported a net loss

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

for the three-month periods ended June 30, 2024 and 2023, common stock equivalents including stock options and warrants were anti-dilutive,

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

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

JUNE 30, 2024

(Expressed in U.S.

1 unchanged sentence

OF SIGNIFICANT ACCOUNTING POLICIES – Continued

(j) Reporting

(l) Reporting

Currency and Translation

8 unchanged sentences

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

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

The statement of loss and

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

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

The statement of income

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

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.

other than the functional currencies are recognized in net income 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

4 unchanged sentences

effect of these factors cannot be accurately predicted.

(l) Inventories.

(n) Inventories

Inventories are stated at the lower of cost, determined

21 unchanged sentences

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

(n) Stock-based Compensation

(p) Stock-based

Stock-based awards issued to employees are recorded

30 unchanged sentences

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

tax in the consolidated statement of income (loss).

tax in the consolidated statement of profit (loss).

Accounting Pronouncements

Recent accounting pronouncements adopted

There were no recent accounting pronouncements adopted during the nine

months ended September 30, 2023.

There were no recent accounting pronouncements adopted during the six

months ended June 30, 2024.

Recently Issued Accounting Pronouncements Not

13 unchanged sentences

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

(t) 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 June 30, 2024 and 2023.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

JUNE 30, 2024

(Expressed in U.S.

NOTE 2 – ACCOUNTS RECEIVABLE, NET

Accounts receivable net consist of:

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

September 30,

Accounts receivable

1 unchanged sentence

Accounts receivable, net

The overall accounts receivable balance as of

September 30, 2023 decreased by $ 3,213,048 , as compared to those of December 31, 2022.

We have policies in place to ensure that sales

are made to customers with an appropriate credit history.

The overall accounts receivable balance

as of June 30, 2024 decreased by $ 3,129,401 compared to those of December 31, 2023.

We have policies in place to ensure that sales are

made to customers with an appropriate credit history.

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

2 unchanged sentences

Inventories - Schedule of Inventories, Current

September 30,

Raw materials

1 unchanged sentence

Inventory, net

The inventory valuation allowance, representing

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

As of June 30, 2024 and December 31, 2023, the reserve for inventory

impairment was due to exchange rate change.

NOTE 4 – PREPAID LAND LEASES

18 unchanged sentences

The lease term expires on August 12,

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

The amount paid was recorded as prepaid land leases, net of current portion in the consolidated balance sheet as of June 30 2024

and December 31, 2023.

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

for stamp duty and related land use rights fees.

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

and placed in service.

As of June 30, 2024, the prepaid land lease increased to $ 9,284,611 due to an additional amount paid for stamp

duty and related land use rights fees.

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

placed in service.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

JUNE 30, 2024

(Expressed in U.S.

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consist of the following:

Property, Plant and Equipment, Net -

Schedule of Property, Plant and Equipment

September 30,

Mineral rights

Plant and machinery

Motor vehicles

Furniture, fixtures and office equipment

Motor vehicles

Construction in process

6 unchanged sentences

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

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 $ 13,636,724 and $ 14,713,101 as at September 30, 2023 and December 31,

2022, respectively.

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

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

incurred during plant shutdown , administrative expenses and cost of net

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

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

incurred during plant shutdown , administrative expenses and cost of net

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

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

incurred during plant shutdown , administrative expenses and cost of net

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

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

overheads incurred during plant shutdown , administrative expenses and

cost of net revenue .

The Company has

commenced a flood prevention initiative.

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

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

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

crude salt pans at the Company’s plant.

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

As of September 30,

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

The aggregate carrying values of these properties situated on parcels of the land are $ 7,943,149 and $ 8,346,742 as at June 30, 2024

and December 31, 2023, respectively.

During the three-month period ended June 30, 2024,

depreciation and amortization expense totaled $ 4,728,984 of which $ 1,283,308 , $ 201,197 and $ 3,244,479 were recorded in direct labor and

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

During the six-month period ended June

30, 2024, depreciation and amortization expense totaled $ 9,458,227 , of which $ 4,390,097 , $ 402,701 and $ 4,665,429 were recorded in direct

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

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

depreciation and amortization expense totaled $ 5,235,219 of which $ 791,952 , $ 169,924 and $ 4,273,343 were recorded in direct labor and

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

During the six-month period ended June

30, 2023, depreciation and amortization expense totaled $ 10,594,090 , of which $ 2,741,788 , $ 599,879 and $ 7,252,423 were recorded in direct

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

NOTE 6 – FINANCE LEASE RIGHT-OF-USE ASSETS

3 unchanged sentences

Plant and Equipment Under Finance Leases

September 30,

Buildings Buildings

Plant and machinery Plant and Machinery

Accumulated depreciation and amortization

( 2,115,747 )

Net book value

3 unchanged sentences

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

During the three and nine months period

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

direct labor and factory overheads incurred during plant shutdown.

During the three and nine months period

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

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

During the three and six months period ended June

30, 2024, depreciation and amortization expense totaled $ 1,269 and $ 2,540 , respectively, which was recorded in direct labor and factory

overheads incurred during plant shutdown.

During the three and six months period ended June

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

overheads incurred during plant shutdown.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

JUNE 30, 2024

(Expressed in U.S.

NOTE 7 – OPERATING LEASE RIGHT– OF

As of September 30, 2023, the total operating

lease ROU assets was $ 7,668,554 .

The total operating lease cost for the nine-month

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

The Company has the rights to use certain parcels

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

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

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

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

NOTE 8 – ACCOUNTS PAYABLE, OTHER PAYABLE

AND ACCRUED EXPENSES

Accounts payable, other payable and accrued expenses

consist of the following:

Accounts and Other Payable and Accrued

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

For parcels of land

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

The parcels of land of which the

Company cannot obtain land use rights certificates covers a total of approximately 34.95 square kilometers with an aggregate operating lease right-of-use assets amount of $ 7,653,236

as at June 30, 2024.

As of June 30, 2024, the total operating lease

ROU assets was $ 6,407,509 .

The total operating lease cost for the six-month

period ended June 30, 2024 and 2023 was $ 440,030 and $ 476,367 .

8 – PAYABLE AND ACCRUED EXPENSES

Payable and accrued expenses consist of the following:

Payable and Accrued

Expenses - Schedule of Accounts Payable and Accrued Liabilities

September 30,

Accounts payable

Salary payable

Other payable

Social security insurance contribution payable

Other payable-related party

Accrued expense for construction

Accrued expense-others

Accrued expense-others mainly include of the shares

to be paid for the acquisition of salt plant $ 7,878,182 and others.

NOTE 9 – RELATED PARTY TRANSACTIONS

On September 25, 2012, the Company purchased

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

“Seller”) at a cost of approximately $ 5.7

million in cash, of which Mr.

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

equity interest in the Seller.

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

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

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

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

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

The expense associated with this agreement for the three and nine

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

On September 25, 2012, the Company purchased five

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

(the “Seller”)

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

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

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

management services for an annual amount of approximately $ 87,927 for five years from January 1, 2023 to December 31, 2027 .

associated with this agreement for the three and six months ended June 30, 2024 was approximately $ 21,885 and $ 43,867 .

The expense associated

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

NOTE 9 – RELATED PARTY TRANSACTIONS –

5 unchanged sentences

Chief Operating Officer

September 30,

Amount due to related parties:

3 unchanged sentences

NOTE 10 – TAXES PAYABLE

September 30,

Land use tax payable

Value added tax and other taxes payable

NOTE 11 – LEASE LIABILITIES-FINANCE AND OPERATING

NOTE 11 – LEASE LIABILITIES-FINANCE AND

OPERATING LEASE

The components of finance lease liabilities were

Lease Liabilities - Finance and Operating

Lease - Schedule of Finance Leased Liabilities

September 30,

Lease - Schedule of Finance and Operating Leased Liabilities

Interest rate

3 unchanged sentences

Interest expenses from capital lease obligations

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

condensed consolidated statement of income (loss).

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

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

amounted to $ 24,814 and 27,901 for the three-month period ended June 30, 2024 and 2023, respectively, which were charged to the condensed

consolidated statement of income (loss).

Interest expenses from capital lease obligations amounted to $ 49,644 and $ 56,461 for the six-month

period ended June 30, 2024 and 2023, respectively, which were charged to the condensed consolidated statement of income (loss).

The components of operating lease liabilities

Lease Liabilities - Finance and Operating

Lease - Schedule of Operating Leased Liabilities

September 30,

Interest rate

3 unchanged sentences

The weighted average remaining operating lease

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

rate was 4.89 %.

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

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

term at June 30, 2024 was 18 years and the weighted average discounts rate was 4.89 %.

Lease payments for the three-month period ended

June 30, 2024 and 2023, respectively, were $ 530,962 and $ 519,808 .

Lease payments for the six-month period ended June 30, 2024 and 2023,

respectively, were $ 757,221 and $ 759,706 .

Maturities of lease liabilities were as follows:

14 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

JUNE 30, 2024

(Expressed in U.S.

18 unchanged sentences

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 September 30, 2023 for SCHC, SYCI,

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

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.

As at June 30, 2024, GULF RESOURCES 'statutory

provident fund stood at $26.67 million.

NOTE 13 – TREASURY STOCK

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

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

As of June 30, 2024 and December 31, 2023, the

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

NOTE 14 – STOCK-BASED COMPENSATION

6 unchanged sentences

of the 2007 Plan and applicable award agreement.

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

As of June 30, 2024, the number of shares of the Company’s common stock available

for grant of awards under the 2019 Plan was 561,801 shares.

4 unchanged sentences

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

For the three months ended September 30, 2023

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

During the three and nine months ended September 30, 2023, there were

no options granted to employees or non-employees.

The following table summarizes all Company

stock option transactions between January 1, 2023 and September 30, 2023.

For the three months ended June 30, 2024 and 2023, total compensation

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

There were no related tax benefits as a full valuation

allowance was recorded in the three months ended June 30, 2024 and 2023.

The following table summarizes all Company stock

option transactions between January 1, 2024 and June 30, 2024.

Stock-Based Compensation - Schedule of Stock

8 unchanged sentences

Expired during the period

Balance, September 30, 2023

Stock Options and Warrants Outstanding and Exercisable

Balance, June 30, 2024

Stock Options Outstanding and Exercisable

Weighted Average

Outstanding at September 30, 2023

Outstanding at June 30, 2024

Exercise Prices

1 unchanged sentence

Outstanding and exercisable

All options exercisable and outstanding at September

All options exercisable and outstanding at June

30, 2024 are fully vested.

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

As of June 30, 2024 there was no unrecognized compensation cost related to outstanding stock options,

The aggregate intrinsic value of options outstanding and exercisable

as of September 30, 2023 was $ 0 .

During the three and nine months ended September

as of June 30, 2024 was $ 0 .

During the three and six months ended June 30,

2024 and 2023, there were no options exercised.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

JUNE 30, 2024

(Expressed in U.S.

NOTE 15 – OTHER EXPENSES

In June 2024, the Company retired some

fixed assets including aqueducts and wells for a total amount approximately $ 29,169,008 .

This decision was made due to the following reasons:

(1) the aqueducts exhibits serious water seepage, posed potential damage, and could lead to environmental pollution;

(2) the wells were

found to have reduced water flow, low brine content and high energy consumption.

NOTE 16 – INCOME TAXES

1 unchanged sentence

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

States (“US”)

United States (“US”)

United States

3 unchanged sentences

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

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

income for the three-month and six-month periods ended June 30, 2024 and 2023, and management believes that its earnings are permanently

invested in the PRC.

Virgin Islands (“BVI”)

British Virgin Islands (“BVI”)

Upper Class Group Limited, a subsidiary of Gulf

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

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

2023 and 2022.

Upper Class Group Limited did not generate assessable profit for the three-month and six-month periods ended June 30, 2024

HKJI, a subsidiary of Upper Class Group Limited, was

1 unchanged sentence

from Hong Kong.

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

ended September 30, 2023 and 2022.

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

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

ended June 30, 2024 and 2023.

The applicable statutory tax rates for the three-month and six-month periods ended June 30, 2024

and 2023 are 16.5 %.

2 unchanged sentences

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

The operating subsidiaries SCHC is a wholly foreign-owned enterprises

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

The PRC tax losses

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

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

Tax losses of the operating subsidiaries of the Company

may be carried forward for five years.

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

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

The PRC tax losses may be

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

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

Tax losses of the operating subsidiaries of the Company may be carried

forward for five years.

On February 22, 2008, the Ministry of Finance

3 unchanged sentences

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

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

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

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

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

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

foreseeable future.

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

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

As of September 30, 2023

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

As of June 30, 2024 and December 31, 2023, the

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

$ 50,171,573 and $ 87,160,228 , respectively.

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

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

Accordingly, as of June 30, 2024 and December 31, 2023, the Company has not recorded any WHT on the cumulative amount of distributable

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

As of June 30, 2024 and December 31, 2023, the

unrecognized WHT were $ 1,552,871 and $ 3,396,379 , respectively.

The Company’s income tax returns are subject

14 unchanged sentences

continuing operations are:

- Schedule of Components of Income Tax Expense Benefit

Three-Month Period Ended September 30,

Nine-Month Period Ended September 30,

Income Taxes - Schedule of Components of Income Tax Expense Benefit

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

Current taxes – PRC

2 unchanged sentences

( 2,511,394 )

Income Tax (Expense) Benefit

Total Income tax (expenses) benefits

$ ( 1,208,110 )

$ ( 192,699 )

$ ( 2,478,170 )

$ ( 393,255 )

Significant components of the Company’s

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

deferred tax assets and liabilities at June 30, 2024 and December 31, 2023 are as follows:

Income Taxes - Schedule of Deferred

Tax Assets and Liabilities

September 30,

Deferred tax liabilities

9 unchanged sentences

The decrease in valuation allowance for the three-month

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

period ended June 30, 2024 is $ 42,555 .

The increase in valuation allowance for the three-month

period ended September 30, 2022 is $ 0 .

The decrease in valuation allowance for the nine-month

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

The increase in valuation allowance for the nine-month

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

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

The decrease in valuation allowance for the six-month

period ended June 30, 2024 is $ 57,028 .

The increase in valuation allowance for the six-month

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

There were no unrecognized tax benefits and accrual

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

and nine months ended September 30, 2023 and 2022.

for uncertain tax positions as of June 30, 2024 and December 31, 2023 and no amounts accrued for penalties and interest for the three

and six months ended June 30, 2024 and 2023.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

JUNE 30, 2024

(Expressed in U.S.

NOTE 17 – BUSINESS SEGMENTS

The Company has four reportable segments:

crude salt, chemical products and natural gas.

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

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

An operating segment’s performance is primarily

6 unchanged sentences

All the customers are located in PRC.

September 30, 2023

June 30, 2024 Corporate

Total Operating Segment

(external customers)

7 unchanged sentences

income tax benefit (expense)

( 3,500,334 )

( 3,737,479 )

( 3,938,887 )

Depreciation and amortization

Capital expenditures

September 30, 2022

June 30, 2023

(external customers)

(intersegment)

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

Income(loss) from operations before income tax benefit

Income tax benefit (expense)

( 2,642,167 )

( 3,010,967 )

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

Income (loss) from operations after

income tax benefit (expense)

Depreciation and amortization

2 unchanged sentences

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

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

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

Commencing May 2022,

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

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

(Expressed in U.S.

NOTE 17 – BUSINESS SEGMENTS – Continued

September 30, 2023

June 30, 2024

(external customers)

(intersegment)

Income(loss) from operations before income tax benefit

( 3,340,404 )

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

( 9,445,401 )

2 unchanged sentences

Income tax benefit (expense)

Income (loss) from operations after

income tax benefit (expense)

Loss from operations after income tax benefit (expense)

( 7,085,078 )

( 7,667,859 )

( 7,938,246 )

Depreciation and amortization

Capital expenditures

September 30, 2022

June 30, 2023

(external customers)

2 unchanged sentences

( 1,197,201 )

Income tax benefit(expense)

( 1,617,225 )

( 1,718,656 )

Income tax benefit (expense)

Loss from operations after income tax benefit (expense)

( 1,223,970 )

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

( 1,325,401 )

Depreciation and amortization

2 unchanged sentences

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

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

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

Commencing May 2022,

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

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

(Expressed in U.S.

NOTE 17 – BUSINESS SEGMENTS – Continued

Three-Month Period Ended September 30,

Nine-Month Period Ended September 30,

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

Reconciliations

2 unchanged sentences

$ ( 845,275 )

$ ( 10,146,029 )

$ ( 1,617,225 )

Corporate costs

3 unchanged sentences

( 10,416,416 )

( 1,718,656 )

Other income, net of expense

Other Expenses

( 29,169,008 )

( 29,173,011 )

Income (loss) before taxes

1 unchanged sentence

$ ( 874,515 )

$ ( 39,568,220 )

$ ( 1,632,818 )

The following table shows the major customer(s)

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

(10% or more) for the three-month period ended June 30, 2024.

Business Segments - Schedule of

1 unchanged sentence

Chemical Products

Percentage of

Percentage of Total Revenue (%)

Shandong Brother Technology Limited

2 unchanged sentences

The following table shows the major customer(s)

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

(10% or more) for the six-month period ended June 30, 2024.

Chemical Products

Percentage of

Shandong Morui Chemical Company Limited

1 unchanged sentence

Shouguang Weidong Chemical Company Limited

Shandong Shouguangshen Runfa Marine Chemical Company Limited

The following table shows the major customer(s)

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

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

Chemical Products

Percentage of Total Revenue (%)

Shandong Morui Chemical Company Limited

1 unchanged sentence

Shandong Brother Technology Limited

Shandong Shouguang God Runfa Marine Chemical Company Limited

The following table shows the major customer(s)

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

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

Chemical Products

Percentage of

Shandong Morui Chemical Company Limited

Shouguang Weidong Chemical Company Limited

Shandong Brother Technology Limited

Shouguang Weidong Chemical Company Limited

Shandong Shouguangshen Runfa Marine Chemical Company Limited

NOTE 18 – CUSTOMER CONCENTRATION

Sale of Products

Product Concentration

During the nine-month period ended September 30,

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

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

$ 1,485,777 .

During the nine-month period ended September 30,

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

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

Customer Concentration

During the six-month period ended June 30, 2024,

the Company sold 60 % of its products to its top five customers, respectively.

As of June 30, 2024, amounts due from these customers were

$ 1,063,926 .

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

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

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

were $ 1,514,987 .

NOTE 19 – MAJOR SUPPLIERS

Purchase of Raw Materials

Supplier Concentration

During the nine-month period ended September 30,

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

As of September 30, 2023, amounts due to

those suppliers were $ 229,260 .

During the nine-month period ended September 30,

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

As of September 30, 2022, amounts due to

those suppliers were $ 219,646 .

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 September 30, 2023

and December 31, 2022.

NOTE 20 – CAPITAL COMMITMENT AND OTHER SERVICE

CONTRACTUAL OBLIGATIONS

The following table sets forth the Company’s

contractual obligations as of September 30, 2023:

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

Product Concentration

Cost of Goods

During the six-month period ended June 30, 2024

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

As of June 30, 2024, amounts due to those suppliers

were $ 132,606 .

During the six-month period ended June 30, 2023

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

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

were $ 221,315 .

NOTE 20 – LOSS CONTINGENCIES

55 unchanged sentences

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

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

of Factory No.

389 Zhi Yi, dated

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

Production of

7 was allowed to resume in April 2019.

16 unchanged sentences

In view of the above facts and circumstances,

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

the Company believes that it is not necessary to accrue for any estimated losses or impairment as of June 30, 2024.

NOTE 21 - SUBSEQUENT EVENT

Not Applicable.

Subsequent Event

Shandong Shouguang Vegetable Industry Group

and Shandong Shouguang Vegetable Seed Group Co., Ltd.

owe RMB15.0million (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 Co., Ltd.

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements