What changed in this filing

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Item 1. Financial Statements

2025-11-19 compared with 2025-08-13 · 605 added, 476 removed, 883 unchanged (55% of the section changed)

4 unchanged sentences

(Expressed in U.S.

June 30, 2025

September 30, 2025

December 31, 2024

18 unchanged sentences

Accounts payable and accrued expenses

Accrued liabilities

Taxes payable-current

Advance from customer

Amount due to related parties

17 unchanged sentences

1,382,114 and 1,120,145 shares issued;

and 13,346,618 and 10,726,924 shares outstanding as of June 30, 2025 and December 31, 2024

and 1,353,531 and 1,091,562 shares outstanding as of September 30, 2025 and December 31, 2024, respectively (1)

Treasury stock;

285,830 shares as of June 30, 2025 and December 31, 2024 at cost

28,583 shares as of September 30, 2025 and December 31, 2024 at cost

( 1,372,673 )

3 unchanged sentences

Retained earnings unappropriated

( 3,708,985 )

Retained earnings appropriated

Accumulated other comprehensive income

Accumulated other comprehensive loss

( 19,316,969 )

4 unchanged sentences

$ 169,455,995

(1) The shares and per

share data are presented on a retroactive basis to reflect the stock split.

See accompanying notes to the condensed consolidated financial statements.

3 unchanged sentences

(Expressed in U.S.

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

OPERATING COSTS AND EXPENSE

Three-Month Period Ended September 30,

Nine -Month Period Ended September 30,

OPERATING COSTS AND EXPENSES

Cost of net revenue

11 unchanged sentences

( 3,169,821 )

( 2,409,957 )

TOTAL OPERATING COSTS AND EXPENSE

11 unchanged sentences

Other expense, net

Loss on disposal of property, plant and equipment

( 3,521,613 )

( 3,524,825 )

Loss on disposal of long-lived assets

( 2,008,853 )

( 29,169,008 )

Impairment of long-lived assets

( 29,782,912 )

LOSS BEFORE TAXES

2 unchanged sentences

( 41,067,789 )

( 44,164,800 )

INCOME TAX BENEFIT (EXPENSE)

8 unchanged sentences

$ ( 40,582,933 )

OTHER COMPREHENSIVE (LOSS) INCOME

- Foreign currency translation adjustments

( 1,243,121 )

TOTAL COMPREHENSIVE LOSS

5 unchanged sentences

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES(1):

(1) The shares and per share data are presented on a retroactive basis

to reflect the stock split.

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’

SIX-MONTH PERIOD ENDED JUNE 30, 2025

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2025

(Expressed in U.S.

comprehensive

outstanding(1)

unappropriated

BALANCE AT MARCH 31, 2025 (Unaudited)

BALANCE AT JUNE 30, 2025 (Unaudited)

( 1,372,673 )

1 unchanged sentence

$ 142,214,825

Currency translation adjustment

Net loss for three-month period ended JUNE 30, 2025

BALANCE AT JUNE 30, 2025(Unaudited)

Translation adjustment

Net loss for three-month period ended September 30, 2025

( 35,664,512 )

BALANCE AT SEPTEMBER 30, 2025 (Unaudited)

( 1,372,673 )

$ ( 3,708,985 )

$ ( 19,316,969 )

$ 107,461,696

comprehensive

outstanding(1)

unappropriated

BALANCE AT MARCH 31, 2024 (Unaudited)

BALANCE AT JUNE 30, 2024 (Unaudited)

( 1,372,673 )

1 unchanged sentence

$ 166,915,125

Currency translation adjustment

Net loss for three-month period ended June 30, 2024

Translation adjustment

Net income for three-month period ended September 30, 2024

( 3,492,883 )

BALANCE AT JUNE 30, 2024(Unaudited)

BALANCE AT SEPTEMBER 30, 2024 (Unaudited)

( 1,372,673 )

2 unchanged sentences

comprehensive

outstanding(1)

unappropriated

4 unchanged sentences

Restricted shares issued for services

Acquisition of Assets

Currency translation adjustment

Net loss for three-month period ended JUNE 30, 2025

Net loss for nine-month period ended September 30, 2025

( 41,067,789 )

BALANCE AT JUNE 30, 2025(Unaudited)

BALANCE AT September 30, 2025(Unaudited)

( 1,372,673 )

1 unchanged sentence

$ ( 19,316,969 )

$ 107,461,696

comprehensive

outstanding(1)

unappropriated

3 unchanged sentences

$ 205,248,296

Currency translation adjustment

( 1,243,121 )

Net loss for six-month period ended June 30, 2024

Translation adjustment

Net loss for nine-month period ended September 30, 2024

( 40,582,933 )

BALANCE AT JUNE 30, 2024(Unaudited)

BALANCE AT SEPTEMBER 30, 2024(Unaudited)

( 1,372,673 )

1 unchanged sentence

$ 166,525,118

(1) The shares and per share data

are presented on a retroactive basis to reflect the stock split.

See accompanying notes to the condensed consolidated financial statements.

Treasury Stock

3 unchanged sentences

Share to be Issued

See accompanying notes to the condensed consolidated financial statements.

GULF RESOURCES, INC.

2 unchanged sentences

(Expressed in U.S.

Six-Month Period Ended June 30,

Nine-Month Period Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

6 unchanged sentences

( 3,615,091 )

Stock-based compensation expense

Amortization of right-of-use asset

Loss on disposal of equipment

Stock-based compensation expense

Loss on disposal of long-lived assets

Impairment of long-lived assets

Accrued Liabilities

Changes in assets and liabilities:

2 unchanged sentences

Prepayments and deposits

( 2,331,871 )

Advance from customers

4 unchanged sentences

Taxes payable

Lease Liabilities

Net cash used in operating activities

( 2,139,435 )

Operating lease

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

1 unchanged sentence

( 8,673,384 )

Net cash provided by (used in) investing activities

( 60,526,213 )

Net cash used in investing activities

( 8,673,384 )

( 60,526,213 )

CASH FLOWS FROM FINANCING ACTIVITIES

2 unchanged sentences

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

NET DECREASE IN CASH AND CASH EQUIVALENTS

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

( 4,255,079 )

2 unchanged sentences

CASH AND CASH EQUIVALENTS - END OF PERIOD

GULF RESOURCES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Expressed in U.S.

Years Ended June 30,

Periods Ended September 30,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the six-month period ended June 30, 2025 for:

Cash paid during the nine-month period ended September 30, 2025 for:

Paid for taxes

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

SEPTEMBER 30, 2025

(Expressed in U.S.

1 unchanged sentence

of Presentation and Consolidation

The accompanying audited consolidated financial

The accompanying unaudited consolidated financial

statements have been prepared by Gulf Resources, Inc.

3 unchanged sentences

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”).

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

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.

Going Concern Consideration

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.

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

June 30, 2025, the Company had current assets of $ 20.28 million and current liabilities of $ 14.79 million.

As a result, the

surplus was $ 5.49 million, and it has suffered losses for the six months ended by June 30 , 2025.

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.

(b) Going Concern Consideration

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 operations.

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 September 30, 2025, the Company had

current assets of $ 15.67 million and current liabilities of $ 17.11 million.

As a result, the deficit was $ 1.44 million,

and it has suffered losses for the nine months ended by September 30, 2025.

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.

Nature of Business

The Company manufactures and trades bromine through

2 unchanged sentences

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 commenced trial operation

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

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)).

(i) Bromine and Crude Salt Segments

2 unchanged sentences

9 passed inspection and could resume operations.

In April 2019, Factory No.

1, and Factory No.

7 resumed operation.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

(Expressed in U.S.

On November 25, 2019, the government

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

facilities, including Factory No.

1 and Factory No.

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 No.

1 and Factory

7, to temporarily stop production from December 16, 2019 to February 10, 2020.

Subsequently, due to the coronavirus outbreak in China, the local government ordered those bromine facilities to postpone the

commencement of production.

Subsequently, the Company received an approval dated February 27, 2020 issued by the local governmental

authority allowing the Company to resume production after the winter temporary closure.

Further, the Company received another

approval from the Shouguang Yangkou People’s Government dated March 5, 2020 allowing the Company to resume production at its

bromine factories No.

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

(the “March 2020 Approval”).

Subsequently, due to the coronavirus outbreak in China,

the local government ordered those bromine facilities to postpone the commencement of production.

Subsequently, the Company received an

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

temporary closure.

Further, the Company received another approval from the Shouguang Yangkou People’s Government dated March 5,

2020 allowing the Company to resume production at its bromine factories No.

9 in order to meet the needs of bromide

products for epidemic prevention and control (the “March 2020 Approval”).

The Company’s Factories No.

7 commenced trial production in mid March 2020

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

9 commenced commercial production on May 6, 2020.

Company received verbal notification from the government regarding Factory No.

8, allowing it to recommence production in August

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

9 commenced commercial production

on May 6, 2020.

The Company received 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

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

This subsidiary was created

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

The creation of

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

However, the establishment of this

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

The Company is still waiting for governmental approval for Factories

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 Co.

Ltd, our subsidiary,

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

This subsidiary was created in response to a new

government policy that required bromine and crude salt companies to have separate registrations.

The creation of this subsidiary and the

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

However, the establishment of this subsidiary has resulting

in a reallocation of costs between bromine and crude salt.

(ii) Chemical Segment

23 unchanged sentences

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

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 June 30, 2025 and December 31, 2024.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

(Expressed in U.S.

The Company suspended the construction in the chemical factory until

it decide what products can be produced most profitably.

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, 2025 and December 31, 2024.

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

impact the overall cost of the project.

(iii) Natural Gas Segment

In January 2017, the Company completed the

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

production in January 2019.

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

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

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

to solve the related land issue.

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

its natural gas well in Daying.

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

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

Pursuant to the Opinions of the Ministry of

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

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

participate in the natural gas production.

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

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

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.

(d) Use of Estimates

30 unchanged sentences

of Credit Risk

The Company is exposed to credit risk in the normal

course of business, primarily related to accounts receivable and cash and cash equivalents.

Substantially all of the Company’s cash

and cash equivalents are maintained with financial institutions in the PRC, namely, Industrial and Commercial Bank of China Limited, China

Merchants Bank Company Limited and Sichuan Rural Credit Union, which are not insured or otherwise protected.

The Company placed $ 7,736,081

and $ 10,075,162 with these institutions as of June 30, 2025 and December 31, 2024, respectively.

The Company has not experienced

any losses in such accounts in the PRC.

The Company is exposed to credit risk in the normal course of business,

primarily related to accounts receivable and cash and cash equivalents.

Substantially all of the Company’s cash and cash equivalents

are maintained with financial institutions in the PRC, namely, Industrial and Commercial Bank of China Limited, China Merchants Bank Company

Limited, Bank of China Limited and Sichuan Rural Credit Union, which are not insured or otherwise protected.

The Company placed $ 5,820,083 and

$ 10,075,162 with these institutions as of September 30, 2025 and December 31, 2024, respectively.

The Company has not

experienced any losses in such accounts in the PRC.

Concentrations of credit risk with respect to accounts receivable exists

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

SEPTEMBER 30, 2025

(Expressed in U.S.

44 unchanged sentences

The Company’s

contributions totaled $ 123,099 and $ 100,290 for the three-month period ended June 30, 2025 and 2024, respectively, and totaled $ 296,584

and $ 223,413 for the six-month period ended June 30, 2025 and 2024, respectively.

contributions totaled $ 121,872 and $ 99,035 for the three-month period ended September 30, 2025 and 2024, respectively, and totaled $ 418,457

and $ 322,448 for the nine-month period ended September 30, 2025 and 2024, respectively.

Net revenue is net of discount and value added

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

SEPTEMBER 30, 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 six months period ended June

30, 2025 and 2024, the Company determined that there were no events or circumstances indicating possible impairment of its long-lived

For the three-month and nine-month periods ending September 30, 2025,

the impairment of the company's long-term assets was $ 29,782,912 .

For the three-month and nine-month periods ending September 30, 2024, there

was no impairment of the company's long-term assets.

and Diluted Earnings per Share of Common Stock

8 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 six-month periods ended June 30, 2025

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

2025 and 2024, respectively.

Because the Company reported a net loss

for the six-month periods ended June 30, 2025 and 2024, common stock equivalents including stock options and warrants were anti-dilutive,

for the nine-month periods ended September 30, 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.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

SEPTEMBER 30, 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 income.

The statement of income

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

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.

Gains or losses resulting from transactions in currencies

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

other than the functional currencies are recognized in net loss 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

JUNE 30, 2025

(Expressed in U.S.

(q) Stock-based

(q) Stock-based Compensation

Stock-based awards issued to employees are recorded

30 unchanged sentences

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

tax in the consolidated statement of profit (loss).

tax in the consolidated statement of income (loss).

Accounting Pronouncements

Recent accounting pronouncements adopted

There were no recent accounting pronouncements adopted during the six

months ended June 30, 2025.

Recently Issued Accounting Pronouncements Not Yet Adopted

There were no recent accounting pronouncements adopted during the nine

months ended September 30, 2025.

Recently Issued Accounting Pronouncements Not

There were no recently issued accounting pronouncements not yet adopted

during the six months ended June 30, 2025.

during the nine months ended September 30, 2025.

(u) Fair Value Measurement

20 unchanged sentences

There were no material unrecognized

financial assets and liabilities as of June 30, 2025 and 2024.

financial assets and liabilities as of September 30, 2025 and 2024.

The Company determines the fair value with

the help from independent third party professional valuation specialists, and the assumptions used in estimating fair value require

significant judgment.

The use of different assumptions and judgments could result in a materially different estimate of fair value.

There are Base land price coefficient correction method and market comparison method for Prepaid land leases, and cost method for

Property, Plant and equipment are used in the valuation, which are all classified in Level 3 of the valuation hierarchy.

The following table presents the Company’s

assets measured at fair value on a non-recurring basis for the years ended September 30, 2025:

Basis of Presentation and Consolidation - Fair Value Assets

Measured on Non-Recurring Basis

Fair Value Measurement Non-Recurring

Fair Value Measurements at Reporting Date Using

September 30,2025

Quoted Prices

Total Gain(Loss)

September 30,2025

As of September 30, 2025

Prepaid land leases

As of September 30, 2025

Property, Plant and equipment

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

SEPTEMBER 30, 2025

(Expressed in U.S.

NOTE 2 – ACCOUNTS RECEIVABLE, NET

Accounts receivable net consist of:

September 30,

Accounts receivable

1 unchanged sentence

Accounts receivable, net

The overall accounts receivable balance as of June 30, 2025 increased

by $ 2,586,327 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.

The overall accounts receivable balance as of

September 30, 2025 increased by $ 2,858,041 , as compared to those of December 31, 2024.

The increase was due to the rise in sales.

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.

NOTE 3 – INVENTORIES

1 unchanged sentence

Inventories - Schedule of Inventories, Current

September 30,

Raw materials

3 unchanged sentences

The Company recorded impairment charges for slow moving inventory in

the amounts of $ nil and $ 989,035 for the years ended June 30, 2025 and December 31, 2024.

the amounts of nil and $ 989,035 for the years ended September 30, 2025 and December 31, 2024.

NOTE 4 – PREPAYMENTS AND DEPOSITS, NET

2 unchanged sentences

Deposits, Net - Schedule of Prepayments and Deposits, Net

September 30,

December 31, 2024

4 unchanged sentences

Prepayments and deposits, net

As of June 30, 2025, the total amount of advance payments and deposits

recorded by the company, net of impairment provisions was $ 8,743,324 .

As of September 30, 2025, the total amount of advance payments and

deposits recorded by the company, net of impairment provisions was $ 5,916,171 .

NOTE 5 – PREPAID LAND LEASES

10 unchanged sentences

2019, all the leases in which term has commenced and were in use were classified as operating lease right-of-use assets (“ROU”).

In December 2017, the Company paid a one lump

sum upfront amount of $ 8,883,165 for a 50-year lease of a parcel of land at Bohai Marine Fine Chemical Industrial Park (“Bohai”)

for the new chemical factory under construction.

In December 2017, the Company paid a one lump sum upfront amount of

$ 8,883,165 for a 50-year lease of a parcel of land at Bohai Marine Fine Chemical Industrial Park (“Bohai”) for the new chemical

factory under construction.

There is no purchase option at the end of the lease term.

This was classified as an

operating lease prior to and as of January 1, 2019.

This was classified as an operating lease prior

to and as of January 1, 2019.

The land use certificate was issued on October 25, 2019.

The lease term expires on

August 12, 2069.

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

June 30 2025 and December 31, 2024.

As of June 30, 2025, the prepaid land lease increased to $ 9,242,933 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.

The lease term expires on August 12, 2069.

amount paid was recorded as prepaid land leases, net of current portion in the consolidated balance sheet as of September 30 2025 and

December 31, 2024.

As of September 30, 2025, the prepaid land lease increased to $ 9,242,933 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.

The above leased-land had done the impairment of

based on the independent third party evaluation report , and further been auctioned by the court due to the compulsory execution

related to litigation.

Please see note 16 for more details.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

SEPTEMBER 30, 2025

(Expressed in U.S.

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, NET

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

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

and Equipment, Net

September 30,

Mineral rights

7 unchanged sentences

( 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 authority.

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 $ 48,765,141 and $ 50,219,026 as at June 30, 2025 and December 31, 2024,

respectively.

During the three-month period ended June 30, 2025,

depreciation and amortization expense totaled $ 3,989,399 , of which $ 430,283 , $ 197,636 and $ 3,361,480 were recorded in direct

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

During the six-month period

ended June 30, 2025, depreciation and amortization expense totaled $ 7,988,425 , of which $ 2,900,054 , $ 981,108 and $ 4,107,263 were recorded

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

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

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

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

During the six-month period ended June

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

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

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 $ 57,674,442

and $ 50,219,026

as at September 30, 2025 and December 31, 2024, respectively.

The increase in this amount is

mainly due to the renovation project of crude salt pans.

During the three-month period ended September 30, 2025, depreciation

and amortization expense totaled $ 3,747,191 ,of which $ 353,924 , $ 193,767 and $ 3,199,500 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, 2025 , depreciation

and amortization expense totaled $ 11,735,615 of which $ 3,253,978 , $ 1,174,875 and $ 7,306,762 were recorded in direct labor and factory

overheads incurred during plant shutdown , administrative expenses and

cost of net revenue .

During the three-month period ended 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 revenue .

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 revenue .

The company had done the impairment of $ 22,790,991 for these assets based

on the independent third party evaluation report, and further been auctioned by the court due to the compulsory execution related to

Please see note 16 for more details.

For those acquired crude salt assets bought back

in year 2024.

The company carried out and completed an update and renovation on them during year 2025, with a total cost of $ 8,673,384 .

NOTE 7 – FINANCE LEASE RIGHT-OF-USE ASSETS

3 unchanged sentences

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 six months period ended June

30, 2025, depreciation and amortization expense totaled $ 1,255 and $ 2,512 , respectively, which was recorded in direct labor and factory

overheads incurred during plant shutdown.

During the three and six months period ended June

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

overheads incurred during plant shutdown.

During the three and nine months period ended

September 30, 2025, depreciation and amortization expense totaled $ 1,266 and $ 3,778 , respectively, which was recorded in direct labor

and factory overheads incurred during plant shutdown.

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.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

SEPTEMBER 30, 2025

(Expressed in U.S.

6 unchanged sentences

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 $ 7,071,659 as at June 30, 2025.

As of June 30, 2025, the total operating lease

ROU assets was $ 5,937,515 .

The total operating lease cost for the six-month

period ended June 30, 2025 and 2024 was $ 435,102 and $ 440,030 .

lease right-of-use assets amount of $ 6,980,537 as at September 30, 2025.

As of September 30, 2025, the total operating

lease ROU assets was $ 5,847,348 .

The total operating lease cost for the nine-month

period ended September 30, 2025 and 2024 was $ 654,450 and $ 659,509 .

NOTE 9 – PAYABLE AND ACCRUED EXPENSES

Payable and accrued expenses consist of the following:

Payables and accrued expenses

consist of the following:

Payable and Accrued

Expenses - Schedule of Accounts Payable and Accrued Liabilities

September 30,

Accounts payable

1 unchanged sentence

Social security insurance contribution payable

Other payable-related party

Accrued expense for construction

3 unchanged sentences

NOTE 10– RELATED PARTY TRANSACTIONS

On September 25, 2012, the Company purchased five

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

(the “Seller”)

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

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

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

management services for an annual amount of approximately $ 86,911 for five years from January 1, 2023 to December 31, 2027 .

associated with this agreement for the three and six months ended June 30, 2025 was approximately $ 21,787 and $ 43,515 .

The expense associated

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

On September 25, 2012, the Company purchased

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

“Seller”) at a cost of approximately $ 5.7

million in cash, of which Mr.

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

equity interest in the Seller.

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

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

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

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

ended September 30, 2025 was approximately $ 21,877

and $ 65,300 .

The expense associated with this agreement for the three and nine months ended September 30, 2024 was approximately

$ 22,258 and $ 66,125 .

NOTE 10 – RELATED PARTY TRANSACTIONS –

1 unchanged sentence

Name of related parties

Chairman Of the Board

Chief Executive Officer

Former Chairman Of the Board

Chief Executive Officer and Chairman of the Board

Chief Financial Officer

Chief Operating Officer

Chief Operating Officer,Director

Chengdu Dianjinshi Culture media Co., LTD

Affiliated with company officers

September 30,

Amount due to related parties:

September 30,

Due from related party:

Chengdu Dianjinshi Culture media Co., LTD

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

(Expressed in U.S.

NOTE 11– TAXES PAYABLE

September 30,

Land use tax payable

Value added tax and other taxes payable

NOTE 12 – LEASE LIABILITIES-FINANCE AND

OPERATING LEASE

NOTE 12 – LEASE LIABILITIES-FINANCE AND OPERATING

The components of finance lease liabilities were

1 unchanged sentence

Lease - Schedule of Finance and Operating Leased Liabilities

September 30,

Interest rate

3 unchanged sentences

Interest expenses from finance lease obligations

amounted to $ 21,674 and $ 24,814 for the three-month period ended June 30, 2025 and 2024, respectively, which were charged to the condensed

consolidated statement of income (loss).

Interest expenses from finance lease obligations amounted to $ 43,396 and $ 49,644 for the six-month

period ended June 30, 2025 and 2024, respectively, which were charged to the condensed consolidated statement of income (loss).

amounted to $ 18,184 and $ 21,191 for the three-month period ended September 30, 2025 and 2024, respectively, which were charged to the

condensed consolidated statement of income (loss).

Interest expenses from finance lease obligations amounted to $ 61,580 and $ 70,835 for

the nine-month period ended September 30, 2025 and 2024, respectively, which were charged to the condensed consolidated statement of income

The components of operating lease liabilities

Interest rate

September 30,

Discount rate

Total Operating lease liabilities

2 unchanged sentences

The weighted average remaining operating lease

term at June 30, 2025 was 17 years and the weighted average discounts rate was 4.89 %.

Lease payments for the three-month period ended

June 30, 2025 and 2024, respectively, were $ 520,167 and $ 530,962 .

Lease payments for the six-month period ended June 30, 2025 and 2024,

respectively, were $ 745,488 and $ 757,221 .

term at September 3 0 , 2025 was 17 years and the weighted average discounts

rate was 4.89 %.

Lease payments for the three-month period ended September 30, 2025 and 2024, respectively, were $ 79,507 and $ 66,387 .

payments for the nine-month period ended September 30, 2025 and 2024, respectively, were $ 824,305 and $ 823,608 .

Maturities of lease liabilities were as follows:

15 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

SEPTEMBER 30, 2025

(Expressed in U.S.

NOTE 13 –– EQUITY

Reverse Stock Split and Authorized Shares

On October 27, 2025, the Company completed a 1-for-10

reverse stock split of the company’s common stock, such that for each ten shares outstanding prior to the stock split there was

one share outstanding after the reverse stock split.

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

the stock split figures.

Restricted Shares

16 unchanged sentences

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 six months ended June 30, 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.

During the nine months ended September 30, 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

1 unchanged sentence

The fair value of the award on the date of grant was $ 196,100 which was expensed in

full during the six months period ended June 30, 2025.

full during the nine months period ended September 30, 2025.

Retained Earnings – Appropriated

3 unchanged sentences

Statutory Common Reserve Funds

SCHC, SYCI, SHSI and DCHC are required each

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

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

This reserve can be used to make up

any loss incurred or to increase share capital.

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

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

As at June 30, 2025, GULF RESOURCES 'statutory

provident fund stood at $ 26.67 million.

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, 2025 GULF RESOURCES 'statutory provident fund stood at

$ 26.67 million.

NOTE 14 – TREASURY STOCK

As of June 30, 2025 and December 31, 2024, the

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

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

(Expressed in U.S.

As of September 30, 2025 and December 31, 2024,

the number of treasury stock of the Company was 28,583 and 28,583 , respectively.

NOTE 15 – STOCK-BASED COMPENSATION

6 unchanged sentences

of the 2007 Plan and applicable award agreement.

As of June 30, 2025, the number of shares of the Company’s common stock available

As of September 30, 2025, the number of shares of the Company’s common stock available

for grant of awards under the 2019 Plan was 1,801 shares.

4 unchanged sentences

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

For the three and six months ended June 30, 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 and six months ended June 30, 2025 and 2024.

The following table summarizes all Company stock

option transactions between January 1, 2025 and June 30, 2025.

For the three and nine months ended September 30, 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 and nine months ended September 30, 2025 and 2024.

The following table summarizes all Company

stock option transactions between January 1, 2025 and September 30, 2025.

Stock-Based Compensation - Schedule of Stock

Option Activity

Number of Option

Outstanding and exercisable

Average Exercise price of Option

Weighted- Average Exercise price of Option

Exercise Price per Common Share

3 unchanged sentences

Expired during the period

Balance, June 30, 2025

Stock Options Outstanding and Exercisable

Balance, September 30, 2025

Stock Options and Warrants Outstanding and Exercisable

Weighted Average

Outstanding at June 30, 2025

Outstanding at September 30, 2025

Exercise Prices

1 unchanged sentence

Outstanding and exercisable

All options exercisable and outstanding at June

All options exercisable and outstanding at September

30, 2025 are fully vested.

As of June 30, 2025 there was no unrecognized compensation cost related to outstanding stock options,

As of September 30, 2025 there was no unrecognized compensation cost related to outstanding stock options,

The aggregate intrinsic value of options outstanding and exercisable

as of June 30, 2025 was $ 0 .

During the three and six months ended June 30,

as of September 30, 2025 was $ 0 .

During the three and nine months ended September

30, 2025 and 2024, there were no options exercised.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

SEPTEMBER 30, 2025

(Expressed in U.S.

16 – ACCRUED LIABILITIES

18, 2023 , Shandong Shouguang Vegetable Industry Group Co., Ltd.

and Shandong Shouguang Vegetable Seed Group Co., Ltd.

into loan agreements with Shandong Deepin City Emergency Loan Fund Co., Ltd..

A total of nine companies and individuals providing

guarantee to these loans, including SCHC and SYCI.

As of July 2024, Shangdong Shouguang Vegetable Industry Group Co., Ltd.

Shandong Shouguang Vegetable Seed Group Co., Ltd.

owed a principal of $2,104,050 and RMB $1,402,700 to Shandong Deepin City

Emergency Loan Fund Co., Ltd., respectively.

Mediated by the Local Arbitration

Commission and documented in mediation documents No.

1358 and 1357, Shandong Shouguang Vegetable Industry Group Co., Ltd.

Shouguang Vegetable Seed Industry Group Co., Ltd.

were to repay $2,104,050 and $1,402,700 to Shandong Deepin City Emergency Loan Fund

before May 8, 2024, respectively.

In addition, they were required to pay interests every ten days starting from January 1, 2024.

SCHC and SYCI are jointly and severally liable for both the principal and

Shandong Deepin City Emergency Loan Fund Co.,

sought court action as Shandong Shouguang Vegetable Industry Group Co., Ltd.

and Shandong Shouguang Vegetable Seed Industry Group

were unable to pay principal before deadline or interests as scheduled.

Pursuant to court orders (2024) Lu 07 Exec 640 and (2024)

Lu 07 Exec 641, SCHC and SYCI, as guarantors, are required to repay the principal and interests.

The Shandong Weifang Intermediate People's

Court ruled to auction the land at Xiangjiang road, Yangkou town, Shouguang City and the attached properties on it, and the auction proceeds

would be used to repay Shandong Deepin City Emergency Loan Fund Co., Ltd.

The court engaged a third-party

valuer for evaluation of the land at Xiangjiang road, Yangkou town ,Shouguang city and its attached properties.

The valuation report returned

a fair value of $ 4,580,892 .

The Company recognized an impairment loss of $ 29,782,912 accordingly.

The court imposed a forced

auction of the land and its attached properties in July, 2025 however the auction was filed.

A second auction was held on August 15, 2025.

The land and its attached properties were sold at $ 2,556,733 .

As the selling price was lower than the fair value, the Company recognized

a loss on disposal of long-term assets of $ 2,008,853 .

As of September 30, 2025, as

SCHC and SYCI were liable for a sum of principal and interests of $ 3,521,613 , net of auction proceeds, the Company recognized accrued

liabilities of $ 968,113 accordingly.

NOTE 17 – INCOME TAXES

The Company utilizes the asset and liability method 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.

United States (“US”)

The Company utilizes the asset and liability

method 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”)

United States

3 unchanged sentences

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

income for the three-month and six-month periods ended June 30, 2025 and 2024, and management believes that its earnings are permanently

income for the three-month and nine-month periods ended September 30, 2025 and 2024, and management believes that its earnings are permanently

invested in the PRC.

British Virgin Islands (“BVI”)

Virgin Islands (“BVI”)

Upper Class Group Limited, a subsidiary of Gulf

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

Upper Class Group Limited did not generate assessable profit for the three-month and six-month periods ended June 30, 2025

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

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 six-month periods

ended June 30, 2025 and 2024.

The applicable statutory tax rates for the three-month and six-month periods ended June 30, 2025

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, 2025 and 2024.

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

30, 2025 and 2024 are 16.5 %.

2 unchanged sentences

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

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

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

The PRC tax losses may be

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

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

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

forward for five years.

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.

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 10% effective tax rate.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

(Expressed in U.S.

As of June 30, 2025 and December 31, 2024, the

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

$ 70,523,755 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 June 30, 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 June 30, 2025 and December 31, 2024, the

unrecognized WHT were $ 4,477,604 and $ 1,078,743 , respectively.

As of September 30, 2025 and December 31, 2024,

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

are $ 12,985,585 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 future.

Accordingly, as of September 30, 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 September 30, 2025

and December 31, 2024, the unrecognized WHT are $ 0 and $ 1,078,743 , respectively.

The Company’s income tax returns are subject

15 unchanged sentences

Income Taxes - Schedule of Components of Income Tax Expense Benefit

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

Three-Month Period Ended September 30,

Nine-Month Period Ended September 30,

Current taxes – PRC

Deferred tax – PRC entities

( 1,241,334 )

( 2,511,394 )

Total Income tax benefits

$ ( 1,208,110 )

$ ( 2,478,170 )

Total Income tax (expenses) benefits

Significant components of the Company’s

deferred tax assets and liabilities at June 30, 2025 and December 31, 2024 are as follows:

deferred tax assets and liabilities at September 30, 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

Impairment of long-lived assets

PRC tax losses

Accrued liabilities

US federal net operating loss

6 unchanged sentences

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

As of June 30, 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

As of September 30,

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 June 30, 2025 is $ 268,713 .

period ended September 30, 2025 is $ 9,138,862 .

The decrease in valuation allowance for the three-month

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

The increase in valuation allowance for the six-month

period ended June 30, 2025 is $ 1,352,530 .

The decrease in valuation allowance for the six-month

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

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

The increase in valuation allowance for the nine-month

period ended September 30, 2025 is $ 10,491,391 .

The decrease in valuation allowance for the nine-month

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

There were no unrecognized tax benefits and accrual

for uncertain tax positions as of June 30, 2025 and December 31, 2024 and no amounts accrued for penalties and interest for the three

and six months ended June 30, 2025 and 2024.

for uncertain tax positions as of September 30, 2025 and December 31, 2024 and no amounts accrued for penalties and interest for the three

and nine months ended September 30, 2025 and 2024.

GULF RESOURCES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

SEPTEMBER 30, 2025

(Expressed in U.S.

1 unchanged sentence

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.

bromine, 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.

June 30, 2025 Operating Segment

September 30, 2025 Operating Segment

Corporate Corporate

1 unchanged sentence

(intersegment)

Income(loss) from operations before income tax benefit

Loss from operations before income tax benefit

Income tax benefit (expense)

Income (loss) from operations after

Loss from operations after

income tax benefit (expense)

1 unchanged sentence

Capital expenditures

June 30, 2024

September 30, 2024

(external customers)

(intersegment)

Income(loss) from operations before income tax benefit

Loss from operations before income tax benefit

( 4,029,999 )

2 unchanged sentences

Income tax benefit (expense)

Income (loss) from operations after

Loss from operations after

income tax benefit (expense)

4 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 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.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

SEPTEMBER 30, 2025

(Expressed in U.S.

NOTE 18 – BUSINESS SEGMENTS – Continued

June 30, 2025

September 30, 2025

(external customers)

(intersegment)

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

Loss from operations before income tax benefit

( 3,775,713 )

1 unchanged sentence

( 5,207,267 )

( 5,694,821 )

Income tax benefit (expense)

Loss from operations after income tax benefit (expense)

Loss from operations after

income tax benefit (expense)

( 3,775,713 )

1 unchanged sentence

( 5,207,267 )

( 5,694,821 )

Depreciation and amortization

Capital expenditures

June 30, 2024

September 30, 2024

(external customers)

(intersegment)

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

Loss from operations before income tax benefit

( 13,475,400 )

2 unchanged sentences

Income tax benefit (expense)

Loss from operations after income tax benefit (expense)

Loss from operations after

income tax benefit (expense)

( 10,114,010 )

5 unchanged sentences

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

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

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

Commencing May 2022,

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

SEPTEMBER 30, 2025

(Expressed in U.S.

NOTE 18 – BUSINESS SEGMENTS – Continued

Three-Month Period Ended June 30,

Six-Month Period Ended June 30,

Three-Month Period Ended September 30,

Nine-Month Period Ended September 30,

Reconciliations

5 unchanged sentences

Corporate costs

Unrealized gain on translation of intercompany balance

Loss from operations

3 unchanged sentences

Interest income, net of expense

Other Expenses,net

Loss on disposal of property, plant and equipment

Other expense, net

( 3,521,613 )

( 3,524,825 )

Loss on disposal of long-lived assets

( 2,008,853 )

( 29,169,008 )

Impairment of long-lived assets

( 29,782,912 )

Loss before taxes

3 unchanged sentences

$ ( 44,164,800 )

The following table shows the major customer(s) (10% or more) for the

three-month period ended June 30, 2025.

The following table shows the major customer(s)

(10% or more) for the three-month period ended September 30, 2025.

Business Segments - Schedule of

2 unchanged sentences

Percentage of Total Revenue (%)

Shandong Morui Chemical Company Limited

Shandong Brother Technology Limited

Shouguang Weidong Chemical Company Limited

Shandong Morui Chemical Company Limited

Shandong Shouguangshen Runfa Marine Chemical Company Limited

Shouguang Weidong Chemical Company Limited

Shandong Xurui New Materials Company Limited

The following table shows the major customer(s)

(10% or more) for the six-month period ended June 30, 2025.

(10% or more) for the nine-month period ended September 30, 2025.

Chemical Products

5 unchanged sentences

The following table shows the major customer(s)

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

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

Chemical Products

Percentage of Total Revenue (%)

Shandong Brother Technology Limited

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 six-month period ended June 30, 2024.

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

Chemical Products

5 unchanged sentences

Customer Concentration

During the six-month period ended June 30, 2025,

the Company sold 65.2 % of its products to its top five customers, respectively.

As of June 30, 2025, amounts due from these customers

were $ 2,207,307 .

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

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

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

During the nine-month period ended September 30,

2025, the Company sold 67.7 % of its products to its top five customers.

As of September 30, 2025, amounts due from these customers were

$ 2,579,855 .

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

(Expressed in U.S.

During the nine-month period ended September 30,

2024, the Company sold 62.9 % of its products to its top five customers.

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

NOTE 20– MAJOR SUPPLIERS

1 unchanged sentence

Cost of Goods

During the six-month period ended June 30, 2025

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

As of June 30, 2025, amounts due to those suppliers

were $ 380,812 .

During the six-month period ended June 30, 2024

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

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

were $ 132,606 .

During the nine-month period ended September 30,

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

As of September 30, 2025, amounts due to

those suppliers were $ 379,806 .

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 .

NOTE 21 – LOSS CONTINGENCIES

Settled Litigation

On or about August 3, 2018, written decisions

of administration penalty captioned Shou Guo Tu Zi Fa Gao Zi [2018] No.

On or about August 3, 2018, written decisions of administration penalty

captioned Shou Guo Tu Zi Fa Gao Zi [2018] No.

291, Shou Guo Tu Zi Fa Gao Zi [2018] No.

292, Shou Guo Tu Zi Fa

Gao Zi [2018] No.

292, Shou Guo Tu Zi Fa Gao Zi [2018] No.

Guo Tu Zi Fa Gao Zi [2018] No.

294, Shou Guo Tu Zi Fa Gao Zi [2018] No.

295 and Shou Guo Tu Zi Fa Gao Zi [2018]

296 (together, the “Written Decisions”) were served on Shouguang City Haoyuan Chemical Company Limited (“SCHC”)

by Shouguang City Natural Resources and Planning Bureau (the “Bureau”), naming SCHC as respondent respectively thereof.

Decisions challenged the land use of Factory nos.

2, 9, 7, 4, 8 and 10, respectively, and alleged, among other things, that SCHC had illegally

occupied and used the land in the total area of approximately 52,674 square meter, on which Factory nos.

2, 9, 7, 4, 8 and 10 were built,

respectively.

The Written Decisions ordered SCHC, among other things, to return the land subject to the Written Decisions to its respective

legal owner, restore the land to its original state, and demolish or confiscate all the buildings and facilities thereon and pay monetary

penalty of approximately RMB 1.3 million ($184,000) in the aggregate.

Each of the Written Decisions shall be executed within 15 days upon

serving on SCHC.

Additional interest penalty shall be imposed at a daily rate of 3% in the event that SCHC does not make the monetary

penalty payment in a timely manner.

Subsequently, the Bureau filed enforcement actions to the People’s Court of Shouguang City,

Shandong Province (the “Court”), naming SCHC as enforcement respondent and alleged, among other things, that SCHC failed to

perform its obligations under each of the Written Decisions within the specified timeframe.

The enforcement proceedings sought court orders

to enforce the Written Decisions.

295 and Shou Guo Tu Zi Fa Gao Zi [2018] No.

296 (together, the

“Written Decisions”) were served on Shouguang City Haoyuan Chemical Company Limited (“SCHC”) by Shouguang City

Natural Resources and Planning Bureau (the “Bureau”), naming SCHC as respondent respectively thereof.

The Decisions challenged

the land use of Factory nos.

2, 9, 7, 4, 8 and 10, respectively, and alleged, among other things, that SCHC had illegally occupied and

used the land in the total area of approximately 52,674 square meter, on which Factory nos.

2, 9, 7, 4, 8 and 10 were built, respectively.

The Written Decisions ordered SCHC, among other things, to return the land subject to the Written Decisions to its respective legal owner,

restore the land to its original state, and demolish or confiscate all the buildings and facilities thereon and pay monetary penalty of

approximately RMB 1.3 million ($184,000) in the aggregate.

Each of the Written Decisions shall be executed within 15 days upon serving

Additional interest penalty shall be imposed at a daily rate of 3% in the event that SCHC does not make the monetary penalty

payment in a timely manner.

Subsequently, the Bureau filed enforcement actions to the People’s Court of Shouguang City, Shandong

Province (the “Court”), naming SCHC as enforcement respondent and alleged, among other things, that SCHC failed to perform

its obligations under each of the Written Decisions within the specified timeframe.

The enforcement proceedings sought court orders to

enforce the Written Decisions.

On May 5, 2019, written decisions of administrative ruling captioned (2019) Lu 0783 Xing Shen No.

9 unchanged sentences

The Court Rulings became enforceable immediately upon service on SCHC on May 5, 2019.

In the last twenty years, to the Company’s

knowledge, there were no government regulations requiring bromine manufacturers to obtain land use and planning approval document.

such, the Company believes most of the bromine manufacturers in Shouguang City do not have land use and planning approval documents and

lease their land parcels from the village associations.

They are facing the same issues in connection with land use and planning as the

To the Company’s knowledge, the local government has submitted its plan to solve the issues to higher authority and are

waiting for approval from the higher authority.

The Company is in the process of resolving the

issues in connection with SCHC’s land use and planning diligently.

The Company has been in discussions closely with the local government

authorities with the help from Shouguang City Bromine Association to seek reliefs and, based on verbal confirmation by local government

authorities, believes the administrative penalties imposed by the Bureau according to the Written Decisions are being re-assessed by local

government authorities and may be revoked.

Pursuant to a Written Application dated October 28, 2019 addressed to the Court by the Bureau,

the Bureau withdrew its application for the enforcement proceedings regarding the administrative penalty imposed on Factory No.

In the last twenty years, to the Company’s knowledge, there were

no government regulations requiring bromine manufacturers to obtain land use and planning approval document.

As such, the Company believes

most of the bromine manufacturers in Shouguang City do not have land use and planning approval documents and lease their land parcels

from the village associations.

They are facing the same issues in connection with land use and planning as the Company.

To the Company’s

knowledge, the local government has submitted its plan to solve the issues to higher authority and are waiting for approval from the higher

The Company is in the process of resolving the issues in connection

with SCHC’s land use and planning diligently.

The Company has been in discussions closely with the local government authorities

with the help from Shouguang City Bromine Association to seek reliefs and, based on verbal confirmation by local government authorities,

believes the administrative penalties imposed by the Bureau according to the Written Decisions are being re-assessed by local government

authorities and may be revoked.

Pursuant to a Written Application dated October 28, 2019 addressed to the Court by the Bureau, the Bureau

withdrew its application for the enforcement proceedings regarding the administrative penalty imposed on Factory No.

7, Factory No.

and Factory No.10.

Pursuant to a written decisions of administrative ruling captioned (2019) Lu 0783 Xing Shen 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

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 Factory

7 was allowed to resume in April 2019.

The Company received a notification from the Shouguang City Government in February

2019 informing the Company that Factory No.

The Company received a notification from the Shouguang City Government in February 2019 informing

the Company that Factory No.

9 have passed inspection and were approved to resume operation.

In addition, on August 28, 2019, the People’s

Government of Shandong Province, issued a regulation titled “Investment Project Management Requirements of Chemical Companies in

Shandong Province” permitting the construction of facilities on existing sites or infrastructure of bromine manufacturing and other

chemical industry-related types of projects (clause 11 of section 3).

The Company believes that the goal of the government is to standardize

and regulate the industry and not to demolish the facilities or penalize the manufacturers.

As of the date of this report, the Company

has not been notified by the local government that it will take any measure to enforce the administrative penalties.

Based on information

known to date, the Company believes that it is remote that the Written Decisions or Court Rulings will be enforced within the expected

timeframe and a material penalty or costs and expenses against the Company will result.

However, there can be no assurance that there

will not be any further enforcement action, the occurrence of which may result in further liabilities, penalties and operational disruption.

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 June 30, 2025.

In addition, on August 28, 2019, the People’s Government of Shandong

Province, issued a regulation titled “Investment Project Management Requirements of Chemical Companies in Shandong Province”

permitting the construction of facilities on existing sites or infrastructure of bromine manufacturing and other chemical industry-related

types of projects (clause 11 of section 3).

The Company believes that the goal of the government is to standardize and regulate the industry

and not to demolish the facilities or penalize the manufacturers.

As of the date of this report, the Company has not been notified by

the local government that it will take any measure to enforce the administrative penalties.

Based on information known to date, the Company

believes that it is remote that the Written Decisions or Court Rulings will be enforced within the expected timeframe and a material penalty

or costs and expenses against the Company will result.

However, there can be no assurance that there will not be any further enforcement

action, the occurrence of which may result in further liabilities, penalties and operational disruption.

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, 2025.

NOTE 22 - SUBSEQUENT EVENT

Subsequent Event

On July 3, 2025, the Company filed with the SEC a Form

S-3 (Registration Statement No.

333- 168591), to register the Company's common stock, preferred stock and warrants with an aggregate offering

price not to exceed $10,000,000, to be sold by us under a “shelf” registration process ("Shelf Registration").

terms of such sales will be provided in the relevant prospectus supplement.

Any prospectus supplements also will describe the specific

manner in which these securities will be offered and may supplement, update or amend information contained in the registration Form S-3.

As of the date of this report, the registration statement on Form

S-3 has not been declared effective and we have not entered into any agreement in relation to the Shelf Registration.

[Not applicable.]

As previously disclosed, at the 2025 Annual Meeting

of Stockholders of the Company held on September 9, 2025, the stockholders of the Company approved a proposal to authorize the Company’s

Board of Directors (the “Board”) to amend the Company’s Articles of Incorporation with the Secretary of State of the

State of Nevada to effect a reverse stock split of the outstanding shares of the Company’s common stock, par value $0.0005 (“Common

Stock”) at a reverse split ratio of between 1-for-2 and 1-for-10 as determined by the Board.

On October 10, 2025, pursuant to the authority granted

by the Company’s stockholders, the Board effectuated and approved a one-for-ten (1:10) reverse stock split ratio (the “Reverse

Stock Split”) of the Common Stock.

The Reverse Stock Split became effective at 12:01 am Eastern Time on October 27, 2025 (the

“Effective Time”).

When the Reverse Stock Split became effective, every ten (10) shares of the Company’s issued and

outstanding Common Stock immediately prior to the Effective Time automatically be reclassified into one (1) share of Common Stock, without

any change in the par value per share.

The Reverse Stock Split reduced the number of issued and outstanding shares of Common stock from

approximately 13.3 million to approximately 1.3 million.

The Reverse Stock Split did not change the total number of authorized shares

of Common Stock.

No fractional shares were issued as a result of the

Reverse Stock Split.

Stockholders who otherwise be entitled to receive a fractional share in connection with the Reverse Stock Split received

one full share of the post-reverse stock split Common Stock in lieu of such fractional share.

Commencing on October 27, 2025, trading of the Company’s

Common Stock continues The Nasdaq Capital Market on a Reverse Stock Split-adjusted basis.

The new CUSIP number for the Company’s

Common Stock following the Reverse Stock Split is 40251W507.

On November 12, 2025, the Company issued a press release providing

certain updates on its hearing scheduling process with the Nasdaq Hearings Panel.

The Company has received a hearing notification letter

from Nasdaq scheduling an oral hearing for December 9, 2025.

As of November 10, 2025, the Company’s common stock had maintained

the requisite closing bid price in compliance with Listing Rule 5550(a)(2).

In light of the above and in accordance with the instructions

provided by the hearing notification letter, the Company has submitted a request to cancel the hearing, subject to the Company’s

Listing Analyst review and confirmation.

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