What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-13 compared with 2024-11-19 · 439 added, 556 removed, 781 unchanged (56% of the section changed)

4 unchanged sentences

(Expressed in U.S.

September 30, 2024

March 31, 2025

December 31, 2024

3 unchanged sentences

Prepayments and deposits

Amount due from related parties

Other receivable

30 unchanged sentences

COMMON STOCK;

$ 0.0005 par value;

shares authorized;

11,012,754 shares issued;

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

and 11,012,754 shares issued;

and 13,346,618

and 10,726,924 shares outstanding as of March 31, 2025 and December 31, 2024

Treasury stock;

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

285,830 shares as of March 31, 2025 and December 31, 2024 at cost

( 1,372,673 )

1 unchanged sentence

Additional paid-in capital

Share to be issued

Retained earnings unappropriated

Retained earnings appropriated

Accumulated other comprehensive loss

Accumulated other comprehensive income

( 20,632,127 )

7 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

INCOME (LOSS)

(Expressed in U.S.

Three-Month Period Ended September 30,

Nine -Month Period Ended September 30,

OPERATING INCOME (EXPENSE)

Three-Month Period Ended

OPERATING COSTS AND EXPENSE

Cost of net revenue

1 unchanged sentence

( 2,119,845 )

( 11,303,519 )

( 20,464,418 )

Sales and marketing expenses

2 unchanged sentences

( 3,734,689 )

( 7,185,537 )

( 4,471,954 )

General and administrative expenses

( 1,389,523 )

( 2,409,957 )

( 2,266,260 )

Other operating income (loss)

TOTAL OPERATING COSTS AND EXPENSE

1 unchanged sentence

( 6,576,481 )

( 20,930,621 )

( 27,185,348 )

PROFIT (LOSS) FROM OPERATIONS

( 4,581,609 )

( 2,293,288 )

LOSS FROM OPERATIONS

( 4,610,207 )

3 unchanged sentences

Interest income

Other expenses (income)

( 29,173,011 )

INCOME(LOSS) BEFORE TAXES

( 4,596,580 )

( 2,259,321 )

( 44,164,800 )

( 3,892,139 )

INCOME TAX BENEFIT (EXPENSE)

NET PROFIT (LOSS)

$ ( 3,492,883 )

$ ( 1,775,797 )

Other expense

LOSS BEFORE INCOME TAXES

( 4,629,500 )

( 5,262,192 )

COMPREHENSIVE INCOME (LOSS)

NET PROFIT (LOSS)

INCOME TAX (EXPENSE) BENEFIT

$ ( 4,629,500 )

$ ( 3,992,132 )

COMPREHENSIVE LOSS:

$ ( 4,629,500 )

2 unchanged sentences

- Foreign currency translation adjustments

( 7,879,513 )

TOTAL COMPREHENSIVE (LOSS) INCOME

1 unchanged sentence

$ ( 4,385,999 )

$ ( 10,894,873 )

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2024

THREE-MONTH PERIOD ENDED MARCH 31, 2025 AND 2024

(Expressed in U.S.

1 unchanged sentence

unappropriated

BALANCE AT JUNE 30, 2024 ( Una udited)

( 1,372,673 )

$ ( 19,296,390 )

$ 166,915,125

Translation adjustment

Net loss for three-month period ended September 30,

( 3,492,883 )

BALANCE AT SEPTEMBER 30, 2024 (Unaudited)

( 1,372,673 )

$ ( 16,193,514 )

$ 166,525,118

comprehensive

unappropriated

BALANCE AT JUNE 30, 2023 ( Una udited)

( 1,372,673 )

$ 156,849,972

$ ( 23,154,780 )

$ 260,251,151

Restricted shares

Translation adjustment

Net income for three-month period ended September 30,

( 1,775,797 )

BALANCE AT SEPTEMBER 30, 2023 (Unaudited)

( 1,372,673 )

$ 155,074,175

$ ( 20,906,802 )

$ 260,723,332

comprehensive

unappropriated

BALANCE AT DECEMBER 31, 2024 (Audited)

2 unchanged sentences

$ 143,706,670

Translation adjustment

Net income for nine-month period ended September 30,

Restricted shares issued for services

Currency translation adjustment

Net loss for three-month period ended March 31, 2025

( 4,629,500 )

BALANCE AT SEPTEMBER 30, 2024 (Unaudited)

BALANCE AT MARCH 31, 2025(Unaudited)

( 1,372,673 )

7 unchanged sentences

$ 205,248,296

$ 271,618,205

Restricted shares

Translation adjustment

( 7,879,513 )

Net income for nine-month period ended September 30,

( 3,015,360 )

Currency translation adjustment

Net loss for three-month period ended March 31, 2024

( 3,992,132 )

BALANCE AT SEPTEMBER 30, 2023 (Unaudited)

( 3,992,132 )

BALANCE AT MARCH 31, 2024(Unaudited)

( 1,372,673 )

5 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

Share to be Issued

See accompanying notes to the condensed consolidated financial statements.

3 unchanged sentences

(Expressed in U.S.

Nine-Month Period Ended September 30,

Three-Month Period Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Net income(loss)

$ ( 4,629,500 )

$ ( 3,992,132 )

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

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

Amortization on capital lease

Depreciation and amortization

Unrealized translation difference

Deferred tax asset

( 1,270,060 )

( 1,002,511 )

Stock-based compensation expense

Amortization of right-of-use asset

Loss on disposal of equipment

Changes in assets and liabilities

Accounts receivable

Prepayments and deposits

( 1,549,443 )

Prepayments and deposits

Advance from customers

1 unchanged sentence

Accounts and Other payable and accrued expenses

Taxes payable

Lease liabilities

Net cash used in operating activities

( 1,580,128 )

( 1,330,476 )

Amount due to related Parties

Taxes payable

Operating lease

Net cash (used in) provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment

( 60,526,213 )

( 15,197,648 )

Net cash from investing activities

( 60,526,213 )

( 15,197,648 )

CASH FLOWS USED IN FINANCING ACTIVITIES

Repayment of finance lease obligation

Net cash used in financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

EFFECTS OF EXCHANGE RATE CHANGES

ON CASH AND CASH EQUIVALENTS

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

( 1,552,117 )

2 unchanged sentences

CASH AND CASH EQUIVALENTS - END OF PERIOD

$ 103,774,977

Periods Ended September 30,

GULF RESOURCES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Expressed in U.S.

Years Ended March 31,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the nine-month period ended September 30, 2024 for:

Cash paid during the three-month period ended March 31, for:

Paid for taxes

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

MARCH 31, 2025

(Expressed in U.S.

5 unchanged sentences

the “Company”).

The consolidated financial statements include

the accounts of Gulf Resources, Inc.

and its wholly-owned subsidiary, Upper Class Group Limited, a company incorporated in the British

Virgin Islands, which owns 100% of Hong Kong Jiaxing Industrial Limited, a company incorporated in Hong Kong (“HKJI”).

owns 100% of Shouguang City Haoyuan Chemical Company Limited (“SCHC”) which owns 100% of Shouguang Yuxin Chemical Industry

Co., Limited (“SYCI”) ,Daying County Haoyuan Chemical Company Limited (“DCHC”) and Shouguang

Hengde Salt Industry Co.

All material intercompany transactions have been eliminated on consolidation.

Nature of Business

The Company manufactures and trades bromine through

its wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited (“SCHC”);

manufactures and trades crude salt

through its wholly-owned subsidiary, SHSI;

and manufactures chemical products for use in the oil industry, pesticides, paper manufacturing

industry and for human and animal antibiotics through its wholly-owned subsidiary, Shouguang Yuxin Chemical Industry Co., Limited (“SYCI”)

in the People’s Republic of China (“PRC”).

DCHC was established to further explore and develop natural gas and brine

resources (including bromine and crude salt) in the PRC.

DCHC’s business commenced trial operation in January 2019 but has temporarily

suspended production insince May 2019 as required by the government to obtain project approval (see Note 1 (b)(iii)).

On March 11, 2020, the World Health Organization

(WHO) officially declared COVID-19 a pandemic.

While not fully quantifiable, the Company believes this situation did not have a material

adverse impact on its operating results in the year of 2021.

In 2022, COVID may have had a slightly more effect.

The government conducted

frequent unannounced inspections, which caused some disruption to production.

In addition, the Company believes the government’s

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

The virus outbreak and resulting

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

It has delayed the delivery

of machinery and other equipment for the Company’s Yuxin Chemical factory causing a postponement in its completion and opening.

The Company believes the virus outbreak has delayed the finalization of the Sichuan Province environmental plan, causing a further delay

for the Company’s project in Sichuan Province.

The 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

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 March 31, 2025, As of March 31, 2025, the Company had

current assets of $ 17.64 million and current liabilities of $ 15.26 million.

As a result, the surplus was $ 2.38 million, and it has suffered

losses in both the fiscal years of 2025 and 2024 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.

If 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 operations.

of the Business

The Company manufactures and trades bromine

through its wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited (“SCHC”) ;manufactures and trades crude

salt through its wholly-owned subsidiary, Shouguang Hengde Salt Industry Co.

Ltd (“SHSI”);

and manufactures chemical products

for use in the oil industry, pesticides, paper manufacturing industry and for human and animal antibiotics through its wholly-owned subsidiary,

Shouguang Yuxin Chemical Industry Co., Limited (“SYCI”) in the People’s Republic of China (“PRC”).

County Haoyuan Chemical Company Limited (“DCHC”) was established to further explore and develop natural gas and brine resources

(including bromine and crude salt) in the PRC.

DCHC’s business commenced trial operation in January 2019 but suspended production

temporarily in May 2019 as required by the government to obtain project approval (see Note 1 (b)(iii)).

On March 11, 2020, the World Health

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

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

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

While our operations are currently not materially

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

While not yet

quantifiable, the Company believes this situation did not have a material adverse impact on its operating results in the year of

2021 and will continue to assess the financial impact.

The virus outbreak slightly delayed the commencement of the operations for

Factory No.1, No.4, No.7, No.9.

We received approval to open factory No.

COVID has still delayed the approval for

factories N0.2 and No.10.

(i) Bromine and Crude Salt Segments

3 unchanged sentences

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

On November 25, 2019, the government of Shouguang

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

On November 25, 2019, the government of

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

1 and Factory No.

3 unchanged sentences

Subsequently, the

Company received an approval dated February 27, 2020 issued by the local governmental authority allowing the Company to resume production

Company received an approval dated February 27, 2020 issued by thelocal governmental authority allowing the Company to resume production

after the winter temporary closure.

5 unchanged sentences

The Company’s Factories No.

7 commenced trial production in mid-March 2020 and commercial production on April 3, 2020 and its Factories No.

commenced commercial production on May 6, 2020.

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

permits the Factory No.

8 to resume production in August 2022.

The Company is still waiting for governmental

approval for Factories No.

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

areas including that for prevention of flood.

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

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

Pursuant to the notification from the government

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

AM China Time.

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

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

7 commenced trial production in midMarch 2020 and commercial production on April 3, 2020 and its Factories No.

commercial production on May6, 2020.

The Company received verbal notification from the government regarding Factory No.

8, allowing it

to recommence production in August 2022.

8 began contributing revenue in the fourth quarter 2022.The Company is still waiting

for governmental approval for Factories No.

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

for all mining areas including that for prevention of flood.

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

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

In April 2022, Shouguang Hengde Salt Industry

1 unchanged sentence

This subsidiary was created

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

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

The creation of

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

However, the establishment of this

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

However, the establishment of

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

(ii) Chemical Segment

20 unchanged sentences

On February 22, 2022, the Company announced that discussions with the government have convinced

management that the electricity restrictions were eased.

Accordingly, the Company contacted its suppliers and expect to have the remainder

management that the electricity restrictions are being eased.

Accordingly, the Company has contacted its suppliers and will have the remainder

of the equipment produced and delivered, so the Company can complete installation and begin testing and trial production.

The COVID restrictions and resulting national

and international supply chain issues as well as governmental permit issues have caused delays in receiving some previously ordered machinery

and equipment.

The Company is working with its existing suppliers and may identify new suppliers so that it can complete construction

of its factory based on accelerated delivery.

Currently, the Company is unable to estimate when the construction can be completed and

the production can begin.

On March 23, 2023, the Company issued

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

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

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

to apply for environmental and safety approval.

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

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

On July 26, 2023, the Company announced

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

its chemical products strategy.

The Company believes the relocation process will

cost approximately $ 69 million in total.

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

to the design of the new chemical factory, and progress payment and deposit for the construction of the new factory building in the amount

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

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

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

impact the overall cost of the project.

The COVID restrictions and resulting national and international supply

chain issues as well as permitting issues have caused delays in receiving some previously ordered machinery and equipment.

is working with its existing suppliers and may identify new suppliers so that it can complete construction of its factory based on accelerated

Currently, the Company can not estimate when construction will be completed and production can begin.

The Company estimates this relocation process will cost approximately

$ 69 million in total.

The Company incurred relocation costs comprising prepaid land lease, professional fees related to the design

of the new chemical factory, purchase of plant and equipment and construction costs and installation costs incurred for the new chemical

factory in the amount of $ 45,584,344 and $ 45,584,344 , which were recorded in the Property, plant and equipment in the consolidated balance

sheets as of March 31, 2025 and December 31, 2024.

The Company suspended the construction in the chemical factory until it

decide what products can be produced most profitably.

(iii) Natural Gas Segment

In January 2017, the Company completed the first

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

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

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

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

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

In compliance with

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

natural gas, respectively.

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

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

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

The Company plans to proceed with

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

been finalized.

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

January 2019.

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

Province, whereby the Company is required to obtain project approval for its well located in Daying, including the whole natural gas

and brine water project, and approvals for safety production inspection, environmental protection assessment, and to solve the

related land issue.

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

gas well in Daying.

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

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

Pursuant to the Opinions of the Ministry of Natural

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

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

in the natural gas production.

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

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

The Company’s consolidated financial

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

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

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

The Company bases

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

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

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

The Company’s consolidated financial statements have been

prepared in accordance with accounting principles generally accepted in the United States of America and this requires management to

make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial

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

The Company bases its estimates on

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

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

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

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

9 unchanged sentences

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 uncollectability 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.

(f) Concentration

6 unchanged sentences

The Company placed $ 8,523,045

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

and $ 10,075,162 with these institutions as of March 31, 2025 and December 31, 2024, respectively.

The Company has not experienced

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

MARCH 31, 2025

(Expressed in U.S.

6 unchanged sentences

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

of existing facilities or equipment are capitalized and depreciated, when available for intended use, using the straight-line method at

rates sufficient to depreciate such costs less 5% residual value over the estimated productive lives.

All other ordinary repair and maintenance

costs are expensed as incurred.

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

costs less 5% residual value over the estimated productive lives.

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

Mineral rights are recorded at cost less accumulated

12 unchanged sentences

Plant and machinery (including protective shells, transmission channels and ducts)

Motor vehicles Motor Vehicles

Motor vehicles

Furniture, fixtures and equipment

4 unchanged sentences

Common facilities that are built specifically to service production

directly attributed to designate oil and gas properties are depreciated based on the proved developed reserves of the respective oil and

gas properties on a pro-rata basis.

Common facilities that are not built specifically to service identified oil and gas properties are

depreciated using the straight-line method over their estimated useful lives.

Costs associated with significant development projects are

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

directly attributed to designated oil and gas properties are depreciated based on the proved developed reserves of the respective oil

and gas properties on a pro-rata basis.

Common facilities that are not built specifically to service identified oil and gas properties

are depreciated using the straight-line method over their estimated useful lives.

Costs associated with significant development projects

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

depreciation.

(h) Retirement

3 unchanged sentences

The required contributions

under the retirement plans are charged to the condensed consolidated statement of loss on an accrual basis when they are due.

under the retirement plans are charged to the condensed consolidated statement of income on an accrual basis when they are due.

The Company’s

contributions totaled $ 99,035 and $ 121,941 for the three-month period ended September 30, 2024 and 2023, respectively, and totaled $ 322,448

and $ 405,664 for the nine-month period ended September 30, 2024 and 2023, respectively.

contributions totaled $ 173,485 and $ 123,123 for the three-month periods ended March 31, 2025 and 2024, respectively.

Net revenue is net of discount and value added

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

MARCH 31, 2025

(Expressed in U.S.

19 unchanged sentences

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

For the three and nine months period ended September

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

and Diluted Earnings per Share of Common Stock

Basic earnings per common share are based

on the weighted average number of shares outstanding during the periods presented.

For the three-month period ended March 31, 2025

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

and Diluted Net Income per Share of Common Stock

Basic earnings per common share are based on the

weighted average number of shares outstanding during the periods presented.

Diluted earnings per share are computed using weighted

5 unchanged sentences

Anti-dilutive common stock equivalents which were excluded from

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

the calculation of number of dilutive common stock equivalents amounted to 0 and 0 shares for the three-month periods ended March 31,

2025 and 2024, respectively.

Because the Company reported a net loss

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

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

Because the Company reported a net loss for the

three-month periods ended March 31, 2025 and 2024, common stock equivalents including stock options and warrants were anti-dilutive, therefore

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

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

MARCH 31, 2025

(Expressed in U.S.

12 unchanged sentences

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

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

The statement of loss and

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

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

The statement of income

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

Gains or losses resulting from transactions in currencies

other than the functional currencies are recognized in net loss for the reporting periods as part of general and administrative expense.

other than the functional currencies are recognized in net income for the reporting periods as part of general and administrative expense.

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

28 unchanged sentences

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

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S.

NOTE 1 – BASIS OF PRESENTATION AND

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

(p) Stock-based Compensation

31 unchanged sentences

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

tax in the consolidated statement of income (loss).

tax in the consolidated statement of profit (loss).

Accounting Pronouncements

In June 2016, the FASB issued

2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.

amendments in this Update affect loans, debt securities, trade receivables, and any other financial assets that have the contractual

right to receive cash.

The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets.

For public entities, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within

those fiscal years.

For the Company which is a smaller reporting company, ASU No.

2019-10 extends the effective dates for two years.

The Company had evaluated the effect of the adoption of this standard on the consolidated financial statements and related disclosures.

And the Company had adopted this standard beginning January 1, 2024.

Recent accounting pronouncements adopted

There were no recent accounting pronouncements adopted during the nine

months ended September 30, 2024.

There were no recent accounting pronouncements adopted during the three

months ended March 31, 2025.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S.

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES – Continued

Recently Issued Accounting Pronouncements Not

In June 2016, the FASB issued ASU No.

2016-13, Financial

Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.

The amendments in this Update affect

loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash.

The ASU requires

an entity to recognize expected credit losses rather than incurred losses for financial assets.

For public entities, the amendments are

effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

For the Company which

is a smaller reporting company, ASU No.

Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.

The amendments in this

Update affect loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive

The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets.

For public entities,

the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

For the Company which is a smaller reporting company, ASU No.

2019-10 extends the effective dates for two years.

The Company is currently evaluating the effect

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

The Company is currently

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

(t) Fair Value Measurement

20 unchanged sentences

There were no material unrecognized

financial assets and liabilities as of September 30, 2024 and 2023.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

(Expressed in U.S.

financial assets and liabilities as of March 31, 2025 and 2024.

NOTE 2 – ACCOUNTS RECEIVABLE, NET

Accounts receivable net consist of:

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

September 30,

Accounts receivable

1 unchanged sentence

Accounts receivable, net

The overall accounts receivable balance as of

September 30, 2024 decreased by $ 3,678,816 , as compared to those of December 31, 2023.

We have policies in place to ensure that sales

are made to customers with an appropriate credit history.

The overall accounts receivable balance

as of March 31, 2025 increased by $ 1,549,699 compared to those of December 31, 2024.

We have policies in place to ensure that sales are

made to customers with an appropriate credit history.

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

2 unchanged sentences

Inventories - Schedule of Inventories, Current

September 30,

Raw materials

Finished goods

( 1,240,760 )

Inventory, net

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

impairment was due to exchange rate change.

The Company recorded impairment charges for slow moving inventory in

the amounts of $ nil and $ 989,035 for the years ended March 31, 2025 and December 31, 2024.

NOTE 4 – PREPAYMENTS AND

DEPOSITS, NET

Prepayments and deposits consisted of the following:

Prepayments and

Deposits, Net - Schedule of Prepayments and Deposits, Net

December 31, 2024

Prepayments and deposits

Provision for impairment

( 1,650,824 )

( 1,648,454 )

Prepayments and deposits, net

As of March 31, 2025 , the Company recorded the total prepayments

and deposits, and the provision for impairment was $ 6,393,161 .

NOTE 5– PREPAID LAND LEASES

18 unchanged sentences

The lease term expires on August 12,

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

The amount paid was recorded as prepaid land leases, net of current portion in the consolidated balance sheet as of March 31 2025

and December 31, 2024.

As of September 30, 2024, the prepaid land lease increased to $ 9,442,751 due to an additional amount paid

for stamp duty and related land use rights fees.

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

and placed in service.

As of March 31, 2025, the prepaid land lease increased to $ 9,217,790 due to an additional amount paid for stamp

duty and related land use rights fees.

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

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

MARCH 31, 2025

(Expressed in U.S.

2 unchanged sentences

Property, Plant and Equipment, Net - Schedule of Property, Plant and Equipment

September 30,

Mineral rights

6 unchanged sentences

( 83,826,560 )

( 6,754,076 )

( 6,744,380 )

Net book value

1 unchanged sentence

$ 136,143,177

The Company has certain buildings and salt pans

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

The Company has certain buildings and salt

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

government authority.

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

The aggregate carrying

values of these properties situated on parcels of the land are $ 7,870,846 and $ 8,346,742 as at September 30, 2024 and December 31, 2023,

respectively.

During the three-month period ended September 30, 2024, depreciation

and amortization expense totaled $ 4,522,525 ,of which $ 1,211,694 , $ 203,244 and $ 3,107,587 were recorded in direct labor and factory overheads

incurred during plant shutdown , administrative expenses and cost of net

During the nine-month period ended September 30, 2024 , depreciation

and amortization expense totaled $ 13,980,751 of which $ 5,601,791 , $ 605,945 and $ 7,773,015 were recorded in direct labor and factory overheads

incurred during plant shutdown , administrative expenses and cost of net

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

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

incurred during plant shutdown , administrative expenses and cost of net

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

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

overheads incurred during plant shutdown , administrative expenses and

cost of net revenue .

The aggregate carrying values of these properties situated on parcels of the land are $ 49,444,325

and $ 50,219,026

as at March 31, 2025 and December 31, 2024, respectively.

During the three-month period ended March 31,

2025, depreciation and amortization expense totaled $ 3,999,026 , of which $ 2,469,771 , $ 783,472 and $ 745,783 were recorded in direct labor

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

During the three-month period ended March 31,

2024, depreciation and amortization expense totaled $ 4,729,242 , of which $ 3,106,788 , $ 201,504 and $ 1,420,950 were recorded in direct labor

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

NOTE 7 – FINANCE LEASE RIGHT-OF-USE ASSETS

Property, plant and equipment under finance leases, net consist of

the following:

Property, plant and equipment under finance lease, net consist of the

Finance Lease Right-Of-Use Assets - Schedule of Property,

Plant and Equipment Under Finance Leases

September 30,

Buildings Buildings

5 unchanged sentences

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

During the three and nine months period ended

September 30, 2024, depreciation and amortization expense totaled $ 1,268 and $ 3,808 , respectively, which was recorded in direct labor

and factory overheads incurred during plant shutdown.

During the three and nine months period ended

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

and factory overheads incurred during plant shutdown.

During the three-month period ended March 31,

2025, depreciation and amortization expense totaled $ 1,258 , which was recorded in direct labor and factory overheads incurred during plant

During the three-month period ended March 31,

2024, depreciation and amortization expense totaled $ 1,270 , which was recorded in direct labor and factory overheads incurred during plant

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

MARCH 31, 2025

(Expressed in U.S.

NOTE 7 – OPERATING LEASE RIGHT–OF

The Company has the rights to use certain parcels

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

For parcels of land

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

The parcels of land of which the

Company cannot obtain land use rights certificates covers a total of approximately 34.95 square kilometers with an aggregate operating

lease right-of-use assets amount of $ 7,642,937 as at September 30, 2024.

As of September 30, 2024, the total operating

lease ROU assets was $ 6,385,605 .

The total operating lease cost for the nine-month

period ended September 30, 2024 and 2023 was $ 659,509 and $ 706,033 .

NOTE 8 – PAYABLE AND ACCRUED

Accounts payable, other payable and accrued expenses

consist of the following:

NOTE 8 – OPERATING LEASE RIGHT-OF USE ASSETS

The Company has the rights to use certain

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

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

The parcels of land of

which the Company cannot obtain land use rights certificates covers a total of approximately 34.95 square kilometers with an aggregate

operating lease right-of-use assets amount of $ 7,190,872 as of March 31, 2025.

As of March 31, 2025, the total operating lease

ROU assets was $ 6,050,429 .

The total operating lease cost for the three-month

period ended March 31, 2025 and 2024 was $ 217,801 and $ 217,345 .

NOTE 9 – PAYABLE AND ACCRUED EXPENSES

Payable and accrued expenses consist of the following:

Payable and Accrued

Expenses - Schedule of Accounts Payable and Accrued Liabilities

September 30,

Accounts payable

4 unchanged sentences

Accrued expense-others

Accrued expense-others mainly include of the shares to be paid for

the acquisition of salt plant $ 7,878,182 and others

NOTE 9 – RELATED PARTY

Accrued expense-others mainly include the purchase of the unpaid portion

of salt Pans of $ 4,788,641 , and others.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S.

NOTE 10 – RELATED PARTY TRANSACTIONS

On September 25, 2012, the Company purchased

2 unchanged sentences

million in cash, of which Mr.

Ming Yang, the former chairman of the board of directors of the Company, had a 99 %

Ming Yang, who was the Chairman of the Company then, had a 99 %

equity interest in the Seller.

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

party, to provide property management services for an annual amount of approximately $ 87,927 for

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

The expense associated with this agreement for the three and nine

months ended September 30, 2024 was approximately $ 22,258

and $ 66,125 .

The expense associated with this agreement for the three and nine months ended September 30, 2023 was approximately

party, to provide property management services for an annual amount of approximately $ 86,911

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

The expense associated with this agreement for the three months ended March

31, 2025 and 2024 was approximately $ 21,728

and $ 21,982 .

2 unchanged sentences

Name of related parties

Former Chairman Of the Board

Chief Executive Officer and Chairman of the Board

Chairman Of the Board

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer,Director

September 30,

Chief Operating Officer

Chengdu Dianjinshi Culture media Co., LTD

Affiliated with company officers

Amount due to related parties:

Considering that the Company has not performed

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

earned for their services with the Company, which may be considered for future compensation should the Company improve its results of

Due from related party:

Chengdu Dianjinshi Culture media Co., LTD

NOTE 11 – TAXES PAYABLE

September 30,

Land use tax payable

Value added tax and other taxes payable

NOTE 11 – LEASE LIABILITIES-FINANCE

AND OPERATING LEASE

NOTE 12 – LEASE LIABILITIES-FINANCE AND

OPERATING LEASE

The components of finance lease liabilities were

1 unchanged sentence

Lease - Schedule of Finance and Operating Leased Liabilities

September 30,

Interest rate

2 unchanged sentences

Finance lease liability, net of current portion

Interest expenses from capital lease obligations

amounted to $ 21,191 and $ 23,791 for the three-month period ended September 30, 2024 and 2023, respectively, which were charged to the

condensed consolidated statement of income (loss).

Interest expenses from capital lease obligations amounted to $ 70,835 and $ 80,252 for

the nine-month period ended September 30, 2024 and 2023, respectively, which were charged to the condensed consolidated statement of income

Interest expenses from a finance lease liability

amounted to $ 21,722 and $ 24,830 for the three-month periods ended March 31, 2025 and 2024, respectively, were charged to the condensed

consolidated statement of loss.

The components of operating lease liabilities

September 30,

Interest rate

3 unchanged sentences

The weighted average remaining operating lease

term at September 3 0 , 2024 was 18 years and the weighted average discounts

rate was 4.89 %.

Lease payments for the three-month period ended September 30, 2024 and 2023, respectively, were $ 66,387 and $ 64,866 .

payments for the nine-month period ended September 30, 2024 and 2023, respectively, were $ 823,608 and $ 824,572 .

term on March 31, 2025 was 17 years and the weighted average discount rates was 4.89 %.

This discount rates used are based on the base

rate quoted by the People's Bank of China and vary with the remaining term of the lease.

Lease payment in the three-months ended March

31, 2025 and 2024 was $ 225,321 and $ 226,259 .

Maturities of lease liabilities were as follows:

10 unchanged sentences

Amount representing interest

( 4,928,746 )

Present value of net minimum lease payments

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

(Expressed in U.S.

NOTE 13 – EQUITY

12 unchanged sentences

determined based on the closing price of the Company's common stock on the grant date.

The Company granted an aggregate of 295,000 restricted

shares of common stock in January 2025 to a consultant, the Company's directors, officers, and an employee as compensation for services

rendered for the year ended December 31, 2024.

The restricted shares award were granted under the 2019 Omnibus Equity Incentive Plan and

vested immediately.

The fair value of the award on the date of grant was $ 194,700 which was expensed in full during the year ended December

During the three months ended March 31,

2025, the Company granted in the aggregate, 265,000 restricted

shares of common stock on March 21, 2025 to a consultant, the company's directors, officers and an employee as compensation for services rendered for the current year.

The restricted shares

award were granted under the 2019 Omnibus Equity Incentive Plan and vested immediately.

The fair value of the award on the date of

grant was $ 196,100 which

was expensed in full during the three months period ended March 31, 2025.

Retained Earnings – Appropriated

2 unchanged sentences

tax to the following reserve.:

Statutory Common Reserve Funds

SCHC, SYCI, SHSI and DCHC are required each year

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

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

This reserve can be used to make up any loss incurred

or to increase share capital.

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

reserve balance falling below 25% of the registered capital.

As at September 30, 2024 GULF RESOURCES 'statutory provident fund stood at

$26.67 million.

Statutory Reserve

SCHC, SYCI, SHSI and DCHC are required each

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

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

This reserve can be used to make up

any loss incurred or to increase share capital.

Except for the reduction of losses incurred, any other application should

not result in this reserve balance falling below 25% of the registered capital.

As of March 31, 2025, the Company’s statutory

provident fund stood at $ 26.67

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S.

NOTE 14 – TREASURY STOCK

As of September 30, 2024 and December 31, 2023,

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

As of March 31, 2025 and December 31, 2024, the

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

NOTE 15 – STOCK-BASED COMPENSATION

6 unchanged sentences

of the 2007 Plan and applicable award agreement.

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

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

As of March 31, 2025, the number of shares of the Company’s common stock available

for grant of stock options and issuance under the 2019 Plan was 1,801 shares.

The fair value of each option award is estimated

3 unchanged sentences

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

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

For the three months ended March 31, 2025 and 2024, total compensation

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

There were no related tax benefits as a full valuation

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

The following table summarizes all Company

stock option transactions between January 1, 2024 and September 30, 2024.

allowance was recorded in the three months ended March 31, 2025 and 2024.

The following table summarizes all Company stock

option transactions between January 1, 2025 and March 31, 2025.

Stock-Based Compensation - Schedule of Stock

8 unchanged sentences

Expired during the period

Balance, September 30, 2024

Balance, March 31, 2025

Stock Options and Warrants Outstanding and Exercisable

Weighted Average

Outstanding at September 30, 2024

Outstanding at March 31, 2025

Exercise Prices

1 unchanged sentence

Outstanding and exercisable

All options exercisable and outstanding at September

All options exercisable and outstanding at March

31, 2025 are fully vested.

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

As of March 31, 2025 there was no unrecognized compensation cost related to outstanding stock options,

The aggregate intrinsic value of options outstanding and exercisable

as of September 30, 2024 was $ 0 .

During the three and nine months ended September

30, 2024 and 2023, there were no options exercised.

as of March 31, 2025 and 2024 was $ 0 .

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

MARCH 31, 2025

(Expressed in U.S.

NOTE 15 – OTHER EXPENSES

In September 2024, the Company retired

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

This decision was made due to the following

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

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

NOTE 16 – INCOME TAXES

1 unchanged sentence

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

If it is more likely than not that some portion or all of a deferred

tax asset will not be realized, a valuation allowance is recognized.

States (“US”)

4 unchanged sentences

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

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

invested in the PRC.

income for the three-month periods ended March 31, 2025 and 2024, and management believes that its earnings are permanently invested in

Virgin Islands (“BVI”)

1 unchanged sentence

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

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

2024 and 2023.

Upper Class Group Limited did not generate assessable profit for the three-month periods ended March 31, 2025 and 2024.

HKJI, a subsidiary of Upper Class Group Limited, was

1 unchanged sentence

from Hong Kong.

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

ended September 30, 2024 and 2023.

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

30, 2024 and 2023 are 16.5 %.

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

31, 2025 and 2024.

The applicable statutory tax rates for the three-month periods ended March 31, 2025 and 2024 are 16.5 %.

There is no dividend withholding tax in Hong Kong.

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

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

The operating subsidiaries SCHC is a wholly foreign-owned enterprises

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

The PRC tax losses

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

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

Tax losses of the operating subsidiaries of the Company

may be carried forward for five years.

Enterprise income tax (“EIT”) for

SCHC, SYCI, SHSI and DCHC in the PRC is charged at 25 % of the assessable profits.

The operating subsidiaries SCHC, SYCI, DCHC, and

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

PRC tax losses may be carried forward to be utilized against future taxable profit for ten years for High-tech enterprises and small and

medium-sized enterprises of science and technology and for five years for other companies.

Tax losses of the operating subsidiaries of

the Company may be carried forward for five years.

On February 22, 2008, the Ministry of Finance

3 unchanged sentences

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

As of September 30, 2024 and December 31, 2023,

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

are $ 46,286,602 and $ 87,160,228 , respectively.

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

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

foreseeable future.

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

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

As of September 30, 2024

and December 31, 2023, the unrecognized WHT are $ 1,342,345 and $ 3,396,379 , respectively.

As of March 31, 2025 and December 31, 2024, the

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

$ 35,315,678 and $ 40,524,183 , respectively.

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

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

Accordingly, as of March 31, 2025 and December 31, 2024, the Company has not recorded any WHT on the cumulative amount of distributable

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

As of March 31, 2025 and December 31, 2024, the

unrecognized WHT are $ 816,956 and $ 1,078,743 , respectively.

The Company’s income tax returns are subject

11 unchanged sentences

in every four years.

The tax returns for 2014 and 2018 have been examined, and there is no Hong Kong Profits Tax was charged.

The components of the income tax benefit from

continuing operations are:

The tax returns for 2014 and 2018 are currently subject to examination.

The components of the provision for income tax

benefit (expense) from continuing operations are:

Income Taxes - Schedule of Components of Income Tax Expense Benefit

Three-Month Period Ended September 30,

Nine-Month Period Ended September 30,

Three-Month Period Ended March 31,

Current taxes – PRC

Deferred tax – PRC entities

( 1,270,060 )

Total Income tax (expenses) benefits

$ ( 1,270,060 )

Significant components of the Company’s

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

deferred tax assets and liabilities at March 31, 2025 and December 31, 2024 are as follows:

Income Taxes - Schedule of Deferred

Tax Assets and Liabilities

September 30,

Deferred tax liabilities

1 unchanged sentence

Exploration costs

Impairment of property plant and equipment

PRC tax losses

5 unchanged sentences

Net deferred tax asset

The decrease in valuation allowance for the three-month

period ended September 30, 2024 is $ 14,209 .

The decrease in valuation allowance for the three-month

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

The decrease in valuation allowance for the nine-month

period ended September 30, 2024 is $ 71,237 .

The decrease in valuation allowance for the nine-month

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

Deferred tax assets consist of future reversals of existing taxable

temporary differences and adequate future taxable income, exclusive of reversing deductible temporary differences.

As of March 31, 2025

and 2024, valuation allowances were mainly provided against deferred tax assets caused by exploration costs and net operating loss where

it was determined it was more likely than not that the benefits of the deferred tax assets will not be realized due to their continuous

The increase in valuation allowance for the three-month

period ended March 31, 2025 is $ 1,083,817 .

The increase in valuation allowance for the three-month

period ended March 31, 2024 is $ 14,473 .

There were no unrecognized tax benefits and accrual

for uncertain tax positions as of September 30, 2024 and December 31, 20232 and no amounts accrued for penalties and interest for the

three and nine months ended September 30, 2024 and 2023.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

(Expressed in U.S.

for uncertain tax positions as of March 31, 2025 and December 31, 2024 and no amounts accrued for penalties and interest for the three

months ended March 31, 2025 and 2024.

NOTE 17 – BUSINESS SEGMENTS

The Company has four reportable segments:

crude salt, chemical products and natural gas.

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

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

An operating segment’s performance is primarily

6 unchanged sentences

All the customers are located in PRC.

September 30, 2024

Total Segment Total

Three-Month Period Ended March 31, 2025 Operating Segment

Corporate Corporate

1 unchanged sentence

(intersegment)

Income(loss) from operations before income tax benefit

( 4,029,999 )

( 4,510,766 )

( 4,581,609 )

Income tax benefit (expense)

Income (loss) from operations after

income tax benefit (expense)

( 3,028,932 )

( 3,407,069 )

( 3,477,912 )

Depreciation and amortization

Capital expenditures

September 30, 2023

(external customers)

(intersegment)

Income(loss) from operations before income tax benefit

( 2,143,203 )

( 2,035,988 )

( 2,293,288 )

Income tax benefit (expense)

Income (loss) from operations after

income tax benefit (expense)

( 1,626,276 )

( 1,552,464 )

( 1,809,764 )

Depreciation and amortization

Capital expenditures

* Certain common production overheads, operating

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

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

Commencing May 2022,

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

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

(Expressed in U.S.

NOTE 17 – BUSINESS SEGMENTS – Continued

September 30, 2024

(external customers)

(intersegment)

Income(loss) from operations before income tax benefit

Loss from operations before income expense

( 3,370,836 )

1 unchanged sentence

( 4,610,207 )

Income tax benefit (expense)

Income (loss) from operations after

income tax benefit (expense)

Income tax (expense) benefit

Loss from operations after income taxes(expense) benefit

( 3,370,836 )

3 unchanged sentences

Capital expenditures

September 30, 2023

Three-Month Period Ended March 31, 2024

(external customers)

(intersegment)

Income(loss) from operations before income tax benefit

( 3,340,404 )

Loss from operations before income expense

( 4,782,815 )

1 unchanged sentence

( 5,269,419 )

Income tax benefit (expense)

Income (loss) from operations after

income tax benefit (expense)

Income tax (expense) benefit

Loss from operations after income taxes(expense) benefit

( 3,584,744 )

3 unchanged sentences

Capital expenditures

* Certain common production overheads, operating

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

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

Commencing May 2022,

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

* Certain common production overheads, operating and administrative

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

to the average selling price and production volume of the respective segment.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

MARCH 31, 2025

(Expressed in U.S.

NOTE 17 – BUSINESS SEGMENTS – Continued

Three-Month Period Ended September 30,

Nine-Month Period Ended September 30,

Three-Month Period Ended March 31,

Reconciliations

Total segment operating Income (loss)

$ ( 4,510,766 )

$ ( 2,035,988 )

Total segment operating loss

$ ( 4,328,371 )

1 unchanged sentence

Corporate costs

Unrealized gain on translation of intercompany balance

Income (loss) from operations

( 4,581,609 )

( 2,293,288 )

Unrealized gain (loss) on translation of intercompany balance

Loss from operations

( 4,610,207 )

( 5,269,419 )

Other income, net of expense

Other Expenses

( 29,173,011 )

Income (loss) before taxes

$ ( 4,596,580 )

$ ( 2,259,321 )

Loss before taxes

$ ( 4,629,500 )

$ ( 5,262,192 )

The following table shows the major customer(s)

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

The following table shows the major customers

(10% or more) for the three-month period ended March 31, 2025.

Business Segments - Schedule of

5 unchanged sentences

Shouguang Weidong Chemical Company Limited

The following table shows the major customer(s)

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

Chemical Products

Percentage of

Shandong Morui Chemical Company Limited

Shandong Brother Technology Limited

Shouguang Weidong Chemical Company Limited

The following table shows the major customer(s)

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

Shandong Shouguangshen Runfa Marine Chemical Company Limited

The following table shows the major customers

(10% or more) for the three-month period ended March 31, 2024.

Chemical Products

Percentage of

Shandong Brother Technology Limited

Shandong Morui Chemical Company Limited

Shouguang Weidong Chemical Company Limited

The following table shows the major customer(s)

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

Chemical Products

Percentage of

Shandong Morui Chemical Company Limited

Shandong Brother Technology Limited

Shouguang Weidong Chemical Company Limited

Shandong Shouguangshen Runfa Marine Chemical Company Limited

1 unchanged sentence

Customer Concentration

During the nine-month period ended September 30,

During the three-month period ended March 31,

2025, the Company sold 62.4 % of its products to its top five customers.

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

During the nine-month period ended September 30,

As of March 31, 2025, amounts due from these customers were $ 1,462,756 .

During the three-month period ended March 31,

2024, the Company sold 55 % of its products to its top five customers.

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

$ 1,485,777 .

As of March 31, 2024, amounts due from these customers were $ 2,803,534 .

NOTE 19 – MAJOR SUPPLIERS

1 unchanged sentence

Cost of Goods

During the nine-month period ended September 30,

2024 the Company purchased 100 % of its raw materials from its top four suppliers.

As of September 30, 2024, amounts due to

those suppliers were $ 127,698 .

During the nine-month period ended September 30,

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

As of September 30, 2023, amounts due to

those suppliers were $ 229,260 .

During the three-month period ended March 31,

2025, the Company purchased 100 % of its raw materials from its top three suppliers.

As of March 31, 2025, amounts due to those

suppliers were $ 390,250 .

During the three-month period ended March 31,

2024, the Company purchased 100 % of its raw materials from its top three suppliers.

As of March 31, 2024, amounts due to those

suppliers were $ 207,431 .

NOTE 20 – LOSS CONTINGENCIES

55 unchanged sentences

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

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

of Factory No.

389 Zhi Yi, dated

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

Production of

7 was allowed to resume in April 2019.

16 unchanged sentences

In view of the above facts and circumstances,

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

the Company believes that it is not necessary to accrue for any estimated losses or impairment as of March 31, 2025.

NOTE 21 - SUBSEQUENT EVENT

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements