What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-04-11 compared with 2024-09-27 · 407 added, 362 removed, 154 unchanged (83% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations.

We are a Nevada holding company which conducts

operations through our wholly-owned China-based subsidiaries.

Our business is conducted and reported in four segments, namely,

bromine, crude salt, chemical products and natural gas.

Through our wholly-owned subsidiary, SCHC, we

produce and trade bromine and crude salt.

We are one of the largest producers of bromine in China, as measured by production output.

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

Bromine also is used to

form intermediary chemical compounds such as Tetramethylbenzidine.

Bromine is commonly used in brominated flame retardants,

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

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.

Through our wholly-owned subsidiary, SYCI, we

manufacture and sell chemical products used in oil and gas field exploration, oil and gas distribution, oil field drilling, papermaking

Management’s Discussion and Analysis

of Financial Condition and Results of Operations.

We are a Nevada holding company

which conducts operations through our wholly-owned China-based subsidiaries.

Our business is conducted and reported in four segments,

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

Through our wholly-owned subsidiary,

SCHC, we produce and trade bromine and SHSI for crude salt production and trading.

We are one of the largest producers of

bromine in China, as measured by production output.

Elemental bromine is used to manufacture a wide variety of bromine compounds used

in industry and agriculture.

Bromine also is used to form intermediary chemical compounds such as Tetramethylbenzidine.

Bromine is commonly

used in brominated flame retardants, fumigants, water purification compounds, dyes, medicines and disinfectants.

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.

Through our wholly-owned subsidiary,

SYCI, we manufacture and sell chemical products 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.

Our wholly-owned subsidiary, DCHC, was established

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

Our wholly-owned subsidiary, DCHC,

was established to explore and develop natural gas and brine resources (including bromine and crude salt) in Sichuan Province, China.

Bromine and Crude Salt

As disclosed in the Company’s Current Report

on Form 8-K filed on September 8, 2017, the Company received, on September 1, 2017, letters from the Yangkou County, Shouguang City government

addressed to each of its subsidiaries, SCHC and SYCI, 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 and environmental protection requirements.

In the Company’s press release of August

11, 2017 and on its conference call of August 14, 2017, the Company addressed concerns that increased government enforcement of stringent

environmental rules that were adopted in early 2017 to insure corporations bring their facilities up to necessary standards so that pollution

and other negative environmental issues are limited and remediated, could have an impact on our business in both the short and long-term.

The Company also expressed that although it believed its facilities were fully compliant at the time, the Company did not know how its

facilities would fare under the new rules.

Teams of inspectors from the government were sent to many provinces to inspect all mining and

manufacturing facilities.

The local government requested that facilities be closed, so that the facilities could undergo the inspection

and analysis in the most efficient manner by inspectors’ team.

As a result, our facilities were closed on September 1, 2017.

The Company believes that this is another step

by the government to improve the environment.

It further believes the goal of the government is not to close all plants, but rather to

codify the regulations related to project approval, land use, planning approval and environmental protection assessment approval so that

illegal plants are not able to open in the future and so that plants close to population centers do not cause serious environmental damage.

In addition, the Company believes that the Shandong provincial government wants to assure that each of its regional and county governments

has applied the Notice in a consistent manner.

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 the 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 will not be allowed to commence production prior to obtaining those approvals.

February 2019, the Company received a notification from the local government of Yangkou County that its Factories No.

As disclosed in the Company’s

Current Report on Form 8-K filed on September 8, 2017, the Company received, on September 1, 2017, letters from the Yangkou County, Shouguang

City government addressed to each of its subsidiaries, SCHC and SYCI, 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 and environmental protection requirements.

In the Company’s press

release of August 11, 2017 and on its conference call of August 14, 2017, the Company addressed concerns that increased government enforcement

of stringent environmental rules that were adopted in early 2017 to insure corporations bring their facilities up to necessary standards

so that pollution and other negative environmental issues are limited and remediated, could have an impact on our business in both the

short and long-term.

The Company also expressed that although it believed its facilities were fully compliant at the time, the Company

did not know how its facilities would fare under the new rules.

Teams of inspectors from the government were sent to many provinces to

inspect all mining and manufacturing facilities.

The local government requested that facilities be closed, so that the facilities could

undergo the inspection and analysis in the most efficient manner by inspectors’ team.

As a result, our facilities were closed on

September 1, 2017.

The Company believes that this

is another step by the government to improve the environment.

It further believes the goal of the government is not to close all plants,

but rather to codify the regulations related to project approval, land use, planning approval and environmental protection assessment

approval so that illegal plants are not able to open in the future and so that plants close to population centers do not cause serious

environmental damage.

In addition, the Company believes that the Shandong provincial government wants to assure that each of its regional

and county governments has applied the Notice in a consistent manner.

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

the 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 will not be allowed to commence production prior to obtaining those approvals.

In February 2019, the Company received a notification from the local government of Yangkou County that its Factories No.

9 passed inspection and were allowed to resume operations.

1 unchanged sentence

7 resumed operations.

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

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.

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

4 unchanged sentences

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 People’s Government of Yangkou County, Shouguang City notifying the Company that due to the new standards and regulations

relating to safety production and environmental pollution, from certain local governmental departments, such as the municipal environmental

protection department, the security supervision department and the fire department, its chemical enterprises would have to be relocated

to a new industrial park called Bohai Marine Fine Chemical Industry Park.

On November 24, 2017, the Company

received a letter from the People’s Government of Yangkou County, Shouguang City notifying the Company that due to the new standards

and regulations relating to safety production and environmental pollution, from certain local governmental departments, such as the municipal

environmental protection department, the security supervision department and the fire department, its chemical enterprises would have

to be relocated to a new industrial park called Bohai Marine Fine Chemical Industry Park.

Although our chemical companies were in compliance

2 unchanged sentences

Chemical companies that are not being asked to move into the park are being permanently closed.

Since our factories closed, the

Company has secured from the government the land use rights for its chemical plant.

Since our factories closed, the Company

has secured from the government the land use rights for its chemical plant.

On January 6, 2020, the Company received the environmental

6 unchanged sentences

electrical restrictions, the opening of the chemical factory has been postponed.

The Company has received the refrigeration and air

compressor units.

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 Company has received the refrigeration and air compressor

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

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

As a result of our acquisitions of SCHC and SYCI,

our historical consolidated financial statements and the information presented below reflects the accounts of SCHC、SYCI and

DCHC, the consolidated financial statements and the information presented below as of and for the year ended December 31, 2023.

following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in

As a result of our

acquisitions of SCHC and SYCI, our historical consolidated financial statements and the information presented below reflects the

accounts of SCHC 、 SYCI and DCHC, the consolidated financial

statements and the information presented below as of and for the year ended December 31, 2024.

The following discussion should be

read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

Flood Prevention Project

In August 2023, the Company

initiated its preventive measures for safeguarding its bromine facilities.

Our strategy involves the renovation of the channels of four

major rivers within our mining area, encompassing the tributary of the Mihe River.

The aim is to prevent flooding that could harm the

wells, aqueducts and crude salt pans at our plant.

2023, the Company initiated its preventive measures for safeguarding its bromine facilities.

Our strategy involves the renovation of the

channels of four major rivers within our mining area, encompassing the tributary of the Mihe River.

The aim is to prevent flooding that

could harm the wells, aqueducts and crude salt pans at our plant.

In December 2023, the Company completed this flood prevention project.

As of December

31, 2023, we incurred $ 46,510,856 in other expenses for the project.

The cost incurred for four

major rivers are:

As of December 31, 2023, we incurred $46,510,856 in other expenses for the project.

The cost incurred for four major

(1) Liansigou Section for $8,057,722;(2) Mi River Section for $20,168,321;(3) Ta River Section $10,070,033;

Weitan River Section for $8,214,780 .

(4) Weitan River

Section for $8,214,780.

RESULTS OF OPERATIONS.

Year ended December 31, 2023 as compared to

year ended December 31, 2022

Percent Change Increase/

Year ended December 31, 2024 as compared to year ended

December 31, 2023

Percent Change

Increase/ (Decrease)

Cost of Net Revenue

1 unchanged sentence

$ (28,089,953 )

$ (7,085,731 )

Sales, Marketing and Other Operating Expense

5 unchanged sentences

$ (4,240,832 )

Other Operating Expense

Loss from Operations

$ (21,283,649 )

(Loss)/Profit from Operations

$ (11,890,725 )

2 unchanged sentences

$ (46,510,856 )

(Loss) /Income before Taxes

Loss on disposal of property, plant and equipment

$ (29,169,008 )

Impairment of Property, plant and equipment

$ (6,772,500 )

Loss before Taxes

$ (57,287,270 )

$ (58,256,662 )

Income Tax Expense (Benefit)

1 unchanged sentence

$ (3,538,617 )

Net (Loss) /Income

$ (58,935,452 )

Net Loss of $61,795,279 was

mainly attributable to decreased sales, reduced margins.

$ (61,795,279 )

of $58,935,452 for year 2024 was mainly attributable to decreased sales and reduced margins.

The company also suffered a loss of $29,169,008

and $6,772,500 on retirement of fixed assets and impairment of fixed assets.

Additionally, the compensation expenses amounted to $194,700

for shares issued to company employees, officers and consultant for the year 2024 .

The Company also incurred losses of $46,510,856

on a flood prevention project.

Net Revenue The table below

shows the changes in net revenue in the respective segment of the Company for the fiscal year 2023 compared to the same period in 2022:

of $61,795,279 for year 2023 was mainly attributable to decreased sales and reduced margins.

Additionally, the compensation expenses amounted

to $451,350 for shares issued to company employees, officers and consultant for the year 2023 .

The Company also incurred losses

of $46,510,856 on a flood prevention project.

Net Revenue The

table below shows the changes in net revenue in the respective segment of the Company for the fiscal year 2024 compared to the same period

Net Revenue by Segment

Increase (Decrease)

December 31, 2024

December 31, 2023

Percent Increase (Decrease)

of Net Revenue

Chemical Products

Equipment Lease

Years Ended December 31

2 unchanged sentences

Bromine (excluded volume sold to SYCI)

Bromine segment

Bromine se g ment

Net revenue from our bromine segment decreased by 79.4%

to $5,549,815 for the year ended December 31, 2024, compared to $26,921,462 for the year ended December 31, 2023.

decrease was due to a 55% decrease in average selling price.

This decrease was due

to a decrease in bromine unit price of 27% and a decrease in volume of 72%.

Crude salt se g ment

4 unchanged sentences

Chemical products segment

For the years ended December 31, 2023 and

December 31, 2022, the net revenue for the chemical products segment was $0 due to the closure of our chemical factories since September

For the years ended December 31, 2024

and December 31, 2023, the net revenue for the chemical products segment was $0 due to the closure of our chemical factories since September

Natural Gas segment

For the years ended December 31, 2023, and December

31, 2022, the net revenue for the natural gas production was $0.

Equipment Lease

For the year ended December 31, 2024, and December 31, 2023,

31, 2022, the net revenue for the equipment lease was $150,861 and $132,993.

the net revenue for the n atural g as se g ment was $61,207 and $150,861.

The 59.4% decrease in revenue was primarily

due to the expiration of contracts.

Cost of Net Revenue

3 unchanged sentences

Chemical Products

of net revenue primarily includes costs of the raw materials consumed, the direct salaries and benefits for production staff, electricity

costs, depreciation and amortization of manufacturing plant and machinery, and other manufacturing-related costs.

Cost of net revenue

primarily includes costs of the raw materials consumed, the direct salaries and benefits for production staff, electricity costs,

depreciation and amortization of manufacturing plant and machinery, and other manufacturing-related costs.

Our cost of net revenue

was $14,746,741 for the year ended December 31, 2024, representing a $13,343,212 (or 48%) decrease compared to the preceding year.

In May 2022, we separated the bromine and the

crude salt business to comply with government regulations.

This separation required a reevaluation of cost allocations, resulting in increased

allocations to bromine and decreased allocations to crude salt.

Bromine production capacity and utilization

of our factories

The table below represents the annual capacity

and utilization ratios for all of our bromine producing properties:

Annual Production Capacity (in tonnes)

The decrease in costs was mainly due to a significant decrease in sales volume.

Bromine production capacity and utilization of our factories

The table below represents the annual capacity and utilization

ratios for all of our bromine producing properties:

Annual Production Capacity

Fiscal year 2024

1 unchanged sentence

Variance of the fiscal year 2024 and 2023

Utilization ratio is calculated based on the annualized actual production volume in tonnes for the periods divided by the annual production capacity in tonnes.

(i) Utilization ratio is calculated based on the annualized actual production volume in tonnes for the periods

divided by the annual production capacity in tonnes.

Bromine segment

For the year ended December 31, 2023, the cost

of net revenue for the bromine segment was $26,521,281.

For the year ended December 31, 2022, the cost

of net revenue for the bromine segment was $25,087,171.

For the year ended December 31, 2024, the cost of net revenue

for the bromine segment was $13,750,051.

For the year ended December 31, 2023, the cost of net revenue for the bromine segment was $26,521,281.

Crude salt segment

For the year ended December 31, 2024, the cost

of net revenue for the crude salt segment was $1,567,993.The cost of net revenue for our crude salt segment for the year ended December

31, 2022 was $3,581,567.

of net revenue for the crude salt segment was $996,396.

The cost of net revenue for our crude salt segment for the year ended

December 31, 2023 was $1,567,993.

Chemical products segment

Cost of net revenue for our chemical products

segment for the fiscal year 2023 and 2022 was $0.

Cost of net revenue for our chemical products segment for

the fiscal year 2024 and 2023 was $0.

Natural Gas segment

Cost of net revenue for our natural gas segment

for the year ended December 31, 2023 and 2022 was $679 and $414.

Gross Profit.

was $1,953,837, or 7%, of net revenue for the year ended December 31, 2023, compared to $37,425,334, or 57%, of net revenue for the same

period in 2022.

Cost of net revenue for our natural gas segment for the

year ended December 31, 2024 and 2023 was $294 and $679.

Gross (Loss) Profit.

Gross (loss) was $7,085,731or

93%, of net revenue for the year ended December 31, 2024, compared to $1,953,837, or 7%, of net revenue for the same period in 2023.

Gross Profit (Loss) by Segment

% Point Change

December 31, 2024

December 31, 2023

% Point Change

Profit Margin

Gross Profit (loss) Margin

(loss) Margin

$ (8,200,236 )

Chemical Products

Equipment Lease

Total Gross Profit

For the year ended December 31, 2023, gross

profit margin for our brom ine segment was 2% compared to 58% in the previous year.

This decrease was primarily attributable to the lower average selling price of bromine of $3,386 per ton in the year ended December 31,

2023, compared to $7,543 per ton in the year ended December 31, 2022.

For the year ended December 31, 2022, the gross

profit margin for our bromine segment was 58%.

Crude salt segment

For the year ended December

31, 2023, the gross profit margin for our crude salt segment was 47%, compared to 49% in the preceding year, representing a 2% decrease.

This decrease was primarily attributable to the lower average selling price of crude salt of $31 per ton in the year ended December 31,

2023 compared to $38 per ton in the year ended December 31, 2022 。

labor and factory overheads incurred during plant shutdown.

On September 1, 2017, the Company received notification from the

government of Yangkou County, Shouguang City of PRC stating that production at all its bromine and crude salt and chemical factories

should be halted with immediate effect in order for the Company to perform rectification and improvement in accordance with the county’s

new safety and environmental protection requirements.

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 Bohai Park.

As such, direct labor and factory overhead costs (including depreciation of plant and machinery)

amounted $9,544,675 and $12,002,629 for fiscal years 2023 and 2022, which were presented as operating expenses instead of in cost of

The increase in direct labor and factory overhead costs was primarily attributable to the factories operation status during

the fiscal year 2023 and year 2022, respectively.

These five factories (including No.1,No.4,No.7,No.8 and No.9)were in production during

the year 2023.

and Administrative Expenses.

General and administrative expenses were $4,240,832 for the year ended December 31, 2023, representing

a decrease of $1,787,247 (or 30%) as compared to$6,028,079 for the same period in 2022.

(Loss)/Profit from Operations.

Operating loss

was $11,890,725 for the fiscal year 2023, compared to a profit of $16,481,696 in the same period in 2022.

Total Gross (Loss) Profit

$ (7,085,731 )

Bromine se g ment

For the year ended December 31, 2024, the gross loss margin

for our bromine segment was 147% compared to the gross profit of 2% in the previous year.

This decrease was due to a decrease in bromine

unit price of 27% and a decrease in volume of 72%.

Crude salt se g ment

ended December 31, 2024, the gross profit margin for our crude salt segment was 51%, compared to 47% in the preceding year, representing

a 4% increase.

Direct labor and factory

overheads incurred during plant shutdown.

On September 1, 2017, the Company received notification from the government of Yangkou

County, Shouguang City of PRC stating that production at all its bromine and crude salt and chemical factories should be halted with immediate

effect in order for the Company to perform rectification and improvement in accordance with the county’s new safety and environmental

protection requirements.

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 Bohai

As such, direct labor and factory overhead costs (including depreciation of plant and machinery) amounted $8,880,643 and $9,544,675

for fiscal years 2024 and 2023, which were presented as operating expenses instead of in cost of revenue.

The decrease in direct labor

and factory overhead costs was primarily attributable to the factories operation status during the fiscal year 2024 and year 2023, respectively.

These five factories (including No.1,No.4,No.7,No.8 and No.9)were in production during the year 2024.

General and Administrative

General and administrative expenses were $5,271,011 for the year ended December 31, 2024, representing an increase of

$1,030,179 (or 24%) as compared to $4,240,832 for the same period in 2023.

Loss from Operations.

Operating loss was $21,283,649

for the fiscal year 2024, compared to a loss of $11,890,725 in the same period in 2023.

Income (loss) from Operations by Segment

1 unchanged sentence

Year ended December 31, 2023

$ (17,238,619 )

$ (10,005,755 )

Chemical Products

Profit (Loss) from operations before corporate costs

$ (3,028,479 )

$ (1,653,349 )

(Loss from operations before corporate costs

$ (20,539,156 )

$ (11,105,079 )

Corporate costs

Unrealized gain (loss) on translation of intercompany balance

(Loss)/ Profit from operations before taxes

Loss from operations from our

bromine segment was $10,005,755 for the fiscal year 2023, compared to an income of $17,905,181 in the same period in 2022.

in income was primarily due to a 55% decrease in average selling price.

Loss from operations before taxes

$ (21,283,649 )

$ (11,890,725 )

Bromine se g ment

Loss from operations from our bromine segment was $17,238,619

for the fiscal year 2024, compared to a loss of $10,005,755 in the same period in 2023.

This decrease was due to a decrease in bromine

unit price of 27% and a decrease in volume of 72%.

Crude salt se g ment

Income from operations from our crude salt segment

was $640,309 for fiscal year 2023, compared to an income of $2,301,885 in the same period in 2022.

The main reason for the decline in

crude salt in 2023 compared with 2022 is that the unit price of sales is down by 19%, and the sales volume is also down by 47%.

Chemical products

Loss from operations from our

crude salt segment was $76,694 for fiscal year 2024 compared to an income of $640,309 in the same period in 2023.

The main reason for

the decline in crude salt in 2024 compared with 2023 is that the unit price of sales is down by 13%, and the sales volume is also down

Chemical products segment

Loss from operations from our chemical products segment

was $3,028,479 for the fiscal year 2024, compared to a loss of $1,653,349 in the same period in 2023.

Natural Gas segment

Loss from operations from our natural gas segment was $195,364

1 unchanged sentence

Other (Expense)/Income, Net .

Other income,

net, which represent bank interest income, net of finance lease interest expense was $144,919 for the fiscal year 2023, representing a

decrease of $19,820 (or approximately 12%) as compared to the preceding year.

Expenditure on water pollution treatment.

on water pollution treatment was $46,510,856 in the fiscal year 2023.

Net (Loss)/Income.

Net loss was $61,795,279

for the fiscal year 2023, compared to net income of $10,059,450 in the preceding year.

Net (Loss)/Income Per Share

For the fiscal year 2023, net loss per share was

$5.92 compared to net income of $1.00 in the preceding year.

income, net, which represent bank interest income, net of finance lease interest expense and $50,470 of non-operating expenses was

$62,113 for the fiscal year 2024, representing a decrease of $207,032 (or approximately 143% as compared to the preceding year.

Loss on disposal of property, plant and equipment.

Loss on disposal of property, plant and equipment was $29,169,008 in the fiscal year 2024.

In June 2024, considered the bromide

well and transmission channel have been in use for many years, the Company conducted a site inspection and found that some wells and channels

were seriously damaged by water seepage which in turn required write-off or new construction, and the write-off amount is $29,169,008.

Impairment of Property, plant and equipment.

of property, plant and equipment was $6,772,500 in the fiscal year 2024.

In December 2024, due to the delayed completion of some machinery

and equipment of Yuxin Chemical's new plant resulting from the impact of the current market environment, our company hired professional

evaluators to perform impairment test on these assets.

The latter determined impairment was $6,772,500.

Net loss was $58,935,452 for the

fiscal year 2024, compared to net loss of $61,795,279 in the preceding year.

Net Loss Per Share

For the fiscal year 2024, net loss per share was $5.49 compared

to net loss per share of $5.92 in the preceding year.

There were 10,726,924 shares outstanding compared to 10,726,924 shares.

Foreign Currency Translation Adjustment

For the fiscal year 2023,

the Company had a negative foreign currency translation adjustment of $5,025,980 versus a negative adjustment of $24,886,118 in the previous

Foreign Currency Translation

For the fiscal year 2024, the Company

had a negative foreign currency translation adjustment of $2,800,874 versus a negative adjustment of $5,025,980 in the previous year.

This adjustment impacts all balance sheet translations into U.S.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2023, cash and cash equivalents

were $72,223,894 as compared to $108,226,214 as of December 31, 2022.

The components of this decrease of $36,002,320 are reflected

As of December 31, 2024, cash and cash equivalents were

$10,075,162 as compared to $72,223,894 as of December 31, 2023.

The components of this decrease of $62,148,732 are reflected below.

Statement of Cash Flows

Years Ended December 31

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities

$ (32,751,851 )

Net cash used in investing activities

$ (60,551,488 )

Net cash used in financing activities

Effects of exchange rate changes on cash and cash equivalents

$ (2,023,072 )

$ (2,982,659 )

Net decrease in cash and cash equipment

For the fiscal years 2023 and 2022, we met our

working capital and capital investment requirements by using cash flows from operations and cash on hand.

Net Cash (Used in)/Provided

by Operating Activities

$ (62,148,732 )

$ (36,002,320 )

For the fiscal years 2024 and

2023, we met our working capital and capital investment requirements by using cash flows from operations and cash on hand.

Net Cash Provided by (Used

in) Operating Activities

During the year ended December

2023, cash flow used in operating activities of approximately $32.75 million was mainly due to a net loss of $61.8 million, offset by

a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $27.13 million and an increase in accounts

and other payable and accrued expenses of $1.11 million.

year ended December 31, 2022, cash flow provided by operating activities of approximately $51.1 million was mainly due to a net income

of $10.06 million, a decrease in accounts receivable of $8.2 million, a decrease in accounts payable of $0.8 million, a decrease in deferred

taxes of $6.59 million, and a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $26.78

million, offset by an increases in operating leases and prepayments.

31, 2024, cash flow used in operating activities of approximately $0.68 million was mainly due to a net loss of $58.9 million, offset

by a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $18 million, impairment of property,

gain on disposal of equipment of $29 million, plant and equipment of $6.8 million and an increase in account receivable of $4.26 million.

During the year ended

December 31, 2023, cash flow used in operating activities of approximately $32.75 million was mainly due to a net loss of $61.8

million, offset by a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $27.13 million

and an increase in accounts and other payable and accrued expenses of $1.11 million.

Accounts receivable

Cash collections on our accounts receivable had

a major impact on our overall liquidity.

The following table presents the aging analysis of our accounts receivable as of December 31,

2023 and 2022.

Cash collections on our accounts

receivable had a major impact on our overall liquidity.

The following table presents the aging analysis of our accounts receivable as

of December 31, 2024 and 2023.

December 31, 2024

8 unchanged sentences

Aged 211-240 days

The overall accounts receivable balance as of

December 31, 2023 decreased by $497,470, compared to those of December 31, 2022.

We have policies in place to ensure that sales are

made to customers with an appropriate credit history.

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

The overall accounts receivable

balance as of December 31, 2024 decreased by $4,301,173, compared to those of December 31, 2023.

The decrease was mainly due to the decrease

in the amount of accounts receivable in the current period as a result of the decrease in sales revenue.

We have policies in place to

ensure that sales are made to customers with an appropriate credit history.

We perform ongoing credit evaluation on the financial condition

of our customers.

Our inventory consists of the following:

3 unchanged sentences

Finished goods

The net inventory

level as of December 31, 2023 decreased by $1,021,343, as compared to the net inventory level as of December 31, 2022, one of the main

reasons for the reduction in inventories was the decline in sales.

Raw materials increased by $6,648 as of December 31,

The net inventory level as of

December 31, 2024 decreased by $261,858, as compared to the net inventory level as of December 31, 2023, one of the main reasons for the

reduction in inventories was the decline in sales.

Raw materials decreased by $22,230 as of December 31,

2024, as compared to December 31, 2023.

Finished goods decreased by $1,027,991 as of December 31, 2023, as compared to December 31, 2022.

Finished goods decreased by $239,628 as of December

31, 2024, as compared to December 31, 2023.

Net Cash Used In Investing Activities

For the fiscal year 2024, we used approximately $60.5 million

for purchase of fixed assets.

For the fiscal year 2023, we used $0 for investing activities.

For the fiscal year 2022, we used approximately

$37.6 million for investing activities.

Net Cash Used In Financing Activities

For the fiscal year 2023 and 2022, we used $0.3

million to repay finance lease obligations.

We believe that our available funds and cash flows

generated from operations will be sufficient to meet our anticipated ongoing operating needs for the next twelve months.

As of December 31, 2023, we had approximately

$72 million in available cash, all of which is in highly liquid current deposits yielding minimal or no interest.

We do not anticipate

paying cash dividends in the foreseeable future.

We intend to continue to focus our efforts on

the activities of SCHC, SYCI, SHSI and DCHC as these segments continue to expand within the Chinese market.

We may not be able to identify, successfully integrate

or profitably manage any businesses or business segment we may acquire, or any expansion of our business.

An expansion may involve a number

of risks, including possible adverse effects on our operating results, diversion of management’s attention, inability to retain

key personnel, risks associated with unanticipated events and the financial statement effect of potential impairment of acquired intangible

assets, any of which could have a materially adverse effect on our condition and results of operations.

In addition, if competition

for acquisition candidates or operations were to increase, the cost of acquiring businesses could increase materially.

We may effect an

acquisition with a target business which may be financially unstable, under-managed, or in its early stages of development or growth.

Our inability to implement and manage our expansion strategy successfully may have a material adverse effect on our business and future

Net Cash Used In Financing

For the fiscal year 2024 and 2023, we used $0.3 million

to repay finance lease obligations.

We believe that our available

funds and cash flows generated from operations will be sufficient to meet our anticipated ongoing operating needs for the next twelve

As of December 31, 2024, we had

approximately $10 million in available cash, all of which is in highly liquid current deposits yielding minimal or no interest.

not anticipate paying cash dividends in the foreseeable future.

We intend to continue to focus

our efforts on the activities of SCHC, SYCI, SHSI and DCHC as these segments continue to expand within the Chinese market.

We may not be able to identify,

successfully integrate or profitably manage any businesses or business segment we may acquire, or any expansion of our business.

may involve a number of risks, including possible adverse effects on our operating results, diversion of management’s attention,

inability to retain key personnel, risks associated with unanticipated events and the financial statement effect of potential impairment

of acquired intangible assets, any of which could have a materially adverse effect on our condition and results of operations.

if competition for acquisition candidates or operations were to increase, the cost of acquiring businesses could increase materially.

We may effect an acquisition with a target business which may be financially unstable, under-managed, or in its early stages of development

Our inability to implement and manage our expansion strategy successfully may have a material adverse effect on our business

and future prospects.

Going Concern Consideration

There is no significant uncertainty

about the continuing operations of the Company.

consolidated financial statements are prepared on the going concern basis, meaning that the enterprise is expected to realize the

assets and settle the liabilities through normal business operations.

However, the going concern of the enterprise relies on many

factors, such as profitable operations, generating operating cash flows, obtaining financing, etc.

The company assesses its

liquidity by monitoring cash and cash equivalents, as well as operating and capital expenditure commitments.

As of December 31,

2024, As of Dec 31, 2024, the Company had current assets of $17.45 million and current liabilities of $17.73 million.

the deficit was $0.28 million, and it has suffered losses in both the fiscal years of 2024 and 2023 as well.

If it is unable to

raise additional funds, it may need to take measures such as cutting administrative and operational cost and save funds.

there are significant doubts regarding the company's ability to continue operations, the company is attempting to alleviate such

concerns through measures such as controlling operating expenses, shifting business focus to revenue-generating activities,

obtaining authorization from domestic banks and other financial institutions, and seeking equity or debt financing.

Additionally,

the company will also obtain financial support commitments from related parties.

However, these situations still pose significant

doubts regarding the company's ability to continue operations.

The financial statements do not consider the potential impact on the

recoverability of assets, classification, and amounts and classification of liabilities if the company is unable to continue

Contractual Obligations and Commitments

We have no significant contractual obligations

not fully recorded on our consolidated balance sheets or fully disclosed in the notes to our consolidated financial statements.

information regarding our contractual obligations and commitments at December 31, 2023 is provided in the notes to our consolidated financial

See “Notes to Consolidated Financial Statements, Note 19 - Capital Commitment and Other Service Contractual Obligations.”

We have no significant contractual

obligations not fully recorded on our consolidated balance sheets or fully disclosed in the notes to our consolidated financial statements.

Additional information regarding our contractual obligations and commitments at December 31, 2024 is provided in the notes to our consolidated

financial statements.

Material Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet

arrangements falling within the definition of Item 303(a) of Regulation S-K.

We do not currently have any off-balance sheet arrangements

falling within the definition of Item 303(a) of Regulation S-K.

Critical Accounting Policies and Estimates

Our Consolidated Financial Statements are prepared

in accordance with accounting principles generally accepted in the United States of America (U.S.

GAAP), which requires us to make judgments,

estimates and assumptions.

See “Note 1 – Nature of Business and Summary of Significant Accounting Policies,” in Notes

to the Consolidated Financial Statements, which is included in “Item 8.

Financial Statements and Supplementary Data,” which

describes our significant accounting policies and methods used in the preparation of our Consolidated Financial Statements.

estimates and judgments that we use in applying our accounting policies require us to make difficult and subjective judgments, often as

a result of the need to make estimates regarding matters that are inherently uncertain.

Our Consolidated Financial Statements

are prepared in accordance with accounting principles generally accepted in the United States of America (U.S.

GAAP), which requires us

to make judgments, estimates and assumptions.

See “Note 1 – Nature of Business and Summary of Significant Accounting Policies,”

in Notes to the Consolidated Financial Statements, which is included in “Item 8.

Financial Statements and Supplementary Data,”

which describes our significant accounting policies and methods used in the preparation of our Consolidated Financial Statements.

methods, estimates and judgments that we use in applying our accounting policies require us to make difficult and subjective judgments,

often as a result of the need to make estimates regarding matters that are inherently uncertain.

Our most critical estimates include:

5 unchanged sentences

Allowance for Doubtful Accounts

We make estimates of the uncollectibility of accounts

receivable, especially analyzing accounts receivable and historical bad debts, customer concentrations, customer credit-worthiness, current

economic trends and changes in customer payment terms, when evaluating the adequacy of the allowance for doubtful accounts.

Credit evaluations

are undertaken for all major sale transactions before shipment is authorized.

On a quarterly basis, we evaluate aged items in the accounts

receivable aging report and provide an allowance in an amount we deem adequate for doubtful accounts.

If management were to make different

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

We make estimates of the uncollectibility

of accounts receivable, especially analyzing accounts receivable and historical bad debts, customer concentrations, customer credit-worthiness,

current economic trends and changes in customer payment terms, when evaluating the adequacy of the allowance for doubtful accounts.

evaluations are undertaken for all major sale transactions before shipment is authorized.

On a quarterly basis, we evaluate aged items

in the accounts receivable aging report and provide an allowance in an amount we deem adequate for doubtful accounts.

If management were

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

Inventory Valuation

Inventory is stated at the lower of cost or market,

with cost determined on a first-in first-out basis.

The carrying value of inventory is reduced for estimated obsolescence by the difference

between its cost and the estimated market value based upon assumptions about future demand.

We evaluate the inventory carrying value for

potential excess and obsolete inventory exposures by analyzing historical and anticipated demand.

If actual future demand or market conditions

are less favorable than those projected by management, additional inventory write-downs may be required in the future, which could have

a material adverse effect on our results of operations.

Inventory is stated at the lower

of cost or market, with cost determined on a first-in first-out basis.

The carrying value of inventory is reduced for estimated obsolescence

by the difference between its cost and the estimated market value based upon assumptions about future demand.

We evaluate the inventory

carrying value for potential excess and obsolete inventory exposures by analyzing historical and anticipated demand.

If actual future

demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required in

the future, which could have a material adverse effect on our results of operations.

Depreciation of Property, Plant and Equipment

Property, plant and equipment are stated at cost

less accumulated depreciation and any impairment losses.

Expenditures for new facilities or equipment, and major expenditures for betterment

of existing facilities or equipment are capitalized and depreciated using the straight-line method at rates sufficient to depreciate such

costs over the estimated productive lives.

Property, plant and equipment

are stated at cost less accumulated depreciation and any impairment losses.

Expenditures for new facilities or equipment, and major expenditures

for betterment of existing facilities or equipment are capitalized and depreciated using the straight-line method at rates sufficient

to depreciate such costs over the estimated productive lives.

All other ordinary repair and maintenance costs are expensed as incurred.

Mineral rights are

recorded at cost less accumulated depreciation and any impairment losses.

Mineral rights are amortized ratably over the term of the lease,

or the equivalent term under the units of production method, whichever is shorter.

In some situations, the life of the asset may be extended

or shortened if circumstances arise that would lead us to believe that the estimated life of the asset has changed.

The life of leasehold

improvements may change based on the extension of lease contracts with our landlords.

Changes in the estimated lives of assets will result

in an increase or decrease in the amount of depreciation recognized in future periods.

Mineral rights are recorded at cost less accumulated depreciation and any impairment losses.

Mineral rights are amortized ratably over

the term of the lease, or the equivalent term under the units of production method, whichever is shorter.

In some situations, the life

of the asset may be extended or shortened if circumstances arise that would lead us to believe that the estimated life of the asset has

The life of leasehold improvements may change based on the extension of lease contracts with our landlords.

Changes in the estimated

lives of assets will result in an increase or decrease in the amount of depreciation recognized in future periods.

Impairment of Long Lived Assets

We periodically evaluate whether events or circumstances

have occurred that indicate long-lived assets may not be recoverable or that the remaining useful life may warrant revision.

events or circumstances are present, we assess the recoverability of long-lived assets by determining whether the carrying value will

be recovered through the expected undiscounted future cash flows resulting from the use of the asset.

In the event the sum of the expected

undiscounted future cash flows is less than the carrying value of the asset, an impairment loss equal to the excess of the asset’s

carrying value over its fair value is recorded.

Valuation Allowance on Deferred Tax Assets

We evaluate our deferred income tax assets to

determine if valuation allowances are required or should be adjusted.

A valuation allowance is established against our deferred tax assets

based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard.

assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the

duration of statutory carry forward periods, our experience with expiring unused tax attributes and tax planning alternatives.

such judgments, significant weight is given to evidence that can be objectively verified.

We periodically evaluate whether

events or circumstances have occurred that indicate long-lived assets may not be recoverable or that the remaining useful life may warrant

When such events or circumstances are present, we assess the recoverability of long- lived assets by determining whether the

carrying value will be recovered through the expected undiscounted future cash flows resulting from the use of the asset.

the sum of the expected undiscounted future cash flows is less than the carrying value of the asset, an impairment loss equal to the excess

of the asset’s carrying value over its fair value is recorded.

Allowance on D eferred

We evaluate our deferred income

tax assets to determine if valuation allowances are required or should be adjusted.

A valuation allowance is established against our deferred

tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard.

This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability,

the duration of statutory carry forward periods, our experience with expiring unused tax attributes and tax planning alternatives.

making such judgments, significant weight is given to evidence that can be objectively verified.

Stock-based compensation

We account for stock-based compensation in accordance

with the fair value recognition provisions of U.S.

We use the Black-Scholes model which requires the input of highly subjective

These assumptions include estimating the length of time employees will retain their vested stock options before exercising

them, the estimated volatility of our common stock price over the expected term and the number of options that will ultimately not complete

their vesting requirements.

The assumptions for expected volatility and expected term are the two assumptions that significantly affect

the grant date fair value.

Changes in expected risk-free rate of return do not significantly impact the calculation of fair value, and

determining this input is not highly subjective.

We use annualized historical stock price volatility

which is deemed to be appropriate to serve as the expected volatility of our stock price and is assumed to be constant and prevailing.

We account for stock-based compensation

in accordance with the fair value recognition provisions of U.S.

We use the Black- Scholes model which requires the input of highly

subjective assumptions.

These assumptions include estimating the length of time employees will retain their vested stock options before

exercising them, the estimated volatility of our common stock price over the expected term and the number of options that will ultimately

not complete their vesting requirements.

The assumptions for expected volatility and expected term are the two assumptions that significantly

affect the grant date fair value.

Changes in expected risk-free rate of return do not significantly impact the calculation of fair value,

and determining this input is not highly subjective.

We use annualized historical stock

price volatility which is deemed to be appropriate to serve as the expected volatility of our stock price and is assumed to be constant

and prevailing.

The expected term represents the weighted-average period that our stock options are expected to be outstanding.

The expected life is based

on historical option exercise pattern.

life is based on historical option exercise pattern.

Recent Accounting Pronouncements

See “Note 1 – Nature of Business and

Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in Item 8.

Financial Statements and

Supplementary Data for a full description of recent accounting pronouncements including the respective expected dates of adoption and

effects on the consolidated financial statements.

Quantitative and Qualitative Disclosures

about Market Risk.

Pursuant to Item 305(e) of Regulation S-K (§

229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,”

as defined by Rule 229.10(f)(1).

See “Note 1 – Nature

of Business and Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in Item 8.

Statements and Supplementary Data for a full description of recent accounting pronouncements including the respective expected dates of

adoption and effects on the consolidated financial statements.

Quantitative and Qualitative Disclosures about

Pursuant to Item 305(e) of Regulation

S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting

company,” as defined by Rule 229.10(f)(1).

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 7. Management’s Discussion and Analysis