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Item 8. Financial Statements and Supplementary Data

2026-08-17 compared with 2025-04-11 · 1219 added, 616 removed, 1052 unchanged (64% of the section changed)

17 unchanged sentences

PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Resources, Inc.

Opinion on the Financial Statements

We have audited the accompanying

consolidated balance sheet of Gulf Resources, Inc.

and subsidiaries (collectively the “Company”) as of December 31, 2024,

and the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows for the year ended

December 31, 2024, the related notes, and financial statement schedule (collectively referred to as the “consolidated financial

statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position

of the Company as of December 31, 2024, and the results of its operations and its cash flows for each of the years in the year ended December

31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements

are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance

with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were

we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

To the Board of Directors and Stockholders of Gulf Resources,

on the Financial Statements

have audited the accompanying consolidated balance sheets of Gulf Resources, Inc.

and subsidiaries (collectively the “Company”)

as of December 31, 2025 and 2024, and the related consolidated statements of comprehensive income (loss), stockholders’ equity,

and cash flows for the year ended December 31, 2025 and 2024, the related notes, and financial statement schedule (collectively referred

to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in

all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and

its cash flows for each of the years in the year ended December 31, 2025 and 2024, in conformity with accounting principles generally

accepted in the United States of America.

to Correct Previously Issued Consolidated Financial Statements

discussed in Note 26 to the Consolidated Financial Statements, the consolidated financial statements for the years ended December 31,

2024 have been restated.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

9 unchanged sentences

Critical Audit Matters

The critical audit matters communicated

below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to

be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters

does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the

critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they

Property, plant and equipment, net

As described in Note 1 to the

consolidated financial statements, property, plant and equipment consisted of facilities for products, mineral rights, constructions in

process and producing oil and gas properties.

The Company reviews the economic benefits associated with the item purchased periodically.

Once the Company determine the likelihood of economic benefits associated is probable, the item would be recognized as an asset.

We identified determining carrying

amount of property, plant and equipment as a critical audit matter due to the material balance on the balance sheet and significant judgement

and assumptions were used by the Management regarding the timing and ability to contribute to the generation of cash flows, which in turn

led to a high degree of auditor judgement, subjectivity and effort in performing procedures and evaluating audit evidence relating to

Management’s assessment of the carrying amount.

The primary procedures we performed to address this critical

audit matter included the following:

- Reviewed the Company’s accounting policies, assumptions and estimates.

- Physical inspection.

- Examined contracts.

- Performed independent analysis for impairment testing.

Critical audit matters are matters arising from the current year audit

of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate

to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex

We determined that there were no critical audit matters.

/s/ GGF CPA LTD

1 unchanged sentence

Guangzhou, Guangdong, China

April 11, 2025

August 17, 2026

GULF RESOURCES, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE

(Expressed in U.S.

2024 (Restated)

Current Assets

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Current Liabilities

Short-term bank borrowing

Accounts payable and accrued expenses

Accrued liabilities

Taxes payable-current

Advance from customer

Amount due to related parties

5 unchanged sentences

Operating lease liabilities, net of current portion

Long-term bank borrowing

Total non-current liabilities

Total Liabilities

Commitment and Contingencies

Stockholders’ Equity

4 unchanged sentences

COMMON STOCK;

$ 0.0005 par value;

80,000,000 shares

11,012,754 and 11,012,754 shares issued;

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

80,000,000 shares authorized;

1,568,114 and 1,120,145

shares issued;

and 1,539,531 and 1,091,562

shares outstanding as of December 31, 2025 and 2024 (1)

Treasury stock;

5 unchanged sentences

Retained earnings unappropriated

( 7,526,347 )

Retained earnings appropriated

6 unchanged sentences

$ 167,822,288

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

to reflect the stock split.

The accompanying notes are an integral

1 unchanged sentence

GULF RESOURCES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE

2 unchanged sentences

Years Ended December 31,

2024 (Restated)

OPERATING COSTS AND EXPENSE

3 unchanged sentences

Sales and marketing expenses

Direct labor and factory overheads

Direct labor and factory overheads incurred during plant shutdown

( 5,098,990 )

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Other expenses, net

Loss on disposal of property, plant and equipment

( 4,003,497 )

Impairment of property, plant and equipment

Impairment of long-lived assets

( 30,068,794 )

Expenditure on water pollution treatment

( 6,772,500 )

Loss on disposal of long-lived assets

( 2,008,853 )

( 29,169,008 )

Gain on disposal of subsidiary

INCOME BEFORE INCOME TAXES

5 unchanged sentences

$ ( 59,900,372 )

$ ( 61,795,279 )

COMPREHENSIVE INCOME (LOSS):

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( 2,730,049 )

( 5,025,980 )

TOTAL COMPREHENSIVE LOSS

3 unchanged sentences

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

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

to reflect the stock split.

The accompanying notes are an integral

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(Expressed in U.S.

shares issued

shares outstanding

treasury stock

of shares issued (1)

of shares outstanding (1)

of treasury stock (1)

paid-in capital(1)

2 unchanged sentences

other comprehensive Income(loss)

BALANCE AT JANUARY 1, 2023

BALANCE AT JANUARY 1, 2024 (Restated)

$ ( 1,372,673 )

2 unchanged sentences

$ 205,248,296

Restricted shares issued for services

Restricted shares to be issued for service

Currency translation adjustment

4 unchanged sentences

( 59,900,372 )

BALANCE AT DECEMBER 31, 2023

BALANCE AT DECEMBER 31, 2024 (Restated)

$ ( 1,372,673 )

1 unchanged sentence

$ ( 20,783,318 )

$ 142,812,575

of shares issued (1)

of shares outstanding (1)

of treasury stock (1)

paid-in capital(1)

Earnings unappropriated

Earnings appropriated

comprehensive

unappropriated

BALANCE AT JANUARY 1, 2025

3 unchanged sentences

Restricted shares to be issued for service

Acquisition of Assets

Currency translation adjustment

( 2,800,874 )

Disposal of subsidiary

Net loss for year ended December 31, 2025

1 unchanged sentence

( 43,920,231 )

BALANCE AT DECEMBER 31, 2025

$ ( 1,372,673 )

1 unchanged sentence

$ ( 12,218,081 )

$ 111,477,922

Treasury Stock

3 unchanged sentences

Share to be Issued

The shares and per share data are presented on a retroactive basis to reflect the stock split.

The accompanying notes are an integral

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S.

Years Ended December 31,

2024 (Restated)

CASH FLOWS FROM OPERATING ACTIVITIES

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Impairment of property plant and equipment

Amortization of right-of-use asset

Loss on disposal of property, plant and equipment

Amortization of operating lease right-of-use asset

Amortization of finance lease right-of-use asset

Accrued liabilities

Loss on disposal of long-lived assets

Gain on disposal of subsidiary

Accrued interest receivable

Changes in assets and liabilities

Accounts receivable

Prepayment and deposits

( 2,635,370 )

Prepayment and deposits

Advance from customers

4 unchanged sentences

Lease liabilities

Net cash provided by (used in) operating activities

( 32,751,851 )

Net cash provided by operating

CASH FLOWS FROM INVESTING ACTIVITIES

1 unchanged sentence

( 8,848,156 )

( 28,923,642 )

Interest-free loan repaid by related parties

Interest-free loan lent to related parties

Proceeds from disposal of subsidiary

Loans to third parties

( 13,934,085 )

Net cash used in investing activities

( 22,571,837 )

( 28,948,917 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term borrowing

Proceeds from short-term borrowing

Repayment of finance leases obligation

( 31,866,665 )

Proceeds from interest-free loan from a related party

Net cash used in financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

Net cash provided by / (used in) financing activities

( 31,851,811 )

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

( 2,023,830 )

6 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH

FLOWS (CONTINUED)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S.

Years Ended December 31,

2024 (Restated)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

1 unchanged sentence

Paid for taxes

Interest on finance lease obligation

Paid for Flood Prevention Project

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING

Interest paid

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

The accompanying notes are an integral

2 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

DECEMBER 31, 2025

(Expressed in U.S.

NOTE 1 – NATURE OF BUSINESS AND

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – NATURE OF BUSINESS

AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation and Consolidation

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(collectively, the “Company”).

The consolidated financial statements

include the accounts of Gulf Resources, Inc.

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

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

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

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

The consolidated financial statements include the

accounts of Gulf Resources, Inc.

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

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

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

Limited (“SYCI”) ,Daying County Haoyuan Chemical Company Limited (“DCHC”) and Shouguang Hengde Salt Industry

All material intercompany transactions have been eliminated on consolidation.

(b) Going Concern Consideration

The consolidated financial statements are prepared on the

going concern basis, meaning that the enterprise is expected to realize the assets and settle the liabilities through normal business

However, the going concern of the enterprise relies on many factors, such as profitable operations, generating operating cash

flows, obtaining financing, etc.

The company assesses its

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

As of December 31, 2024,

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

As a result, the deficit

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

If it is unable to raise additional funds,

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

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

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

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

Additionally, the company will also obtain

financial support commitments from related parties.

However, these situations still pose significant doubts regarding the company's ability

to continue operations.

The financial statements do not consider the potential impact on the recoverability of assets, classification,

and amounts and classification of liabilities if the company is unable to continue operations.

manufactures and trades bromine through its wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited

(“SCHC”) manufactures and trades crude salt through its wholly owned subsidiary, SHSI;

and manufactures chemical

products for use in the oil industry, pesticides, paper manufacturing industry and for human and animal antibiotics through its

wholly- owned subsidiary, Shouguang Yuxin Chemical Industry Co., Limited (“SYCI”) in the People’s Republic of

China (“PRC”).

DCHC was established to further explore and develop natural gas and brine resources (including bromine

and crude salt) in the PRC.

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

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

(b) Nature of Business

The Company manufactures and

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

and trades crude salt through its wholly owned subsidiary, SHSI;

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

paper manufacturing industry and for human and animal antibiotics through its wholly- owned subsidiary, Shouguang Yuxin Chemical Industry

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

DCHC was established to further explore

and develop natural gas and brine resources (including bromine and crude salt) in the PRC.

DCHC’s business commenced trial operation

in January 2019 but suspended production temporarily in May 2019 as required by the government to obtain project approval (see Note 1

(i) Bromine and Crude Salt Segments

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

Pursuant to the notification from

the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 10, 2022 until February

Pursuant to the notification

from the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 10, 2022 until February

1, 2023 8:00 AM China Time.

1 unchanged sentence

during the aforesaid period and reopened the operating bromine and crude salt factories in February, 2023 as planned.

In April 2022, Shouguang Hengde

Salt Industry Co.

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

This subsidiary

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

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

However, the establishment

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

In April 2022, Shouguang Hengde Salt Industry Co.

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

This subsidiary was created in

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

The creation of

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

However, the establishment of

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

GULF RESOURCES, INC.

30 unchanged sentences

and trial production.

The Company believes this

relocation process will cost approximately $ 69

million in total.

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

of the new chemical factory, and progress payments and deposits for the construction of the new factory building in the amount of $ 45,584,344

and $ 45,584,344 ,

which were recorded in the prepaid land leases, prepayments and deposits and property, plant and equipment in the consolidated balance

sheets as of December 31, 2024 and 2023.

The Company believes this relocation

process will cost approximately $ 69 million in total.

The Company incurred relocation costs comprising prepaid land lease, professional

fees related to the design of the new chemical factory, and progress payments and deposits for the construction of the new factory building

in the amount of $ 45,584,344 and $ 45,584,344 , which were recorded in the prepaid land leases, prepayments and deposits and property, plant

and equipment in the consolidated balance sheets as of December 31, 2025 and 2024.

On December 10, 2025, SCHC entered

into an equity transfer agreement with Shandong Rongyuan Pharmaceutical Co., Ltd.

Pursuant to the agreement, Shandong Rongyuan

Pharmaceutical Co., Ltd.

agreed to purchase 100 % of the equity interest in SYCI for an aggregate consideration of RMB 21.2 million (US$

The transaction was completed on December 22, 2025.

(iii) Natural Gas Segment

In January 2017, the Company completed

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

in January 2019.

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

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

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

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

In compliance

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

and natural gas, respectively.

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

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

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

The Company plans to proceed with

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

been finalized.

(d) Use of Estimates

In January 2017, the Company

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

production in January 2019.

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

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

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

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

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

license for bromine and natural gas, respectively.

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

Promoting the Reform of Mineral Resources Management (Trial) promulgated by the Ministry of Natural Resources of PRC on January 9, 2020,

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

plans to proceed with its applications for the natural gas and brine project approvals with related government departments until the governmental

planning has been finalized.

The Company’s consolidated

13 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS DECEMBER 31, 2024

DECEMBER 31, 2025

(Expressed in U.S.

1 unchanged sentence

AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

(e) Cash and Cash Equivalents

(d) Cash and Cash Equivalents

Cash and cash equivalents consist

2 unchanged sentences

investments, the carrying amounts approximate their fair values.

(f) Accounts receivable and Allowance for Doubtful Accounts

(e) Accounts receivable and Allowance for Doubtful Accounts

Accounts receivable is stated

11 unchanged sentences

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

31, 2023, the provision for doubtful debts was $ 29,711 and $ 25,060 .

The provision for doubtful accounts in the consolidated statements

of comprehensive (loss) income for the years ended December 31, 2024 is $ 5,069 .

(g) Concentration of Credit Risk

The Company is exposed to credit

risk in the normal course of business, primarily related to accounts receivable and cash and cash equivalents.

the provision for doubtful debts was $ 16,430

and $ 29,711 .

The reversal for doubtful accounts in the consolidated statements of comprehensive income (loss) for the years ended December 31,

2025 was $ 13,375 .

(f) Concentration of Credit Risk

The Company is exposed to credit risk in the

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

Substantially all of the

Company’s cash and cash equivalents are maintained with financial institutions in the PRC, namely, Industrial and Commercial Bank

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

Company placed $ 10,075,162 and $ 72,223,894 with these institutions as of December 31, 2024 and 2023, respectively.

The Company has not

experienced any losses in such accounts in the PRC.

Company’s cash and cash equivalents are maintained with financial institutions in the PRC, namely, Industrial and Commercial

Bank of China Limited, China Merchants Bank Company Limited, Sichuan Rural Credit Union, Bank of China Limited and Shandong

Shouguang Rural Commercial Bank Co., Ltd., which are not insured or otherwise protected.

The Company placed $ 3,793

and $ 10,075,162

with these institutions as of December 31, 2025 and 2024, respectively.

The Company has not experienced any losses in such accounts

Concentrations of credit risk

2 unchanged sentences

financial condition and extends credit terms as and when appropriate.

(h) Inventories

(g) Inventories

Inventories are stated at the

4 unchanged sentences

price less costs to complete and selling expenses.

(i) Advances to suppliers, net

Advances to suppliers are stated at the original amount less

an allowance for doubtful account.

Advances to supplier primarily consists of prepayments for

purchase of cryptocurrency mining machines and standardized computing equipment.

The Company reviews its advance to suppliers on a periodic

basis and determines the adequacy of provision when amounts outstanding are not likely to be collected in cash or utilized against receive

An allowance for doubtful is recorded in the period in which the Company cash collection or receipts of products is remote.

GULF RESOURCES, INC.

5 unchanged sentences

AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

(j) Property, Plant and Equipment

(h) Advances to suppliers, net

Advances to suppliers are stated at

the original amount less an allowance for doubtful account.

Advances to suppliers primarily consists of prepayments for purchase

of raw materials and equipment for production purposes.

The Company reviews its advances to suppliers on a periodic basis and determines

the adequacy of provision when amounts outstanding are not likely to be collected in cash or utilized against receive of products.

allowance for doubtful is recorded in the period in which the Company cash collection or receipts of products is remote.

(i) Property, Plant and Equipment

Property, plant and equipment

17 unchanged sentences

Significant Accounting Policies - Schedule of Property, Plant and Equipment Useful Life

Buildings (including salt pans)

Mineral rights

Leasehold Improvements Leasehold Improvements

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

1 unchanged sentence

Furniture, fixtures and equipment

Property, plant and equipment

under the finance lease are depreciated over their expected useful lives on the same basis as owned assets, or where shorter, the term

of the lease, which is 20 years.

Producing oil and gas properties

8 unchanged sentences

depreciation.

(k) Asset Retirement Obligation

(j) Asset Retirement Obligation

The Company follows Financial

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the two chemical plants that are to be relocated, currently, there are no obligations to restore the land to its original condition.

(l) Recoverability of Long-lived Assets

(k) Recoverability of Long-lived Assets

In accordance with Financial

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

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

determined that the impairment of long-lived assets was $ 6,772,500 and $ nil .

(m) Retirement Benefits

Pursuant to the relevant laws and

regulations in the PRC, the Company participates in a defined contribution retirement plan for its employees arranged by a governmental

For the year ended December

31, 2025 and 2024, the Company recognized impairment of long-lived assets of $ 30,068,794 and $ 6,772,500 , respectively.

(l) Retirement Benefits

Pursuant to the relevant laws

and regulations in the PRC, the Company participates in a defined contribution retirement plan for its employees arranged by a governmental

organization.

11 unchanged sentences

AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

(n) Mineral Rights

(m) Mineral Rights

The Company follows FASB ASC

2 unchanged sentences

Mineral rights are included in property, plant and equipment.

The Company determines if an arrangement

is a lease at inception.

Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease

liabilities in the consolidated balance sheets.

The Company determines if an

arrangement is a lease at inception.

Operating leases are included in operating lease right-of-use (“ROU”) assets and operating

lease liabilities in the consolidated balance sheets.

Finance leases are included in finance lease ROU assets and finance lease liabilities

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operating lease ROU assets and liabilities arising from short-term lease.

(p) Basic and Diluted Earnings per Share of Common Stock

Basic earnings per common share

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

Diluted earnings per share are computed using

weighted average number of common shares plus dilutive common share equivalents outstanding during the period.

Potential common shares

that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive, i.e.

the exercise prices of the

outstanding stock options were greater than the market price of the common stock.

Anti-dilutive common stock equivalents which were excluded

from the calculation of number of dilutive common stock equivalents amounted to 0 and 0 shares for the years ended December 31, 2024 and

2023, respectively.

These awards could be dilutive in the future if the market price of the common stock increases and is greater than

the exercise price of these awards.

(q) Reporting Currency and Translation

Finance leases are initially

recorded at the net present value of future minimum lease payments, which includes certain lease and non- lease components.

Finance leases

generally have one of these five attributes:

1) ownership of the underlying asset transfers to the Company at the end of the lease term,

2) the lease agreement contains a purchase option that the Company is reasonably certain to exercise, 3) the lease term represents the

major part of the asset’s economic life, 4) the present value of lease payments over the lease term equals or exceeds substantially

all of the fair value of the asset, and 5) the underlying asset is so specialized in nature that it provides no alternative use to the

lessor after the lease term.

Finance Lease Assets are presented on separately on the Consolidated Balance Sheets.

(o) Basic and Diluted Earnings per Share of Common Stock

Basic earnings per common stock are based on the

weighted average number of shares outstanding during the periods presented.

Diluted earnings per share are computed using weighted average

number of common stocks plus dilutive common stock equivalents outstanding during the period.

Potential common stocks that would have

the effect of increasing diluted earnings per stock are considered to be anti- dilutive, i.e.

the exercise prices of the outstanding

stock options were greater than the market price of the common share.

Anti-dilutive common stock equivalents which were excluded from

the calculation of number of dilutive common stock equivalents amounted to 0

share for the years ended December 31, 2025 and 2024.

These awards could be dilutive in the future if the market price of the

common stock increases and is greater than the exercise price of these awards.

(p) Reporting Currency and Translation

The financial statements of the

21 unchanged sentences

of the consideration paid for the acquisition of business which is translated at historical rates.

(r) Revenue Recognition

(q) Revenue Recognition

Net revenue is net of discount

11 unchanged sentences

Revenue from contracts with customers is disaggregated in Note

(s) Income Taxes

(r) Income Taxes

The Company accounts for income

14 unchanged sentences

for income tax in the consolidated statement of comprehensive income (loss).

(t) Exploration Costs

(s) Exploration Costs

Exploration costs, which included

19 unchanged sentences

periodically for impairment.

(u) Fair Value Measurement

(t) Fair Value Measurement

The Company applies Accounting

8 unchanged sentences

is as follows:

Level 1 inputs to the valuation methodology

are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 1 inputs to the valuation methodology are quoted

prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation

1 unchanged sentence

that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 inputs to the valuation methodology

are unobservable and significant to the fair value.

Level 3 inputs to the valuation methodology are unobservable

and significant to the fair value.

The carrying amounts of the Company’s

financial instruments approximate their fair values because of their short-term nature.

The Company’s financial instruments include

cash, accounts receivable, amounts due to related parties, accounts payable and other current payables.

There were no material unrecognized

financial assets and liabilities as of December 31, 2024 and 2023.

(v) Loss Contingencies

The Company accrues for loss contingencies

relating to legal matters, including litigation defense costs, claims and other contingent matters, including liquidated damage liabilities,

when such liabilities become probable and reasonably able to be estimated.

Such estimates may be based on advice from third parties or

on management’s judgment, as appropriate.

Revisions to accruals are reflected in income (loss) in the period in which different

facts or information become known or circumstances change that affect the Company’s previous assumptions with respect to the likelihood

or amount of loss.

Amounts paid upon the ultimate resolution of such liabilities may be materially different from previous estimates.

(w) Stock-based Compensation

The Company’s financial instruments

include cash, accounts receivable, amounts due to related parties, short-term borrowing, long-term borrowing, other receivables,

accounts payable and other current payables.

There were no material unrecognized financial assets and liabilities as of December 31,

2025 and 2024.

The Company determines the fair value with the help from independent

third-party professional valuation specialists, and the assumptions used in estimating fair value require significant judgment.

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

Market valuation method was applied to land and cost method was applied

to property and equipment, all of which are classified as Level 3 within the valuation hierarchy.

The following table presents the Company’s assets measured at

fair value on a non-recurring basis for the years ended December 31, 2024:

Basis of Presentation and Summary of Significant Accounting Policies - Assets measured at non-recurring basis

as of December 31, 2024

Quoted Prices in Active

Markets for Identical Assets

Other Observable Inputs

Significant Unobservable Inputs

the Year Ended December

Property, Plant and Equipment

( 6,772,500 )

The following table presents the Company’s assets measured at

fair value on a non-recurring basis for the years ended December 31, 2025:

December 31, 2025

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Total Gain (Loss) for the Year Ended

December 31, 2025

Property, Plant and Equipment

( 23,076,873 )

Prepaid Land Leases

( 6,991,921 )

(u) Loss Contingencies

The Company accrues for loss

contingencies relating to legal matters, including litigation defense costs, claims and other contingent matters, including liquidated

damage liabilities, when such liabilities become probable and reasonably able to be estimated.

Such estimates may be based on advice from

third parties or on management’s judgment, as appropriate.

Revisions to accruals are reflected in income (loss) in the period in

which different facts or information become known or circumstances change that affect the Company’s previous assumptions with respect

to the likelihood or amount of loss.

Amounts paid upon the ultimate resolution of such liabilities may be materially different from previous

(v) Stock-based Compensation

The Company accounts for stock-based

8 unchanged sentences

The amendments in this Update expand the scope of Topic 718 to include share-based payment transactions

for acquiring goods and services from nonemployees.

for acquiring goods and services from non-employees.

Prior to this Update, Topic 718 applied only to share-based transactions to employees.

4 unchanged sentences

The Company has elected to account for the forfeiture of stock-based awards as they occur.

(x) New Accounting Pronouncements

(w) New Accounting Pronouncements

Recent accounting pronouncements adopted

In June 2016, the FASB

issued ASU No.

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

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

have the contractual right to receive cash.

The ASU requires an entity to recognize expected credit losses rather than incurred

losses for financial assets.

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

including interim periods within those fiscal years.

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

2019-10 extends

the effective dates for two years.

The Company had evaluated the effect of the adoption of this standard on the consolidated

financial statements and related disclosures.

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

Recently Issued Accounting Pronouncements Not Yet

There were no recently issued accounting pronouncements

not yet adopted for the year ended December 31, 2024.

There was no recent accounting

pronouncements adopted for the year ended December 31, 2025.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No.

Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), which requires

disaggregated disclosure of income statement expenses for public business entities.

The objective of ASU 2024-03 is to “address

requests from investors for more detailed information about the types of expenses .

in commonly presented expense captions (such

as cost of sales, selling, general, and administrative expenses, and research and development).” Investors advised the FASB that

“disclosure of disaggregated information about expenses is critically important in understanding an entity’s performance,

assessing an entity’s prospects for future cash flows, and comparing an entity’s performance over time and with that of other

entities.” ASU 2024-03 adds ASC 220-40 to require a footnote disclosure about specific expenses by requiring public entities to

disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following

natural expenses:

(1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5)

depreciation, depletion, and amortization (DD&A) recognized as part of oil- and gas-producing activities or other types of depletion

The tabular disclosure would also include certain other expenses, when applicable.

The ASU does not change or remove existing

expense disclosure requirements;

however, it may affect where that information appears in the footnotes to the financial statements.

ASU 2024-03 is effective for all public entities for fiscal years beginning after December 15, 2026, and interim periods within fiscal

years beginning after December 15, 2027.

Early adoption is permitted.

The Company does not expect the adoption to have a material impact

on the consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial

Instruments—Credit Losses (Topic 326) Measurement of Credit Losses for Accounts Receivable and Contract Assets.

The ASU addresses

challenges encountered when applying the guidance in Topic 326, Financial Instruments—Credit Losses, to current accounts receivable

and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers.

The amendments

will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting

Early adoption is permitted.

The Company is in the process of assessing the impact of the amendments on the Company’s

consolidated financial statements.

NOTE 2 – DISPOSAL OF SUBSIDIARY

On December 10, 2025, SCHC entered into an equity transfer agreement with

Shandong Rongyuan Pharmaceutical Co., Ltd.

Pursuant to the agreement, Shandong Rngyuan Pharmaceutical Co., Ltd.

agreed to purchase

100% of the equity interest in SYCI for an aggregate consideration of RMB 21.2 million (US$ 2,999,304).

The transaction was completed

on December 22, 2025.

The Company recognized a disposal gain of $674,776, calculated as the difference between consideration received

and the carrying value of the subsidiaries’ net assets after adjusting for foreign currency translation.

As a result of the disposal,

the Company recognized a gain from the disposal of subsidiary amounted of $674,776 during the

years ended December 31, 2025.

The following table summarizes

the total consideration received and assets disposed in the current period:

Subsidiaries - Gain On Disposal Of Subsidiaries And Other Assets

consideration (sale price)

( 3,562,908 )

foreign exchange difference

gain on disposal of subsidiary

GULF RESOURCES, INC.

4 unchanged sentences

NOTE 3 – ACCOUNTS RECEIVABLE, NET

Accounts receivable consist of the following:

December 31, 2025

December 31, 2024

Accounts receivable

Allowance for doubtful debt

Accounts receivable, net

The overall accounts receivable

balance as of December 31, 2024 decreased by $ 4,301,173

compared to those of December 31, 2023.

The decrease in accounts receivable is due to the decrease in sales revenue.

We have policies

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

We perform ongoing credit evaluation on the financial

condition of our customer.

balance as of December 31, 2025 increased by $ 2,704,897 compared to those of December 31, 2024.

The increase in accounts receivable is

due to the increase in sales revenue.

We have policies in place to ensure that sales are made to customers with an appropriate credit

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

NOTE 4 – INVENTORIES

Inventories consist of:

consist of the following:

Inventories - Schedule of Inventories, Current

December 31, 2025

December 31, 2024

Raw materials

4 unchanged sentences

charges for slow moving inventory in the amounts of $ 293,586 and $ 989,035 for the years ended December 31, 2025 and 2024.

NOTE 4 – PREPAYMENTS

AND DEPOSITS, NET

Prepayments and deposits consisted of the following:

NOTE 5 – PREPAYMENTS AND DEPOSITS, NET

Prepayments and deposits consist of the following:

Prepayments and

Deposits, Net - Schedule of Prepayments and Deposits, Net

December 31, 2024

December 31, 2023

Prepayments and deposits

1 unchanged sentence

( 1,685,900 )

Prepayments and deposits, net

For the year December 31, 2024 and 2023, the Company recorded

provision of $ 1,663,933 and nil for the prepayments and deposits.

( 1,648,454 )

and deposits, net

For the year December 31, 2025 and 2024, the

Company recognized provision of nil 0 and $ 1,663,933

for the prepayments and deposits.

NOTE 6 – OTHER RECEIVABLES,NET

Other receivables consisted of the following:

Other Receivable, Net - Schedule of Other Receivable

Loan receivable (1)

Proceeds receivable from sale of subsidiary (2)

receivables, net

(1) During the year ended December 31, 2025, the Company entered into

five borrowing arrangements with a third party for an aggregate principal amount of $14,160,101, bearing interest at 9% per annum.

borrowings were guaranteed by individuals or entities or secured by certain assets.

As of December 31, 2025, the aggregate accrued and

unpaid interest related to these borrowings was $195,182.

To date, all of the above borrowings, including the

related accrued interest, had been fully repaid.

(2) There was $2,416,086 receivable from the sale of the Company’s subsidiary,

SYCI, which is due in 2026 from Shandong Rongyuan Pharmaceutical Co., Ltd.

NOTE 7 – PREPAID LAND LEASES

9 unchanged sentences

As of January 1, 2019, all the leases in which term has commenced and were in use were classified as operating lease right-of-use assets

In December 2017, the

Company paid a one lump sum upfront amount of $ 8,846,282 for a 50-year lease of a parcel of land at Bohai Marine Fine Chemical

Industrial Park (“Bohai”) for the new chemical factory to be built.

There is no purchase option at the end of the lease

In December 2017, the Company paid a one lump sum

upfront amount of $ 9,047,232 for a 50-year lease

of a parcel of land at Bohai Marine Fine Chemical Industrial Park (“Bohai”) for the new chemical factory to be built.

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

This was classified as an operating lease prior to and as of January 1, 2019.

The land use certificate was issued on October

land use certificate was issued on October 25, 2019.

The lease term expires on August 12, 2069.

The amount paid was recorded as prepaid land leases, net of current portion in

the consolidated balance sheet as of December 31 2024 and 2023.

As of December 31, 2024, the prepaid land lease increased to

$ 9,204,556 due to an additional amount paid for stamp duty and related land use rights fees.

Amortization of this prepaid land lease

will commence when the chemical factory is built and placed in service.

The leased land was impaired by $ 6,991,921 based on an independent third-party

valuation report and was subsequently auctioned by the court.

GULF RESOURCES, INC.

6 unchanged sentences

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

2024 (Restated)

Mineral rights

Leasehold Improvements

Plant and machinery

7 unchanged sentences

Net book value

The rollforward of property,

plant and equipment, net were as follows:

Property, Plant and

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

chlorine shed(b)

Impairment(c)

of fixed asse(d)

Depreciation(e)

of subsidiary(f)

translation(g)

Mineral rights

( 21,627,487 )

Furniture, fixtures and office

Motor vehicles

( 10,240,327 )

The Company has certain

buildings and salt pans erected on parcels of land located in Shouguang, PRC, and such parcels of land are collectively owned by

local townships or the government authority.

The Company has not been able to obtain property ownership certificates over these

buildings and salt pans.

The aggregate carrying values of these properties situated on parcels of the land are $ 50,219,026 and

$ 8,346,742 as at December 31, 2024 and December 31, 2023, respectively.

( 31,867,814 )

Accumulated depreciation and

( 65,569,186 )

( 13,065,486 )

( 1,696,307 )

( 79,598,798 )

( 6,744,380 )

( 23,076,873 )

Net book value

( 23,076,873 )

( 2,276,204 )

( 13,065,486 )

For those crude salt pans acquired in fiscal year 2024, the Company completed renovation and upgrade activities during fiscal year

2025, with a total cost of $ 9,129,878 .

(b) The Company completed renovation and upgrade

work on the chlorine shed during fiscal year 2025, with a total cost of $ 214,761 .

based on independent valuation reports.

Furniture and fixtures

During the year ended December 31, 2025, a piece of land with a value of $ 2,276,204

was disposed due to court-ordered auction.

(e) During the year ended

December 31, 2025, depreciation and amortization expense totaled $ 13,065,486

were recorded in direct labor and factory overheads incurred during plant shutdown, cost of revenue, and

general & administrative expenses.

During the year ended December 31, 2024,

31, 2024, depreciation and amortization expense totaled $ 17,989,747

of which $ 10,864,807 , $ 6,806,372

and $ 318,568

were recorded in direct labor and factory overheads incurred cost of net revenue ,

during plant shutdown, and administrative expenses respectively.

During the year ended

December 31, 2023, depreciation and amortization expense totaled $ 27,064,404 of

which $ 15,626,277 , $ 4,113,962 and

$ 7,324,165 were

recorded in direct labor and factory overheads incurred cost of net revenue , during

plant shutdown, and administrative expenses respectively.

depreciation and amortization expense totaled $ 15,819,827 were recorded in direct labor and factory overheads incurred during plant shutdown,

cost of revenue, and general & administrative expenses.

(f) On December 22, 2025, the SYCI was sold.

net value of transferred fixed assets was $ 727,033 ,

including furniture, fixtures and office equipment of $ 630,271 ,

motor vehicles of $ 96,762 and

accumulated depreciation and amortization of $ 722,195 .

See Note 26- Restatement, for discussion regarding

the impact of the Restatement.

NOTE 9 – FINANCE LEASE RIGHT-OF-USE ASSETS

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

Property, plant and equipment under finance leases, net consist of the following:

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

Plant and Equipment Under Finance Leases

Buildings Buildings

2024 (Restated)

Buildings Building

Accumulated depreciation and amortization

( 19,390,837 )

( 19,242,775 )

Net book value

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

DECEMBER 31, 2024

(Expressed in U.S.

The above buildings erected on

2 unchanged sentences

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

During the year ended December

31, 2024, depreciation and amortization expense totaled $ 5,068 , respectively, which was recorded in direct labor and factory overheads

incurred during plant shutdown.

During the year ended December

31, 2023, depreciation and amortization expense totaled $ 61,981 , respectively, which was recorded in direct labor and factory overheads

incurred during plant shutdown.

NOTE 8 – OPERATING LEASE RIGHT–OF-USE

The Company has the rights to use

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

During the year ended December 31, 2025, depreciation

and amortization expense totaled $ 3,124,602 , which was recorded in direct labor and factory overheads incurred during plant

shutdown, cost of revenue, and general & administrative expenses.

During the year ended December 31, 2024, depreciation

and amortization expense totaled $ 3,045,602 , which was recorded in direct labor and factory overheads incurred during plant

shutdown, cost of revenue, and general & administrative expenses.

On June 26, 2024, SHSI entered into a Crude

Salt Assets Acquisition Agreement with the total transfer price of $ 18,010,850 .

On June 27, 2024, SHSI entered into four Crude Salt Field Acquisition Agreements with 4 sellers, with the total transfer prices of

$ 5,644,388 ,

$ 6,140,260 ,

$ 2,892,097 ,

and $ 6,369,207 ,

respectively.

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

In 2024, Company purchased

crude salt pans at a total cost of $ 39,056,802 .

See Note 26- Restatement, for

discussion regarding the impact of the Restatement.

NOTE 10 – OPERATING LEASE RIGHT–OF-USE ASSETS

The Company has the rights to

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

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

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

aggregate operating lease right-of-use assets amount of $ 7,318,031 as at December 31, 2024.

As of December 31, 2024, the total operating lease ROU assets

was $ 6,169,855 .

The total operating lease cost for the years ended December

31, 2024 and 2023 was $ 877,809 and $ 887,603 .

of land of which the Company cannot obtain land use rights certificates covers a total of approximately 34.95 square kilometers at December

As of December 31, 2025, the

total operating lease right-of-use assets was $ 5,669,794 .

The total operating lease cost for the years

ended December 31, 2025, and 2024 was $ 875,201

and $ 877,809 .

11 – BORROWINGS

The Company entered into a loan

agreement with Shandong Shouguang Industrial and Commercial Bank Co., Ltd.

for a principal amount of $ 2,845,400 , bearing interest at 6.375 % per annum, with a maturity date of December 26, 2025 .

The borrowing was guaranteed by Yang Ming, Yu Wenxiang, and Shouguang Broadcasting

and Television Group Col, Ltd.

The borrowing was also secured by land and buildings owned by Shandong Shouguang Vegetable Seed Industry

Group Co., Ltd.

The Company paid interest on a monthly basis, however, the principal balance became past due and remained unpaid as of

December 31, 2025 due to disputes between the Company and the bank.

The Company entered into a loan

agreement with Shandong Shouguang Rural Commercial Bank Co., Ltd.

for a principal amount of $ 2,344,610 , bearing interest at 6.35 % per

annum, with a maturity date of March 26, 2027 .

The borrowing was guaranteed by Yang Ming and Yu Wenxiang secured by the 15 th

and 16 th floors of Meilin Building, located in Shouguang, Shandong China, which are owned by Shandong Shouguang Hongye Economic

and Trade Co., Ltd.

The company pays interest monthly and the principal is due at maturity.

NOTE 12 – PAYABLE AND ACCRUED EXPENSES

2 unchanged sentences

Expenses - Schedule of Accounts Payable and Accrued Liabilities

2024 (Restated)

Accounts payable

1 unchanged sentence

Social security insurance contribution payable

Other payable-related party

Accrued expense for construction

Accrued expense-others (1)

Accrued expense-others mainly include the purchase

of the unpaid portion of salt Pans of $ 7,878,182 , and others.

(1) Accrued expense-others mainly included accrued professional fees and accrued interest payable that is disputed by the Company in connection

with its borrowing from Shouguang Industrial and Commercial Bank Co., Ltd.

See Note 26 - Restatement for discussion regarding the impact of the

NOTE 13 – RELATED PARTY TRANSACTIONS

On September 25, 2012,

the Company purchased five floors of a commercial building in the PRC, through SYCI, from Shandong Shouguang Vegetable Seed Industry

Group Co., Ltd.

(the “Seller”) at a cost of approximately $ 5.7 million

On September 25, 2012, the Company purchased

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

“Seller”) at a cost of approximately $ 5.7 million

in cash, of which Mr.

Ming Yang, the Chairman of the Company, had a 99 %

equity interest in the Seller that time.

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

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

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

interest in the Seller that time.

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

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

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

The expense associated with this agreement for the year ended December 31,

2024 was $ 87,821 .

The expense associated with this agreement for the year ended December 31, 2023 was $ 88,049 .

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

DECEMBER 31, 2024

(Expressed in U.S.

2025 and 2024 was $ 87,655

and $ 87,821 , respectively.

NOTE 13 – RELATED PARTY TRANSACTIONS – Continued

6 unchanged sentences

Affiliated with company officers

December 31, 2025

December 31, 2024

Amount due to related parties:

Due from related party :

Amount due from related parties:

Chengdu Dianjinshi Culture media Co., LTD

2 unchanged sentences

Value added tax and other taxes payable

Of the remaining balance as of December 31, 2025, $259,171 was overdue,

as notified by the Tax Bureau in a Tax Matters Notice.

The overdue amount was attributable to certain value-added tax invoices issued

by the Company's upstream suppliers during 2018 and 2019 that were subsequently identified as abnormal deductions in the tax authorities'

NOTE 15 – LEASE LIABILITIES - FINANCE AND OPERATING LEASE

The components of finance lease liabilities

were as follows:

The components of finance lease liabilities were as follows:

Lease Liabilities - Finance and Operating

Lease - Schedule of Finance and Operating Leased Liabilities

Imputed Interest rate

Lease - Schedule of Finance Leased Liabilities

2024 (Restated)

Total finance lease liability

Current portion

( 3,342,293 )

Finance lease liability, net of current portion

Interest expenses from capital lease obligations amounted

to $ 91,901 and $ 96,914 for the years ended December 31, 2024 and 2023, respectively, which were charged to the consolidated statement

of comprehensive income (loss).

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

The financing lease includes

one contract with a lease term from January 1, 2011 to December 31, 2030, and five contracts with the lease term from June 29, 2024 to

June 28, 2044.

All contracts have a non-cancellable lease period of 20 years, and the company has the right to preferentially renew the

lease contract under the same conditions upon the contact expires.

However, the company will decide whether to renew the lease based

on the market operation situation upon the expiration.

The components of operating lease liabilities are as follows:

Lease Liabilities - Finance and Operating Lease - Schedule of

operating Lease Liabilities

December 31, 2025

(Expressed in U.S.

The components of operating lease liabilities as follows:

Discount rate

December 31, 2024

Total Operating lease liabilities

1 unchanged sentence

Operating lease liabilities, net of current portion

The weighted average remaining

operating lease term at December 31, 2024 was 17.3 years and the weighted average discounts rate was 4.89 %, This discount rates used are

based on the base rate quoted by the People’s Bank of China and vary with the remaining term of the lease.

Lease payments for the

years ended December 31, 2024 and 2023, respectively, were $ 823,608 and $ 824,572 .

The components of lease cost were as follows:

Lease Liabilities -

Finance and Operating Lease - Schedule of Lease Cost

2024 (Restated)

Finance lease cost:

- Amortization of right-of-use assets

- Interest on lease liabilities

Operating lease cost

Total lease cost

Maturities of lease liabilities were as follows:

Lease Liabilities - Finance and Operating

Lease - Schedule of Financing and Operating Lease Maturities

Liabilities - Finance and Operating Lease - Schedule of Maturities of Lease Liabilities

Finance Lease

Operating Lease

Payable within:

the next 12 months

6 unchanged sentences

Present value of net minimum lease payments

A summary of supplemental information related to leases is listed as follows:

Liabilities - Finance and Operating Lease - Schedule of Supplemental Information Related to Leases

Weighted average remaining lease term:

Finance leases

Operating leases

Weighted average discount rate:

Finance leases

Operating leases

Supplemental cash flow information related to leases was as follows:

Liabilities - Finance and Operating Lease - Schedule of Cash Flow, Supplemental

Cash paid for amounts included in measurement of lease liabilities :

-Operating cash flows from operating leases

-Financing cash flows from finance leases

Non-cash information on lease liabilities arising from obtaining right-of-use assets:

-Finance leases

-Operating leases

NOTE 16 –– EQUITY

Stock Issued For The Acquisition

June 2024, SHSI entered into crude salt

field acquisition agreements with five sellers.

On February 28, 2025 (“closing date”), the transactions as contemplated by the acquisition

agreements were closed.

On the closing date, the Company issued an aggregate of 2,059,694 (post reverse share split 205,969 shares) shares of its common stock to

the sellers at an agreed price of $1.50 per share, pursuant to the acquisition agreements.

Reverse Stock Split and Authorized Shares

On October 27, 2025, the Company

completed a 1-for-10 reverse stock split of the Company’s common stock, such that for each ten shares outstanding prior to the stock

split there was one share outstanding after the reverse stock split.

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

to reflect the stock split figures.

Restricted Shares

A restricted stock award (“RSA”) is an award of common shares that is subject

to certain restrictions during a specified period.

A restricted stock award (“RSA”) is an award

of common stocks that is subject to certain restrictions during a specified period.

Restricted stock awards are independent

7 unchanged sentences

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

During the year ended December

31, 2023, the Company granted in the aggregate, 295,000 restricted shares of common stock to a consultant, the company's directors, officers

and an employee.

The restricted shares award were granted under the 2019 Omnibus Equity Incentive Plan (See Note 15) and vested immediately.

The fair value of the award on the date of grant was $ 451,350 which was expensed in full during the year ended December 31, 2023.

The Company granted an

aggregate of 295,000

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

compensation for services rendered for the year ended December 31, 2024.

The Company granted an aggregate of 295,000

(post reverse share split 29,500 shares) restricted shares of common stock in January 25, 2025 to a consultant, the Company's

directors, officers, and an employee as compensation for services rendered in the year ended December 31, 2024.

The restricted

shares award was granted under the 2019 Omnibus Equity Incentive Plan (See Note 18) and vested immediately.

The fair value of the

award on the date of grant was $ 194,700

(post reverse share split 19,470 shares) which was expensed in full during the year ended December 31, 2024.

The Company granted in

the aggregate, 265,000

(post reverse share split 26,500 shares) restricted shares of common stock on March 21, 2025 to a consultant, the company's

directors, officers and an employee as compensation for services rendered.

The restricted shares award were granted under the 2019

Omnibus Equity Incentive Plan (See Note 15) and vested immediately.

Omnibus Equity Incentive Plan and vested immediately.

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

which was expensed in full during the year ended December 31, 2024.

(post reverse share split 19,610 shares) which was expensed in full during the year ended December 31, 2025.

The Company granted in the aggregate,

186,000 restricted shares of common stock on November 21, 2025 to a consultant, the company's directors, officers and an employee as compensation

for services rendered.

The restricted shares award were granted under the 2025 Omnibus Equity Incentive Plan and vested immediately.

fair value of the award on the date of grant was $ 734,700 which was expensed in full during the year ended December 31, 2025.

Retained Earnings - Appropriated

3 unchanged sentences

Statutory Reserve

SCHC, SYCI, SHSI and DCHC are

The Company’s PRC subsidiaries are

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

6 unchanged sentences

NOTE 17 – TREASURY STOCK

As of December 31, 2024 and December

31, 2023, the number of treasury stock of the Company was 285,830 and 285,830 , respectively.

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

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

NOTE 18 – STOCK-BASED COMPENSATION

Pursuant to the Company’s

2019 Omnibus Equity Incentive Plan adopted and approved in 2019 (“2019 Plan”), awards under the 2019 Plan is limited in the

aggregate to 2,068,398 shares of our common stock, inclusive of the awards that were previously issued and outstanding under the Company’s

2007 Equity Incentive Plan, as amended (the “2007 Plan”).

Upon adoption and approval of the 2019 Plan, the 2007 Plan was frozen,

no new awards will be granted under the 2007 Plan, and outstanding awards under the 2007 Plan will continue to be governed by the terms

and condition of the 2007 Plan and applicable award agreement.

As of December 31, 2024, the number of shares of the Company’s common

stock available for grant of stock options and issuance under the 2019 Plan is 561,801 shares.

The fair value of each

option award is estimated on the date of grant using the Black-Scholes option-pricing model.

The risk free rate is based on the

yield-to-maturity in continuous compounding of the US Government Bonds with the time-to-maturity similar to the expected tenor of

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

based on the historical option exercise pattern.

For the year ended December 31,

2024 and 2023, total compensation costs for options issued recorded in the consolidated statement of comprehensive income (loss) were

$ 0 and $ 0 .

There were no related tax benefits as a full valuation allowance was recorded in the years ended December 31, 2024 and 2023.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

DECEMBER 31, 2024

(Expressed in U.S.

Pursuant to the Company’s 2025 Omnibus Equity Incentive Plan

adopted and approved in 2025 (“2025 Plan”), awards under the 2025 Plan is limited in the aggregate to 2,000,000 shares of

our common stock, inclusive of the awards that were previously issued and outstanding under the Company’s 2019 Omnibus Equity Incentive

Plan,, as amended (the “2019 Plan”).

Upon adoption and approval of the 2025 Plan, the 2019 Plan was frozen, no new awards

will be granted under the 2019 Plan, and outstanding awards under the 2019 Plan will continue to be governed by the terms and condition

of the 2019 Plan and applicable award agreement.

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

for grant of stock options and issuance under the 2025 Plan is 14,000 shares.

The fair value of each option award is

estimated on the date of grant using the Black-Scholes option-pricing model.

The risk free rate is based on the yield-to-maturity in

continuous compounding of the US Government Bonds with the time-to-maturity similar to the expected tenor of the option granted,

volatility is based on the annualized historical stock price volatility of the Company, and the expected life is based on the

historical option exercise pattern.

For the year ended December 31, 2025 and 2024,

total compensation costs for options issued recorded in the consolidated statement of comprehensive income (loss) were nil.

There were no

related tax benefits as a full valuation allowance was recorded in the years ended December 31, 2025 and 2024.

NOTE 18 – STOCK-BASED COMPENSATION – Continued

3 unchanged sentences

Option Activity

of Option and Warrants Outstanding and

Average Exercise price of Option

of Exercise Price per Common Share

Number of Option and Warrants Outstanding and exercisable

Weighted- Average Exercise price of Option and Warrants

Range of Exercise Price per Common Stock

Balance, January 1, 2025

5 unchanged sentences

Exercisable and outstanding

All options exercisable and outstanding at December 31,

2024 are fully vested.

All options exercisable and outstanding at December 31, 2025 are

fully vested.

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

The aggregate intrinsic value of options outstanding and

exercisable as of December 31, 2024 and 2023 was $ 0 and $ 0 .

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

DECEMBER 31, 2024

(Expressed in U.S.

NOTE 16– EXPENDITURE ON WATER POLLUTION TREATMENT

Expenditure on water pollution treatment

The Company had done the flood

prevention project which involved the renovation of the channels of four major rivers within our mining area, encompassing the tributary

of the Mihe River.

The aim is to prevent flooding that could harm the wells, aqueducts and crude salt pans at our plant.

incurred total expense of $ 46,510,856 in the fiscal year 2023.

The aggregate intrinsic value of options outstanding

and exercisable as of December 31, 2025 and 2024 was $ 0 and $ 0 .

NOTE 19 – ACCRUED LIABILITIES

Settled Litigation

On September 18, 2023, Shandong

Shouguang Vegetable Industry Group Co., Ltd.

and Shandong Shouguang Vegetable Seed Group Co., Ltd.

entered into loan agreements with Shandong

Deepin City Emergency Loan Fund Co., Ltd..

A total of nine companies and individuals providing guarantee to these loans, including SCHC

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

and Shandong Shouguang Vegetable Seed Group Co., Ltd.

owed a principal of $2,104,050 and $1,402,700 to Shandong Deepin City Emergency Loan Fund Co., Ltd., respectively.

Mediated by the Local Arbitration Commission

and documented in mediation documents No.

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

Shouguang Vegetable Seed Industry Group Co., Ltd.

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

Fund Co., Ltd.

before May 8, 2024, respectively.

In addition, they were required to pay interests every ten days starting from

January 1, 2024.

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

Shandong Deepin City Emergency

Loan Fund Co., Ltd.

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

and Shandong Shouguang Vegetable Seed

Industry Group Co., Ltd.

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

Pursuant to court orders (2024) Lu 07

Exec 640 and (2024) Lu 07 Exec 641, SCHC and SYCI, as guarantors, are required to repay the principal and interests.

The Shandong Weifang

Intermediate People's Court ruled to auction the land at Xiangjiang road, Yangkou town, Shouguang City and the attached properties on

it, and the auction proceeds would be used to repay Shandong Deepin City Emergency Loan Fund Co., Ltd.

The court engaged a third-party

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

The valuation report returned

a fair value of $ 4,580,892 .

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

The court imposed a forced auction

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

A second auction was held on August 15, 2025.

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

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

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

As of December 31, 2025, as SCHC was liable for a sum of principal

and interests of $ 499,688 , net of auction proceeds, the Company recognized accrued liabilities of $ 499,688 accordingly.

NOTE 20 – INCOME TAXES

4 unchanged sentences

(a) United States (“US”)

United States

Gulf Resources, Inc.

4 unchanged sentences

(b) British Virgin Islands (“BVI”)

Upper Class Group Limited, a subsidiary

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

gain in the BVI.

Upper Class Group Limited, a

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

or capital gain in the BVI.

Upper Class Group Limited did not generate assessable profit for the years ended December 31, 2025 and 2024.

22 unchanged sentences

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

As of December 31, 2025 and 2024,

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

are $ 35,595,921 and $ 40,524,183 , respectively.

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

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

foreseeable future.

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

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

As of December 31, 2025

and 2023, the accumulated distributable earnings under the Generally Accepted Accounting Principles (GAAP”) of PRC that are subject

to WHT are $ 40,524,183

and $ 87,160,228 ,

respectively.

Since the Company intends to reinvest its earnings to further expand its businesses in mainland China, its foreign invested

enterprises do not intend to declare dividends to their immediate foreign holding companies in the foreseeable future.

Accordingly, as

of December 31, 2024 and December 31, 2023, the Company has not recorded any WHT on the cumulative amount of distributable retained earnings

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

As of December 31, 2024 and December 31, 2023, the unrecognized

WHT are $ 1,078,743 and $ 3,396,379 , respectively.

and December 31, 2024, the unrecognized WHT are $ 2,521,128 and $ 1,078,743 , respectively.

The Company’s income tax

4 unchanged sentences

US income tax returns since 2017 are currently subject to examination.

Inland Revenue Department of Hong

Kong (“IRD”) may examine the Company’s income tax returns filed in Hong Kong for seven years from date of filing.

the years 2012 through 2018, HKJI did not report any taxable income.

Inland Revenue Department of

Hong Kong (“IRD”) may examine the Company’s income tax returns filed in Hong Kong for seven years from date of filing.

For the years 2012 through 2018, HKJI did not report any taxable income.

It did not file any income tax returns during these years except

3 unchanged sentences

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

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

DECEMBER 31, 2024

(Expressed in U.S.

The components of the provision for income tax benefit (expense)

from continuing operations are:

The components of the provision for income tax benefit

(expense) from continuing operations are:

Income Taxes - Schedule of Components of Income Tax Expense Benefit

1 unchanged sentence

Current taxes – PRC

$ ( 322,890 )

Deferred taxes – PRC entities

( 1,632,978 )

( 3,215,727 )

Total Income tax (expenses) benefits

$ ( 1,648,182 )

$ ( 3,538,617 )

Significant components of the

Company’s deferred tax assets and liabilities at December 31, 2024 and December 31, 2023 are as follows:

Significant components of the Company’s deferred

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

Income Taxes - Schedule of Deferred

Tax Assets and Liabilities

Deferred tax liabilities

Deferred tax assets:

Exploration costs

Impairment of property plant and equipment

Impairment of long-lived assets

PRC tax losses

Accrued liabilities

US federal net operating loss

4 unchanged sentences

Net deferred tax asset

Deferred tax assets

consist of future reversals of existing taxable temporary differences and adequate future taxable income, exclusive of reversing

deductible temporary differences.

As of December 31, 2024 and 2023, valuation allowances were mainly provided against deferred tax

assets caused by exploration costs, Impairment of property plant and equipment , Allowance

and net operating loss where it was determined it was more likely than not that the benefits of the deferred tax assets will not be

realized due to their continuous losses.

The increase in valuation allowance for the year ended

December 31, 2024 is $ 1,401,232 .

The increase in valuation allowance for the year ended

December 31, 2023 is $ 3,516,915 .

Deferred tax assets consist of future reversals of existing taxable

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

As of December 31,

2025 and 2024, valuation allowances were mainly provided against deferred tax assets caused by exploration costs, impairment of long-lived

assets, allowance and net operating loss where it was determined it was more likely than not that the benefits of the deferred tax assets

will not be realized due to their continuous losses.

The decrease in valuation allowance for the year

ended December 31, 2025 is $ 3,437,308 .

The increase in valuation allowance for the year ended December 31, 2024 is $ 1,401,232 .

There were no unrecognized tax benefits and accrual

4 unchanged sentences

the years ended December 31, 2025 and 2024.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

DECEMBER 31, 2024

(Expressed in U.S.

NOTE 21 – BUSINESS SEGMENTS

Operating segment’s performance

is primarily evaluated based on segment operating income, which excludes share-based compensation expense, certain corporate costs and

other income not associated with the operations of the segment.

These corporate costs are separately stated below and also include costs

that are related to functional areas such as accounting, treasury, information technology, legal, human resources, and internal audit.

The Company believes that segment operating income, as defined above, is an appropriate measure for evaluating the operating performance

of its segments.

All the customers are located in PRC.

December 31, 2024

Operating Segment

Corporate Corporate

ASC 280, Disclosures about Segments,

of an Enterprise and Related Information, establishes standards for reporting information about operating segments.

Operating segments

are defined as components of an enterprise engaging in business activities from which they may earn revenues and incurred expenses, and

about which separate financial information is available that is evaluated regularly by the chief operating decision-marker, or decision-making

group( the “CODM”), in deciding how to allocate resources and assessing performance.

The Company’s Chief Executive Officer (Mr.

Xiaobin Liu) is determined

as the CODM of the Company, Mr Liu measures the performance of each segment based on metrics of revenue and profit before taxes from operations

and uses these results to evaluate the performance of, and to allocate resources to each of the segments.

The Company has organized operations

into four different business segments:

(1) bromine, (2) crude salt, (3) chemical products, (4) natural gas.

As of December 31, 2025 and

December 31, 2024, the detailed income statements of each of our divisions are presented below :

December 31, 2025 Operating Segment

Chemical Products

Segment Total

(external customers)

6 unchanged sentences

( 1,450,130 )

Income tax (expense) benefit

( 8,568,624 )

( 1,648,182 )

Income tax (expense) benefit

Loss from operations after

4 unchanged sentences

( 1,450,130 )

Depreciation and amortization

( 8,568,624 )

Depreciation and

Capital expenditures

18 unchanged sentences

( 23,896,751 )

Depreciation and amortization

Depreciation and

Capital expenditures

2 unchanged sentences

SCHC were split by reference to the average selling price and production volume of the respective segment.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

DECEMBER 31, 2024

(Expressed in U.S.

Years Ended December 31,

Reconciliations

2024 (Restated)

Total segment operating loss

2 unchanged sentences

Corporate costs

( 1,450,130 )

Unrealized gain (loss) on translation of intercompany balance

2 unchanged sentences

( 22,248,569 )

Interest income, net of expense

Other expense, net

Expenditure on water pollution treatment

( 4,003,497 )

Loss on disposal of property, plant and equipment

Gain on disposal of subsidiary

Loss on disposal of long-lived assets

( 2,008,853 )

Impairment of Property, plant and equipment

( 29,169,008 )

Impairment of long-lived assets

( 30,068,794 )

( 6,772,500 )

Loss before taxes

5 unchanged sentences

Revenue by Major Customers

Chemical Products

Total Revenue

Percentage of Total

Shandong Morui Chemical Company Limited

Shandong Brother Technology Limited

Shandong Shouguang Shenrunfa Marine Chemical Company Limited

Shouguang Weidong Chemical Company Limited

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

year ended December 31, 2023

The following table shows the major customers (10% or more)

for the year ended December 31, 2024:

Percentage of Total

Shandong Morui Chemical Company Limited

1 unchanged sentence

Shouguang Weidong Chemical Company Limited

Shandong Shouguang Shenrunfa Marine Chemical Company Limited

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

DECEMBER 31, 2024

(Expressed in U.S.

NOTE 22 – CUSTOMER CONCENTRATION

3 unchanged sentences

During the year ended December 31, 2025, the Company sold 67.6 % of its products

to its top five customers, respectively.

to its top five customers.

As of December 31, 2025, amounts due from these customers were $ 2,347,943 .

2 unchanged sentences

During the year ended December 31, 2024, the Company sold 66.05 % of its products

to its top five customers, respectively.

to its top five customers.

As of December 31, 2024, amounts due from these customers were $ 594 ,234.

6 unchanged sentences

were $ 146,148 .

During the year ended December

31, 2023, the Company purchased 100 % of its raw materials from its top four suppliers.

As of December 31, 2023, amounts due to those suppliers

were $ 206,984 .

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

DECEMBER 31, 2024

(Expressed in U.S.

During the year ended December 31, 2024, the Company

purchased 100 %

of its raw materials from its top four suppliers.

As of December 31, 2024, amounts due to those suppliers were $ 30,003 .

NOTE 24 – LOSS CONTINGENCIES

Settled Litigation

On or about August 3, 2018,

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

291, Shou Guo Tu Zi Fa Gao Zi [2018]

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

1 unchanged sentence

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

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

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

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

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

30 unchanged sentences

The Court Rulings became enforceable immediately upon service on SCHC on May

In the last twenty years, to the

Company’s knowledge, there were no government regulations requiring bromine manufacturers to obtain land use and planning approval

In the last twenty years, to

the Company’s knowledge, there were no government regulations requiring bromine manufacturers to obtain land use and planning approval

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

38 unchanged sentences

NOTE 25 - SUBSEQUENT EVENT

Subsequent Events

On January 20, 2025,

the company issued total 295,000 shares to its employees, officers and consultant for the services rendered for the year ended

December 31, 2024.

Pursuant to the notification from

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

Parent company

Pursuant to the notification

from the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 26, 2025 until February

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

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

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

On January 9, 2026, the Company

filed a registration statement on Form S-8 (the “Registration Statement”) is filed by the Registrant for the purpose of registering

(i) 103,378 common stocks of the Company, par value 0.0005 per share (the “Common Stocks”) issued under

the Company’s 2019 Stock Incentive Plan (the “2019 Plan”), after giving effect of the 10-to-1 reserve stock split as

previously announced on Form 8-K filed with SEC on October 22, 2025 and (ii) 200,000 Common Stocks issuable pursuant to the

Company’s 2025 Stock incentive plan (the “2025 Plan”).

Pursuant to Rule 416(a) under the Securities Act of

1933, as amended (the “Securities Act”), this registration statement also covers an indeterminate number of additional shares

which may be offered and issued to prevent dilution from share splits, share dividends or similar transactions as provided in the Plan.

Any common stocks covered by an award granted under the Plan (or portion of an award) that terminates, expires, lapses or repurchased

for any reason will be deemed not to have been issued for purposes of determining the maximum aggregate number of common stocks that may

be issued under the Plan.

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.

On June 25, 2026, Company received

a written notice from Nasdaq (the “Extension Letter”) stating that it had accepted the Company’s plan to regain compliance

with Nasdaq Listing Rule 5250(c)(1) (the “Rule”).

Nasdaq granted the Company a plan period to regain compliance with the Rule.

Unless otherwise defined herein, capitalized terms used in this current report on Form 8-K have the meanings given to them in the Previous

Announcements (as defined below).

(I) As previously reported in the current report on Forms 8-K (the “Previous Announcements”)

filed on April 27, 2026 and May 29, 2026 with the Securities Exchange Commission by the Company, the Company announced that it received

delinquency notifications from Nasdaq on April 23, 2026 and May 26, 2026 (the “Deficiency Letters”), due to the Company’s

non-compliance with the Rule as a result of the Company’s failure to timely file its annual report on Form 10-K (the “Form

10-K”) for the period ended December 31, 2025 and its quarterly report on Form 10-Q for the period ended March 31, 2026 (the “Form

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

As of the date of this

Form 8-K, the Company remains delinquent in filing its Delinquent Reports.

(II) The Company submitted a plan to the Nasdaq Listing Qualification

(the “Staff”) to regain compliance (the “Compliance Plan”) with the Nasdaq Requirements on June 17, 2026.

the Extension Letter, the Company is required to file its delinquent Form 10-K and Form 10-Q by the applicable extended deadline to evidence

compliance with the relevant Nasdaq requirements.The Extension Letter further provides that if the Company fails to evidence compliance

upon filing the Delinquent Reports, Staff will notify the Company that its securities will be subject to delisting.

(III)The previously

received Deficiency Letters and the Extension Letter have no immediate effect on the listing or trading of the Company’s common

stock on Nasdaq, subject to the Company’s continued compliance with the other applicable listing requirements.

(IV)The Company is

committed to taking the actions set forth in the plan and intends to use all reasonable efforts to regain compliance with the initiatives

and conditions set forth in the Compliance Plan within the plan period.

However, there is no assurance that the Company will be successful

in regaining compliance with the Nasdaq Requirements within the planned period.

NOTE 26 – RESTATEMENT

As Previously Reported

The Company restates its previously released audited consolidated financial

statements for the year ending 2024, and incorporate them into the 2024 Annual Report "10-K Form Report" (the "Restatement").

This restatement is due to the discovery of errors related to the reclassification of buildings without property ownership certificates

in fixed assets.

The impacts for the periods prior to 2024 have been accumulated and presented as an initial balance adjustment item for

the retained earnings as of December 31, 2023.

As the Company does not have property ownership certificates,

the acquisition of the 20-year usage rights for this land, buildings, and salt pan conforms to the definition of a lease as stated in

The Company revised the financial statements and accounted for these usage rights as leases in accordance with the provisions

The effects of the restatement on the consolidated balance sheet as

of December 31, 2024, are summarized in the following table:

Restatement -

Schedule of Condensed Balance Sheet

December 31, 2024

(Expressed in U.S.

On February 28, 2025 (the

“Closing Date”), a wholly owned subsidiary of the Company, SHSI, closed the transactions contemplated by the Acquisition

Agreements (the “Agreements”) dated June 26, 2024 by and between SHSI, and Shouguang Qingshuibo Farm Co., LTD.

1”), dated June 27, 2024 by and between SHSI and each of Shouguang city Yangkou Town Dingjia Zhuangzi Village Stock Economic Cooperative

(“Seller 2”), Shouguang city Yangkou town Renjia Zhuangzi village stock economic cooperative (“Seller 3”), Shouguang

city Yangkou town Shanjia Zhuangzi village stock economic cooperative (“Seller 4”), Shouguang city Yangkou town Zhengjia

Zhuangzi village stock economic cooperative (“Seller 5”), respectively, as amended on December 17, 2024.

Pursuant to the

Agreements, SHSI acquired the crude salt field owned by each seller located in Shandong province, China.

On the Closing Date, the Company

issued a total of 2,059,694

shares of the Company’s common stock, par value $ 0.0005

per share (the “Shares”), 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 the Seller

1, the Seller 2, the Seller 3, the Seller 4 and the Seller 5.

The issuance of the Shares was exempt from registration pursuant to Regulation

S of the Securities Act of 1933, as amended.

Determined by the civil mediation document issued by

Shouguang People's Court on March 17, 2025, SCHC owed Shouguang Chengyu Trading Co., Ltd.

a sum of RMB 226,825.44 for goods.

SCHC is required

to pay RMB 50,000 to Shouguang Chengyu Trading Co., Ltd.

before the 15th day of each month starting from April 2025 until the debt is

fully repaid.

On March 21, 2025, the company issued total 265,000 shares

to its employees, officers and consultant for the service rendered in the year ended December 31, 2025.

As Previously

Current Assets

Accounts receivable, net

Inventories, net

Prepayments and deposits

Amount due from related parties

Other receivables

Total current assets

Non-Current Assets

Property, plant and equipment, net

( 46,712,127 )

Finance lease right-of-use assets

Operating lease right-of-use assets

Prepaid land leases, net of current portion

Deferred tax assets, net

Total non-current assets

( 1,633,707 )

Liabilities and Stockholders’ Equity

Current Liabilities

Accounts payable and accrued expenses

( 7,878,181 )

Taxes payable-current

Amount due to related parties

Finance lease liability, current portion

Operating lease liabilities, current portion

Total current liabilities

( 4,753,631 )

Non-Current Liabilities

Finance lease liability, net of current portion

Operating lease liabilities, net of current portion

Total non-current liabilities

Total Liabilities

Commitment and Contingencies

Stockholders’ Equity

PREFERRED STOCK;

$0.001 par value;

1,000,000 shares authorized;

none outstanding

COMMON STOCK;

$0.0005 par value;

80,000,000 shares authorized;

1,120,145 shares issued;

and 1,091,562 shares outstanding as of December 31, 2024, and 2023

Treasury stock;

28,583 shares as of December 31, 2024 at cost

( 1,372,673 )

Additional paid-in capital

Share to be issued

Retained earnings unappropriated

Retained earnings appropriated

Accumulated other comprehensive loss

( 20,854,143 )

( 20,783,318 )

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

$ 169,455,995

( 1,633,707 )

$ 167,822,288

The following descriptions of the restatement adjustments

to the balance sheet excludes a description of adjustments previously identified and concluded as immaterial that were also corrected

as part of the restatement.

(a) The change in common stock and additional paid-in capital is due to the company's 1-for-10 reverse

stock split on October 27, 2025.

(b) As of December 31, 2024, in the fixed assets, the original value of the buildings subject to reclassification amounted to $68,476,868,

The Company reclassified them based on their acquisition methods.

The self-built portion was reclassified as "leasehold improvements"

in the property, plant and equipment, with an original value of $3,507,367.

The leased portion was reclassified as finance lease right-of

use assets, with an original value of $64,189,590, accumulated amortization of $19,111,170, and a net value of $45,078,420.

amount of $7,878,181 in accounts payable and accrued expenses was reclassified as finance lease liability relating to the salt pans.

The finance lease liabilities including the current portion of $3,124,550 and the non-current portion of $4,014,019.

(d) Regarding

the decrease in retained earnings unappropriated, the main reason was that general and administrative expenses increased by $964,920.

The increase in general and administrative expenses was due to the reclassification of finance lease right-of-use asset.

Previously, depreciation

was calculated after deducting 5% residual value from the fixed assets, but now there is no residual value for amortization of finance

lease right-of-use asset calculation.

change in the accumulated other comprehensive loss represents the foreign currency translation differences in the financial statements.

The effects of the restatement on the consolidated statement

of operations income (loss) for the year ended December 31, 2024, are summarized in the following table:

- Schedule of statement of operations income (loss)

December 31, 2024

As Previously

OPERATING COSTS AND EXPENSE

Cost of revenues

( 14,746,741 )

Sales and marketing expenses

Direct labor and factory overheads incurred during plant shutdown

( 8,880,643 )

General and administrative expenses

( 5,271,011 )

( 6,235,931 )

TOTAL OPERATING COSTS AND EXPENSE

( 28,944,659 )

( 29,909,579 )

LOSS FROM OPERATIONS

( 21,283,649 )

( 22,248,569 )

OTHER INCOME (EXPENSE)

Interest expense

Interest income

Other expenses, net

Loss on disposal of property, plant and equipment

( 29,169,008 )

Impairment of property, plant and equipment

( 6,772,500 )

LOSS BEFORE INCOME TAXES

( 57,287,270 )

( 58,252,190 )

INCOME TAX EXPENSE

( 1,648,182 )

$ ( 58,935,452 )

$ ( 59,900,372 )

COMPREHENSIVE LOSS:

$ ( 58,935,452 )

$ ( 59,900,372 )

OTHER COMPREHENSIVE (LOSS) INCOME

- Foreign currency translation adjustments

( 2,800,874 )

( 2,730,049 )

TOTAL COMPREHENSIVE LOSS

$ ( 61,736,326 )

$ ( 62,630,421 )

BASIC AND DILUTED LOSS PER SHARE

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES:

( 9,635,362 )

The following descriptions of the restatement adjustments

to the statement of operations exclude a description of adjustments previously identified and concluded as immaterial they were also corrected

as part of the restatement.

(a) The increase

of $964,920 in general and administrative expenses was due to the reclassification of finance lease right-of-use asset.

Previously, depreciation

was calculated after deducting 5% residual value from the fixed assets, but now there is no residual value for amortization of finance

lease right-of-use asset calculation.

(b) The change

in the accumulated other comprehensive loss represents the foreign currency translation differences in the financial statements.

diluted loss per share is due to the company's 1-for-10 reverse stock split on October 27, 2025.

The effects of the restatement on the consolidated statement of stockholders'

deficit for the year ended December 31, 2024 are summarized in the following table:

Restatement - Schedule

of consolidated statement of stockholders’ deficit

comprehensive

unappropriated

YEAR ENDED DECEMBER 31, 2024

(As Previously Reported)

BALANCE AT JANUARY 1, 2024

$ ( 1,372,673 )

$ 101,688,262

$ ( 18,053,269 )

$ 205,248,296

Restricted shares to be issued for service

Currency translation adjustment

( 2,800,874 )

Net loss for year ended December 31, 2024

( 58,935,452 )

BALANCE AT DECEMBER 31, 2024

$ ( 1,372,673 )

$ 101,688,262

$ ( 20,854,143 )

$ 143,706,670

YEAR ENDED DECEMBER 31, 2024

(Restatement Impact)

BALANCE AT JANUARY 1, 2024

( 9,892,609 )

( 9,635,362 )

Restricted shares to be issued for service

Currency translation adjustment

Net loss for year ended December 31, 2024

BALANCE AT DECEMBER 31, 2024

( 9,892,609 )

( 9,635,362 )

$ ( 964,920 )

$ ( 894,095 )

YEAR ENDED DECEMBER 31, 2024

(As Restated)

BALANCE AT JANUARY 1, 2024

$ ( 1,372,673 )

$ 101,712,325

$ ( 18,053,269 )

$ 205,248,296

Restricted shares to be issued for service

Currency translation adjustment

( 2,730,049 )

Net loss for year ended December 31, 2024

( 59,900,372 )

BALANCE AT DECEMBER 31, 2024

$ ( 1,372,673 )

$ 101,712,325

$ ( 20,783,318 )

$ 142,812,575

The following descriptions of the restatement adjustments

to the consolidated statement of stockholders' deficit excludes a description of adjustments previously identified and concluded as immaterial

the were also corrected as part of the restatement.

(a) The change

in common stock and additional paid-in capital is due to the company's 1-for-10 reverse stock split on October 27, 2025.

(b) Regarding

the decrease in retained earnings unappropriated, the main reason was that general and administrative expenses increased by $964,920.

The increase of general and administrative expenses was due to the reclassification of finance lease right-of-use asset.

Previously, depreciation

was calculated after deducting 5% residual value from the fixed assets, but now there is no residual value for amortization of finance

lease right-of-use asset calculation.

change in the accumulated other comprehensive loss represents the foreign currency translation differences in the financial statements.

The effects of the restatement on the consolidated statement of cash

flows for the year ended December 31, 2024, are summarized in the following table:

- Schedule of consolidated statement of cash flows

December 31, 2024

As Previously

CASH FLOWS FROM OPERATING ACTIVITIES

$ ( 58,935,452 )

$ ( 59,900,372 )

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

Amortization on capital lease

Depreciation and amortization

( 2,188,048 )

Deferred tax asset

Stock-based compensation expense

Bad debt expense

Impairment of inventory

Impairment of property plant and equipment

Amortization of operating lease right-of-use asset

Amortization of finance lease right-of-use asset

Loss on disposal of property, plant and equipment

Changes in assets and liabilities

Accounts receivable

Prepayment and deposits

Advance from customers

Other receivables

Accounts and Other payable and accrued expenses

( 2,191,652 )

Taxes payable

Lease liabilities

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment

( 60,526,213 )

( 28,923,642 )

Interest-free loan lent to related parties

Net cash used in investing activities

( 60,551,488 )

( 28,948,917 )

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of finance leases obligation

( 31,602,571 )

( 31,866,665 )

Proceeds from interest-free loan from a related party

Net cash used in financing activities

( 31,602,571 )

( 31,851,811 )

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

( 2,023,072 )

( 2,023,830 )

NET DECREASE IN CASH AND CASH EQUIVALENTS

( 62,148,732 )

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS - END OF YEAR

December 31, 2024

As Previously

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the year for:

Paid for taxes

Interest on finance lease obligation

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

The following descriptions of the restatement adjustments

to the statement of cash flows excludes a description of adjustments previously identified and concluded as immaterial that were also

corrected as part of the restatement.

(a) This restatement

is due to the reclassification of buildings without property ownership certificates in fixed assets.

The Company reclassified them based

on their acquisition methods.

The self-built portion was reclassified as "leasehold improvements" in the property, plant and

The leased portion was reclassified as finance lease right-of-use assets.

(b) Regarding

the increase in net loss, the main reason was that general and administrative expenses increased by $964,920.

The increase in general

and administrative expenses was due to the reclassification of finance lease right-of-use asset.

Previously, depreciation was calculated

after deducting 5% residual value from the fixed assets, but now there is no residual value for amortization of finance lease right-of-use

asset calculation.

without property ownership certificates have been reclassified as finance lease right-of use assets, resulting in an amount of $31,602,571.

(d) The change

in the accumulated other comprehensive loss represents the foreign currency translation differences in the financial statements.

The effects of the restatement on the parent company only

balance sheet as of December 31, 2024, are summarized in the following table:

Restatement - Schedule of

Condensed Balance Sheet

December 31, 2024

Current Assets

Prepayments and deposits

Total Current Assets

Non-Current Assets

Interests in subsidiaries

Amounts due from group companies

( 7,878,181 )

Deferred tax assets, net

Total non-current assets

( 8,772,276 )

Liabilities and Stockholders’ Equity

Current Liabilities

Other payables and accrued expenses

( 7,878,181 )

Amounts due to related parties

Amounts due to group companies

Total Current Liabilities

( 7,878,181 )

Total Liabilities

( 7,878,181 )

Stockholders’ Equity

PREFERRED STOCK;

$0.001 par value;

1,000,000 shares authorized;

none outstanding

COMMON STOCK;

$0.0005 par value;

80,000,000 shares authorized;

1,120,145 shares issued;

and 1,091,562 shares outstanding as of December 31, 2024

Treasury stock;

28,583 shares as of December 31, 2024 and December 31, 2023 at cost

( 1,372,673 )

Additional paid-in capital

Share to be issued

Retained earnings unappropriated

Retained earnings appropriated

Accumulated other comprehensive loss

( 20,854,143 )

( 20,783,318 )

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

$ 153,576,831

( 8,772,276 )

$ 144,804,555

(a) The amount

of $7,878,181 in accounts payable and accrued expenses was reclassified as finance lease liability relating to salt pans.

lease liabilities including the current portion of $3,124,550 and the non-current portion of $4,014,019.

(b) The change

in common stock and additional paid-in capital is due to the company's 1-for-10 reverse stock split on October 27, 2025.

the decrease in retained earnings unappropriated, the main reason was that general and administrative expenses increased by $964,920.

The increase of general and administrative expenses was due to the reclassification of finance lease right- of-use asset.

depreciation was calculated after deducting 5% residual value from the fixed assets, but now there is no residual value for amortization

of finance lease right-of-use asset calculation.

(d) The change

in the accumulated other comprehensive loss represents the foreign currency translation differences in the financial statements.

The effects of the restatement on the parent company only

statement of comprehensive income (loss) for the year ended December 31, 2024, are summarized in the following table:

- Schedule of statement of operations income (loss)

December 31, 2024

OPERATING EXPENSES

General and administrative expenses

$ ( 742,480 )

TOTAL OPERATING EXPENSES

OTHER EXPENSES

Interest expense

TOTAL OTHER EXPENSES

TOTAL EXPENSES

Equity in net loss of subsidiaries

( 58,192,972 )

( 59,157,892 )

LOSS BEFORE INCOME TAXES

( 58,935,452 )

( 59,900,372 )

$ ( 58,935,452 )

$ ( 59,900,372 )

(a) The increase of $964,920 in equity in net loss of subsidiaries

relating to general and administrative expenses was due to the reclassification of finance lease right-of-use asset.

Previously, depreciation

was calculated after deducting 5% residual value from the fixed assets, but now there is no residual value for amortization of finance

lease right-of-use asset calculation.

The effects of the restatement on the parent company only

statement of cash flows for the year ended December 31, 2024, are summarized in the following table:

Restatement - Schedule of consolidated statement of cash flows

December 31, 2024

As Previously

CASH FLOWS FROM OPERATING ACTIVITIES

$ ( 58,935,452 )

$ ( 59,900,372 )

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

Equity loss in unconsolidated subsidiaries

Stock-based compensation expense-options

Shares issued from treasury stock for services

Changes in assets and liabilities:

Other payables and accrued expenses

Net cash used in operating activities

CASH FLOWS FROM FINANCING ACTIVITIES

Advances from group companies

Net cash provided by financing activities

NET INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS - END OF YEAR

(a) The increase of $964,920 in general and administrative

expenses was due to the reclassification of finance lease right-of-use asset.

Previously, depreciation was calculated after deducting

5% residual value from the fixed assets, but now there is no residual value for amortization of finance lease right-of-use asset calculation.

GULF RESOURCES, INC.

7 unchanged sentences

Condensed Balance Sheets

Parent Company

As of December 31,

Current Assets

2024 (Restated)

Prepayments and deposits

5 unchanged sentences

Total non-current assets

$ 153,576,831

$ 207,038,150

Liabilities and Stockholders’ Equity

3 unchanged sentences

Amounts due to group companies

Total Current Liability

Total Current Liabilities

Total Liabilities

5 unchanged sentences

COMMON STOCK;

$0.0005 par value;

80,000,000 shares authorized;

shares issued;

and 10,726,924

shares outstanding as of December 31, 2024 and December 31, 2023

1,568,114 and 1,120,145 shares issued;

and 1,539,531 and 1,091,562 shares outstanding as of December 31, 2025 and December 31, 2024

Treasury stock;

5 unchanged sentences

Retained earnings unappropriated

( 7,526,347 )

Retained earnings appropriated

Cumulative translation adjustment

Currency translation adjustment

( 12,218,081 )

4 unchanged sentences

$ 144,804,555

Condensed Statements of Comprehensive Loss

Statements of Loss

Years Ended December 31,

2024 (Restated)

OPERATING EXPENSES

3 unchanged sentences

TOTAL OPERATING EXPENSES

( 1,443,957 )

OTHER EXPENSES

2 unchanged sentences

TOTAL EXPENSES

( 1,443,957 )

Equity in net loss of subsidiaries

6 unchanged sentences

$ ( 59,900,372 )

Condensed Statements of Cash Flows

Statements of Cash Flows

Years Ended December 31,

2024 (Restated)

CASH FLOWS FROM OPERATING ACTIVITIES

8 unchanged sentences

Net cash used in operating activities

( 1,188,448 )

CASH FLOWS FROM FINANCING ACTIVITIES

12 unchanged sentences

financial statements and notes thereto.

As of December 31, 2024, the

Company itself has no purchase commitment, capital commitment and operating lease commitment.

As of December 31, 2025, the Company

itself has no purchase commitment, capital commitment and operating lease commitment.

(ii) Restricted Net Assets

19 unchanged sentences

due to PRC exchange control regulations that restrict the Company’s ability to convert RMB into US Dollars.

Changes in and Disagreements with Accountants

on Accounting and Financial Disclosure.

(a) Dismissal of Independent Registered Public Accounting

On April 16, 2024, WWC, P.C.

Certified Public Accountants

(“WWC”) was dismissed as our independent registered public accounting firm, effective immediately.

The decision to dismiss

WWC as the Company’s principal independent accountant was approved by the Audit Committee of the Board of Directors of the Company

on April 16, 2024.

WWC’s reports on our consolidated financial statements

for the fiscal years ended December 31, 2023 and 2022 did not contain an adverse opinion or a disclaimer of opinion and were not qualified

or modified as to uncertainty, audit scope or accounting principles.

During the two most recent fiscal years ended December

31, 2023 and 2022, and the subsequent interim period through April 16, 2024, there were no disagreements with WWC on any matter of accounting

principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction

of WWC, would have caused WWC to make reference to the subject matter of the disagreements in connection with its reports on our consolidated

financial statements for such years.

Also during this time, there were no “reportable events,” as defined in Item 304(a)(1)(v)

of Regulation S-K.

We provided WWC with a copy of the above disclosures

and requested that WWC furnish the Company with a letter addressed to the SEC stating whether or not it agrees with the statements made

A copy of WWC’s letter dated April 16, 2024 was attached as Exhibit 16.1 to a Current Report on Form 8-K that was filed by

us with the SEC on April 16, 2024.

(b) Appointment of New Independent Registered Public

Accounting Firm.

On April 16, 2024, we engaged GGF CPA LIMITED (“GGF”)

as our independent registered public accounting firm for the fiscal year ending December 31, 2023, effective immediately.

During the fiscal

years ended December 31, 2023 and 2022 and through April 16, 2024, neither we nor anyone on its behalf consulted with GGF regarding (i)

the application of accounting principles to any specified transaction, either completed or proposed or the type of audit opinion that

might be rendered on our consolidated financial statements, and neither a written report nor oral advice was provided to us that GGF concluded

was an important factor considered by us in reaching a decision as to any accounting, auditing, or financial reporting issue, or (ii)

any matter that was either the subject of a “disagreement,” as defined in Item 304(a) (1)(iv) of Regulation S-K, or a “reportable

event,” as defined in Item 304(a)(1)(v) of Regulation S-K.

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 8. Financial Statements and Supplementary Data