What changed in this filing

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Item 1. Business

2025-04-11 compared with 2024-09-27 · 725 added, 649 removed, 225 unchanged (86% of the section changed)

We manufacture and trade bromine and crude salt,

natural gas, manufacture and sell chemical products used in oil and gas field explorations and papermaking chemical agents, and materials

for human and animal antibiotics.

We manufacture and trade bromine

and crude salt, natural gas, manufacture and sell chemical products used in oil and gas field explorations and papermaking chemical agents,

and materials for human and animal antibiotics.

To date, our products have been sold only within the People’s Republic of China.

in this report, the terms “we,” “us,” “our,” “Company” and “Gulf Resources”

As used in this report, the terms “we,” “us,” “our,” “Company” and “Gulf Resources”

refers to Gulf Resources, Inc., a holding company and/or its consolidated wholly-owned subsidiaries, and the terms “ton” and

“tons” refers to metric tons, in each case, unless otherwise stated or the context requires otherwise.

The functional currency of the Company’s

operating foreign subsidiaries is the Renminbi (“RMB”), which had an average exchange rate of $0.14908 and $0.14204 during

fiscal years 2022 and 2023, respectively, the reporting currency of the Company is the United States dollar (“USD” or $”).

The functional currency of the

Company’s operating foreign subsidiaries is the Renminbi (“RMB”), which had an average exchange rate of $0.14204 and

$0.14042 during fiscal years 2023 and 2024, respectively, the reporting currency of the Company is the United States dollar (“USD”

Our Corporate History and Corporate Structure

We (Gulf Resources Inc.) were originally incorporated

in Delaware and subsequently re-incorporated in Nevada.

From November 1993 through August 2006, we were engaged in the business of owning,

leasing and operating coin and debit card pay-per copy photocopy machines, fax machines, microfilm reader-printers and accessory equipment

under the name “Diversifax, Inc.”.

Due to the increased use of internet services, demand for our services declined sharply,

and in August 2006, our Board of Directors decided to discontinue our operations.

Upper Class Group Limited, incorporated in the

British Virgin Islands in July 2006, acquired all the outstanding stock of Shouguang City Haoyuan Chemical Company Limited (“SCHC”),

We (Gulf Resources Inc.) were

originally incorporated in Delaware and subsequently re-incorporated in Nevada.

From November 1993 through August 2006, we were engaged

in the business of owning, leasing and operating coin and debit card pay-per copy photocopy machines, fax machines, microfilm reader-printers

and accessory equipment under the name “Diversifax, Inc.”.

Due to the increased use of internet services, demand for our services

declined sharply, and in August 2006, our Board of Directors decided to discontinue our operations.

Upper Class Group Limited, incorporated

in the British Virgin Islands in July 2006, acquired all the outstanding stock of Shouguang City Haoyuan Chemical Company Limited (“SCHC”),

a company incorporated in Shouguang City, Shandong Province, the People’s Republic of China (the “PRC”), in May 2005.

5 unchanged sentences

recognized the assets and liabilities transferred at their carrying amounts.

On December 12, 2006, our Company, then known

as Diversifax, Inc., a public “shell” company, acquired Upper Class Group Limited and SCHC.

Under the terms of the agreement,

the stockholders of Upper Class Group Limited received 13,250,000 (restated for the 2-for-1 stock split in 2007 and the 1-for-4 stock

split in 2009) shares of our voting common stock in exchange for all outstanding shares of Upper Class Group Limited.

Members of the Yang

family received approximately 62% of our common stock as a result of the acquisition.

Under accounting principles generally accepted in

the United States, the share exchange is considered to be a capital transaction rather than a business combination.

That is, the share

exchange is equivalent to the issuance of stock by Upper Class Group Limited for the net assets of Gulf Resources, Inc., accompanied by

a recapitalization, and is accounted for as a change in capital structure.

On December 12, 2006, our Company,

then known as Diversifax, Inc., a public “shell” company, acquired Upper Class Group Limited and SCHC.

Under the terms of

the agreement, the stockholders of Upper Class Group Limited received 13,250,000 (restated for the 2- for-1 stock split in 2007 and the

1-for-4 stock split in 2009) shares of our voting common stock in exchange for all outstanding shares of Upper Class Group Limited.

of the Yang family received approximately 62% of our common stock as a result of the acquisition.

Under accounting principles generally

accepted in the United States, the share exchange is considered to be a capital transaction rather than a business combination.

the share exchange is equivalent to the issuance of stock by Upper Class Group Limited for the net assets of Gulf Resources, Inc., accompanied

by a recapitalization, and is accounted for as a change in capital structure.

Accordingly, the accounting for the share exchange is identical

6 unchanged sentences

2007, we changed our corporate name to Gulf Resources, Inc.

On February 5, 2007, we acquired Shouguang Yuxin

Chemical Industry Co., Limited (“SYCI”), a company incorporated in the People’s Republic of China.

Under the terms of

the acquisition agreement, the stockholders of SYCI received a total of 8,094,059 (restated for the 2-for-1 stock split in 2007 and the

1-for-4 stock split in 2009) shares of common stock of Gulf Resources, Inc.

in exchange for all outstanding shares of SYCI’s common

Simultaneously with the completion of the acquisition, a dividend of $2,550,000 was paid to the former stockholders of SYCI.

the time of the acquisition, approximately 49.1% of the outstanding shares of SYCI were owned by Ms.

Yang’s wife, and the

remaining 50.9% of the outstanding shares of SYCI were owned by SCHC, all of whose outstanding shares were owned by Mr.

On February 5, 2007, we

acquired Shouguang Yuxin Chemical Industry Co., Limited (“SYCI”), a company incorporated in the People’s Republic

Under the terms of the acquisition agreement, the stockholders of SYCI received a total of 8,094,059 (restated for the

2-for-1 stock split in 2007 and the 1-for-4 stock split in 2009) shares of common stock of Gulf Resources, Inc.

in exchange for all

outstanding shares of SYCI’s common stock.

Simultaneously with the completion of the acquisition, a dividend of $2,550,000 was

paid to the former stockholders of SYCI.

At the time of the acquisition, approximately 49.1% of the outstanding shares of SYCI were

Yang’s wife, and the remaining 50.9% of the outstanding shares of SYCI were owned by SCHC, all of whose

outstanding shares were owned by Mr.

Yang and his wife.

Since the ownership of Gulf Resources, Inc.

and SYCI are substantially the same, the acquisition was accounted for as a transaction between

entities under common control, whereby Gulf Resources, Inc.

and SYCI are substantially the

same, the acquisition was accounted for as a transaction between entities under common control, whereby Gulf Resources, Inc.

recognized the assets and liabilities of SYCI at their carrying amounts.

and per share amounts have been retroactively adjusted to reflect the acquisition.

To satisfy certain ministerial requirements necessary

to confirm certain government approvals required in connection with the acquisition of SCHC by Upper Class Group Limited, all of the equity

interest of SCHC were transferred to a newly formed Hong Kong corporation named Hong Kong Jiaxing Industrial Limited (“Hong Kong

Jiaxing”) all of the outstanding shares of which are owned by Upper Class Group Limited.

The transfer of all of the equity interest

of SCHC to Hong Kong Jiaxing received approval from the local State Administration of Industry and Commerce on December 10, 2007.

As a result of the transactions described above,

our corporate structure is linear.

That is Gulf Resources owns 100% of the outstanding shares of Upper Class Group Limited, which owns

100% of the outstanding shares of Hong Kong Jiaxing, which owns 100% of the outstanding shares of SCHC, which owns 100% of the outstanding

shares of SYCI.

Further, as a result of our acquisitions of SCHC and SYCI, our historical consolidated financial statements, as contained

in our Consolidated Financial Statements and Management’s Discussion and Analysis, appearing elsewhere in the report, reflect the

accounts of SCHC and SYCI.

On January 12, 2015, the Company and SCHC entered

into an Equity Interest Transfer Agreement with Shouguang City Rongyuan Chemical Co., Ltd (“SCRC”), pursuant to which SCHC

agreed to acquire SCRC and all rights, title and interest in and to all assets owned by SCRC, a leading manufacturer of materials for

human and animal antibiotics in China and other parts of Asia.

On February 4, 2015, the Company closed the transactions

contemplated by the agreement between the Company, SCHC and SCRC.

On the closing Date, the Company issued 7,268,011 shares of its

common stock, par value $0.0005 per share (the “Shares”), at the closing market price of $1.84 per Share on the closing date

to the four former equity owners of SCRC .The issuance of the Shares was exempt from registration pursuant to Regulation S of the Securities

Act of 1933, as amended.

On the Closing Date, the Company entered into a lock-up agreement with the four former equity owners of SCRC.

In accordance with the terms of the lock-up agreement, the shareholders agreed not to sell or transfer the Shares for five years from

the date the stock certificates evidencing the Shares were issued.

The sellers of SCRC agreed as part of the purchase

price to accept the Shares, based on a valuation of $10.00 (restated for the 1-for-5 reverse stock split in January 2020), which was a

73% premium to the price on the day the agreement was reached.

For accounting purposes, the Shares were valued at $9.20 (restated for

the 1-for-5 reverse stock split in January 2020), which was the closing price of our common stock on the closing date of the agreement.

The price difference between the original sale price of $10.00 (restated for the 1-for-5 reverse stock split in January 2020) and the

$9.20 (restated for the 1-for-5 reverse stock split in January 2020) closing price of our stock on the closing date of the agreement is

solely for accounting purposes.

Share and per share amounts have been retroactively

adjusted to reflect the acquisition.

To satisfy certain ministerial

requirements necessary to confirm certain government approvals required in connection with the acquisition of SCHC by Upper Class Group

Limited, all of the equity interest of SCHC were transferred to a newly formed Hong Kong corporation named Hong Kong Jiaxing Industrial

Limited (“Hong Kong Jiaxing”) all of the outstanding shares of which are owned by Upper Class Group Limited.

of all of the equity interest of SCHC to Hong Kong Jiaxing received approval from the local State Administration of Industry and Commerce

on December 10, 2007.

As a result of the transactions

described above, our corporate structure is linear.

That is Gulf Resources owns 100% of the outstanding shares of Upper Class Group Limited,

which owns 100% of the outstanding shares of Hong Kong Jiaxing, which owns 100% of the outstanding shares of SCHC, which owns 100% of

the outstanding shares of SYCI.

Further, as a result of our acquisitions of SCHC and SYCI, our historical consolidated financial statements,

as contained in our Consolidated Financial Statements and Management’s Discussion and Analysis, appearing elsewhere in the report,

reflect the accounts of SCHC and SYCI.

On January 12, 2015, the Company

and SCHC entered into an Equity Interest Transfer Agreement with Shouguang City Rongyuan Chemical Co., Ltd (“SCRC”), pursuant

to which SCHC agreed to acquire SCRC and all rights, title and interest in and to all assets owned by SCRC, a leading manufacturer of

materials for human and animal antibiotics in China and other parts of Asia.

On February 4, 2015, the Company

closed the transactions contemplated by the agreement between the Company, SCHC and SCRC.

On the closing Date, the Company issued 7,268,011

shares of its common stock, par value $0.0005 per share (the “Shares”), at the closing market price of $1.84 per Share on

the closing date to the four former equity owners of SCRC .The issuance of the Shares was exempt from registration pursuant to Regulation

S of the Securities Act of 1933, as amended.

On the Closing Date, the Company entered into a lock-up agreement with the four former equity

owners of SCRC.

In accordance with the terms of the lock-up agreement, the shareholders agreed not to sell or transfer the Shares for

five years from the date the stock certificates evidencing the Shares were issued.

The sellers of SCRC agreed as

part of the purchase price to accept the Shares, based on a valuation of $10.00 (restated for the 1-for-5 reverse stock split in January

2020), which was a 73% premium to the price on the day the agreement was reached.

For accounting purposes, the Shares were valued at $9.20

(restated for the 1-for-5 reverse stock split in January 2020), which was the closing price of our common stock on the closing date of

the agreement.

The price difference between the original sale price of $10.00 (restated for the 1-for-5 reverse stock split in January

2020) and the $9.20 (restated for the 1-for-5 reverse stock split in January 2020) closing price of our stock on the closing date of the

agreement is solely for accounting purposes.

There has been no change in the number of shares issued.

On November 24, 2015, Gulf Resources, Inc., a

Delaware corporation, consummated a merger with and into its wholly-owned subsidiary, Gulf Resources, Inc., a Nevada corporation.

result of the reincorporation, the Company is now a Nevada corporation.

On December 15, 2015, the Company incorporated

a new subsidiary in the Sichuan Province of the PRC named Daying County Haoyuan Chemical Company Limited (“DCHC”) with registered

capital of RMB50,000,000, and there was RMB14,848,730 capital contributed by SCHC as of December 31, 2021.

DCHC was established to further

explore and develop natural gas and brine resources (including bromine and crude salt) in China.

On September 2, 2016, the Company announced the

planned merger of two of its 100% owned subsidiaries, SYCI and SCRC.

On March 24, 2017, the legal process of the merger was completed

and SCRC was officially deregistered on March 28, 2017.

The results of these two subsidiaries were reported under SYCI in the fiscal year

On January 27, 2020, we completed a 1-for-5 reverse

stock split of our common stock, such that for each five shares outstanding prior to the stock split there was one share outstanding after

the reverse stock split.

All shares of common stock referenced in this report have been adjusted to reflect the stock split figures.

January 28, 2020, our shares began trading on the NASDAQ Global Select Market under the new CUSIP # 40251W.

In April 2022, Shouguang Hengde Salt Industry

On November 24, 2015, Gulf Resources,

Inc., a Delaware corporation, consummated a merger with and into its wholly-owned subsidiary, Gulf Resources, Inc., a Nevada corporation.

As a result of the reincorporation, the Company is now a Nevada corporation.

On December 15, 2015, the Company

incorporated a new subsidiary in the Sichuan Province of the PRC named Daying County Haoyuan Chemical Company Limited (“DCHC”)

with registered capital of RMB50,000,000, and there was RMB14,848,730 capital contributed by SCHC as of December 31, 2021.

DCHC was established

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

On September 2, 2016, the Company

announced the planned merger of two of its 100% owned subsidiaries, SYCI and SCRC.

On March 24, 2017, the legal process of the merger

was completed and SCRC was officially deregistered on March 28, 2017.

The results of these two subsidiaries were reported under SYCI in

the fiscal year 2018.

On January 27, 2020, we completed

a 1-for-5 reverse stock split of our common stock, such that for each five shares outstanding prior to the stock split there was one share

outstanding after the reverse stock split.

All shares of common stock referenced in this report have been adjusted to reflect the stock

split figures.

On January 28, 2020, our shares began trading on the NASDAQ Global Select Market under the new CUSIP # 40251W.

In April 2022, Shouguang Hengde

Salt Industry Co.

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

1 unchanged sentence

Acquisition Agreements

On June 26, 2024, a wholly owned subsidiary of the Company, Shouguang

Hengde Salt Industry Co.

Ltd ( “SHSI”), entered into a Crude Salt Field Acquisition Agreement (the “Acquisition Agreement”)

with Shouguang Qingshuibo Farm Co., LTD.

(“Seller A”), pursuant to which Seller A agrees to transfer to SHSI, and SHSI agrees

to purchase, 2,380,000 square meters of crude salt field (including the land lease fee) for RMB54.40 per square meter, with the total

transfer price of RMB129,472,000.

The term of transfer is from June 29, 2024 to June 28, 2044.

80% of the transfer price shall be paid

upon the execution of Acquisition Agreement, and the remaining 20% shall be paid in shares of common stock of the Company within three

months from the date of Acquisition Agreement after SHSI has inspected the and accepted the crude salt field in writing.

On June 27, 2024, SHSI entered into four Crude Salt Field Acquisition

Agreements (the “Agreements”) with Shouguang city Yangkou town Dingjia Zhuangzi village stock economic cooperative, Shouguang

city Yangkou town Shanjia Zhuangzi village stock economic cooperative, Shouguang City Yangkou town Zhengjia Zhuangzi village stock economic

cooperative, and Shouguang city Yangkou town Renjia Zhuangzi village stock economic cooperative (together, “Sellers”), pursuant

to which Sellers agree to transfer to SHSI, and SHSI agrees to purchase from Sellers, 750,000, 804,000, 385,000, and 822,000 square meters

of crude salt field (including the land lease fee) for RMB54.10, RMB54.90, RMB54.00, and RMB55.70 per square meter, respectively, with

the total transfer price of RMB40,575,000, RMB44,139,600, RMB20,790,000, and RMB45,785,400, respectively.

The term of transfers is from

June 29, 2024 to June 28, 2044.

80% of the transfer price shall be paid upon the execution of Agreements, and the remaining 20% shall

be paid in shares of common stock of the Company within three months from the date of Agreements after SHSI has inspected the and accepted

the crude salt fields in writing.

In June 2024, a wholly owned subsidiary of the Company,

Shouguang Hengde Salt Industry Co.

Ltd ( “SHSI”) entered into crude salt field acquisition agreements with Shouguang Qingshuibo

Farm Co., LTD.

(“Seller A”), Shouguang city Yangkou town Dingjia Zhuangzi village stock economic cooperative (“Seller

B”), Shouguang city Yangkou town Shanjia Zhuangzi village stock economic cooperative (“Seller C”), Shouguang City Yangkou

town Zhengjia Zhuangzi village stock economic cooperative (“Seller D”), and Shouguang city Yangkou town Renjia Zhuangzi village

stock economic cooperative (“Seller E”), respectively, as amended in December 2024.

A summary of these agreements are set

On June 26, 2024, SHSI entered into an acquisition

agreement with Seller A, pursuant to which Seller A agrees to transfer to SHSI, and SHSI agrees to purchase, 2,380,000 square meters of

crude salt field (including the land lease fee) for RMB54.40 per square meter, with the total transfer price of RMB129,472,000.

of transfer is from June 29, 2024 to June 28, 2044.

80% of the transfer price shall be paid upon the execution of the agreement, and the

remaining 20% shall be paid in shares of common stock of the Company within three months from the date of the agreement after SHSI has

inspected the and accepted the crude salt field in writing.

Subsequently, on December

17, 2024, the parties entered into an amendment to the agreement, pursuant to which the Article 2.

2 of the agreement has been amended

eighty percent (80%) of the total amount, equaling RMB103,577,600 had been paid on the date of signing the contract by both

The remaining RMB25,894,400 shall be paid in a combination of common stock of the Company and cash as follows:

(1) RMB10,357,800

shall be paid in shares, calculated on a per share price of US$1.5, using the exchange rate RMB/US$:7.27.

These shares shall be issued

by the Company to Seller A or Seller A's designated parties within three months after SHSI has inspected and accepted the crude salt field

(2) the balance shall be paid in cash before December 31, 2028.

On June 27, 2024, SHSI entered into an acquisition

agreement with each Seller B, Seller C, Seller D and Seller E, respectively, pursuant to which the sellers agreed to transfer to SHSI,

and SHSI agrees to purchase from the sellers, 750,000, 804,000, 385,000, and 822,000 square meters of crude salt field (including the

land lease fee) for RMB54.10, RMB54.90, RMB54.00, and RMB55.70 per square meter, respectively, with the total transfer price of RMB40,575,000,

RMB44,139,600, RMB20,790,000, and RMB45,785,400, respectively.

The term of transfers is from June 29, 2024 to June 28, 2044.

transfer price shall be paid upon the execution of the agreements, and the remaining 20% shall be paid in shares of common stock of the

Company within three months from the date of the agreements after SHSI has inspected the and accepted the crude salt fields in writing.

December 17, 2024, SHSI entered into an amendment to the acquisition agreement with Seller B, pursuant to which the Article 2.

agreement has been amended as follows:

(80%) of the total amount, equaling RMB32,460,000 had been paid on the date of signing the contract

by both parties.

The remaining RMB8,115,000 shall be paid in a combination of common stock of the Company and cash as follows:

(1) RMB3,246,000

shall be paid in shares, calculated on a per share price of US$1.5, using the exchange rate RMB/US$:7.27.

These shares shall be issued

by the Company to Seller B or Seller B’s designated parties within three months after SHSI has inspected and accepted the crude

salt field in writing;

(2) the balance shall be paid in cash before December 31, 2028.

December 17, 2024, SHSI entered into an amendment to the acquisition agreement with Seller C, pursuant to which the Article 2.

agreement has been amended as follows:

Eighty percent (80%) of the total amount, equaling RMB35,311,680 had been paid on the date of signing

the contract by both parties.

The remaining RMB8,827,920 shall be paid in a combination of common stock of the Company and cash as follows:

(1) RMB3,531,168 shall be paid in shares, calculated on a per share price of US$1.5 per, using the exchange rate RMB/US$:7.27.

shall be issued by the Company to Seller C or Seller C's designated parties within three months after SHSI has inspected and accepted

the crude salt field in writing;

(2) the balance shall be paid in cash before December 31, 2028.

On December 17, 2024,

SHSI entered into an amendment to the acquisition agreement with Seller D, pursuant to which the Article 2.

2 of the agreement has been

amended as follows:

Eighty percent (80%) of the total amount, equaling RMB 16,632,000 had been paid on the date of signing the contract

by both parties.

The remaining RMB 4,158,000 shall be paid in a combination of common stock of the Company and cash as follows:

(1) RMB1,663,200

shall be paid in shares, calculated on a per share price ofUS$1.5, using the exchange rate RMB/US$:7.27.

These shares shall be issued

by the Company to Seller D or Seller D's designated parties within three months after SHSI has inspected and accepted the crude salt field

(2) the balance shall be paid in cash before December 31, 2028.

On December 17, 2024, SHSI

entered into an amendment to the acquisition agreement with Seller E, pursuant to which the Article 2.

2 of the agreement has been amended

Eighty percent (80%) of the total amount, equaling RMB36,628,320 had been paid on the date of signing the contract by both

The remaining RMB9,157,080 shall be paid in a combination of common stock of the Company and cash as follows:

(1) RMB3,662,832

shall be paid in shares, calculated on a per share price of US$1.5, using the exchange rate RMB/US$:7.27.

These shares shall be issued

by the Company to Seller E or Seller E's designated party within three months after SHSI has inspected and accepted the crude salt field

(2) the balance shall be paid in cash by SHSI to Seller E before December 31, 2028.

In accordance to each amendment,

the parties also acknowledged and agreed that, in compliance with the Nasdaq Listing Rule 5635, the issuance of shares pursuant to the

agreement may not exceed 19.9% of the total outstanding shares of common stock of the Company prior to the issuance of the shares (the

“19.9% Threshold”), unless such issuance is approved by the shareholders of the Company in accordance with the Nasdaq rules

and regulations.

SHSI shall cause the Company to take all necessary steps to obtain such shareholder approval if the issuance of shares

under the agreement exceeds the 19.9% Threshold.

On December 30, 2024, SHSI

and each of the sellers mutually acknowledged and confirmed that the salt land provided by each seller meets the acquisition criteria,

is in the anticipated usable condition, and has been accepted and handed over to SHSI.

On February 28, 2025, the

transactions as contemplated by the acquisition agreements were closed.

On the closing date, the Company issued a total of 2,059,694 shares

of the Company’s common stock at a price of $1.50 per share, to five individuals, who are citizens residing in the People’s

Republic of China, designated by each seller.

Nasdaq Compliance

received a notice (the “Initial Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”)

on April 18, 2024 notifying the Company that due to the Company’s failure to timely file its Annual Report on Form 10-K for the

fiscal year ended December 31, 2023 (the “Form 10-K”), with the SEC, the Company is not in compliance with Nasdaq’s

continued listing requirements under Nasdaq Listing Rule 5250(c)(1) (the “Rule”), which requires the timely filing of all

required periodic reports with the SEC, and the Company subsequently received a notice (the “May Notice”) from Nasdaq on May

21, 2024 due to the Company’s non-compliance with the Rule as a result of the Company’s failure to timely file its Quarterly

Report on Form 10-Q for the fiscal quarter ended March 31, 2024 (the “Form 10-Q”, together with the Form 10-K, the “Delinquent

The May Notice states that the Company has until June 17, 2024 to submit to Nasdaq a plan to regain compliance with

26, 2024, the Company received a letter from Nasdaq indicating that, based on its further review and the plan of compliance submitted

by the Company on June 14, 2024, Nasdaq has determined to grant an exception to enable the Company to regain compliance with the Rule.

The terms of the exception are as follows:

on or before October 14, 2024, the Company must file the Delinquent Reports, as required by

In the event the Company does not satisfy the terms, Nasdaq will provide written notification that its securities will be delisted.

Company received a notice (the “Initial Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC

(“Nasdaq”) on April 18, 2024 notifying the Company that due to the Company’s failure to timely file its Annual Report

on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”), with the SEC, the Company was not in compliance

with Nasdaq’s continued listing requirements under Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule 5250(c)(1) Rule”),

which requires the timely filing of all required periodic reports with the SEC, and the Company subsequently received a notice (the “May

Notice”) from Nasdaq on May 21, 2024 due to the Company’s non-compliance with the Listing Rule 5250(c)(1) Rule as a result

of the Company’s failure to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024 (the “First

Quarter Form 10-Q”, together with the Form 10-K, the “Delinquent Reports”).

The May Notice states that the Company

had until June 17, 2024 to submit to Nasdaq a plan to regain compliance with the Rule.

June 26, 2024, the Company received a letter from Nasdaq indicating that, based on its further review and the plan of compliance submitted

by the Company on June 14, 2024, Nasdaq determined to grant an exception to enable the Company to regain compliance with the Listing Rule

5250(c)(1) Rule.

The terms of the exception were as follows:

on or before October 14, 2024, the Company must file the Delinquent Reports,

as required by the Listing Rule 5250(c)(1) Rule.

In the event the Company does not satisfy the terms, Nasdaq will provide written notification

that its securities will be delisted.

At that time, the Company may appeal Nasdaq’s determination to a hearings panel.

1 unchanged sentence

on August 20, 2024, the Company received a notice (the “August Notice”) from Nasdaq indicating that, because the Company is

delinquent in filing its quarterly report on Form 10-Q for the period ended June 30, 2024, the Company is not in compliance with the Rule.

The Notice also indicates that as a result of this additional delinquency, the Company must submit an update to its original plan to regain

compliance with respect to the filing requirements.

The Company has until September 4, 2024 to submit such update to Nasdaq.

Notice has no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Global Select Market.

the Company can provide no assurance to the timing, the Company has submitted a letter to Nasdaq confirming that there has been no change

to its original plan to regain compliance with respect to the filing requirements, and will continue to work diligently to complete and

file its delayed SEC reports.

delinquent in filing its quarterly report on Form 10-Q for the period ended June 30, 2024 (the “Second Quarter Form 10-Q”),

the Company was not in compliance with the Rule.

The August Notice also indicates that as a result of this additional delinquency, the

Company must submit an update to its original plan to regain compliance with respect to the filing requirements.

The Company had until

September 4, 2024 to submit such update to Nasdaq.

October 15, 2024, the Company received written notice from Nasdaq that, as a result of the Company filing the Form 10-K, the First Quarter

Form 10-Q and the Second Quarter Form 10-Q with the SEC, the Staff has determined that the Company complies with the Listing Rule 5250(c)(1)

Rule and considers the matter to be closed.

November 5, 2024, the Company received a notice (“Price Deficiency Letter”) from Nasdaq stating that the Company was not in

compliance with Nasdaq Listing Rule 5450(a)(1) because the bid price for the Company’s common stock had closed below $1.00 per share

for the previous 34 consecutive business days (the “Minimum Bid Price Requirement”).

In accordance with Nasdaq Listing Rule

5810(c)(3)(A), the Company has been given 180 calendar days, or until May 5, 2025, to regain compliance with the Minimum Bid Price Requirement.

If at any time before May 5, 2025, the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of

10 consecutive business days, Nasdaq will provide written confirmation that the Company has achieved compliance.

In the event the Company

does not regain compliance, the Company may be eligible for additional time.

To qualify for the additional compliance period, the Company

will be required to (i) submit, no later than the expiration date, an on-line Transfer Application, (ii) submit a non-refundable $5,000

application fee, (iii) meet the continued listing requirement for the market value of its publicly held shares and all other continued

listing standards for The Nasdaq Stock Market, with the exception of the bid price requirement, and (iv) will need to provide written

notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split if necessary.

part of its review process, Nasdaq will make a determination of whether they believe the Company will be able to cure this deficiency.

Should Nasdaq conclude that the Company will not be able to cure the deficiency, or should the Company determine not to submit a transfer

application or make the required representation, the Staff will provide notice that the Company’s securities will be subject to

Nasdaq Price Deficiency Letter has no immediate impact on the listing of the Company’s common stock, which will continue to be listed

and traded on The Nasdaq Global Select Market, subject to the Company’s compliance with the other continued listing requirements

of The Nasdaq Stock Market.

Corporate Structure

Our current corporate structure chart is set forth

in the following diagram:

Currently, we operate our business through our

wholly-owned subsidiaries in China, including (i) Shouguang City Haoyuan Chemical Company Limited, or SCHC;

(ii) Shouguang Yuxin Chemical

Industry Co., Limited, or SYCI;

Our current corporate structure chart

is set forth in the following diagram:

Currently, we operate our business

through our wholly-owned subsidiaries in China, including (i) Shouguang City Haoyuan Chemical Company Limited, or SCHC;

(ii) Shouguang

Yuxin Chemical Industry Co., Limited, or SYCI;

(iii) Daying County Haoyuan Chemical Co., Ltd., or DCHC;

ad (iv) Shouguang Hengde Salt Industry Co.

or SHSI, each a PRC company.

Our executive offices are located at Level 11,

Vegetable Building, Industrial Park of the East in Shouguang City, Shandong Province, P.R.C.

and (iv) Shouguang Hengde Salt

Limited, or SHSI, each a PRC company.

Our executive offices are located at

Level 11, Vegetable Building, Industrial Park of the East in Shouguang City, Shandong Province,

Our telephone number is +86 (536) 5670008.

Our website address is www.gulfresourcesinc.com.

website address is www.gulfresourcesinc.com.

The information contained on or accessed through our website is not intended to constitute

and shall not be deemed to constitute part of this Form 10-K.

Recent Regulatory Developments in China

Because all of our operations are conducted in

China through our wholly-owned subsidiaries, the Chinese government may exercise significant oversight and discretion over the conduct

of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations

and/or the value of our common stock.

Recent statements by the Chinese government have

indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China

based issuers.

Any future action by the Chinese government expanding the categories of industries and companies whose foreign securities

offerings are subject to government review could significantly limit or completely hinder our ability to offer or continue to offer securities

to investors and could cause the value of such securities to significantly decline or be worthless.

Recently, the PRC government initiated a series

of regulatory actions and made a number of public statements on the regulation of business operations in China with little advance notice,

including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas

using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts

in anti-monopoly enforcement.

We do not believe that we are directly subject to these regulatory actions or statements, as we do not have

a variable interest entity structure and our business does not involve the collection of user data, implicate cybersecurity, or involve

any other type of restricted industry.

Because these statements and regulatory actions are new, however, it is highly uncertain how soon

legislative or administrative regulation making bodies in China will respond to them, or what existing or new laws or regulations will

be modified or promulgated, if any, or the potential impact such modified or new laws and regulations will have on our daily business

Recent Regulatory Developments in

Because all of our operations

are conducted in China through our wholly-owned subsidiaries, the Chinese government may exercise significant oversight and discretion

over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change

in our operations and/or the value of our common stock.

Recent statements by the Chinese

government have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments

in China based issuers.

Any future action by the Chinese government expanding the categories of industries and companies whose foreign

securities offerings are subject to government review could significantly limit or completely hinder our ability to offer or continue

to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.

Recently, the PRC government initiated

a series of regulatory actions and made a number of public statements on the regulation of business operations in China with little advance

notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed

overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding

efforts in anti-monopoly enforcement.

We do not believe that we are directly subject to these regulatory actions or statements, as we

do not have a variable interest entity structure and our business does not involve the collection of user data, implicate cybersecurity,

or involve any other type of restricted industry.

Because these statements and regulatory actions are new, however, it is highly uncertain

how soon legislative or administrative regulation making bodies in China will respond to them, or what existing or new laws or regulations

will be modified or promulgated, if any, or the potential impact such modified or new laws and regulations will have on our daily business

operations or our ability to accept foreign investments and list on an U.S.

On February 17, 2023, the China Securities Regulatory

Commission (‘CSRC”) released the Trial Measures for Administration of Overseas Securities Offerings and Listings by Domestic

Companies (the “Trial Measures”) and five supporting guidelines, which came into effect on March 31, 2023.

Pursuant to the

Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing

procedures and report relevant information to the CSRC.

If a domestic company fails to complete the filing procedures or conceals any

material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties

by the CSRC, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge

and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.

As a listed company, we

believe that we, and all of our PRC subsidiaries are not required to fulfill filing procedures and obtain approvals from the CSRC to continue

to offer our securities or operate our business as of the date of this annual report.

In addition, to date, none of us and our PRC subsidiaries

has received any filing or compliance requirements from CSRC for the listing of the Company at Nasdaq and all of its overseas offerings.

Furthermore, based on our understanding of the current PRC laws, we believe that the CSRC’s approval is not required to be obtained

for the Company’s listing on Nasdaq;

however, there are substantial uncertainties regarding the interpretation and application of

the Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors (“M&A Rules”), other PRC Laws and

future PRC laws and regulations, and there can be no assurance that any governmental agency will not take a view that is contrary to or

otherwise different from our belief stated herein.

On February 24, 2023, the CSRC, the Ministry of

Finance, the National Administration of State Secrets Protection and the National Archives Administration jointly issued the Provisions

on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the

Confidentiality and Archives Provisions, which took effective from March 31, 2023.

The Confidentiality and Archives Provisions specify

that during the overseas securities offering and listing activities of domestic companies, domestic companies and securities companies

On February 17, 2023, the China

Securities Regulatory Commission (‘CSRC”) released the Trial Measures for Administration of Overseas Securities Offerings

and Listings by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which came into effect on March

Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly,

should fulfill the filing procedures and report relevant information to the CSRC.

If a domestic company fails to complete the filing procedures

or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative

penalties by the CSRC, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly

in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.

As a listed company,

we believe that we, and all of our PRC subsidiaries are not required to fulfill filing procedures and obtain approvals from the CSRC to

continue to offer our securities or operate our business as of the date of this annual report.

In addition, to date, none of us and our

PRC subsidiaries has received any filing or compliance requirements from CSRC for the listing of the Company at Nasdaq and all of its

overseas offerings.

Furthermore, based on our understanding of the current PRC laws, we believe that the CSRC’s approval is not

required to be obtained for the Company’s listing on Nasdaq;

however, there are substantial uncertainties regarding the interpretation

and application of the Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors (“M&A Rules”),

other PRC Laws and future PRC laws and regulations, and there can be no assurance that any governmental agency will not take a view that

is contrary to or otherwise different from our belief stated herein.

On February 24, 2023, the CSRC,

the Ministry of Finance, the National Administration of State Secrets Protection and the National Archives Administration jointly issued

the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies,

or the Confidentiality and Archives Provisions, which took effective from March 31, 2023.

The Confidentiality and Archives Provisions

specify that during the overseas securities offering and listing activities of domestic companies, domestic companies and securities companies

and securities service institutions that provide relevant securities business shall, by strictly abiding by the relevant laws and regulations

29 unchanged sentences

Cash Transfers and Dividend Distribution

Our corporate structure is a direct holding structure,

that is, the overseas entity listed in the U.S., Gulf Resources, Inc., a Nevada corporation (“Gulf Resources”), controls SCHC

(the “WFOE”), SYCI and DCHC through the Hong Kong company, Hong Hong Jiaxing Industrial Limited, or Hong Kong Jiaxing.

Within our direct holding structure, the cross-border

transfer of funds within our corporate group is legal and compliant with the laws and regulations of the PRC.

Foreign investors’

funds can be directly transferred to Hong Kong Jiaxing, and then transferred to subordinate operating entities through SCHC, or the WFOE.

If the Company intends to distribute dividends,

the Company will transfer the dividends to Hong Kong Jiaxing in accordance with the laws and regulations of the PRC, and then Hong Kong

Jiaxing will transfer the dividends to Gulf Resources, and the dividends will be distributed from Gulf Resources to all shareholders respectively

in proportion to the shares they hold, regardless of whether the shareholders are U.S.

investors or investors in other countries or regions.

In the reporting periods presented

in this annual report, no cash and other asset transfers have occurred among the Company and its subsidiaries;

and no dividends or distributions

of a subsidiary has been made to the Company.

For the foreseeable future, the Company does not expect to pay any cash dividends.

Our PRC subsidiaries’ ability to distribute

dividends is based upon their distributable earnings.

Current PRC regulations permit our PRC subsidiaries to pay dividends to their respective

shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations.

addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory

reserve until such reserve reaches 50% of each of their registered capitals.

These reserves are not distributable as cash dividends.

To address persistent capital outflows and the

RMB’s depreciation against the U.S.

dollar in the fourth quarter of 2016, the People’s Bank of China and the State Administration

of Foreign Exchange, or SAFE, have implemented a series of capital control measures in the subsequent months, including stricter vetting

procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments.

The PRC government may continue to strengthen its capital controls and our PRC subsidiaries’ dividends and other distributions may

be subject to tightened scrutiny in the future.

The PRC government also imposes controls on the conversion of RMB into foreign currencies

and the remittance of currencies out of the PRC.

Therefore, we may experience difficulties in completing the administrative procedures

necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any.

Furthermore, if our subsidiaries

in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make

other payments.

In addition, the Enterprise Income Tax Law and

its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese companies

to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and the governments of

other countries or regions where the non-PRC resident enterprises are tax resident.

Pursuant to the tax agreement between Mainland China

and the Hong Kong Special Administrative Region, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to

a Hong Kong enterprise may be reduced to 5% from a standard rate of 10%.

However, if the relevant tax authorities determine that our transactions

or arrangements are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable

withholding tax in the future.

Accordingly, there is no assurance that the reduced 5% withholding rate will apply to dividends received

by our Hong Kong subsidiary from our PRC subsidiaries.

This withholding tax will reduce the amount of dividends we may receive from our

PRC subsidiaries.

Please see “Risk Factors” beginning

on page 16 of this annual report for additional information.

Holding Foreign Company Accountable Act

Our corporate structure is a direct

holding structure, that is, the overseas entity listed in the U.S., Gulf Resources, Inc., a Nevada corporation (“Gulf Resources”),

controls SCHC (the “WFOE”), SYCI and DCHC through the Hong Kong company, Hong Hong Jiaxing Industrial Limited, or Hong Kong

Within our direct holding structure,

the cross-border transfer of funds within our corporate group is legal and compliant with the laws and regulations of the PRC.

investors’ funds can be directly transferred to Hong Kong Jiaxing, and then transferred to subordinate operating entities through

SCHC, or the WFOE.

If the Company intends to distribute

dividends, the Company will transfer the dividends to Hong Kong Jiaxing in accordance with the laws and regulations of the PRC, and then

Hong Kong Jiaxing will transfer the dividends to Gulf Resources, and the dividends will be distributed from Gulf Resources to all shareholders

respectively in proportion to the shares they hold, regardless of whether the shareholders are U.S.

investors or investors in other countries

In the reporting periods presented in this annual report,

no cash and other asset transfers have occurred among the Company and its subsidiaries;

and no dividends or distributions of a subsidiary

has been made to the Company or to the shareholders from the Company.

For the foreseeable future, the Company does not expect to pay any

cash dividends.

Our PRC subsidiaries’ ability

to distribute dividends is based upon their distributable earnings.

Current PRC regulations permit our PRC subsidiaries to pay dividends

to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards

and regulations.

In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if

any, to fund a statutory reserve until such reserve reaches 50% of each of their registered capitals.

These reserves are not distributable

as cash dividends.

To address persistent capital

outflows and the RMB’s depreciation against the U.S.

dollar in the fourth quarter of 2016, the People’s Bank of China and

the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures in the subsequent months,

including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments

and shareholder loan repayments.

The PRC government may continue to strengthen its capital controls and our PRC subsidiaries’ dividends

and other distributions may be subject to tightened scrutiny in the future.

The PRC government also imposes controls on the conversion

of RMB into foreign currencies and the remittance of currencies out of the PRC.

Therefore, we may experience difficulties in completing

the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any.

if our subsidiaries in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to

pay dividends or make other payments.

In addition, the Enterprise Income

Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese

companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and the governments

of other countries or regions where the non-PRC resident enterprises are tax resident.

Pursuant to the tax agreement between Mainland

China and the Hong Kong Special Administrative Region, the withholding tax rate in respect to the payment of dividends by a PRC enterprise

to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10%.

However, if the relevant tax authorities determine that our

transactions or arrangements are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust

the favorable withholding tax in the future.

Accordingly, there is no assurance that the reduced 5% withholding rate will apply to dividends

received by our Hong Kong subsidiary from our PRC subsidiaries.

This withholding tax will reduce the amount of dividends we may receive

from our PRC subsidiaries.

Please see “Risk Factors”

beginning on page 20 of this annual report for additional information.

Holding Foreign Company Accountable

Our common stock may be delisted from the Nasdaq under

37 unchanged sentences

of their being delisted, may materially and adversely affect the value of your investment .”

Closure and rectification process of our Bromine,

Crude Salt and Chem i cal Products factories

On September 1, 2017, the Company received letters

from the People’s Government of Yangkou Town, Shouguang City to each of its subsidiaries, Shouguang City Haoyuan Chemical Company

Limited and Shouguang Yuxin Chemical Industry Co., Limited, which stated that in an effort to improve the safety and environmental protection

management level of chemical enterprises, the plants are requested to immediately stop production and perform rectification and improvements

in accordance with the country’s new safety, environmental protection requirements.

As a result, our facilities located in Yangkou

Town were closed on September 1, 2017 to allow for rectification.

Subsequently, the Safety Supervision and Administration

Department and the Environmental Protection Departments of the local government conducted inspections of every bromine production enterprise

within its jurisdiction including our facilities, in order to improve security, environmental protections, pollution, and safety.

On September 21, 2018, the Company received a

closing notice from the People’s Government of Yangkou Town, Shouguang City informing it to close its three bromine factories (Number

3, Number 4, and Number 11.) and not allowed to resume production.

The crude salt fields surrounding these factories have been reclaimed

as cultivated or construction land and hence did not meet the requirement for bromine and crude salt co-production set by the relevant

In closing these factories, the Company wrote off net book value of these factories’ property, plant and equipment in

the amount of $18,644,473 in the loss on demolition of the factory in the consolidated statements of loss for the fiscal year ended December

31, 2018, recorded an impairment loss on the related mineral rights of these three factories of $1,284,832 included in the impairment

Closure and rectification process

of our Bromine, Crude Salt and Chem i cal Products factories

On September 1, 2017, the Company

received letters from the People’s Government of Yangkou Town, Shouguang City to each of its subsidiaries, Shouguang City Haoyuan

Chemical Company Limited and Shouguang Yuxin Chemical Industry Co., Limited, which stated that in an effort to improve the safety and

environmental protection management level of chemical enterprises, the plants are requested to immediately stop production and perform

rectification and improvements in accordance with the country’s new safety, environmental protection requirements.

our facilities located in Yangkou Town were closed on September 1, 2017 to allow for rectification.

Subsequently, the Safety Supervision

and Administration Department and the Environmental Protection Departments of the local government conducted inspections of every bromine

production enterprise within its jurisdiction including our facilities, in order to improve security, environmental protections, pollution,

On September 21, 2018, the Company

received a closing notice from the People’s Government of Yangkou Town, Shouguang City informing it to close its three bromine factories

(Number 3, Number 4, and Number 11.) and not allowed to resume production.

The crude salt fields surrounding these factories have been

reclaimed as cultivated or construction land and hence did not meet the requirement for bromine and crude salt co-production set by the

relevant authority.

In closing these factories, the Company wrote off net book value of these factories’ property, plant and equipment

in the amount of $18,644,473 in the loss on demolition of the factory in the consolidated statements of loss for the fiscal year ended

December 31, 2018, recorded an impairment loss on the related mineral rights of these three factories of $1,284,832 included in the impairment

of property, plant and equipment in the consolidated statements of loss for the fiscal year ended December 31, 2018 and wrote off $52,926

of prepaid land lease recorded in other operating loss in the consolidated statements of loss for fiscal year ended December 31, 2018.

The Company incurred dismantling fee in the amount of $273,757 recorded in other operating loss in the consolidated statements of loss

for fiscal year ended December 31, 2018.

The Company negotiated with the local villages over compensation for the payment already made

for these land leases and mineral rights in the past.

This part of the cost has been used as the resumption of land use, so the village

committee will not be compensated.

In February 2019, the Company received a notification

from the local government of Yangkou County that its Factory No.

9 passed inspection and could resume operations.

The Company incurred dismantling fee in the amount of

$273,757 recorded in other operating

loss in the consolidated statements of loss for fiscal year ended December 31, 2018.

The Company negotiated with the local villages over

compensation for the payment already made for these land leases and mineral rights in the past.

This part of the cost has been used as

the resumption of land use, so the village committee will not be compensated.

In February 2019, the Company

received a notification from the local government of Yangkou County that its Factory No.

9 passed inspection and

could resume operations.

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,

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 unchanged sentence

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

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”).

The Company’s Factories No.

7 commenced trial production in mid March 2020 and

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

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.

9 commenced commercial production on May 6, 2020.

received verbal notification from the government regarding Factory No.

The Company received verbal notification from the government regarding Factory

8, allowing it to recommence production in August 2022.

8 began contributing revenue in the fourth quarter 2022.

Pursuant to the notification from the government

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

compliance with the notification, the Company ceased production at its bromine facilities during this period and resumed operations at

the bromine and crude salt factories as scheduled in February 2024.

Because many smaller producers have not had the

capital to conduct the rectification required by the government, management believes there could be some extremely attractive acquisition

opportunities in bromine.

However, at the present time, all of management’s attention is focused on getting its facilities approved

and in full production.

Pursuant to a notification from

the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 15, 2024 until February

In compliance with the notification, the Company ceased production at its bromine facilities during this period and resumed

operations at the bromine and crude salt factories as scheduled in February 2025.

Because many smaller producers

have not had the capital to conduct the rectification required by the government, management believes there could be some extremely attractive

acquisition opportunities in bromine.

However, at the present time, all of management’s attention is focused on getting its facilities

approved and in full production.

Management may consider acquisition opportunities in this segment in the future if the prices were sufficiently

We secured the land for our upcoming chemical

factory and obtained the final approval regarding environmental protection assessment.

Construction of the new chemical facilities located

at Bohai Marine Fine Chemical Industrial Park, commenced in June 2020.

Initially, the construction was projected to last around one year,

with an additional six months for equipment installation and testing, However, due to the COVID epidemic and electrical restrictions,

We secured the land for our upcoming

chemical factory and obtained the final approval regarding environmental protection assessment.

Construction of the new chemical facilities

located at Bohai Marine Fine Chemical Industrial Park, commenced in June 2020.

Initially, the construction was projected to last around

one year, with an additional six months for equipment installation and testing, However, due to the COVID epidemic and electrical restrictions,

the opening of the chemical factory has been postponed.

The Company has received the refrigeration and air compressor units.

estimated total cost for the relocation process is approximately $69 million.

As of December 31, 2023 and 2022, the Company incurred

relocation costs in the amount of $45,584,344 and $45,584,344, respectively.

Additionally, the procurement of the final equipment for

our chemical factory has been postponed until we have a better understanding of the potential for derivative bromine products.

We anticipate

proceeding with the completion of its chemical factory in due course.

However, in the event that the Chinese economy persists in its weakness

and if we perceives this trend to be ongoing, there is a possibility that the chemical factory could be repurposed for the production

of Sodium-Ion batteries.

In January 2017, the Company completed the construction

of the first brine water and natural gas well field in Daying County, Sichuan Province, and commenced trial production in January 2019.

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

need for project approval for its Daying well, encompassing the entire natural gas and brine water project.

This also includes approvals

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

Until these approvals are

obtained, the Company must temporarily suspend trial production at its natural gas well in Daying.

Additionally, in compliance with the

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

The estimated

total cost for the relocation process is approximately $69 million.

As of December 31, 2024 and 2023, the Company incurred relocation

costs in the amount of $45,584,344 and $45,584,344, respectively.

Additionally, the procurement of the final equipment for our chemical

factory has been postponed until we have a better understanding of the potential for derivative bromine products.

We anticipate proceeding

with the completion of its chemical factory in due course.

However, in the event that the Chinese economy persists in its weakness and

if we perceives this trend to be ongoing, there is a possibility that the chemical factory could be repurposed for the production of Sodium-Ion

In January 2017, the Company completed

the construction of the first brine water and natural gas well field in Daying County, Sichuan Province, and commenced trial production

in January 2019.

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

mandating the need for project approval for its Daying well, encompassing the entire natural gas and brine water project.

This also includes

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

Until these approvals

are obtained, the Company must temporarily suspend trial production at its natural gas well in Daying.

Additionally, in compliance with

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

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

3 unchanged sentences

of Daying County regarding the establishment of a joint venture for the exploration and production of natural gas and brine products in

We are not writing off any of the goodwill related

to our chemicals business.

We are not writing off any of

the goodwill related to our chemicals business.

We believe the upcoming chemical factory could produce sales and profits.

We believe there may be much less

capacity in the chemical industry, as many factories may be permanently closed.

In addition, other competitor factories may reduce their

production capacity.

We believe there

may be much less capacity in the chemical industry, as many factories may be permanently closed.

In addition, other competitor factories

may reduce their production capacity.

We expect to have a factory that operates efficiently.

Considering the above factors and our strength with better

equipment, we expect to generate sales and earnings in this segment at a level well above previous periods.

We will continue to control the land and buildings

where the old chemical factories are located.

At this time, we have not considered how or if we can monetize those assets.

In April 2022, our subsidiary, Shouguang Hengde

Salt Industry Co.

Considering the above factors and our strength

with better equipment, we expect to generate sales and earnings in this segment at a level well above previous periods.

We will continue to control the

land and buildings where the old chemical factories are located.

At this time, we have not considered how or if we can monetize those

In April 2022, our subsidiary,

Shouguang Hengde Salt Industry Co.

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

This subsidiary

was established in response to a new government policy mandating separate registrations for bromine and crude salt companies.

The Company is awaiting governmental approval

for Factories No.

Impact of COVID-19 on Our Operations and Financial

Outbreaks of epidemic, pandemic, or contagious

diseases such as COVID-19, could have an adverse effect on our business, financial condition, and results of operations.

The spread of

COVID-19 had resulted in the World Health Organization declaring the outbreak of COVID-19 as a global pandemic.

Substantially

all of our revenues and workforce are concentrated in China.

In response to the intensifying efforts to contain the spread of COVID-19,

the Chinese government took a number of actions, which included extending the Chinese New Year holiday in 2020, quarantining individuals

suspected of having COVID-19, asking residents in China to stay at home and to avoid public gathering, among other things.

of the virus resulted in slight delay in the commencement of operations for Factory No.1, No.

8, and may potentially

delay the approval for the remaining two factories, including No.

It is, however, still unclear how the pandemic will evolve

going forward, and we cannot assure you whether the COVID-19 pandemic will again bring about significant negative impact on our business

operations, financial condition and operating results, including but not limited to negative impact to our total revenues.

There remain significant uncertainties surrounding

the COVID-19 outbreak and its further development as a global pandemic.

Hence, the extent of the business disruption and the related

impact on our financial results and outlook for 2021 cannot be reasonably estimated at this time.

The extent to which the COVID-19 impacts

our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may

emerge concerning the severity of the coronavirus and the actions taken globally to contain the coronavirus or treat its impact, among

Existing insurance coverage may not provide protection for all costs that may arise from all such possible events.

assessing our business operations and the total impact COVID-19 may have on our results and financial condition, but there can be

no assurance that this analysis will enable us to avoid part or all of any impact from the spread of COVID-19 or its consequences,

including downturns in business sentiment generally.

This subsidiary was established in response to a new government policy mandating separate registrations for bromine and crude salt companies.

As of the date of this annual report,

the Company is awaiting governmental approval for Factories No.

Our Business Segments

Our business operations are conducted in four segments, bromine, crude

salt, chemical products, and natural gas.

We manufacture and trade bromine, crude salt and natural gas, and manufacture and

sell chemical products used in oil and gas field explorations and papermaking chemical agents, and materials for human and animal antibiotics.

conduct all of our operations in China.

Our business operations are conducted in four segments,

bromine, crude salt, chemical products, and natural gas.

We manufacture and trade bromine, crude salt and natural gas, and manufacture

and sell chemical products used in oil and gas field explorations and papermaking chemical agents, and materials for human and animal

We conduct all of our operations in China.

Bromine and Crude Salt

We manufacture and distribute bromine through

our wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited, or SCHC.

We manufacture and distribute

bromine through our wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited, or SCHC.

Bromine is a halogen element.

a red volatile liquid at standard room temperature which has reactivity between chlorine and iodine.

Elemental bromine is used to

manufacture a wide variety of bromine compounds used in industry and agriculture.

Bromine is also used to form intermediates in organic

synthesis, which is somewhat preferable over iodine due to its lower cost.

Bromine is commonly used in brominated flame retardants,

fumigants, water purification compounds, dyes, medicines and disinfectants.

The extraction of bromine in the Shandong Province

is limited by the provincial government to licensed operations.

is a red volatile liquid at standard room temperature which has reactivity between chlorine and iodine.

Elemental bromine is used to manufacture

a wide variety of bromine compounds used in industry and agriculture.

Bromine is also used to form intermediates in organic synthesis,

which is somewhat preferable over iodine due to its lower cost.

Bromine is commonly used in brominated flame retardants, fumigants, water

purification compounds, dyes, medicines and disinfectants.

The extraction of bromine in the

Shandong Province is limited by the provincial government to licensed operations.

We hold one such license.

As part of our business

strategy, it is our plan to continue acquiring smaller scaled and unlicensed producers and to use our bromine to expand our downstream

chemical operations.

As part of our business strategy,

it is our plan to continue acquiring smaller scaled and unlicensed producers and to use our bromine to expand our downstream chemical

Location of Production Sites

Our production sites are located in the Shandong

Province in northeastern China.

The productive formation (otherwise referred to as the “working region”), extends from latitude

N 36°56’ to N 37°20’ and from longitude E 118°38’ to E 119°14’, in the north region of Shouguang

city, from the Xiaoqing River of Shouguang city to the west of the Dan River, bordering on Hanting District in the east, from the main

channel of “Leading the Yellow River to Supply Qingdao City Project” in the south to the coastline in the north.

The territory is classified as coastal alluvial – marine plain with an average height two to seven meters above the sea level.

Our production sites are located

in the Shandong Province in northeastern China.

The productive formation (otherwise referred to as the “working region”),

extends from latitude N 36°56’ to N 37°20’ and from longitude E 118°38’ to E 119°14’, in the north

region of Shouguang city, from the Xiaoqing River of Shouguang city to the west of the Dan River, bordering on Hanting District in the

east, from the main channel of “Leading the Yellow River to Supply Qingdao City Project” in the south to the coastline in

The territory is classified as coastal alluvial – marine plain with an average height two to seven meters above the sea

The terrain is relatively flat.

Geological background of this region

The Shandong Province working region is located

to the east of Lubei Plain and on the south bank of Bohai Laizhou Bay.

The geotectonic location bestrides on the North China Platte (I)

and north three-level structure units, from west to east including individually the North China Depression, Luxi Plate, and Jiaobei Plate.

Meanwhile, 4 V-level structure units including the Dongying Sag of Dongying Depression (IV) of North China Depression, the Buried Lifting

Area of Guangrao, Niutou sag and Buried Lifting Area of Shuanghe and are all on two V-level structure units including Xiaying Buried Lifting

Area of Weifang Depression (IV) of Luxi Plate and Chuangyi Sag, as well as on a V-level structure units of Jiaobei Buried Lifting Area

of Jiaobei Plate.

The Shandong Province working

region is located to the east of Lubei Plain and on the south bank of Bohai Laizhou Bay.

The geotectonic location bestrides on the North

China Platte (I) and north three-level structure units, from west to east including individually the North China Depression, Luxi Plate,

and Jiaobei Plate.

Meanwhile, 4 V-level structure units including the Dongying Sag of Dongying Depression (IV) of North China Depression,

the Buried Lifting Area of Guangrao, Niutou sag and Buried Lifting Area of Shuanghe and are all on two V-level structure units including

Xiaying Buried Lifting Area of Weifang Depression (IV) of Luxi Plate and Chuangyi Sag, as well as on a V-level structure units of Jiaobei

Buried Lifting Area of Jiaobei Plate.

Processing of Bromine

Natural brine is a complicated salt-water system,

containing many ionic compositions in which different ions have close interdependent relationships and which can be reunited to form many

dissolved soluble salts such as sodium chloride, potassium chloride, calcium sulfate, potassium sulfate and other similar soluble salts.

Natural brine is a complicated

salt-water system, containing many ionic compositions in which different ions have close interdependent relationships and which can be

reunited to form many dissolved soluble salts such as sodium chloride, potassium chloride, calcium sulfate, potassium sulfate and other

similar soluble salts.

The goal of natural brine processing is to separate and precipitate the soluble salts or ions away from the water.

differences in the physical and chemical characteristics of brine samples, the processing methods are varied, and can result in inconsistency

of processing and varied technical performance for the different useful components from the natural brine.

Bromine is the first component extracted during

the processing of natural brine.

In natural brine, the bromine exists in the form of bromine sodium and bromine magnesium and other soluble

The bromine production process

is as follows:

Due to the differences in the physical and chemical characteristics of brine samples, the processing methods are varied, and can result

in inconsistency of processing and varied technical performance for the different useful components from the natural brine.

Bromine is the first component

extracted during the processing of natural brine.

In natural brine, the bromine exists in the form of bromine sodium and bromine magnesium

and other soluble salts.

The bromine production process is as follows:

natural brine is pumped from underground through extraction wells by subaqueous pumps;

the natural brine then passes through transmission pipelines to storage reservoirs;

the natural brine is sent to the bromine refining plant where bromine is extracted from the natural brine.

In neutral or acidic water, the bromine ion is easily oxidized by adding the oxidative of chlorine, which generates the single bromine

away from the brine.

Thereafter the extracted single bromine is blown out by forced air, then absorbed by sulfur dioxide or soda by adding

acid, chlorine and sulfur.

the natural brine is sent to the bromine refining plant where bromine is extracted

from the natural brine.

In neutral or acidic water, the bromine ion is easily oxidized by adding the oxidative of chlorine, which generates

the single bromine away from the brine.

Thereafter the extracted single bromine is blown out by forced air, then absorbed by sulfur dioxide

or soda by adding acid, chlorine and sulfur.

Extracted bromine is stored in containers of different sizes;

the wastewater from this refining process is then transported by pipeline to brine pans.

Our production feeds include

(i) natural brine;

Our production feeds include (i) natural brine;

(ii) vitriol;

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and (v) coal.

We also produce crude salt, which is produced

from the evaporation of the wastewater after our bromine production process.

Once the brine is returned to the surface and the bromine

is removed, the remaining brine is pumped to on-site containing pools and then exposed to natural sunshine.

This causes the water to evaporate

from the brine, resulting in salt being left over afterwards.

Crude salt is the principal material in alkali production as well as chlorine

alkali production and is widely used in the chemical, food and beverage, and other industries.

We also produce crude salt, which

is produced from the evaporation of the wastewater after our bromine production process.

Once the brine is returned to the surface and

the bromine is removed, the remaining brine is pumped to on-site containing pools and then exposed to natural sunshine.

This causes the

water to evaporate from the brine, resulting in salt being left over afterwards.

Crude salt is the principal material in alkali production

as well as chlorine alkali production and is widely used in the chemical, food and beverage, and other industries.

Chemical Products

We produce chemical products through our wholly-owned

subsidiary, Shouguang Yuxin Chemical Industry Company Limited, or SYCI.

At the present time, SYCI is closed pursuant to the letter

from government dated on November 24, 2017.

It is being relocated to Bohai Marine Fine Chemical Industry Park, Shouguang City.

paid $8,978,553 for a 50-year lease of a piece of land for its new factories at Bohai Marine Fine Chemical Industrial Park in December

2017 and leased another piece of land from the third party for its new chemical factory.

We received the final approval for our new chemical

factory and started construction in June 2020.

Historically, SYCI concentrated its efforts on

the production and sale of chemical products that are used in oil and gas field exploration, oil and gas distribution, oil field drilling,

papermaking chemical agents, inorganic chemicals and materials that are used for human and animal antibiotics.

SYCI engaged in depth study

of existing products and new product research and development at the same time.

SYCI’s annual production of oil and gas field exploration

products and related chemicals was over 26,000 tons, and its production of papermaking-related chemical products was over 5,000 tons.

SYCI’s annual production capacity of materials that are used for human and animal antibiotics was over 6,800 tons.

We produce chemical products through

our wholly-owned subsidiary, Shouguang Yuxin Chemical Industry Company Limited, or SYCI.

At the present time, SYCI is closed pursuant

to the letter from government dated on November 24, 2017.

It is being relocated to Bohai Marine Fine Chemical Industry Park, Shouguang

SYCI paid $8,846,282 for a 50-year lease of a piece of land for its new factories at Bohai Marine Fine Chemical Industrial Park

in December 2017 and leased another piece of land from the third party for its new chemical factory.

We received the final approval for

our new chemical factory and started construction in June 2020.

Historically, SYCI concentrated

its efforts on the production and sale of chemical products that are used in oil and gas field exploration, oil and gas distribution,

oil field drilling, papermaking chemical agents, inorganic chemicals and materials that are used for human and animal antibiotics.

engaged in depth study of existing products and new product research and development at the same time.

SYCI’s annual production

of oil and gas field exploration products and related chemicals was over 26,000 tons, and its production of papermaking-related chemical

products was over 5,000 tons.

SYCI’s annual production capacity of materials that are used for human and animal antibiotics was

over 6,800 tons.

Sales and Marketing

We have an in-house sales staff of 7 persons.

We have an in-house sales staff

of 7 persons.

Our customers send their orders to us first.

Our in-house sales staff then attempts to satisfy these orders based on our actual

production schedules and inventories on hand.

Our in-house sales staff then attempts to satisfy these orders based on our

actual production schedules and inventories on hand.

Many of our customers have a long term relationship with us.

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Principal Customers

We sell a substantial portion of our products

to a limited number of PRC customers.

Our principal customers during 2023 were Shandong Morui Chemical Company Limited, Shandong

Brother Technology Limited, and Shouguang Weidong Chemical Company Limited.

We have ongoing policies in place to ensure that sales are

made to customers who are credit-worthy.

During the year ended December 31, 2023, sales

to our three largest bromine customers, based on net revenue from such customers, aggregated $10,866,228 or approximately 40.36% of total

net revenue from sale of bromine;

and sales to our largest customer represented approximately 14%, respectively, of total net revenue

from the sale of bromine.

During the year ended December 31, 2022, sales

to our three largest bromine customers, based on net revenue from such customers, aggregated $19,581,606 or approximately 33% of total

net revenue from sale of bromine;

and sales to our largest customer represented approximately 12%, respectively, of total net revenue

from the sale of bromine.

During each of the years ended December 31, 2023

and 2022, sales to our three largest crude salt customers, based on net revenue from such customers, aggregated $2,971,467 and $6,996,553,

respectively, or approximately 100% and 100% of total net revenue from sale of crude salt;

and sales to our largest customer represented

approximately 38% and 39%, respectively, of total net revenue from the sale of crude salt.

During each of the years ended December 31, 2023

and 2022, the net revenue for the chemical products was $0.

During each of the years ended December 31, 2023

and 2022, the net revenue for the natural gas was $0.

We sell a substantial portion

of our products to a limited number of PRC customers.

Our principal customers during 2024 were Shandong Morui Chemical Company Limited,

Shandong Brother Technology Limited, and Shouguang Weidong Chemical Company Limited.

We have ongoing policies in place to ensure that

sales are made to customers who are credit-worthy.

During the year ended December

31, 2024, sales to our three largest bromine customers, based on net revenue from such customers, aggregated $1,969,624 or

approximately 35% of total net revenue from sale of bromine;

and sales to our largest customer represented approximately 12%,

respectively, of total net revenue from the sale of bromine.

During the year ended December

31, 2023, sales to our three largest bromine customers, based on net revenue from such customers, aggregated $10,866,228 or approximately

40% of total net revenue from sale of bromine;

and sales to our largest customer represented approximately 14%, respectively, of total

net revenue from the sale of bromine.

During each of the years ended

December 31, 2024 and 2023, sales to our three largest crude salt customers, based on net revenue from such customers, aggregated $2,049,988

and $2,971,467, respectively, or approximately 100% and 100% of total net revenue from sale of crude salt;

and sales to our largest customer

represented approximately 38% and 38%, respectively, of total net revenue from the sale of crude salt.

During each of the years ended December 31, 2024 and

2023, the net revenue for the chemical products was $0.

During each of the years ended December

and 2022, the net revenue for the equipment lease was $150,861 and $132,993.

31, 2024 and 2023, the net revenue for the natural gas was $61,207 and $150,861.

Principal Suppliers

Our principal external suppliers are Laizhou Shengfu

Chemical Company Limited, Weifang Wanhong Chemical Company Limited, Shandong Xinlong International Trade Company Limited, Shouguang Runfeng

trading Company Limited.

During the year ended December 31, 2023 and 2022,

we purchased 100% of raw materials for our bromine and crude production from our top three suppliers.

During the year ended December 31, 2023 and 2022,

we did not purchase any raw materials for chemical products production.

This supplier concentration makes us vulnerable to a near-term

adverse impact, should the relationships be terminated.

Our principal external suppliers

are Laizhou Shengfu Chemical Company Limited, Weifang Wanhong Chemical Company Limited, Shandong Xinlong International Trade Company Limited,

Shouguang Runfeng trading Company Limited.

During the year ended December

31, 2024 and 2023, we purchased 100% of raw materials for our bromine and crude production from our top four suppliers.

During the year ended December

31, 2024 and 2023, we did not purchase any raw materials for chemical products production.

This supplier concentration makes us vulnerable

to a near-term adverse impact, should the relationships be terminated.

Business Strategy

Expansion of Production Capacity to Meet Demand

▼ Bromine and Crude

In view of keen competition and the trend of less

bromine contraction of brine water being extracted in Shouguang City, Shandong Province, the Company intended to access more bromine and

crude salt resources by finding new underground brine water resources in the Sichuan Province.

On January 30, 2015 we announced that we

had found natural gas resources under our bromine well in Sichuan Province.

On November 23, 2015, the Company’s subsidiary SCHC

entered into an agreement with the People’s Government of Daying County in Sichuan Province for the exploration and development

of natural gas and brine resources (including bromine and crude salt).

In January 2017, the Company completed the construction of the

first brine water and natural gas well field in Sichuan Province.

Subsequently, the Company found some issues related to the water and

other potential impurities in the natural gas during trial production.

In resolving the problem, the Company purchased customized equipment

for its natural gas project.

The installation of such equipment, including providing piping and electricity, was completed in July 2018.

The Company completed the test production at its first natural gas well in Sichuan Province and commenced trial production in January

On May 29, 2019, the Company received verbal notice

from the government of Tianbao Town, Daying County, Sichuan Province, mandating the need for project approval for its Daying well, encompassing

the entire natural gas and brine water project.

This also includes approvals for safety production inspection, environmental protection

assessment, and to solve the related land issue.

Until these approvals are obtained, the Company must temporarily suspend trial production

at its natural gas well in Daying.

Additionally, in compliance with the Chinese government new policies, the Company is required to obtain

an exploration license for bromine and a mining license for natural gas.

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

▼ Bromine and Crude Salt

In view of keen competition and

the trend of less bromine contraction of brine water being extracted in Shouguang City, Shandong Province, the Company intended to access

more bromine and crude salt resources by finding new underground brine water resources in the Sichuan Province.

On January 30, 2015 we

announced that we had found natural gas resources under our bromine well in Sichuan Province.

On November 23, 2015, the Company’s

subsidiary SCHC entered into an agreement with the People’s Government of Daying County in Sichuan Province for the exploration

and development of natural gas and brine resources (including bromine and crude salt).

In January 2017, the Company completed the construction

of the first brine water and natural gas well field in Sichuan Province.

Subsequently, the Company found some issues related to the water

and other potential impurities in the natural gas during trial production.

In resolving the problem, the Company purchased customized

equipment for its natural gas project.

The installation of such equipment, including providing piping and electricity, was completed in

The Company completed the test production at its first natural gas well in Sichuan Province and commenced trial production

in January 2019.

On May 29, 2019, the Company received

verbal notice from the government of Tianbao Town, Daying County, Sichuan Province, mandating the need for project approval for its Daying

well, encompassing the entire natural gas and brine water project.

This also includes approvals for safety production inspection, environmental

protection assessment, and to solve the related land issue.

Until these approvals are obtained, the Company must temporarily suspend trial

production at its natural gas well in Daying.

Additionally, in compliance with the Chinese government new policies, the Company is required

to obtain an exploration license for bromine and a mining license for natural gas.

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 is engaged in ongoing discussions with the government of Daying County regarding the establishment of a joint

venture for the exploration and production of natural gas and brine products in Sichuan.

On September 1, 2017, the Company received notification

from the Government of Yangkou Town, Shouguang City of PRC that production at all its factories must be halted immediately.

This was required

for the Company to perform rectification and improvement in compliance with the local new safety and environmental protection requirements.

The Company has worked closely with the county

authorities to develop rectification plans for its bromine and crude salt businesses, reaching an agreement on a plan in October 2017.

During the fiscal year ended December 31, 2018, the Company incurred $16,243,677 in the rectification and improvements of plant and equipment

of the bromine and crude salt factories resulting in a cumulative amount of $34,182,329 incurred as of December 31, 2018.

The Shouguang

City Bromine Association, on behalf of all the bromine producers in Shouguang, initiated negotiations with the local government agencies.

The local governmental agencies acknowleged the facts that their initial requirements for the bromine industry did not include the project,

the planning and land use rights approvals, which were later introduced by the provincial government as new requirements.

understood from the local government that local government were coordinating with various government agencies to solve these three outstanding

approval issues in a timely manner and that all impacted bromine plants are not allowed to commence production prior to obtaining those

On September 1, 2017, the Company

received notification from the Government of Yangkou Town, Shouguang City of PRC that production at all its factories must be halted immediately.

This was required for the Company to perform rectification and improvement in compliance with the local new safety and environmental protection

requirements.

The Company has worked closely

with the county authorities to develop rectification plans for its bromine and crude salt businesses, reaching an agreement on a plan

in October 2017.

During the fiscal year ended December 31, 2018, the Company incurred $16,243,677 in the rectification and improvements

of plant and equipment of the bromine and crude salt factories resulting in a cumulative amount of $34,182,329 incurred as of December

The Shouguang City Bromine Association, on behalf of all the bromine producers in Shouguang, initiated negotiations with the

local government agencies.

The local governmental agencies acknowledged the facts that their initial requirements for the bromine industry

did not include the project, the planning and land use rights approvals, which were later introduced by the provincial government as new

requirements.

The Company understood from the local government that local government were coordinating with various government agencies

to solve these three outstanding approval issues in a timely manner and that all impacted bromine plants are not allowed to commence production

prior to obtaining those approvals.

In April 2019, Factory No.1, Factory No.5 and Factory No.7 (Factory no.

5 is considered part of Factory no.7 and both are managed

as one factory since 2010) resumed operations upon receipt of verbal notification from local government of Yangkou County.

7, 2019, the Company renamed its Subdivision Factory No.

5 is considered part of Factory

no.7 and both are managed as one factory since 2010) resumed operations upon receipt of verbal notification from local government of Yangkou

Then, on May 7, 2019, the Company renamed its Subdivision Factory No.

1 to Factory No.

and Factory No.

5 (previously integrated with Factory No.

5 (previously integrated

with Factory No.

7) as the new Factory No.

On November 25,

2019, the government of Shouguang City issued a notice ordering all bromine facilities in Shouguang City, including the

Company’s all 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 on February 27, 2020

issued by the local governmental authority which allows us to resume production after the winter temporary closure.

Company received another approval from the Shouguang Yangkou People’s Government dated on March 5, 2020 to resume production

at its bromine factories No.1, No.

25, 2019, the government of Shouguang City issued a notice ordering all bromine facilities in Shouguang City, including the Company’s

all bromine facilities, including Factory No.1 and Factory No.

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

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 on February 27, 2020 issued by the local governmental authority which

allows us to resume production after the winter temporary closure.

Further, the Company received another approval from the Shouguang Yangkou

People’s Government dated on March 5, 2020 to resume production at its bromine factories No.1, No.

4, No.7 and No.

9 in order to meet the needs of bromide products for epidemic prevention and

control (the “March 2020 Approval”).

The Company’s factories No.7 and No.1 started trial production in middle

March, 2020, and commenced commercial production on April 3, 2020.

The Company received oral notification from the

government regarding Factory No.

9 in order to

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

The Company’s factories

No.7 and No.1 started trial production in middle March, 2020, and commenced commercial production on April 3, 2020.

The Company received oral notification

from the government regarding Factory No.

8, allowing it to resume production in August 2022.

Factory No.8 began contributing revenue in the fourth

quarter 2022.

The Company is awaiting governmental approval

for Factories No.

Factory No.8 began contributing revenue

in the fourth quarter 2022.

The Company is awaiting governmental

approval for Factories No.

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

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This project was implemented for safeguarding its bromine facilities.

Pursuant to the notification from the government

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

compliance with the notification, the Company ceased production at its bromine facilities during this period and resumed operations at

the bromine and crude salt factories as scheduled in February 2024.

Pursuant to the notification from

the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 15, 2024 until February

In compliance with the notification, the Company ceased production at its bromine facilities during this period and resumed

preparation operations at the bromine and crude salt factories as scheduled in February 2025.

▼ Chemical Products

On November 24, 2017, the Company received a letter

from the Government of Yangkou County, Shouguang City notifying the Company to relocate its two chemical production plants located in

the second living area of the Qinghe Oil Extraction Plant to the Bohai Marine Fine Chemical Industrial Park (the “November

On November 24, 2017, the Company

received a letter from the Government of Yangkou County, Shouguang City notifying the Company to relocate its two chemical production

plants located in the second living area of the Qinghe Oil Extraction Plant to the Bohai Marine Fine Chemical Industrial Park (the “November

2017 Letter”).

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incurred relocation costs in the amount of $45,584,344 as of December 31, 2024.

In January 2020, the Company received the environmental

protection approval by the government of Shouguang City, Shandong Province for the planned Yuxin Chemical factory.

Construction of the

new chemical facilities at Bohai Marine Fine Chemical Industrial Park commenced in June 2020, with the bulk of the civil engineering works

completed by the end of June 2021.

In January 2020, the Company received

the environmental protection approval by the government of Shouguang City, Shandong Province for the planned Yuxin Chemical factory.

of the new chemical facilities at Bohai Marine Fine Chemical Industrial Park commenced in June 2020, with the bulk of the civil engineering

works completed by the end of June 2021.

However, due to the supply chain issues as well as the electric restrictions in China, the delivery

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to be ongoing, there is a possibility that the chemical factory could be repurposed for the production of Sodium-Ion batteries.

To date, our sales have been limited to customers

within the PRC and we expect that our sales will remain primarily domestic for the immediate future.

To date, our sales have been limited

to customers within the PRC and we expect that our sales will remain primarily domestic for the immediate future.

Our marketing strategy

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advantageous relationships.

We compete with PRC domestic private companies

and state owned companies.

Certain state owned and state backed competitors are more established and have more control of certain resources

in terms of pricing than we do.

We compete with PRC domestic private

companies and state owned companies.

Certain state owned and state backed competitors are more established and have more control of certain

resources in terms of pricing than we do.

We compete based on price, our reputation for quality, on-time delivery, our relationship with

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are key considerations in awarding contracts in the PRC.

Our principal competitors in the bromine business

are Shandong Yuyuan Group Company Limited, Shandong Haihua Group Company Limited, Shandong Dadi Salt Chemical Group Company Limited and

Shandong Haiwang Chemical Company Limited, all of which produce bromine principally for use in their chemicals businesses and sell

part of the bromine produced to customers.

These companies may switch to selling bromine to the market if they no longer use bromine in

their chemical businesses.

Our principal competitors in the crude salt business

are Shandong Haiwang Chemical Company Limited, Shandong Haihua Group Company Limited, Shandong Weifang Longwei Industrial Company Limited,

Shandong Yuyuan Group Company Limited and Shandong Caiyangzi Saltworks.

Our principal competitors in the chemical business

are Beijing Shiji Zhongxing Energy Technology Co., Ltd, Yanan Chaozheng Nijiang Co., Ltd, Shandong Dacheng Pesticides Company Limited,

Binhua Group Company Limited, Dongying City Dongchen (Group) Chemical Industry Company Limited, Beijing Peikangjiaye Technologies Limited,

Shouguang Fukang Pharmaceutical Co., Ltd.

Shandong Xinhua Pharmaceutical Limited by Share Ltd, Hunan Erkang Pharmaceutical Limited by

Share Ltd and Xinan Synthetic Pharmaceutical Limited by Share Ltd.

Our principal competitors in the

bromine business are Shandong Yuyuan Group Company Limited, Shandong Haihua Group Company Limited, Shandong Dadi Salt Chemical Group Company

Limited and Shandong Haiwang Chemical Company Limited, all of which produce bromine principally for use in their chemicals businesses

and sell part of the bromine produced to customers.

These companies may switch to selling bromine to the market if they no longer use

bromine in their chemical businesses.

Our principal competitors in the

crude salt business are Shandong Haiwang Chemical Company Limited, Shandong Haihua Group Company Limited, Shandong Weifang Longwei Industrial

Company Limited, Shandong Yuyuan Group Company Limited and Shandong Caiyangzi Saltworks.

Our principal competitors in the

chemical business are Beijing Shiji Zhongxing Energy Technology Co., Ltd, Yanan Chaozheng Nijiang Co., Ltd, Shandong Dacheng Pesticides

Company Limited, Binhua Group Company Limited, Dongying City Dongchen (Group) Chemical Industry Company Limited, Beijing Peikangjiaye

Technologies Limited, Shouguang Fukang Pharmaceutical Co., Ltd.

Shandong Xinhua Pharmaceutical Limited by Share Ltd, Hunan Erkang Pharmaceutical

Limited by Share Ltd and Xinan Synthetic Pharmaceutical Limited by Share Ltd.

Government Regulation

China has been reinforcing the environmental requirements

for the entire chemical industry, demanding the closure or rectification of those factories that do not meet the emission requirements

and are highly polluting.

In early 2017, the government announced the closure or relocation of those chemical industry facilities

that are close to residential areas and the new environmental law officially came into full effect in January 2018.

The following is a summary of the principal governmental

laws and regulations that are or may be applicable to our operations in the PRC.

The scope and enforcement of many of the laws and regulations

described below are uncertain.

We cannot predict the effect of further developments in the Chinese legal system, including the promulgation

of new laws, changes to existing laws or the interpretation or enforcement of laws.

In the natural resources sector, the PRC and the

various provinces have enacted a series of laws and regulations over the past 20 years, including laws and regulations designed to improve

safety and decrease environmental degradation.

The “China Mineral Resources Law” declares state ownership of all

mineral resources in the PRC.

China has been reinforcing the

environmental requirements for the entire chemical industry, demanding the closure or rectification of those factories that do not meet

the emission requirements and are highly polluting.

In early 2017, the government announced the closure or relocation of those chemical

industry facilities that are close to residential areas and the new environmental law officially came into full effect in January 2018.

The following is a summary of

the principal governmental laws and regulations that are or may be applicable to our operations in the PRC.

The scope and enforcement

of many of the laws and regulations described below are uncertain.

We cannot predict the effect of further developments in the Chinese

legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement of laws.

In the natural resources sector,

the PRC and the various provinces have enacted a series of laws and regulations over the past 20 years, including laws and regulations

designed to improve safety and decrease environmental degradation.

The “China Mineral Resources Law” declares state ownership

of all mineral resources in the PRC.

However, mineral exploration rights can be purchased, sold and transferred to foreign owned companies.

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to licensed entities hundreds of smaller operations have continued to extract bromine without licenses.

The Ministry of Land and Resources (“MLR”)

is the principal regulator of mineral rights in China.

The Ministry has authority to grant licenses for land-use and exploration rights,

issue permits for mineral rights and leases, oversee the fees charged for them and their transfer, and review reserve evaluations.

are required to hold a bromine and salt production license in order to operate our bromine and salt production business in the PRC.

bromine and salt production license is subject to a yearly audit.

If we do not successfully pass the yearly approval by relevant government

authorities, our bromine and salt production operations may be suspended until we are able to comply with the license requirements which

could have a material adverse effect on our business, financial condition and results of operations.

The Ministry of Land and Resources

(“MLR”) is the principal regulator of mineral rights in China.

The Ministry has authority to grant licenses for land-use and

exploration rights, issue permits for mineral rights and leases, oversee the fees charged for them and their transfer, and review reserve

We are required to hold a bromine and salt production license in order to operate our bromine and salt production business

Our bromine and salt production license is subject to a yearly audit.

If we do not successfully pass the yearly approval by

relevant government authorities, our bromine and salt production operations may be suspended until we are able to comply with the license

requirements which could have a material adverse effect on our business, financial condition and results of operations.

Human Capital Resources

Employee Profiles

As of December 31, 2023, we employed approximately

380 full-time employees, of whom approximately 78% are with SCHC、SHSI and DCHC, and 22% are with SYCI.

Approximately 29% of

our employees are management personnel and 4% are sales and procurement staff.

None of our employees are represented by a union.

As of December 31, 2024, we employed

approximately 367 full-time employees, of whom approximately 77% are with SCHC 、 SHSI

and DCHC, and 23% are with SYCI.

Approximately 28% of our employees are management personnel and 4% are sales and procurement staff.

of our employees are represented by a union.

Total Rewards

Our compensation program is designed to attract

and reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement of our

strategic goals and create long-term value for our stockholders.

Our employees in China participate in a state pension arrangement organized

by Chinese municipal and provincial governments.

Our compensation program is designed

to attract and reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement

of our strategic goals and create long-term value for our stockholders.

Our employees in China participate in a state pension arrangement

organized by Chinese municipal and provincial governments.

We are required to contribute to the arrangement at the rate of 16% of the

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Health and Safety

The success of our business is fundamentally connected

to the well-being of our people.

The success of our business is

fundamentally connected to the well-being of our people.

Accordingly, we are committed to the health, safety and wellness of our employees.

We provide our employees

and their families with access to a variety of flexible and convenient health and welfare programs, including benefits that support their

physical and mental health by providing tools and resources to help them improve or maintain their health status;

and that offer choice

where possible so they can customize their benefits to meet their needs and the needs of their families.

In response to the COVID-19 pandemic,

we implemented significant operating environment changes that we determined were in the best interest of our employees, as well as the

communities in which we operate, and which comply with government regulations.

This includes having the vast majority of our employees

work from home, while implementing additional safety measures for employees continuing critical on-site work.

A core tenet of our talent system is to both develop

talent from within and supplement with external hires.

This approach has yielded loyalty and commitment in our employee base which in

turn grows our business, our products, and our customers, while adding new employees and external ideas supports a continuous improvement

mindset and our goals of a diverse and inclusive workforce.

Our talent acquisition team uses internal and external resources to recruit

highly skilled and talented workers in the PRC, and we encourage employee referrals for open positions.

We provide our employees and their families with access to a variety of flexible and convenient health and welfare programs, including

benefits that support their physical and mental health by providing tools and resources to help them improve or maintain their health

and that offer choice where possible so they can customize their benefits to meet their needs and the needs of their families.

In response to the COVID-19 pandemic, we implemented significant operating environment changes that we determined were in the best interest

of our employees, as well as the communities in which we operate, and which comply with government regulations.

This includes having the

vast majority of our employees work from home, while implementing additional safety measures for employees continuing critical on-site

A core tenet of our talent system

is to both develop talent from within and supplement with external hires.

This approach has yielded loyalty and commitment in our employee

base which in turn grows our business, our products, and our customers, while adding new employees and external ideas supports a continuous

improvement mindset and our goals of a diverse and inclusive workforce.

Our talent acquisition team uses internal and external resources

to recruit highly skilled and talented workers in the PRC, and we encourage employee referrals for open positions.

Available Information

We make available free of charge on or through

our internet website, www.gulfresourcesinc.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports

on Form 8-K, including exhibits, and all amendments to those reports, if any, filed or furnished pursuant to Section 13(a) or

We make available free of charge

on or through our internet website, www.gulfresourcesinc.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current

Reports on Form 8-K, including exhibits, and all amendments to those reports, if any, filed or furnished pursuant to Section 13(a) or

15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after they are electronically filed with, or furnished

5 unchanged sentences

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

What changed 10-K

Item 1. Business