What changed in this filing

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Item 1. Business

2026-08-17 compared with 2025-04-11 · 741 added, 461 removed, 489 unchanged (71% of the section changed)

6 unchanged sentences

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

The functional currency of the

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

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

The functional currency of the Company’s

operating foreign subsidiaries is the Renminbi (“RMB”), which had an average exchange rate of $0.14042 and $0.13999 during

fiscal years 2024 and 2025, respectively, the reporting currency of the Company is the United States dollar (“USD” or $”).

Our Corporate History and Corporate Structure

We (Gulf Resources Inc.) were

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

From November 1993 through August 2006, we were engaged

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

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

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

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

We (Gulf Resources Inc.) were originally

incorporated in Delaware and subsequently re-incorporated in Nevada.

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

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

equipment under the name “Diversifax, Inc.”.

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

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

Upper Class Group Limited, incorporated

43 unchanged sentences

adjusted to reflect the acquisition.

To satisfy certain ministerial

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

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

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

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

on December 10, 2007.

To satisfy certain ministerial requirements

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

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

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

The transfer of all of the equity

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

As a result of the transactions

20 unchanged sentences

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

The sellers of SCRC agreed as

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

The sellers of SCRC agreed as part

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

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

For accounting purposes, the Shares were valued at $9.20

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

the agreement.

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

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

agreement is solely for accounting purposes.

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

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

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

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

solely for accounting purposes.

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

22 unchanged sentences

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

On October 27, 2025, the Company

completed a 1-for-10 reverse stock split of our 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.

On October 27, 2025, our shares began trading on the NASDAQ Global Select Market under the new CUSIP # 40251W507.

On May 6, 2025, the Company was

notified by the Listing Qualifications Staff of The Nasdaq Stock Market LLC that the Staff granted the Company’s request to transfer

the listing of its common stock, par value $0.0005 per share, from The Nasdaq Global Select Market tier to The Nasdaq Capital Market tier.

On October 27, 2025, our shares began trading on the Nasdaq Capital Market under the same symbol “GURE”.

Recent Developments

Acquisition Agreements

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

Shouguang Hengde Salt Industry Co.

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

Farm Co., LTD.

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

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

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

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

A summary of these agreements are set

On June 26, 2024, SHSI entered into an acquisition

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

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

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

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

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

inspected the and accepted the crude salt field in writing.

Subsequently, on December

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

2 of the agreement has been amended

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

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

(1) RMB10,357,800

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

These shares shall be issued

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

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

On June 27, 2024, SHSI entered into an acquisition

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

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

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

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

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

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

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

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

agreement has been amended as follows:

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

by both parties.

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

(1) RMB3,246,000

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

These shares shall be issued

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

salt field in writing;

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

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

agreement has been amended as follows:

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

the contract by both parties.

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

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

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

the crude salt field in writing;

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

On 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.

On December 1, 2025, the Company

received a letter from The Nasdaq Stock Market, LLC stating that the Company had regained compliance with the minimum bid price requirement

for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2).

Consequently, the hearing before the

Hearings Panel scheduled to take place on December 9, 2025 has been cancelled.

The Company’s securities will continue to be listed

and traded on The Nasdaq Stock Market.

On December 2, 2025, the Company issued a press release announcing

that it has regained compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market.

On December 10,

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

2 of the agreement has been

amended as follows:

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

by both parties.

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

(1) RMB1,663,200

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

These shares shall be issued

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

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

On December 17, 2024, SHSI

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

2 of the agreement has been amended

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

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

(1) RMB3,662,832

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

These shares shall be issued

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

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

In accordance to each amendment,

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

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

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

and regulations.

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

under the agreement exceeds the 19.9% Threshold.

On December 30, 2024, SHSI

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

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

On February 28, 2025, the

transactions as contemplated by the acquisition agreements were closed.

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

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

Republic of China, designated by each seller.

Nasdaq Compliance

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

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

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

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

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

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

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

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

The May Notice states that the Company

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

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

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

5250(c)(1) Rule.

The terms of the exception were as follows:

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

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

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

that its securities will be delisted.

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

Subsequently,

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

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

the Company was not in compliance with the Rule.

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

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

The Company had until

September 4, 2024 to submit such update to Nasdaq.

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

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

Rule and considers the matter to be closed.

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

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

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

In accordance with Nasdaq Listing Rule

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

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

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

In the event the Company

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

To qualify for the additional compliance period, the Company

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

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

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

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

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

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

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

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

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

of The Nasdaq Stock Market.

2025, Shouguang City Haoyuan Chemical Company Limited, an indirect wholly owned subsidiary of Gulf Resources, Inc.

(the “Company”),

entered into an equity transfer agreement to sell 100% of the equity interests in Shouguang Yuxin Chemical Industry Co., Limited to Shandong

Rongyuan Pharmaceutical Co., Ltd.

for aggregate consideration of RMB 21.2 million, payable in instalments through 2028.

The Company’s

board of directors reviewed and affirmed the terms of the transaction, concluding that the sale is fair to and in the best interests of

the Company and its shareholders.

The disposition removes the operational and financial burdens associated with the prolonged suspension

of the Yuxin Chemical facility and enables the Company to reallocate resources to its other, more profitable business segments.

The transaction

closed on December 22, 2025 following completion of the required governmental registration changes.

On December 18,

2025, the Company announced that, pursuant to a notice dated December 15, 2025 from the Shouguang Municipal People’s Government

Office (the “Government of Shouguang City”), it would temporarily suspend relevant operations in Shouguang City to comply

with local regulatory requirements.

The Company characterized the suspension as seasonal in nature and aligned with the Government of

Shouguang City’s objectives for the orderly extraction, effective utilization, and comprehensive development of brine resources,

as well as the protection of the ecological environment.

The Company further noted that bromine demand typically declines during the Chinese

New Year holiday period and that crude salt processing becomes more difficult in winter due to lower temperatures, which mitigated the

commercial impact of the temporary shutdown.

Operations in Shouguang City subsequently resumed on March 2, 2026 in compliance with the

same government notice.

On December 22,

2025, the transaction previously announced on December 10, 2025 to sell 100% of the equity interests in Shouguang Yuxin Chemical Industry

Co., Limited by Shouguang City Haoyuan Chemical Company Limited, an indirect wholly owned subsidiary of Gulf Resources, Inc.

(the “Company”),

to Shandong Rongyuan Pharmaceutical Co., Ltd.

closed following completion of the industrial and commercial change registration by the

relevant Administration for Market Regulation (AMR), which recorded the Purchaser as the sole shareholder of the Target Company.

had previously disclosed the terms of the equity transfer agreement and related matters in its Current Report on Form 8-K filed with the

SEC on December 15, 2025.

On March 2, 2026,

the Company announced that as previously reported on its Form 8-K filed on December 18, 2025, it had temporarily suspended certain operations

in Shouguang City in compliance with a seasonal government notice (the “Notice”) issued by the Government of Shouguang City

to support the orderly extraction, effective utilization, and comprehensive development of brine resources and the protection of the ecological

environment, and that such operations have now resumed in compliance with the Notice.

On January 26, 2026, March 5,

2026, March 19, 2026 and March 28, 2026, respectively, the Company entered into equity financing agreements (individually the “Private

Placement Agreement”;

collectively the “Private Placement Agreements”), with four individual investors (individually

the “Private Placement Purchaser”;

collectively “Private Placement Purchasers”), pursuant to which the Company

agreed to issue new shares of common stock to such investors that in aggregate accounted for approximately 18% of the total shares issued

and outstanding of the Company as of December 31, 2025.

The purchase price per share under the Private Placement Agreement dated January

26, 2026, was set at 90% of the average closing price of the Company’s common stock for the five trading days prior to the date

of such agreement, while the purchase prices under the Private Placement Agreements executed in March 2026 were set at 85% of, or 15%

off, the closing price of the Company’s common stock on the trading day immediately preceding the respective agreement dates, as

quoted on the Nasdaq Stock Market.

For more information, see the Current Report on Form 8-K of the Company filed with the Securities Exchange

Commission, or the SEC.

2026, the Company received a notice (the “Initial Notice”) from the Listing Qualifications Department of The Nasdaq Stock

Market LLC (“Nasdaq”) notifying the Company that due to the Company’s failure to timely file its Annual Report on Form

10-K for the fiscal year ended December 31, 2025 (the “Form 10-K”), with the SEC, the Company was not in compliance with Nasdaq’s

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

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

from Nasdaq on May 26, 2026 due to the Company’s non-compliance with the Listing Rule 5250(c)(1) Rule as a result of the Company’s

failure to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026(the “First Quarter Form 10-Q”,

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

The May Notice states that the Company had until June 22, 2026 to

submit to Nasdaq a plan to regain compliance with the Rule.

On May 26, 2026,

Gulf Resources (the “Company”) received a notice (the “Notice”) from the Listing Qualifications Department of The

Nasdaq Stock Market LLC (“Nasdaq”), indicating that, as a result of not having timely filed its quarterly report on Form 10-Q

for the quarter ended March 31, 2026 (the “Form 10-Q”), and the Company remains delinquent in filing its annual report on

Form 10-K for the year ended December 31, 2025 (the “Initial Delinquent Filing”), the Company is in non-compliance with Nasdaq

Listing Rule 5250(c)(1), which requires timely filing all required periodic financial reports with the Securities Exchange Commission.

On June 1, 2026,

Gulf Resources (the “Company”), following the Company’s ongoing dialogue with the staff of the United States Securities

and Exchange Commission, concluded that the Company will amend its fiscal year 2024 Form 10-K (the “FY2024 Form 10-K”) and

Form 10-Qs for the first, second and third quarters of 2025 (collectively, the “Q1, Q2 and Q3 2025 Form 10-Qs”) to restate

the disclosures (Note 6, Note 7 and Note 12 included in the FY2024 Form 10-K and the Q1, Q2 and Q3 2025 Form 10-Qs) to revise the previous

recognition of buildings without ownership certificates as fixed assets in the balance sheets and to reclassify such buildings as right-of-use

(ROU) assets based on lease agreements and ASC 842 Leases, for each of the periods included in those filing, including fiscal years 2023

and 2024 in the FY2024 Form 10-K and each of the quarterly and year-to-date periods included in the Q1, Q2 and Q3 FY2025 Form 10-Qs (collectively,

the “Prior Filings”).

The Prior Filings should no longer be relied upon because of errors identified in such financial statements,

as described above.

In connection

with the identification of the above mentioned restatement, the Company delayed the completion of its fiscal year 2025 Form 10-K and Quarterly

Report on Form 10-Q for the quarter ended March 31, 2026, and filed a Form 12b-25 (Notice of Late Filing) with the Securities and Exchange

Commission to provide notice of such delay to the SEC and its shareholders.

On June 25, 2026, the Company received a letter from

Nasdaq indicating that, based on its further review and the plan of compliance submitted by the Company on June 17, 2026, Nasdaq determined

to grant an exception to enable the Company to regain compliance with the Listing Rule 5250(c)(1) Rule.

The terms of the exception were

on or before August 31, 2026, the Company must file the Delinquent Reports, as required by the Listing Rule 5250(c)(1) Rule.

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

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

Corporate Structure

Our current corporate structure chart

is set forth in the following diagram:

Our current corporate structure chart is set forth in the

following diagram:

Currently, we operate our business

5 unchanged sentences

Limited, or SHSI, each a PRC company.

Our executive offices are located at

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

On December 10, 2025, Shouguang

City Haoyuan Chemical Company Limited (the “Seller”), an indirect wholly owned subsidiary of Gulf Resources, Inc.

(the “Company”),

entered into an equity transfer agreement (the “SPA”) with Shandong Rongyuan Pharmaceutical Co., Ltd.

(the “Purchaser”)

to sell 100% of the equity interests in Shouguang Yuxin Chemical Industry Co., Limited (the “Target Company”) for RMB 21.2

million, payable in instalments through 2028.

The Company’s board of directors reviewed and approved the SPA, determining that its

terms, including the consideration and payment arrangements, are fair and in the best interests of the Company and its shareholders.

the prolonged suspension of operations at the Yuxin Chemical facility and its adverse impact on performance, the Board believes that completing

the sale will relieve the Company of related burdens and allow it to focus on more profitable business segments.

As previously reported, on December

10, 2025, Shouguang City Haoyuan Chemical Company Limited (the “Seller”), an indirect wholly owned subsidiary of Gulf Resources,

(the “Company”), entered into an equity transfer agreement (the “SPA”) with Shandong Rongyuan Pharmaceutical

(the “Purchaser”) to sell 100% of the equity interest in Shouguang Yuxin Chemical Industry Co., Limited (the “Target

The industrial and commercial registration reflecting the Purchaser as the sole shareholder of the Target Company was

completed by the relevant governmental authority on December 22, 2025, marking the closing of the transaction.

In connection with the

closing, the Company filed a Current Report on Form 8-K on December 29, 2025, which includes the Company’s audited financial statements

for the year ended December 31, 2024, and unaudited financial statements for the nine months ended September 30, 2025, together with related

notes and pro forma financial information filed as Exhibit 99.1 of the aforementioned Form 8-K filed on December 29, 2025.

Our executive offices are located at Level 11,

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

Our telephone number is +86 (536)

website address is www.gulfresourcesinc.com.

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

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

Recent Regulatory Developments in

Because all of our operations

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

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

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

Recent statements by the Chinese

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

in China based issuers.

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

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

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

Our website address is www.gulfresourcesinc.com.

The information contained on or accessed through our website is not

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

Enforcement of Civil Liabilities

under United States Federal Securities Laws

Although the Company is a Nevada

corporation, most of the Company’s operations are and will be located outside of the United States and all Company directors and

officers reside outside the United States.

Moreover, a majority of Company assets are located outside the United States.

Since a majority

of the assets owned by the Company are located outside the United States, any judgment obtained in the United States against the Company

may not be collectible within the United States.

There is no treaty between the United States and China providing for the reciprocal recognition

and enforcement of judgments in civil and commercial matters and a final judgment for the payment of money rendered by any federal or

state court in the United States based on civil liability, whether or not predicated solely upon the federal securities laws, would, therefore,

not be automatically enforceable in China.

Under the PRC Civil Procedure Law, foreign shareholders may originate actions based on PRC

law against the Company in the PRC, if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other

procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete

claim, a factual basis and a cause for the suit.

There is uncertainty as to whether

the courts of China would (1) recognize or enforce judgments of United States courts obtained against the Company or its directors or

officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States,

or (2) entertain original actions brought in each respective jurisdiction against the Company or its directors or officers predicated

upon the securities laws of the United States or any state in the United States.

The recognition and enforcement

of foreign judgments are provided for under the PRC Civil Procedure Law.

PRC courts may recognize and enforce foreign judgments in accordance

with the requirements of the PRC Civil Procedure Law based either on treaties between China and the country where the judgment is made

or on principles of reciprocity between jurisdictions.

China does not have any treaties or other form of reciprocity with the United States

that provide for the reciprocal recognition and enforcement of foreign judgments.

In addition, according to the PRC Civil Procedure Law,

courts in China will not enforce a foreign judgment against the Company or its directors and officers if they decide that the judgment

violates the basic principles of PRC law or national sovereignty, security or public interest.

As a result, it is uncertain whether and

on what basis a PRC court would enforce a judgment rendered by a court in the United States.

Under the PRC Civil Procedure Law, foreign

shareholders may originate actions based on PRC law against the Company in the PRC, if they can establish sufficient nexus to the PRC

for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct

interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit.

In addition, it will be difficult

shareholders to originate actions against us in China in accordance with PRC laws because we are incorporated under the laws

of State of Nevada and it will be difficult for U.S.

shareholders, holding our common stock, to establish a connection to China for a

PRC court to have jurisdiction as required under the PRC Civil Procedure Law.

Recent Regulatory Developments in China

We face various legal and operational

risks and uncertainties associated with having all of our operations in China and the complex and evolving PRC laws and regulations.

The Chinese government has significant authority in regulating our operations and may intervene or influence our operations at any time,

which could result in a material adverse change in our operations and the value of our securities.

The PRC government has recently indicated

its intent to exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers.

Such actions could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause

the value of such securities to significantly decline or be worthless.

For example, anti-monopoly regulators in China have promulgated

new anti-monopoly and competition laws and regulations and strengthened the enforcement under these laws and regulations.

uncertainties as to how the laws, regulations and guidelines recently promulgated will be implemented and whether these laws, regulations

and guidelines will have a material impact on our business, financial condition, results of operations and prospects.

If any non-compliance

is identified by relevant authorities, we may be subject to fines and other penalties.

See “Item 1A.

Risk Factors— Risks

Related to Doing Business in China—Because all of our operations are in China, our business is subject to the complex and rapidly

evolving laws and regulations there.

The Chinese government may exercise significant oversight and discretion over the conduct of our

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

the value of our common stock.”, “—if the Chinese government chooses to exert more oversight and control over offerings

that are conducted overseas and/or foreign investment in China-based issuers, such action could significantly limit or completely hinder

our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or

be worthless.” and “—If the Chinese government were to impose new requirements for approval from the PRC Authorities

to issue our common stock to foreign investors or list on a foreign exchange, such action could significantly limit or completely hinder

our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or

be worthless.”

Recently, the PRC government initiated

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

On February 24, 2023, the CSRC,

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

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

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

The Confidentiality and Archives Provisions

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

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

of the PRC and this Confidentiality and Archives Provisions, institute a sound confidentiality and archives administration systems, take

necessary measures to fulfill confidentiality and archives administration obligations, and shall not divulge any national secrets, work

secrets of governmental agencies and harm national and public interests.

Confidentiality and Archives Provisions provides that it is applicable

to initial public offerings as well as other types of securities listing of PRC domestic enterprises, and any future issuance of securities

and listing activities after the initial listing.

Working papers generated in the PRC by securities companies and securities service providers

that provide relevant securities services for overseas issuance and listing of securities by domestic companies shall be kept in the PRC.

Confidentiality and Archives Provisions provide no explicit definition of working papers.

In practice, the securities companies’

working papers usually refer to various important information and work records related to the securities business obtained and prepared

by the securities companies and securities service providers and their representatives in the whole process of the securities businesses,

such as due diligence work.

Without the approval of relevant competent authorities, such as CSRC, MOF PRC National Administration of State

Secrets Protection, and National Archives Administration of China, depending on the nature and transmission method of secrets, it shall

not be transferred overseas.

Where documents or materials need to be transferred outside of the PRC, it shall be subject to the approval

procedures in accordance with relevant PRC regulations.

The relevant competent authorities, such as, CSRC, MOF, PRC National Administration

of State Secrets Protection, and National Archives Administration of China will regulate, supervise and inspect pursuant to their respective

statutory mandates over matters of Confidentiality and Archives Administration concerning overseas offering and listing by domestic companies.

As Confidentiality and Archives Administration is newly promulgated, there is substantial uncertainty regarding their specific requirements.

If we fail to comply with related laws and regulation, we may be subject to fine, confiscation, blocking transmission or criminal offense.

We have taken measures to adopt management systems for the compliance of Confidentiality and Archives Provisions.

We believe our listing

does not involve in national secrets, work secrets of governmental agencies and undermine national and public interests.

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

Administration of State Secrets Protection and the National Archives Administration jointly issued the Provisions on Strengthening Confidentiality

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

which took effective from March 31, 2023.

The Confidentiality and Archives Provisions specify that during the overseas securities offering

and listing activities of domestic companies, domestic companies and securities companies and securities service institutions that provide

relevant securities business shall, by strictly abiding by the relevant laws and regulations of the PRC and this Confidentiality and Archives

Provisions, institute a sound confidentiality and archives administration systems, take necessary measures to fulfill confidentiality

and archives administration obligations, and shall not divulge any national secrets, work secrets of governmental agencies and harm national

and public interests.

Confidentiality and Archives Provisions provide that it is applicable to initial public offerings as well as other

types of securities listing of PRC domestic enterprises, and any future issuance of securities and listing activities after the initial

Working papers generated in the PRC by securities companies and securities service providers that provide relevant securities

services for overseas issuance and listing of securities by domestic companies shall be kept in the PRC.

Confidentiality and Archives

Provisions provide no explicit definition of working papers.

In practice, the securities companies’ working papers usually refer

to various important information and work records related to the securities business obtained and prepared by the securities companies

and securities service providers and their representatives in the whole process of the securities businesses, such as due diligence work.

Without the approval of relevant competent authorities, such as CSRC, MOF PRC National Administration of State Secrets Protection, and

National Archives Administration of China, depending on the nature and transmission method of secrets, it shall not be transferred overseas.

Where documents or materials need to be transferred outside of the PRC, it shall be subject to the approval procedures in accordance with

relevant PRC regulations.

The relevant competent authorities, such as, CSRC, MOF, PRC National Administration of State Secrets Protection,

and National Archives Administration of China will regulate, supervise and inspect pursuant to their respective statutory mandates over

matters of Confidentiality and Archives Administration concerning overseas offering and listing by domestic companies.

As Confidentiality

and Archives Administration is newly promulgated, there is substantial uncertainty regarding their specific requirements.

If we fail to

comply with related laws and regulations, we may be subject to fine, confiscation, blocking transmission or criminal offense.

taken measures to adopt management systems for the compliance of Confidentiality and Archives Provisions.

We believe our listing does

not involve in national secrets, work secrets of governmental agencies and undermine national and public interests.

There is no assurance

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

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

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

Within our direct holding structure,

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investors or investors in other countries

In the reporting periods presented in this annual report,

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

and no dividends or distributions of a subsidiary

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

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

cash dividends.

Our PRC subsidiaries’ ability

to distribute dividends is based upon their distributable earnings.

Current PRC regulations permit our PRC subsidiaries to pay dividends

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

and regulations.

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

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

These reserves are not distributable

as cash dividends.

To address persistent capital

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

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

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

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

and shareholder loan repayments.

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

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

The PRC government also imposes controls on the conversion

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

Therefore, we may experience difficulties in completing

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

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

pay dividends or make other payments.

In the reporting periods presented in this annual report, no cash and

other asset transfers have occurred among the Company and its subsidiaries;

and no dividends or distributions of a subsidiary has been

made to the Company or to the shareholders of the Company.

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

Our PRC subsidiaries’ ability to distribute

dividends is based upon their distributable earnings.

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

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

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

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

These reserves are not distributable as cash dividends.

To address persistent capital outflows

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

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

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

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

loan repayments.

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

distributions may be subject to tightened scrutiny in the future.

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

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

Therefore, we may experience difficulties in completing the administrative

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

Furthermore, if our subsidiaries

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

other payments.

In addition, the Enterprise Income

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from our PRC subsidiaries.

Please see “Risk Factors”

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

Please see “Item 1A.

Factors— Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC

subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make

payments to us could have a material and adverse effect on our ability to conduct our business.” and “— PRC regulation

of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay

us from making loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity

and our ability to fund and expand our business.”

Holding Foreign Company Accountable

Our common stock may be delisted from the Nasdaq under

the Holding Foreign Companies Accountable Act (“HFCAA”), if the PCAOB is unable to adequately inspect audit documentation

Our common stock may be delisted from the Nasdaq

under the Holding Foreign Companies Accountable Act (“HFCAA”), if the PCAOB is unable to adequately inspect audit documentation

located in China, or investigate our auditor.

Furthermore, on June 22, 2021, the U.S.

Senate passed the Accelerating Holding Foreign Companies

Accountable Act, which was signed into law, and amends the HFCAA and requires the SEC to prohibit an issuer’s securities from trading

Senate passed the Accelerating Holding Foreign

Companies Accountable Act, which was signed into law, and amends the HFCAA and requires the SEC to prohibit an issuer’s securities

from trading on any U.S.

stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

GGF CPA LTD., Certified Public Accountants, is a China-based accounting firm registered with the PCAOB, and is subject to laws in the

United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.

Our auditor, GGF CPA LTD., Certified Public Accountants, is a China-based accounting firm registered with the PCAOB, and is subject to

laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional

Our auditor is headquartered in the China and is subject to inspection by the PCAOB on a regular basis.

On August 26, 2022, the PCAOB

signed the Protocol with the CSRC and the MOF of the People’s Republic of China, governing inspections and investigations of audit

firms based in mainland China and Hong Kong.

On August 26, 2022,

the PCAOB signed the Protocol with the CSRC and the MOF of the People’s Republic of China, governing inspections and investigations

of audit firms based in mainland China and Hong Kong.

The Protocol remains unpublished and is subject to further explanation and implementation.

2 unchanged sentences

On December 15, 2022, the

PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB registered public accounting firms headquartered

in China mainland and Hong Kong completely in 2022.

The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable

to inspect or investigate completely registered public accounting firms headquartered in China mainland and Hong Kong.

However, whether

the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in

China mainland and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s control.

The PCAOB is continuing to demand complete access in China mainland and Hong Kong moving forward and was already making plans to resume

regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as

The PCAOB has indicated that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.

Therefore, the PCAOB in the future may determine that it is unable to inspect or investigate completely registered public accounting firms

in mainland China and Hong Kong.

Our auditor’s working papers related to us and our subsidiaries are located in China.

If our auditor

is not permitted to provide requested audit work papers located in China to the PCAOB, investors would be deprived of the benefits of

PCAOB’s oversight of our auditor through such inspections which could result in limitation or restriction to our access to the U.S.

capital markets and trading of our securities may be prohibited under the HFCAA, which would result in the delisting of our securities

from the Nasdaq.

See “ Risk Factors - Our common stock may be delisted from the Nasdaq under the Holding Foreign Companies Accountable

Act if the PCAOB is unable to adequately inspect audit documentation located in China.

The delisting of our common stock, or the threat

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

PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions

where it is unable to inspect or investigate completely registered public accounting firms.

On December 29, 2022, legislation entitled

“Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”), was signed into law by President

Joseph Biden of the United States.

The Consolidated Appropriations Act contained, among other things, an identical provision to Accelerating

Holding Foreign Companies Accountable Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions

under the HFCAA from three years to two.

Each year, the PCAOB will determine whether it can inspect and investigate completely audit

firms in mainland China and Hong Kong, among other jurisdictions.

We cannot assure you that we will not be identified by the SEC under

the HFCAA as an issuer that has retained an auditor that has a branch or office located in a foreign jurisdiction that the PCAOB determines

it is unable to inspect or investigate completely because of a position taken by an authority in that foreign jurisdiction.

there can be no assurance that, if we have a “non-inspection” year, we will be able to take any remedial measures.

were so identified for two consecutive years, trading in our common stock could in the future be prohibited under the HFCAA and, as a

result, we cannot assure you that we will be able to maintain the listing of our securities on the Nasdaq Stock Market or that you will

be allowed to trade our common stock in the United States on the “over-the-counter” markets or otherwise.

Should our common

stock become not listed or tradeable in the United States, the value of our common stock could be materially affected.

Factors - Our common stock may be delisted from the Nasdaq under the Holding Foreign Companies Accountable Act if the PCAOB is unable

to adequately inspect audit documentation located in China.

The delisting of our common stock, or the threat of their being delisted,

may materially and adversely affect the value of your investment .”

Closure and rectification process

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

On September 21, 2018, the Company

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

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

The crude salt fields surrounding these factories have been

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

relevant authority.

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

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

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

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

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

The Company incurred dismantling fee in the amount of

$273,757 recorded in other operating

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

The Company negotiated with the local villages over

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

This part of the cost has been used as

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

In February 2019, the Company

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

9 passed inspection and

could resume operations.

On September 21, 2018, the

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

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

The crude salt fields surrounding these

factories have been reclaimed as cultivated or construction land and hence did not meet the requirement for bromine and crude salt

co-production set by the relevant authority.

In closing these factories, the Company wrote off net book value of these

factories’ property, plant and equipment in the amount of $18,644,473 in the loss on demolition of the factory in the

consolidated statements of loss for the fiscal year ended December 31, 2018, recorded an impairment loss on the related mineral

rights of these three factories of $1,284,832 included in the impairment of property, plant and equipment in the consolidated

statements of loss for the fiscal year ended December 31, 2018 and wrote off $52,926 of prepaid land lease recorded in other

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

The Company incurred dismantling fee

in the amount of $273,757 recorded in other operating loss in the consolidated statements of loss for fiscal year ended December 31,

The Company negotiated with the local villages over compensation for the payment already made for these land leases and

mineral rights in the past.

This part of the cost has been used as the resumption of land use, so the village committee will not be

In February 2019, the Company received

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

9 passed inspection and could

resume operations.

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

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operations at the bromine and crude salt factories as scheduled in February 2026.

Because many smaller producers

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

Because many smaller producers have

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

acquisition opportunities in bromine.

19 unchanged sentences

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

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

In January 2017, the Company completed

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

in January 2019.

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

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

This also includes

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

Until these approvals

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

Additionally, in compliance with

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

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

(Trial) promulgated by the Ministry of Natural Resources of PRC on January 9, 2020, which came into effect on May 1, 2020, privately owned

enterprises are allowed to participate in the natural gas production.

The Company is engaged in ongoing discussions with the government

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

We are not writing off any of

the goodwill related to our chemicals business.

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

In January 2017, the Company completed the construction of the first

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

2019, the Company received verbal notice from the government of Tianbao Town, Daying County, Sichuan Province, mandating the need for

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

This also includes approvals for safety

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

Until these approvals are obtained, the

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

Additionally, in compliance with the Chinese government

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

Pursuant to the

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

by the Ministry of Natural Resources of PRC on January 9, 2020, which came into effect on May 1, 2020, privately owned enterprises are

allowed to participate in natural gas production.

The Company is engaged in ongoing discussions with the government of Daying County regarding

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

We are not writing off any of the

goodwill related to our chemicals business.

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

9 unchanged sentences

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

In April 2022, our subsidiary,

Shouguang Hengde Salt Industry Co.

In April 2022, our subsidiary, Shouguang

Hengde Salt Industry Co.

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

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

This subsidiary

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

As of the date of this annual report,

1 unchanged sentence

Our Business Segments

Our business operations are conducted in four segments,

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

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

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

Our business operations are conducted

in four segments, bromine, crude salt, chemical products, and natural gas.

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

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

and animal antibiotics.

We conduct all of our operations in China.

1 unchanged sentence

We manufacture and distribute

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

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

Bromine is a halogen element.

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

Elemental bromine is used to manufacture

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

Bromine is also used to form intermediates in organic synthesis,

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

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

purification compounds, dyes, medicines and disinfectants.

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

Elemental bromine is used to

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

Bromine is also used to form intermediates in organic

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

Bromine is commonly used in brominated flame retardants, fumigants,

water purification compounds, dyes, medicines and disinfectants.

The extraction of bromine in the

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

Permissions Required from the PRC Authorities

for Our Operations

Our operations in China are governed

by PRC laws and regulations.

We engage in the manufacturing and trading of bromine through our wholly-owned subsidiary, Shouguang City

Haoyuan Chemical Company Limited (“SCHC”), which holds the necessary licenses for bromine and crude salt mining and production.

Shouguang Hengde Salt Industry Co.

Ltd (“SHSI”) is responsible for trading crude salt.

No operational license is required

for such business activity.

Currently, operations at Shouguang Yuxin Chemical Industry Company Limited (“SYCI”) are suspended

due to relocation and construction, which we have obtained the required construction permit.

To further explore and develop natural gas

and brine resources (including bromine and crude salt) within the PRC in Sichuan Province, the Company established Daying County Haoyuan

Chemical Company Limited (“DCHC”).

DCHC is currently in discussions with government authorities regarding permits for mining

natural gas and halogen water.

As of the date of this report,

our management believes that these entities have obtained the requisite licenses and permits from the PRC government authorities that

are material for their business operations, including, among others, certain business licenses, approvals for the establishment of enterprises

with foreign investment, approvals for overseas direct investment and environmental and occupational safety and health approvals.

the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government

authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform

in the future.

Furthermore, in connection with

our issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual

report, we, and our PRC subsidiaries, (i) are not required to obtain permissions from the China Securities Regulatory Commission, or the

CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not

been asked to obtain such permissions by any PRC authority.

However, the PRC government has

recently indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment

in China-based issuers.

If we fail to receive or maintain the required permissions or approvals, we may be forced to suspend or cease

operations, lending to loss in revenue.

Authorities may impose fines, sanctions, or initiate legal proceedings, negative publicity would

affect our Company’s image.

Investors may react negatively, causing share price declines due to perceived regulatory risk.

of the regulatory uncertainty, which can potentially lead to valuation adjustments and increased risk premiums.

Our business plans may

need to be suspended or scaled back if approvals or permits become harder to obtain.

Location of Production Sites

Our production sites are located

in the Shandong Province in northeastern China.

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

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

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

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

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

Our production sites are located in the Shandong Province in northeastern

The productive formation (otherwise referred to as the “working region”), extends from latitude N 36°56’

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

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

the Yellow River to Supply Qingdao City Project” in the south to the coastline in the north.

The territory is classified as coastal

alluvial – marine plain with an average height two to seven meters above the sea level.

The terrain is relatively flat.

Geological background of this region

The Shandong Province working

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

The geotectonic location bestrides on the North

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

and Jiaobei Plate.

The Shandong Province working region

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

The geotectonic location bestrides on the North China

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

Jiaobei Plate.

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

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Processing of Bromine

Natural brine is a complicated

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

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

similar soluble salts.

Natural brine is a complicated salt-water

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

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

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

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

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

Bromine is the first component

extracted during the processing of natural brine.

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

and other soluble salts.

Due to the differences

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

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

Bromine is the first component extracted

during the processing of natural brine.

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

soluble salts.

The bromine production process is as follows:

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Chemical Products

We produce chemical products through

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

At the present time, SYCI is closed pursuant

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

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

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

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

We received the final approval for

our new chemical factory and started construction in June 2020.

We produce chemical products through our wholly-owned subsidiary, Shouguang

Yuxin Chemical Industry Company Limited, or SYCI.

At the present time, SYCI is closed pursuant to the letter from government dated November

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

SYCI paid $9,047,232 for a 50-year lease

of a piece of land for its new factories at Bohai Marine Fine Chemical Industrial Park in December 2017 and leased another piece of land

from the third party for its new chemical factory.

We received the final approval for our new chemical factory and started construction

in June 2020.

Historically, SYCI concentrated

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Sales and Marketing

We have an in-house sales staff

of 7 persons.

Our customers send their orders to us first.

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

actual production schedules and inventories on hand.

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

Our customers send their

orders to us first.

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

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

We expect this to continue

due to stable demand for mineral products, however, these relationships cannot be guaranteed in the future.

We expect this to continue due to stable demand for mineral products,

however, these relationships cannot be guaranteed in the future.

Principal Customers

We sell a substantial portion

of our products to a limited number of PRC customers.

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

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

We have ongoing policies in place to ensure that

sales are made to customers who are credit-worthy.

sell a substantial portion of our products to a limited number of PRC customers.

Our principal customers during 2025 were Shandong Morui

Chemical Company Limited, Shandong Shouguang God Runfa Ocean Chemical Co., Ltd, Shandong Brother Technology Limited, and Shouguang Weidong

Chemical Company Limited.

We have ongoing policies in place to ensure that sales are made to customers who are credit-worthy.

During the year ended December 31,

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

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

and sales to our largest customer represented approximately 12%,

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

2025, sales to our three largest bromine customers, based on net revenue from such customers, aggregated $9,971,820 or approximately 43%

of total net revenue from sale of bromine;

and sales to our largest customer represented approximately 15%, respectively, of total net

revenue from the sale of bromine.

During the year ended December 31,

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of total net revenue from sale of bromine;

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

net revenue from the sale of bromine.

During each of the years ended

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

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

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

revenue from the sale of bromine.

During each of the years ended December

31, 2025, and 2024, sales to our three largest crude salt customers, based on net revenue from such customers, aggregated $2,418,032 and

$2,049,988, respectively, or approximately 100% and 100% of total net revenue from sale of crude salt;

and sales to our largest customer

represented approximately 40% and 38%, respectively, of total net revenue from the sale of crude salt.

During each of the years ended December 31, 2024 and

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

During each of the years ended December

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

31, 2025, and 2024, the net revenue for the chemical products was $0.

During each of the years ended December 31, 2025, and 2024, the

net revenue for natural gas was $0 and $61,207.

Principal Suppliers

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2025, and 2024, we did not purchase any raw materials for chemical products production.

This supplier concentration makes us vulnerable

This supplier’s concentration makes us vulnerable

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

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

Subsequently, the Company found some issues related to the water

Subsequently, the Company found some issues related to water

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

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in January 2019.

On May 29, 2019, the Company received

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

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

This also includes approvals for safety production inspection, environmental

protection assessment, and to solve the related land issue.

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

production at its natural gas well in Daying.

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

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

Pursuant to the Opinions of the Ministry of Natural

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

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

gas production.

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

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

On May 29, 2019, the Company received verbal notice from the government

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

natural gas and brine water project.

This also includes approvals for safety production inspection, environmental protection assessment,

and to solve the related land issue.

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

natural gas well in Daying.

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

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

Pursuant to the Opinions of the Ministry of Natural Resources on

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

on January 9, 2020, which came into effect on May 1, 2020, privately owned enterprises are allowed to participate in natural gas production.

The Company is engaged in ongoing discussions with the government of Daying County regarding the establishment of a joint venture for

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

On September 1, 2017, the Company

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

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

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

requirements.

The Company has worked closely

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

in October 2017.

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

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

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

local government agencies.

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

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

requirements.

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

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

prior to obtaining those approvals.

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

5 is considered part of Factory

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

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

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

plan in October 2017.

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

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

as of December 31, 2018.

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

negotiations with the local government agencies.

The local governmental agencies acknowledged the fact that their initial

requirements for the bromine industry did not include the project, the planning and land use rights approvals, which were later

introduced by the provincial government as new requirements.

The Company understood from the local government that local government

was coordinating with various government agencies to solve these three outstanding approval issues in a timely manner and that all

impacted bromine plants are not allowed to commence production prior to obtaining those approvals.

In April 2019, Factory No.1,

Factory No.5 and Factory No.7 (Factory no.

5 is considered part of Factory no.7 and both are managed as one factory since 2010)

resumed operations upon receipt of verbal notification from local government of Yangkou County.

Then, on May 7, 2019, the Company

renamed its Subdivision Factory No.

1 to Factory No.

and Factory No.

5 (previously integrated

with Factory No.

7) as the new Factory No.

5 (previously integrated with Factory No.

7) as the new

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

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of production.

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

allows us to resume production after the winter temporary closure.

Subsequently, the Company received approval dated February 27, 2020, issued by the local governmental authority which allows

us to resume production after the winter temporary closure.

Further, the Company received another approval from the Shouguang Yangkou

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Factory No.8 began contributing revenue

in the fourth quarter 2022.

in the fourth quarter of 2022.

The Company is awaiting governmental

approval for Factories No.

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

As a result, we may be required to make certain modifications to our existing wells and aqueducts prior to commencement of operations

of these factories in order to satisfy the local government's requirements.

The Company completed its flood prevention project in December

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

prevention measures.

As a result, we may be required to make certain modifications to our existing wells and aqueducts prior to commencement

of operations of these factories in order to satisfy the local government's requirements.

The Company completed its flood prevention project

in December 2023.

This project was implemented for safeguarding its bromine facilities.

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its chemical factory in due course.

However, in the event that the Chinese economy persists in its weakness and if we perceives this trend

However, in the event that the Chinese economy persists in its weakness and if we perceive this trend

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

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

Government Regulation

China has been reinforcing the

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

the emission requirements and are highly polluting.

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

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

Government Regulation and Permissions Required from

the PRC Authorities for Our Operations

Since all of our operations

are conducted in China through our PRC subsidiaries, the Chinese government has significant authority in regulating our operations and

may intervene or influence our operations at any time, which could result in a material adverse change in our operations and the value

of our common stock.

see “ Item 1A.

Risk Factors — Risks Related to Doing Business in China.

The following is a summary of

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

details, see “Item 1A.

Risk Factors — Risks Related to Doing Business in China — Uncertainties with respect to the

PRC legal system could adversely affect us.”

China has been reinforcing the

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

the emission requirements and are highly polluting.

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

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

In the natural resources sector,

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licensee is required to submit a proposal and feasibility studies to the relevant authority and to pay the Central Government a natural

resources tax in an amount equal to a percent of annual crude salt sales and tones of bromine sold.

Shandong Province has determined that

bromine is to be extracted only by licensed entities and we hold one of such licenses.

resources tax in an amount equal to a percentage of annual crude salt sales and tones of bromine sold.

Shandong Province has determined

that bromine is to be extracted only by licensed entities, and we hold one of such licenses.

Despite the Province desire to limit extraction

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

In April 2022, our subsidiary,

Shouguang Hengde Salt Industry Co.

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

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

As of the date of this annual report, the Company is awaiting governmental approval for Factories No.

We engage in the manufacturing

and trading of bromine through our PRC wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited (“SCHC”),

which holds the licenses for bromine and crude salt mining and production.

Shouguang Hengde Salt Industry Co.

is in the business of trading crude salt.

No operational license is required for such business activity.

Currently, Shouguang Yuxin Chemical

Industry Company Limited (“SYCI”) had entered into an equity transfer agreement with Shandong Rongyuan Pharmaceutical Co.,

(the “Purchaser”) to sell 100% of the equity interests of SYCI.

To further explore and develop natural gas and brine

resources (including bromine and crude salt) within the PRC in Sichuan Province, the Company established Daying County Haoyuan Chemical

Company Limited (“DCHC”).

DCHC is currently in discussions with government authorities regarding permits for mining natural

gas and halogen water.

Recently, the PRC government

has initiated a series of regulatory actions and made a number of public statements on offerings that are conducted overseas and/or involved

foreign investment in China-based issuers, including the “Opinions on Severely Cracking Down on Illegal Securities Activities According

to Law,” or the Opinions, (promulgated by the General Office of the Central Committee of the Communist Party of China and the General

Office of the State Council on July 6, 2021).

The Opinions emphasized the need to strengthen the administration over illegal securities

activities, and the need to strengthen the supervision over overseas listings by Chinese companies.

Given the current PRC regulatory environment,

it is uncertain when and whether we or our PRC subsidiaries, will be required to obtain permission from the PRC government to list on

exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded.

We have been closely

monitoring regulatory developments in China regarding any necessary approvals from the CSRC or other PRC governmental authorities required

for overseas listings.

As of the date of this annual report, we have not received any inquiry, notice, warning, sanctions or regulatory

objection to listing on U.S.

exchange from the CSRC or other PRC governmental authorities.

However, there remains significant uncertainty

as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital

markets activities.

On February 17, 2023, the

CSRC released the Trial Administrative Measures for Administration of Overseas Securities Offerings and Listings by Domestic

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

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

the filing procedures and report relevant information to the CSRC.

If a domestic company fails to complete the filing procedures or

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

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

controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such

as warnings and fines.

As a listed company, we believe that we and all of our PRC subsidiaries are not required to fulfill filing

procedures and obtain approvals from the CSRC to continue to offer our securities or operate our business as of the date of this

annual report.

In addition, to date, none of us and our PRC subsidiaries has received any filing or compliance requirements from

CSRC for the listing of the Company at Nasdaq and all of its overseas offerings.

Furthermore, based on our understanding of the

current PRC laws, we believe that the CSRC’s approval is not required to be obtained for the Company’s listing on

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

Acquisitions of Domestic Companies by Foreign Investors (“M&A Rules”), other PRC Laws and future PRC laws and

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

different from our belief stated herein.

On February 24, 2023, the CSRC

published the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering

and Listing by Domestic Enterprises (the “Provisions on Confidentiality and Archives Administration”), which came into effect

on March 31, 2023.

The Provisions on Confidentiality and Archives Administration require that, in the process of overseas issuance and

listing of securities by domestic entities, the domestic entities, and securities companies and securities service institutions that provide

relevant securities service shall strictly implement the provisions of relevant laws and regulations and the requirements of these provisions,

establish and improve rules on confidentiality and archives administration.

Where the domestic entities provide with or publicly disclose

documents, materials or other items related to the state secrets and government work secrets to the relevant securities companies, securities

service institutions, overseas regulatory authorities, or other entities or individuals, the companies shall apply for approval of competent

departments with the authority of examination and approval in accordance with law and report the matter to the secrecy administrative

departments at the same level for record filing.

Where there is unclear or controversial whether or not the concerned materials are related

to state secrets, the materials shall be reported to the relevant secrecy administrative departments for determination.

However, there

remain uncertainties regarding the further interpretation and implementation of the Provisions on Confidentiality and Archives Administration.

As of the date of this annual

report, we and our PRC subsidiaries have obtained all requisite licenses and permits from the PRC government authorities needed for the

business operations of our PRC subsidiaries in China, and no permission or approval has been denied.

Further, the Company is awaiting

governmental approval for Factories No.

10 as of the date of this annual report.

For more details, please see “Item

Business - Business Strategy- Expansion of Production Capacity to Meet Demand.”

As of the date of this annual

report, we and our PRC subsidiaries have not been involved in any investigations or review initiated by any PRC regulatory authority,

not having any of them received any inquiry, notice or sanction for the business operation, accepting foreign investment or listing on

the Nasdaq Stock Market.

In addition, as of the date of this annual report, we believe that under the currently effective PRC laws

and regulations, we and our PRC subsidiaries are not required to obtain approval or permission from the CSRC or the CAC or any other entity

that is required to approve our PRC subsidiaries’ operations or required for us to offer securities to foreign investors under any

currently effective PRC laws, regulations, and regulatory rules.

If it is determined that we are subject to filing requirements imposed

by the CSRC under the Overseas Listing Regulations or approvals from other PRC regulatory authorities or other procedures, including the

cybersecurity review under the revised Cybersecurity Review Measures, for our future offshore offerings, it would be uncertain whether

we can or how long it will take us to complete such procedures or obtain such approval and any such approval could be rescinded.

to obtain or delay in completing such procedures or obtaining such approval for our offshore offerings, or a rescission of any such approval

is obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities for failure to file with the CSRC or

failure to seek approval from other government authorization for our offshore offerings.

These regulatory authorities may impose fines

and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China,

delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially

and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our common

The CSRC or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offshore

offerings before settlement and delivery of the securities offered.

Consequently, if investors engage in market trading or other activities

in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur.

if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish

the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval

requirements, if and when procedures are established to obtain such a waiver.

Any uncertainties or negative publicity regarding such approval

requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our

common stock.

Given the uncertainties of interpretation

and implementation of laws and regulations and the enforcement practice by government authorities, we may be required to obtain additional

licenses, permits, filings or approvals for our business and operations in the future.

We cannot assure you that we will be able to obtain,

in a timely manner or at all, or maintain such licenses, permits or approvals, and we may also inadvertently conclude that such permissions

or approvals are not required.

Any lack of or failure to maintain requisite approvals, licenses or permits applicable to us or our PRC

subsidiaries may have a material adverse impact on our business, results of operations, financial condition and prospects, significantly

limit or completely hinder our ability to offer or continue to offer securities to investors, and cause the value of our securities to

significantly decline or become worthless.

For more details, see “ Item 1A.

Risk Factors - Risks Related to Doing Business in

China - If the Chinese government were to impose new requirements for approval from the PRC Authorities to issue our common stock to foreign

investors or list on a foreign exchange, such action could significantly limit or completely hinder our ability to offer or continue to

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

China has been reinforcing the

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

the emission requirements and are highly polluting.

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

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

The following is a summary of

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

The scope and enforcement

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

We cannot predict the effect of further developments in the Chinese

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

In the natural resources sector, the PRC and

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

to improve safety and decrease environmental degradation.

The “China Mineral Resources Law” declares state ownership of

all mineral resources in the PRC.

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

Mineral resource rights are granted by the Central Government permitting recipients to conduct mineral resource

activities in a specific area during the license period.

These rights entitle the licensee to undertake mineral resource activities

and infrastructure and ancillary work, in compliance with applicable laws and regulations, within the specific area covered by the

license during the license period.

The licensee is required to submit a proposal and feasibility studies to the relevant authority

and to pay the Central Government a natural resources tax in an amount equal to a percent of annual crude salt sales and tones of

bromine sold.

Shandong Province has determined that bromine is to be extracted only by licensed entities, and we hold one of such

Despite the Province desire to limit extraction to licensed entities hundreds of smaller operations have continued to

extract bromine without licenses.

The Ministry of Land and Resources

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

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

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

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

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

If we do not successfully pass the yearly approval by

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

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

Human Capital Resources

Employee Profiles

As of December 31, 2024, we employed

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

and DCHC, and 23% are with SYCI.

of December 31, 2025, we employed approximately 355 full-time employees, of whom approximately 79% are with SCHC, SHSI and DCHC, and

21% are with SYCI.

Approximately 30% of our employees are management personnel and 5% are sales and procurement staff.

of our employees are represented by a union.

None of our employees

are represented by a union.

Total Rewards

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Health and Safety

The success of our business is

fundamentally connected to the well-being of our people.

The success of our business is fundamentally

connected to the well-being of our people.

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

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

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

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

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

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

This includes having the

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

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

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

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

In response to the

COVID-19 pandemic, we implemented significant operating environment changes that we determined were in the best interest of our employees,

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

This includes having the vast majority of

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

A core tenet of our talent system

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

What changed 10-K

Item 1. Business