GULF RESOURCES, INC. 10-Q/A

Item 1. Financial Statements GULF RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Expressed in U.S. dollars) March 31, 2025 (Unaudited) (Restated) December 31, 2024 (Audited) (Restated) Current Assets Cash $ 8,523,045 $ 10,075,162 Accounts receivable, net 2,114,222 564,523 Inventories, net 455,059 315,371 Prepayments and deposits, net 6,393,161 6,376,656 Amount due from related parties 25,076 25,040 Other receivable 126,050 94,074 Total Current Assets 17,636,613 17,450,826 Non-Current Assets Property, plant and equipment, net 86,334,658 89,431,050 Finance lease right-of-use assets 44,444,784 45,155,288 Operating lease right-of-use assets 6,050,429 6,169,855 Prepaid land leases, net of current portion 9,625,855 9,615,269 Deferred tax assets, net — — Total non-current assets 146,455,726 150,371,462 Total Assets 164,092,339 167,822,288 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable and accrued expenses $ 6,868,025 $ 6,445,277 Taxes payable-current 276,516 113,999 Amount due to related parties 2,586,422 2,584,808 Finance lease liabilities, current portion 239,771 3,342,293 Operating lease liabilities, current portion 498,483 491,850 Total Current Liabilities 10,469,217 12,978,227 Non-Current Liabilities Finance lease liabilities, net of current portion 5,136,322 5,089,884 Operating lease liabilities, net of current portion 6,809,843 6,941,602 Total Non-Current Liabilities 11,946,165 12,031,486 Total Liabilities 22,415,382 25,009,713 Commitment and Loss 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; 1,382,114 and 1,120,145 shares issued; and 1,353,531 and 1,091,562 shares outstanding as of March 31, 2025 and December 31, 2024 (1) 691 560 Treasury stock; 28,583 shares as of March 31, 2025 and December 31, 2024 at cost ( 1,372,673 ) ( 1,372,673 ) Additional paid-in capital (1) 105,192,535 101,712,325 Share to be issued — 194,700 Retained earnings unappropriated 31,723,704 36,393,884 Retained earnings appropriated 26,667,097 26,667,097 Accumulated other comprehensive loss ( 20,534,397 ) ( 20,783,318 ) Total Stockholders’ Equity 141,676,957 142,812,575 Total Liabilities and Stockholders’ Equity $ 164,092,339 $ 167,822,288 (1) The shares and per share data are presented on a retroactive basis to reflect the stock split. See accompanying notes to the condensed consolidated financial statements. 1 GULF RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Expressed in U.S. dollars) (UNAUDITED) 2025(Restated) 2024(Restated) Three-Month Period Ended March 31, 2025(Restated) 2024(Restated) NET REVENUE $ 1,604,447 $ 1,307,062 OPERATING COSTS AND EXPENSE Cost of revenue ( 1,597,464 ) ( 2,119,845 ) Sales and marketing expenses ( 5,053 ) ( 4,491 ) Direct labor and factory overheads incurred during plant shutdown ( 3,225,808 ) ( 3,734,689 ) General and administrative expenses ( 1,427,009 ) ( 717,456 ) TOTAL OPERATING COSTS AND EXPENSE ( 6,255,334 ) ( 6,576,481 ) LOSS FROM OPERATIONS ( 4,650,887 ) ( 5,269,419 ) OTHER INCOME (EXPENSE) Interest expense ( 21,722 ) ( 24,830 ) Interest income 2,429 36,060 Other expense, net — ( 4,003 ) TOTAL OTHER INCOME, NET ( 19,293 ) 7,227 LOSS BEFORE INCOME TAXES ( 4,670,180 ) ( 5,262,192 ) INCOME TAX (EXPENSE) BENEFIT — 1,270,060 NET LOSS $ ( 4,670,180 ) $ ( 3,992,132 ) COMPREHENSIVE LOSS: NET LOSS $ ( 4,670,180 ) $ ( 3,992,132 ) OTHER COMPREHENSIVE INCOME (LOSS) - Foreign currency translation adjustments 248,921 ( 393,867 ) TOTAL COMPREHENSIVE LOSS $ ( 4,421,259 ) $ ( 4,385,999 ) BASIC AND DILUTED LOSS PER SHARE (1) : $ ( 3.93 ) $ ( 3.66 ) BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES (1) : 1,187,413 1,091,562 (1) The shares and per share data are presented on a retroactive basis to reflect the stock split. See accompanying notes to the condensed consolidated financial statements. 2 GULF RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY THREE-MONTH PERIODS ENDED MARCH 31, 2025 AND 2024 (Expressed in U.S. dollars) Common stock Number Number Number Accumulated of shares of shares of treasury Treasury Share to be Additional paid-in Retained earnings Retained earnings other comprehensive Issued (1) Outstanding (1) stock (1) Amount (1) stock issued capital (1) unappropriated appropriated Income(loss) Total BALANCE AT DECEMBER 31, 2024 (Audited) (Restated) 1,120,145 1,091,562 28,583 $ 560 $ ( 1,372,673 ) $ 194,700 $ 101,712,325 $ 36,393,884 $ 26,667,097 $ ( 20,783,318 ) $ 142,812,575 Restricted shares issued for services 56,000 56,000 — 28 — ( 194,700 ) 390,772 — — — 196,100 Acquisition of assets 205,969 205,969 — 103 — — 3,089,438 — — — 3,089,541 Currency translation adjustment — — — — — — — — — 248,921 248,921 Net loss for three-month period ended March 31, 2025 — — — — — — — ( 4,670,180 ) — — ( 4,670,180 ) BALANCE AT MARCH 31, 2025 (Unaudited) (Restated) 1,382,114 1,353,531 28,583 $ 691 $ ( 1,372,673 ) $ — $ 105,192,535 $ 31,723,704 $ 26,667,097 $ ( 20,534,397 ) $ 141,676,957 Common stock Number Number Number Accumulated of shares of shares of treasury Treasury Additional paid-in Retained earnings Retained earnings other comprehensive issued (1) outstanding (1) stock (1) Amount stock capital (1) unappropriated appropriated Income(loss) Total BALANCE AT DECEMBER 31, 2023 (Audited) (Restated) 1,120,145 1,091,562 28,583 $ 560 $ ( 1,372,673 ) $ 101,712,325 $ 96,294,256 $ 26,667,097 $ ( 18,053,269 ) $ 205,248,296 Currency translation adjustment — — — — — — — — ( 393,867 ) ( 393,867 ) Net loss for three-month period ended March 31, 2024 — — — — — — ( 3,992,132 ) — — ( 3,992,132 ) BALANCE AT MARCH 31, 2024(Unaudited) (Restated) 1,120,145 1,091,562 28,583 $ 560 $ ( 1,372,673 ) $ 101,712,325 $ 92,302,124 $ 26,667,097 $ ( 18,447,136 ) $ 200,862,297 (1) The shares and per share data are presented on a retroactive basis to reflect the stock split. See accompanying notes to the condensed consolidated financial statements. 3 GULF RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in U.S. dollars) (UNAUDITED) 2025(Restated) 2024(Restated) Three-Month Period Ended March 31, 2025(Restated) 2024(Restated) CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 4,670,180 ) $ ( 3,992,132 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Amortization on capital lease 60,857 24,830 Depreciation and amortization 3,229,367 4,419,534 Deferred tax asset — ( 1,270,060 ) Stock-based compensation expense 196,100 — Amortization of operating lease right-of-use assets 217,801 217,345 Amortization of finance lease right-of-use assets 775,702 313,941 Changes in assets and liabilities: Accounts receivable ( 1,549,443 ) ( 402,545 ) Inventories ( 139,285 ) ( 57,859 ) Prepayments and deposits ( 7,340 ) ( 44,903 ) Advance from customers — ( 36,222 ) Other receivables ( 31,987 ) ( 774 ) Accounts and other payable and accrued expenses 401,190 ( 17,847 ) Taxes payable 162,411 ( 257,766 ) Lease liabilities ( 225,321 ) ( 226,018 ) Net cash used in operating activities ( 1,580,128 ) ( 1,330,476 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment — — Net cash provided by (used in) investing activities — — CASH FLOWS FROM FINANCING ACTIVITIES Repayment of finance leases obligation — — Net cash provided by (used in) financing activities — — EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 28,011 ( 131,622 ) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 1,552,117 ) ( 1,462,098 ) CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 10,075,162 72,223,894 CASH AND CASH EQUIVALENTS - END OF PERIOD $ 8,523,045 $ 70,761,796 4 GULF RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (Expressed in U.S. dollars) Years Ended March 31, 2025(Restated) 2024 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the three-month period ended March 31, for: Paid for taxes $ 77,386 $ 481,153 Interest paid $ 60,857 $ 24,830 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES See accompanying notes to the condensed consolidated financial statements. 5 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Presentation and Consolidation The accompanying unaudited consolidated financial statements have been prepared by Gulf Resources, Inc. (“Gulf Resources”), a Nevada corporation and its subsidiaries (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 Co. Ltd. (“SHSI”). 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 operations. However, the going concern of the enterprise relies on many factors, such as profitable operations, generating operating cash flows, obtaining financing, etc. The Company assesses its liquidity by monitoring cash and cash equivalents, as well as operating and capital expenditure commitments. As of March 31, 2025, the Company had current assets of $ 17.64 million and current liabilities of $ 10.47 million. As a result, the surplus was $ 7.17 million, but it has suffered losses for the three months ended by March 31, 2025. If it is unable to raise additional funds, it may need to take measures such as cutting administrative and operational costs and saving 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. (c) Nature of the Business The Company manufactures and trades bromine through its wholly-owned subsidiary, Shouguang City Haoyuan Chemical Company Limited (“SCHC”) ;manufactures and trades crude salt through its wholly-owned subsidiary, Shouguang Hengde Salt Industry Co. Ltd (“SHSI”); and manufactures chemical products for use in the oil industry, pesticides, paper manufacturing industry and for human and animal antibiotics through its wholly-owned subsidiary, Shouguang Yuxin Chemical Industry Co., Limited (“SYCI”) in the People’s Republic of China (“PRC”). Daying County Haoyuan Chemical Company Limited (“DCHC”) was established to further explore and develop natural gas and brine resources (including bromine and crude salt) in the PRC. DCHC’s business commenced trial operation in January 2019 but suspended production temporarily in May 2019, as required by the government to obtain project approval (see Note 1 (c)(iii)). (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. 1, No. 4, No. 7 and No. 9 passed inspection and could resume operations. In April 2019, Factory No.1, and Factory No.7 resumed operation. On November 25, 2019, the government of Shouguang City issued a notice ordering all bromine facilities in Shouguang City, including the Company’s bromine facilities, including Factory No. 1 and Factory No. 7, to temporarily stop production from December 16, 2019to February 10, 2020. Subsequently, due to the coronavirus outbreak in China, the local government ordered those bromine facilities to postpone the commencement of production. Subsequently, the Company received an approval dated February 27, 2020 issued by the local governmental authority allowing the Company to resume production after the winter temporary closure. Further, the Company received another approval from the Shouguang Yangkou People’s Government dated March 5, 2020 allowing the Company to resume production at its bromine factories No. 1, No. 4, No.7 and No. 9 in order to meet the needs of bromide products for epidemic prevention and control (the “March 2020 Approval”). The Company’s Factories No. 1 and No. 7 commenced trial production in mid-March 2020 and commercial production on April 3, 2020 and its Factories No. 4 and No. 9 commenced commercial production on May6, 2020. The Company received verbal notification from the government regarding Factory No. 8, allowing it to recommence production in August 2022. Factory No. 8 began contributing revenue in the fourth quarter of 2022. The Company is still waiting for governmental approval for Factories No. 2 and No. 10. To our knowledge, the government is currently completing its planning process for all mining areas including that for prevention of flood. As a result, we may be required to make some modifications to our current wells and aqueducts prior to commencement of operations of these factories to satisfy the local government’s requirements. In April 2022, Shouguang Hengde Salt Industry Co. Ltd, our subsidiary, was incorporated in Shandong Province, China, for crude salt production and trading. This subsidiary was created in response to a new government policy that required bromine and crude salt companies to have separate registrations. The creation of this subsidiary and the separation of bromine and crude salt do not impact sales or overall profits. However, the establishment of this subsidiary has resulting in a reallocation of costs between bromine and crude salt. 6 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued (ii) Chemical Segment On November 24, 2017, the Company received a letter from the Government of Yangkou County, Shouguang City notifying the Company to relocate its two chemical production plants located in the second living area of the Qinghe Oil Extraction to the Bohai Marine Fine Chemical Industrial Park (“Bohai Park”). This was because the two plants were located in a residential area and their production activities impacted the living environment of the residents. This was as a result of the country’s effort to improve the development of the chemical industry, manage safe production and curb environmental pollution accidents effectively, and ensure the quality of the living environment of residents. All chemical enterprises which did not comply with the requirements of the safety and environmental protection regulations were ordered to shut down. In December 2017, the Company secured from the government the land use rights for its chemical plants located at the Bohai Park and in June 2018, the Company presented a completed construction design draft and other related documents to the local authorities for approval. In January 2020, the Company received the environmental protection approval by the government of Shouguang City, Shandong Province for the proposed Yuxin Chemical factory. The Company began the construction on its new chemical facilities located at Bohai Marine Fine Chemical Industrial Park in June 2020 and basically completed the civil works by the end of June 2021. On November 15, 2021, the Company announced that due to the supply chain issues as well as the electric restrictions in China, the delivery of some equipment, the equipment installation and testing and beginning trial production at the chemical factory had been delayed. On February 22, 2022, the Company announced that discussions with the government have convinced management that the electricity restrictions are being eased. Accordingly, the Company has contacted its suppliers and expected to have the remainder of the equipment produced and delivered, so the Company can complete installation and begin testing and trial production. The Company estimates this relocation process will cost approximately $ 69 million in total. The Company incurred relocation costs comprising prepaid land lease, professional fees related to the design of the new chemical factory, purchase of plant and equipment and construction costs and installation costs incurred for the new chemical factory in the amount of $ 45,584,344 and $ 45,584,344 , which were recorded in the property, plant and equipment in the consolidated balance sheets as of March 31, 2025 and December 31, 2024. The Company suspended the construction in the chemical factory until it decide what products can be produced most profitably. (iii) Natural Gas Segment In January 2017, the Company completed the first brine water and natural gas well field construction in Daying located in Sichuan Province, China, and commenced trial production in January 2019. On May 29, 2019, the Company received a verbal notice from the government of Tianbao Town, Daying County, Sichuan Province, whereby the Company is required to obtain project approval for its well located in Daying, including the whole natural gas and brine water project, and approvals for safety production inspection, environmental protection assessment, and to solve the related land issue. Until these approvals have been received, the Company has to temporarily halt trial production at its natural gas well in Daying. In compliance with the Chinese government new policies, the Company is also required to obtain an exploration license and a mining license for bromine and natural gas, respectively. Pursuant to the Opinions of the Ministry of Natural Resources on Several Issues in Promoting the Reform of Mineral Resources Management(Trial) promulgated by the Ministry of Natural Resources of PRC on January 9, 2020, which came into effect on May 1, 2020, privately owned enterprises are allowed to participate in the natural gas production. The Company plans to proceed with its applications for the natural gas and brine project approvals with related government departments until the governmental planning has been finalized. (d) Use of Estimates The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and this requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The most significant accounting estimates with regard to these consolidated financial statements that require the most significant and subjective judgments include, but are not limited to, useful lives of property, plant and equipment,recoverability of long-lived assets, determination of impairment losses, assessment of market value of inventories and provision for inventory obsolescence, allowance for doubtful accounts, recognition and measurement of deferred income taxes, valuation allowance for deferred tax assets, and assumptions used for the valuation of share based payments. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions. (e) Cash and Cash Equivalents Cash and cash equivalents consist of all cash balances and highly liquid investments with original maturities of three months or less. Because of short maturity of these investments, the carrying amounts approximate their fair values. (f) Allowance for Doubtful Accounts We make estimates of the uncollectability of accounts receivable, especially analyzing accounts receivable and historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in customer payment terms, when evaluating the adequacy of the allowance for doubtful accounts. Credit evaluations are undertaken for all major sale transactions before shipment is authorized. On a quarterly basis, we evaluate aged items in the accounts receivable aging report and provide an allowance in an amount we deem adequate for doubtful accounts. If management were to make different judgments or utilize different estimates, material differences in the amount of our reported operating expenses could result. (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. Substantially all of the Company’s cash and cash equivalents are maintained with financial institutions in the PRC, namely, Industrial and Commercial Bank of China Limited, China Merchants Bank Company Limited and Sichuan Rural Credit Union, which are not insured or otherwise protected. The Company placed $ 8,523,045 and $ 10,075,162 with these institutions as of March 31, 2025 and December 31, 2024, respectively. The Company has not experienced any losses in such accounts in the PRC. 7 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued (h) Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. Expenditures for new facilities or equipment, and major expenditures for betterment of existing facilities or equipment are capitalized and depreciated using the straight-line method at rates sufficient to depreciate such costs less 5% residual value over the estimated productive lives. All other ordinary repair and maintenance costs are expensed as incurred. Mineral rights are recorded at cost less accumulated depreciation and any impairment losses. Mineral rights are amortized ratably over the term of the lease, or the equivalent term under the units of production method, whichever is shorter. Construction in process primarily represents direct costs of construction of property, plant and equipment. Costs incurred are capitalized and transferred to property, plant and equipment upon completion and depreciation will commence when the completed assets are placed in service. The Company’s depreciation and amortization policies on property, plant and equipment, other than mineral rights and construction in process, are as follows: SCHEDULE OF PROPERTY PLANT AND EQUIPMENT Useful life (in years) Mineral rights 50 Leasehold improvements 8 - 20 Plant and machinery (including protective shells, transmission channels and ducts) 3 - 8 Motor vehicles 5 Furniture, fixtures and equipment 3 - 8 Producing oil and gas properties are depreciated on a unit-of-production basis over the proved developed reserves. Common facilities that are built specifically to service production directly attributed to designated oil and gas properties are depreciated based on the proved developed reserves of the respective oil and gas properties on a pro-rata basis. Common facilities that are not built specifically to service identified oil and gas properties are depreciated using the straight-line method over their estimated useful lives. Costs associated with significant development projects are not depreciated until commercial production commences and the reserves related to those costs are excluded from the calculation of depreciation. (i) Asset Retirement Obligation The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”), which established a uniform methodology for accounting for estimated reclamation and abandonment costs. FASB ASC 410 requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which the legal obligation associated with the retirement of the long-lived asset is incurred. When the liability is initially recorded, the offset is capitalized by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. To settle the liability, the obligation is paid, and to the extent there is a difference between the liability and the amount of cash paid, a gain or loss upon settlement is recorded. Currently, there are no reclamation or abandonment obligations associated with the land being utilized for exploitation by the bromine and crude salt factories. Also, for the two chemical plants that are to be relocated, currently, there are no obligations to restore the land to its original condition. (j) Recoverability of Long-lived Assets In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10-35 “Impairment or Disposal of Long-lived Assets” , long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable or that the useful lives of those assets are no longer appropriate. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. The Company determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the carrying amount of the assets. An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value of such assets less costs to sell. Asset impairment charges are recorded to reduce the carrying amount of the long-lived asset that will be sold or disposed of to their estimated fair values. Charges for the asset impairment reduce the carrying amount of the long-lived assets to their estimated salvage value in connection with the decision to dispose of such assets. For the three-month periods ended March 31, 2025 and 2024, the Company determined that there were no events or circumstances indicating possible additional impairment of its long-lived assets. (k) 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. The Company makes contributions to the retirement plan at the applicable rate based on the employees’ salaries. The required contributions under the retirement plans are charged to the condensed consolidated statement of income on an accrual basis when they are due. The Company’s contributions totaled $ 173,485 and $ 123,123 for the three-month periods ended March 31, 2025 and 2024, respectively. (l) Mineral Rights The Company follows FASB ASC 805 “Business Combinations” that certain mineral rights are considered tangible assets and that mineral rights should be accounted for based on their substance. Mineral rights are included in property, plant and equipment. 8 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued (m) Leases 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 in the consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease and finance lease ROU assets and liabilities are recognized on January 1, 2019, based on the present value of lease payments over the lease term discounted using the rate implicit in the lease. In cases where the implicit rate is not readily determinable, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has elected not to recognize operating lease ROU assets and liabilities arising from short-term lease. Finance leases are initially recorded at the net present value of future minimum lease payments, which include 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 separately on the Consolidated Balance Sheets. (n) Reporting Currency and Translation The financial statements of the Company’s foreign subsidiaries are measured using the local currency, Renminbi (“RMB”), as the functional currency; whereas the functional currency and reporting currency of the Company is the United States dollar (“USD” or “$”). As such, the Company uses the “current rate method” to translate its PRC operations from RMB into USD, as required under FASB ASC 830 “Foreign Currency Matters”. The assets and liabilities of its PRC operations are translated into USD using the rate of exchange prevailing at the balance sheet date. The capital accounts are translated at the historical rate. Adjustments resulting from the translation of the balance sheets of the Company’s PRC subsidiaries are recorded in stockholders’ equity as part of accumulated other comprehensive income (loss). The statement of comprehensive income (loss) is translated at average rate during the reporting period. Gains or losses resulting from transactions in currencies other than the functional currencies are recognized in net loss for the reporting periods as part of general and administrative expenses. The statement of cash flows is translated at average rate during the reporting period, with the exception of the consideration paid for the acquisition of business which is translated at historical rates. (o) Revenue Recognition Net revenue is net of discount and value added tax and comprises the sale of bromine, crude salt and chemical products. Revenue is recognized when the control of the promised goods is transferred to the customers in an amount that reflects the consideration that the Company expects to receive from the customers in exchange for those goods. The acknowledgement of receipt of goods by the customers is when control of the product is deemed to be transferred. Invoicing occurs upon acknowledgement of receipt of the goods by the customers. Customers have no rights to return the goods upon acknowledgement of receipt of goods. Revenue from contracts with customers is disaggregated in Note 17. (p) Basic and Diluted Net Income 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 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 three-month periods ended March 31, 2025 and 2024, respectively. Because the Company reported a net loss for the three-month periods ended March 31, 2025 and 2024, common stock equivalents including stock options and warrants were anti-dilutive, therefore the amounts reported for basic and diluted loss per share were the same. (q) Foreign Operations All of the Company’s operations and assets are located in PRC. The Company may be adversely affected by possible political or economic events in this country. The effect of these factors cannot be accurately predicted. (r) Inventories Inventories are stated at the lower of cost, determined on a first-in first-out cost basis, or net realizable value. Costs of work-in-progress and finished goods comprise direct materials, direct labor and an attributable portion of manufacturing overhead. Net realizable value is based on estimated selling price less costs to complete and selling expenses. 9 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued (s) Stock-based Compensation Stock-based awards issued to employees are recorded at their fair values estimated at grant date using the Black-Scholes model and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. Consistent with the accounting requirement for employee stock-based awards, nonemployee stock-based awards are measured at the grant-date fair value of the equity instruments that the Company is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. The Company has elected to account for the forfeiture of stock-based awards as they occur. (t) 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 could be reasonably estimable. Such estimates may be based on advice from third parties or on management’s judgment, as appropriate. Revisions to accruals are reflected in earnings (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. (u) Income Tax The Company accounts for income taxes in accordance with the Income Taxes Topic of the FASB ASC, which requires the use of the liability method of accounting for deferred income taxes. Under this method, deferred income taxes are recorded to reflect the tax consequences on future years of temporary differences between the tax basis of assets and liabilities and their reported amounts at each period end. Deferred tax assets and liabilities are measured using tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. The deferred income tax effects of a change in tax rates are recognized in the period of enactment. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. The guidance also provides criteria for the recognition, measurement, presentation and disclosures of uncertain tax positions. A tax benefit from an uncertain tax position may be recognized if it is “more likely than not” that the position is sustainable based solely on its technical merits. Interests and penalties associated with unrecognized tax benefits are included within the (benefit from) provision for income tax in the consolidated statement of comprehensive income (loss). (v) New Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The amendments in this Update affect loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. For public entities, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For the Company which is a smaller reporting company, ASU No. 2019-10 extends the effective dates for two years. The Company had evaluated the effect of the adoption of this standard on the consolidated financial statements and related disclosures. And the Company had adopted this standard beginning January 1, 2024. Recent accounting pronouncements adopted. There were no recent accounting pronouncements adopted during the three months ended March 31, 2025. 10 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The amendments in this Update affect loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. For public entities, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For the Company which is a smaller reporting company, ASU No. 2019-10 extends the effective dates for two years. The Company is currently evaluating the effect of this on the condensed consolidated financial statements and related disclosure. (w) Fair Value Measurement The Company applies Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures which defines fair value, establishes a framework for measuring fair value and expands financial statement disclosure requirements for fair value measurements. ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. ASC Topic 820 specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows: 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 methodology include quoted prices for identical or similar assets and liabilities in active markets or in inactive markets, and inputs 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. 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, other receivables, accounts payable and other current payables. There were no material unrecognized financial assets and liabilities as of March 31, 2025 and December 31, 2024. NOTE 2 – ACCOUNTS RECEIVABLE, NET SCHEDULE OF ACCOUNTS RECEIVABLE, NET March 31, 2025 December 31, 2024 Accounts receivable $ 2,143,976 $ 594,234 Allowance for doubtful debt ( 29,754 ) ( 29,711 ) Accounts receivable, net $ 2,114,222 $ 564,523 The overall accounts receivable balance as of March 31, 2025 increased by $ 1,549,699 compared to those of December 31, 2024. We have policies in place to ensure that sales are made to customers with an appropriate credit history. We perform ongoing credit evaluations on the financial condition of our customer. 11 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 3 – INVENTORIES, NET Inventories consist of: SCHEDULE OF INVENTORIES NET March 31, 2025 December 31, 2024 Raw materials $ 41,865 $ 10,610 Finished goods 413,194 1,545,521 Less: impairment — ( 1,240,760 ) Inventories, net $ 455,059 $ 315,371 The Company recorded impairment charges for slow moving inventory in the amounts of $ nil and $ 989,035 for the years ended March 31, 2025 and December 31, 2024. NOTE 4 – PREPAYMENTS AND DEPOSITS, NET Prepayments and deposits consisted of the following: SCHEDULE OF PREPAYMENTS AND DEPOSITS, NET March 31, 2025 December 31, 2024 Prepayments and deposits $ 8,043,985 $ 8,025,110 Provision for impairment ( 1,650,824 ) ( 1,648,454 ) Prepayments and deposits, net $ 6,393,161 $ 6,376,656 As of March 31, 2025 , the Company recorded the total prepayments and deposits, and the provision for impairment was $ 6,393,161 . NOTE 5– PREPAID LAND LEASES The Company has the rights to use certain parcels of land located in Shouguang, Shandong , PRC, through lease agreements signed with local townships or the government authority. The production facilities and warehouses of the Company are located on these parcels of land. The lease term ranges from ten ten years to fifty years . Some of the lease contracts were paid in one lump sum upfront and some are paid annually at the beginning of each anniversary date. These leases have no purchase option at the end of the lease term and were classified as operating leases prior to and as of January 1, 2019 when the new lease standard was adopted. Prior to January 2019, the prepaid land lease was amortized on a straight-line basis. 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 (“ROU”). See Note 8. In December 2017, the Company paid a one lump sum upfront amount of $ 8,859,000 for a 50-year lease of a parcel of land at Bohai Marine Fine Chemical Industrial Park (“Bohai”) for the new chemical factory under construction. There is no purchase option at the end of the lease term. This was classified as an operating lease prior to and as of January 1, 2019. The land use certificate was issued on October 25, 2019. The lease term expires on August 12, 2069 . The amount paid was recorded as prepaid land leases, net of current portion in the consolidated balance sheet as of March 31 2025 and December 31, 2024. As of March 31, 2025, the prepaid land lease increased to $ 9,217,790 due to an additional amount paid for stamp duty and related land use rights fees. Amortization of this prepaid land lease will commence when the chemical factory is built and placed in service. 12 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consist of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT March 31, 2025 (Restated) December 31, 2024 (Restated) At cost: Mineral rights $ 2,686,739 $ 2,682,882 Leasehold improvements 3,512,410 3,507,367 Plant and machinery 144,046,220 143,839,420 Furniture, fixtures and office equipment 1,437,153 1,435,090 Motor vehicles 124,394 124,215 Construction in process 10,170,243 10,155,642 Total 161,977,159 161,744,616 Less: Accumulated depreciation and amortization ( 68,888,425 ) ( 65,569,186 ) Less: Impairment ( 6,754,076 ) ( 6,744,380 ) Net book value $ 86,334,658 $ 89,431,050 The rollforward of property, plant and equipment, net was as follows: SCHEDULE OF ROLLFORWARD OF PROPERTY, PLANT AND EQUIPMENT December 31, 2024 (Restated) Depreciation (a) Foreign currency translation March 31, 2025 (Restated) At cost: Mineral rights $ 2,682,882 $ - $ 3,857 $ 2,686,739 Leasehold improvements 3,507,367 - 5,043 3,512,410 Plant and machinery 143,839,420 - 206,800 144,046,220 Furniture, fixtures and office equipment 1,435,090 - 2,063 1,437,153 Motor vehicles 124,215 - 179 124,394 Construction in process 10,155,642 - 14,601 10,170,243 Total 161,744,616 - 232,543 161,977,159 Less: Accumulated depreciation and amortization ( 65,569,186 ) ( 3,226,127 ) ( 93,112 ) ( 68,888,425 ) Less: Impairment ( 6,744,380 ) - ( 9,696 ) ( 6,754,076 ) Net book value $ 89,431,050 $ ( 3,226,127 ) $ 129,735 $ 86,334,658 (a) During the three-month period ended March 31, 2025, depreciation and amortization expense totaled $ 3,226,127 were recorded in direct labor and factory overheads incurred during plant shutdown, cost of revenue, and general & administrative expenses. During the three-month period ended March 31, 2024, depreciation and amortization expense totaled $ 4,416,261 were recorded in direct labor and factory overheads incurred during plant shutdown, cost of revenue, and general & administrative expenses. See Note 22- Restatement, for discussion regarding the impact of the Restatement. NOTE 7 – FINANCE LEASE RIGHT-OF-USE ASSETS Property, plant and equipment under finance lease, net consist of the following: SCHEDULE OF PROPERTY PLANT AND EQUIPMENT UNDER FINANCE LEASE, NET March 31, 2025 (Restated) December 31, 2024 (Restated) At cost: Buildings $ 64,490,648 $ 64,398,063 Total 64,490,648 64,398,063 Less: Accumulated depreciation and amortization ( 20,045,864 ) ( 19,242,775 ) Net book value $ 44,444,784 $ 45,155,288 The above buildings erected on parcels of land located in Shouguang, PRC, are collectively owned by local townships. The Company has not been able to obtain property ownership certificates over these buildings as the Company could not obtain land use rights certificates on the underlying parcels of land. During the three-month period ended March 31, 2025, depreciation and amortization expense totaled $ 775,702 , were recorded in direct labor and factory overheads incurred during plant shutdown, cost of revenue, and general & administrative expenses. During the three-month period ended March 31, 2024, depreciation and amortization expense totaled $ 313,941 , were recorded in direct labor and factory overheads incurred during plant shutdown, cost of revenue, and general & administrative expenses. See Note 22- Restatement, for discussion regarding the impact of the Restatement. 13 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 8 – OPERATING LEASE RIGHT-OF-USE ASSETS The Company has the rights to use certain parcels of land located in Shouguang, the PRC, through lease agreements signed with local townships or the government authority. For parcels of land that are collectively owned by local townships, the Company cannot obtain land use rights certificates. The parcels of land of which the Company cannot obtain land use rights certificates covers a total of approximately 34.95 square kilometers at March 31, 2025. As of March 31, 2025, the total operating lease ROU assets was $ 6,050,429 . The total operating lease cost for the three-month periods ended March 31, 2025 and 2024 was $ 217,801 and $ 217,345 , respectively. NOTE 9 – PAYABLE AND ACCRUED EXPENSES Payable and accrued expenses consist of the following: SCHEDULE OF PAYABLE AND ACCRUED EXPENSES March 31, 2025 (Restated) December 31, 2024 (Restated) Accounts payable $ 390,250 $ 30,003 Salary payable 208,604 323,655 Social security insurance contribution payable 308,921 169,858 Accrued expense for construction 5,337,777 5,310,040 Accrued expense-others 622,473 611,721 Total $ 6,868,025 $ 6,445,277 See Note 22- Restatement , for discussion regarding the impact of the Restatement. 14 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 10 – RELATED PARTY TRANSACTIONS On September 25, 2012, the Company purchased five floors of a commercial building in the PRC, through SYCI, from Shandong Shouguang Vegetable Seed Industry Group Co., Ltd. (the “Seller”) at a cost of approximately $ 5.7 million in cash, of which Mr. Ming Yang, who was the Chairman of the Company then, had a 99 % equity interest in the Seller. During the first quarter of 2018, the Company entered into an agreement with the Seller, a related party, to provide property management services for an annual amount of approximately $ 86,911 for five years from January 1, 2023 to December 31, 2027 . The expense associated with this agreement for the three months ended March 31, 2025 and 2024 was approximately $ 21,728 and $ 21,982 . a) Related parties Name of related parties Position Ming Yang Chairman Of the Board XiaoBin Liu Chief Executive Officer Min Li Chief Financial Officer NaiHui Miao Chief Operating Officer Chengdu Dianjinshi Culture media Co., LTD Affiliated with company officers b) SCHEDULE OF RELATED PARTY TRANSACTIONS March 31, December 31, 2025 2024 Amount due to related parties: Ming Yang $ 410,940 $ 410,350 XiaoBin Liu 887,214 887,214 Min Li 651,502 636,264 NaiHui Miao 636,766 650,980 Total $ 2,586,422 $ 2,584,808 c) March 31, 2025 December 31, 2024 Due from related party: Chengdu Dianjinshi Culture media Co., LTD $ 25,076 $ 25,040 Total $ 25,076 $ 25,040 NOTE 11 – TAXES PAYABLE SCHEDULE OF TAXES PAYABLE March 31, 2025 December 31, 2024 Land use tax payable $ 19,345 $ 19,318 Value added tax and other taxes payable 257,171 94,681 Total $ 276,516 $ 113,999 15 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 12 – LEASE LIABILITIES-FINANCE AND OPERATING LEASE The components of finance lease liabilities were as follows: SCHEDULE OF FINANCE LEASED LIABILITIES March 31, 2025(Restated) December 31, 2024(Restated) Total finance lease liabilities $ 5,376,093 $ 8,432,177 Less: Current portion ( 239,771 ) ( 3,342,293 ) Finance lease liabilities, net of current portion $ 5,136,322 $ 5,089,884 The financing leases include 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: SCHEDULE OF OPERATING LEASE LIABILITIES March 31, 2025 December 31, 2024 Total Operating lease liabilities $ 7,308,326 $ 7,433,452 Less: Current portion ( 498,483 ) ( 491,850 ) Operating lease liabilities, net of current portion $ 6,809,843 $ 6,941,602 The components of lease cost were as follows: SCHEDULE OF LEASE COST Three-Month Period Ended March 31, 2025 (Restated) 2024 (Restated) Finance lease cost: - Amortization of right-of-use assets $ 775,702 $ 313,941 - Interest on lease liabilities 60,857 24,830 Operating lease cost 217,801 217,345 Total lease cost $ 1,054,360 $ 556,116 Maturities of lease liabilities were as follows: SCHEDULE OF MATURITIES OF LEASE LIABILITIES Finance Lease Operating Lease the next 12 months $ 261,485 $ 631,001 the next 13 to 24 months 261,485 828,555 the next 25 to 36 months 261,485 834,455 the next 37 to 48 months 4,955,034 840,733 the next 49 to 60 months 261,485 847,059 thereafter 261,485 8,255,269 Total $ 6,262,459 $ 12,237,072 Less: Amount representing interest ( 886,366 ) ( 4,928,746 ) Present value of net minimum lease payments $ 5,376,093 $ 7,308,326 A summary of supplemental information related to leases is listed as follows: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES March 31, 2025 December 31, 2024 Weighted average remaining lease term: Finance leases 15.9 years 16.2 years Operating leases 19.6 years 19.6 years Weighted average discount rate: Finance leases 4.62 % 4.62 % Operating leases 4.90 % 4.90 % Supplemental cash flow information related to leases were as follows: SCHEDULE OF CASH FLOW, SUPPLEMENTAL Three-Month Period Ended March 31, 2025 2024 Cash paid for amounts included in measurement of lease liabilities: -Operating cash flows from operating leases $ 225,321 $ 226,018 -Financing cash flows from finance leases $ — $ — Non-cash information on lease liabilities arising from obtaining ROU assets: -Finance leases $ — $ — -Operating leases $ — $ — See Note 22- Restatement, for discussion regarding the impact of the Restatement. 16 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 13 – EQUITY Stock Issued For The Acquisition In 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 stocks that is subject to certain restrictions during a specified period. Restricted stock awards are independent of option grants and are generally subject to forfeiture if employment terminates prior to the release of the restrictions. The grantee cannot transfer the shares before the restricted shares vest. Shares of nonvested restricted stock have the same voting rights as common stock, are entitled to receive dividends and other distributions thereon and are considered to be currently issued and outstanding. The Company expenses the cost of the restricted stock awards, which is determined to be the fair market value of the shares at the date of grant, straight-line over the period during which the restrictions lapse. For these purposes, the fair market value of the restricted stock is determined based on the closing price of the Company’s common stock on the grant date. The Company granted an aggregate of 295,000 (post reverse share split 29,500 shares) restricted shares of common stock in January 2025 to a consultant, the Company’s directors, officers, and an employee as compensation for services rendered for the year ended December 31, 2024. The restricted shares award were granted under the 2019 Omnibus Equity Incentive Plan and vested immediately. The fair value of the award on the date of grant was $ 194,700 which was expensed in full during the year ended December 31, 2024. During the three months ended March 31, 2025, 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 for the current year. The restricted shares award were granted under the 2019 Omnibus Equity Incentive Plan and vested immediately. The fair value of the award on the date of grant was $ 196,100 which was expensed in full during the three months period ended March 31, 2025. Retained Earnings – Appropriated In accordance with the relevant PRC regulations and the PRC subsidiaries’ Articles of Association, the Company’s PRC subsidiaries are required to allocate its profit after tax to the following reserve. Statutory Reserve SCHC, SYCI, SHSI and DCHC are required each year to transfer at least 10% of the profit after tax as reported under the PRC statutory financial statements to the Statutory Common Reserve Funds until the balance reaches 50% of the registered share capital. This reserve can be used to make up any loss incurred or to increase share capital. Except for the reduction of losses incurred, any other application should not result in this reserve balance falling below 25% of the registered capital. As of March 31, 2025, the Company’s statutory provident fund stood at $26.67 million. 17 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 14 – TREASURY STOCK As of March 31, 2025 and December 31, 2024, the number of treasury stock of the Company was 28,583 and 28,583 , respectively. NOTE 15 – STOCK-BASED COMPENSATION 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 March 31, 2025, the number of shares of the Company’s common stock available for grant of stock options and issuance under the 2019 Plan was 1,801 shares. The fair value of each option award is estimated 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 three months ended March 31, 2025 and 2024, total compensation costs for options issued recorded in the consolidated statement of comprehensive income (loss) were $ 0 . There were no related tax benefits as a full valuation allowance was recorded in the three months ended March 31, 2025 and 2024. The following table summarizes all Company stock option transactions between January 1, 2025 and March 31, 2025. SCHEDULE OF STOCK OPTION ACTIVITY 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 — $ — $ — Granted during the period — $ — $ — Exercised during the period — $ — $ — Expired during the period — $ — $ — Balance, March 31, 2025 — $ — $ — Stock Options and Warrants Outstanding and Exercisable Outstanding at March 31, 2025 Range of Exercise Prices Weighted Average Remaining Contractual Life (Years) Outstanding and exercisable — — — All options exercisable and outstanding at March 31, 2025 are fully vested. As of March 31, 2025 there was no unrecognized compensation cost related to outstanding stock options, The aggregate intrinsic value of options outstanding and exercisable as of March 31, 2025 and 2024 was $ 0 . 18 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 16 – INCOME TAXES The Company utilizes the asset and liability method of accounting for income taxes in accordance with FASB ASC 740-10. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. (a) United States (“US”) Gulf Resources, Inc. may be subject to the United States of America Tax laws at a tax rate of 21 %. No provision for the US federal income taxes has been made as the Company had no US taxable income for the three-month periods ended March 31, 2025 and 2024, and management believes that its earnings are permanently invested in the PRC. (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 did not generate assessable profit for the three- month periods ended March 31, 2025 and 2024. (c) Hong Kong HKJI, a subsidiary of Upper Class Group Limited, was incorporated in Hong Kong and is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. No provision for income tax has been made as it has no taxable income for the three-month periods ended March 31, 2025 and 2024. The applicable statutory tax rates for the three- month periods ended March 31, 2025 and 2024 are 16.5 %. There is no dividend withholding tax in Hong Kong. (d) PRC Enterprise income tax (“EIT”) for SCHC, SYCI, SHSI and DCHC in the PRC is charged at 25 % of the assessable profits. The operating subsidiaries SCHC, SYCI, DCHC, and SHSI are wholly foreign-owned enterprises (“FIE”) incorporated in the PRC and are subject to PRC Local Income Tax Law. The PRC tax losses may be carried forward to be utilized against future taxable profit for ten years for High-tech enterprises and small and medium-sized enterprises of science and technology and for five years for other companies. Tax losses of the operating subsidiaries of the Company may be carried forward for five years. On February 22, 2008, the Ministry of Finance (“MOF”) and the State Administration of Taxation (“SAT”) jointly issued Cai Shui [2008] Circular 1 (“Circular 1”). According to Article 4 of Circular 1, distributions of accumulated profits earned by a FIE prior to January 1, 2008 to foreign investor(s) in 2008 will be exempted from withholding tax (“WHT”) while distribution of the profit earned by an FIE after January 1, 2008 to its foreign investor(s) shall be subject to WHT at 5% effective tax rate. As of March 31, 2025 and December 31, 2024, the accumulated distributable earnings under the Generally Accepted Accounting Principles (“GAAP”) of PRC that are subject to WHT are $ 35,315,678 and $ 40,524,183 , respectively. Since the Company intends to reinvest its earnings to further expand its businesses in mainland China, its foreign invested enterprises do not intend to declare dividends to their immediate foreign holding companies in the foreseeable future. Accordingly, as of March 31, 2025 and December 31, 2024, the Company has not recorded any WHT on the cumulative amount of distributable retained earnings of its foreign invested enterprises that are subject to WHT in China. As of March 31, 2025 and December 31, 2024, the unrecognized WHT are $ 816,956 and $ 1,078,743 , respectively. The Company’s income tax returns are subject to the various tax authorities’ examination. The federal, state and local authorities of the United States may examine the Company’s income tax returns filed in the United States for three years from the date of filing. The Company’s 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. For the years 2012 through 2019, HKJI did not report any taxable income. It did not file any income tax returns during these years except for 2014 and 2018. For companies which do not have taxable income, IRD typically issues notification to companies requiring them to file income tax returns once in every four years. The tax returns for 2014 and 2018 are currently subject to examination. The components of the provision for income tax benefit (expense) from continuing operations are: SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE BENEFIT 2025 2024 Three-Month Period Ended March 31, 2025 2024 Current taxes – PRC $ — $ — Deferred tax – PRC entities — ( 1,270,060 ) Total Income tax (expenses) benefits $ — $ ( 1,270,060 ) 19 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 16 – INCOME TAXES – Continued Significant components of the Company’s deferred tax assets and liabilities at March 31, 2025 and December 31, 2024 are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES March 31, 2025 December 31, 2024 Deferred tax liabilities $ — $ — Deferred tax assets: Exploration costs 1,734,410 1,731,920 Allowance 420,144 729,731 Impairment of property plant and equipment 1,688,519 1,686,095 PRC tax losses 10,455,188 9,125,871 US federal net operating loss 1,720,637 1,661,464 Total deferred tax assets 16,018,898 14,935,081 Valuation allowance ( 16,018,898 ) ( 14,935,081 ) 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 March 31, 2025 and 2024, valuation allowances were mainly provided against deferred tax assets caused by exploration costs and net operating loss where it was determined it was more likely than not that the benefits of the deferred tax assets will not be realized due to their continuous losses. The increase in valuation allowance for the three-month period ended March 31, 2025 is $ 1,083,817 . The increase in valuation allowance for the three-month period ended March 31, 2024 is $ 14,473 . There were no unrecognized tax benefits and accrual for uncertain tax positions as of March 31, 2025 and December 31, 2024 and no amounts accrued for penalties and interest for the three months ended March 31, 2025 and 2024. NOTE 17 – BUSINESS SEGMENTS 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. The Company has four reportable segments: bromine, crude salt, chemical products and natural gas. The reportable segments are consistent with how management views the markets served by the Company and the financial information that is reviewed by its chief operating decision maker. An operating segment’s performance is primarily 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 (income) 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. SCHEDULE OF SEGMENT REPORTING BY SEGMENT Three-Month Period Ended March 31, 2025 (Restated) Operating Segment Bromine * Crude Salt * Chemical Products Natural Gas Segment Total Corporate Total Net revenue (external customers) $ 1,481,869 $ 122,578 $ — $ — $ 1,604,447 $ — $ 1,604,447 Net revenue (intersegment) — — — — — — — Loss from operations before income expense ( 3,374,506 ) ( 587,809 ) ( 361,892 ) ( 44,844 ) ( 4,369,051 ) ( 281,836 ) ( 4,650,887 ) Income tax (expense) benefit — — — — — — — Loss from operations after income taxes (expense) benefit ( 3,374,506 ) ( 587,809 ) ( 361,892 ) ( 44,844 ) ( 4,369,051 ) ( 281,836 ) ( 4,650,887 ) Total assets 79,776,369 45,042,635 38,250,664 929,031 163,998,699 93,640 164,092,339 Depreciation and amortization 3,261,892 639,289 70,926 32,962 4,005,069 — 4,005,069 Capital expenditures — — — — — — — Three-Month Period Ended March 31, 2024 Bromine * Crude Salt * Chemical Products Natural Gas Segment Total Corporate Total Net revenue (external customers) $ 1,146,197 $ 116,671 $ — $ 44,194 $ 1,307,062 $ — $ 1,307,062 Net revenue (intersegment) — — — — — — — Loss from operations before income expense ( 4,782,815 ) ( 75,092 ) ( 314,824 ) ( 27,709 ) ( 5,200,440 ) ( 68,979 ) ( 5,269,419 ) Income tax (expense) benefit 1,198,071 — 71,989 — 1,270,060 — 1,270,060 Loss from operations after income taxes (expense) benefit ( 3,584,744 ) ( 75,092 ) ( 242,835 ) ( 27,709 ) ( 3,930,380 ) ( 68,979 ) ( 3,999,359 ) Total assets 100,370,933 11,517,576 107,776,242 1,912,377 221,577,128 250,287 221,827,415 Depreciation and amortization 4,449,468 181,891 68,357 33,759 4,733,475 — 4,733,475 Capital expenditures — — — — — — — * Certain common production overheads, operating and administrative expenses and asset items (mainly cash and certain office equipment) of bromine and crude salt segments in SCHC were split by reference to the average selling price and production volume of the respective segment. 20 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 17 – BUSINESS SEGMENTS – Continued SCHEDULE OF SEGMENT COST Reconciliations 2025(Restated) 2024 Three-Month Period Ended March 31, Reconciliations 2025(Restated) 2024 Total segment operating loss $ ( 4,369,051 ) $ ( 5,200,440 ) Corporate costs ( 281,836 ) ( 68,979 ) Unrealized gain (loss) on translation of intercompany balance — — Loss from operations ( 4,650,887 ) ( 5,269,419 ) Other income, net ( 19,293 ) 7,227 Loss before taxes $ ( 4,670,180 ) $ ( 5,262,192 ) The following table shows the major customers (10% or more) for the three-month period ended March 31, 2025. SCHEDULE OF REVENUE BY MAJOR CUSTOMERS Number Customer Bromine (000’s) Crude Salt (000’s) Chemical Products (000’s) Total Revenue (000’s) Percentage of Total Revenue (%) 1 Shandong Morui Chemical Company Limited $ 196 $ 58 $ — $ 254 15.8 % 2 Shandong Brother Technology Limited 193 36 — 229 14.3 % 3 Shouguang Weidong Chemical Company Limited 197 28 — 225 14.0 % 4 Shandong Shouguangshen Runfa Marine Chemical Company Limited $ 195 $ — $ — $ 195 12.1 % The following table shows the major customers (10% or more) for the three-month period ended March 31, 2024. Number Customer Bromine (000’s) Crude Salt (000’s) Chemical Products (000’s) Total Revenue (000’s) Percentage of Total Revenue (%) 1 Shandong Morui Chemical Company Limited $ 134 $ 63 $ — $ 197 15.1 % 2 Shouguang Weidong Chemical Company Limited 135 26 — 161 12.3 % 3 Shandong Brother Technology Limited 133 28 — 161 12.3 % 4 Shandong Shouguangshen Runfa Marine Chemical Company Limited $ 135 $ — $ — $ 135 10.3 % NOTE 18 – CUSTOMER CONCENTRATION During the three-month period ended March 31, 2025, the Company sold 62.4 % of its products to its top five customers. As of March 31, 2025, amounts due from these customers were $ 1,462,756 . During the three-month period ended March 31, 2024, the Company sold 55 % of its products to its top five customers. As of March 31, 2024, amounts due from these customers were $ 2,803,534 . 21 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 19 – MAJOR SUPPLIERS During the three-month period ended March 31, 2025, the Company purchased 100 % of its raw materials from its top three suppliers. As of March 31, 2025, amounts due to those suppliers were $ 390,250 . During the three-month period ended March 31, 2024, the Company purchased 100 % of its raw materials from its top three suppliers. As of March 31, 2024, amounts due to those suppliers were $ 207,431 . NOTE 20 – LOSS CONTINGENCIES On or about August 3, 2018, written decisions of administration penalty captioned Shou Guo Tu Zi Fa Gao Zi [2018] No. 291, Shou Guo Tu Zi Fa Gao Zi [2018] No. 292, Shou Guo Tu Zi Fa Gao Zi [2018] No. 293, Shou Guo Tu Zi Fa Gao Zi [2018] No. 294, Shou Guo Tu Zi Fa Gao Zi [2018] No. 295 and Shou Guo Tu Zi Fa Gao Zi [2018] No. 296 (together, the “Written Decisions”) were served on Shouguang City Haoyuan Chemical Company Limited (“SCHC”) by Shouguang City Natural Resources and Planning Bureau (the “Bureau”), naming SCHC as respondent respectively thereof. The Decisions challenged the land use of Factory nos. 2, 9, 7, 4, 8 and 10, respectively, and alleged, among other things, that SCHC had illegally occupied and used the land in the total area of approximately 52,674 square meter, on which Factory nos. 2, 9, 7, 4, 8 and 10 were built, respectively. The Written Decisions ordered SCHC, among other things, to return the land subject to the Written Decisions to its respective legal owner, restore the land to its original state, and demolish or confiscate all the buildings and facilities thereon and pay monetary penalty of approximately RMB 1.3 million ($184,000) in the aggregate. Each of the Written Decisions shall be executed within 15 days upon serving on SCHC. Additional interest penalty shall be imposed at a daily rate of 3% in the event that SCHC does not make the monetary penalty payment in a timely manner. Subsequently, the Bureau filed enforcement actions to the People’s Court of Shouguang City, Shandong Province (the “Court”), naming SCHC as enforcement respondent and alleged, among other things, that SCHC failed to perform its obligations under each of the Written Decisions within the specified timeframe. The enforcement proceedings sought court orders to enforce the Written Decisions. On May 5, 2019, written decisions of administrative ruling captioned (2019) Lu 0783 Xing Shen No. 384, (2019) Lu 0783 Xing Shen No. 385, (2019) Lu 0783 Xing Shen No. 389, (2019) Lu 0783 Xing Shen No. 390, (2019) Lu 0783 Xing Shen No. 393, and (2019) Lu 0783 Xing Shen No. 394, respectively (together, the “Court Rulings”) were made by the Court in favor of the Bureau. The Court orders, among other relief, to enforce each of the Written Decisions, to return each subject land to its legal owners and demolish or confiscate the buildings and facilities thereon and restore the land to its original state within 10 days from the service of the Court Rulings on SCHC. The Court Rulings became enforceable immediately upon service on SCHC on May 5, 2019. In the last twenty years, to the Company’s knowledge, there were no government regulations requiring bromine manufacturers to obtain land use and planning approval document. As such, the Company believes most of the bromine manufacturers in Shouguang City do not have land use and planning approval documents and lease their land parcels from the village associations. They are facing the same issues in connection with land use and planning as the Company. To the Company’s knowledge, the local government has submitted its plan to solve the issues to higher authority and are waiting for approval from the higher authority. The Company is in the process of resolving the issues in connection with SCHC’s land use and planning diligently. The Company has been in discussions closely with the local government authorities with the help from Shouguang City Bromine Association to seek reliefs and, based on verbal confirmation by local government authorities, believes the administrative penalties imposed by the Bureau according to the Written Decisions are being re-assessed by local government authorities and may be revoked. Pursuant to a Written Application dated October 28, 2019 addressed to the Court by the Bureau, the Bureau withdrew its application for the enforcement proceedings regarding the administrative penalty imposed on Factory No. 7, Factory No. 8 and Factory No.10. Pursuant to a written decisions of administrative ruling captioned (2019) Lu 0783 Xing Shen No. 389 Zhi Yi, dated November 25, 2020, the Court orders to terminate the enforcement of the case captioned (2019) Lu 0783 Xing Shen No. 389. Production of Factory No. 7 was allowed to resume in April 2019. The Company received a notification from the Shouguang City Government in February 2019 informing the Company that Factory No. 1, No.4, No. 7 and No. 9 have passed inspection and were approved to resume operation. In addition, on August 28, 2019, the People’s Government of Shandong Province, issued a regulation titled “Investment Project Management Requirements of Chemical Companies in Shandong Province” permitting the construction of facilities on existing sites or infrastructure of bromine manufacturing and other chemical industry-related types of projects (clause 11 of section 3). The Company believes that the goal of the government is to standardize and regulate the industry and not to demolish the facilities or penalize the manufacturers. As of the date of this report, the Company has not been notified by the local government that it will take any measure to enforce the administrative penalties. Based on information known to date, the Company believes that it is remote that the Written Decisions or Court Rulings will be enforced within the expected timeframe and a material penalty or costs and expenses against the Company will result. However, there can be no assurance that there will not be any further enforcement action, the occurrence of which may result in further liabilities, penalties and operational disruption. In view of the above facts and circumstances, the Company believes that it is not necessary to accrue for any estimated losses or impairment as of March 31, 2025. 22 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 21 - SUBSEQUENT EVENT The Company evaluated subsequent events through the date on which these condensed consolidated financial statements were available to be issued. On May 6, 2025, the Company was notified by the Listing Qualifications Staff of The Nasdaq Stock Market LLC that the Staff granted the Company’s request to transfer the listing of its common stock, par value $ 0.0005 per share, from The Nasdaq Global Select Market tier to The Nasdaq Capital Market tier. On October 27, 2025, our shares began trading on the Nasdaq Capital Market under the same symbol “GURE”. On July 3, 2025, the Company filed a shelf registration statement covering up to $ 10,000,000 of common stock, preferred stock, and warrants, individually or in combination. The registration statement provides that any future offerings will be made pursuant to applicable prospectus supplements, which will set forth the specific terms of each offering and the manner of sale. Effective on October 27, 2025, the Company completed a 1-for-10 reverse stock split of our common stock, such that for each ten shares outstanding prior to the stock split there was one share outstanding after the reverse stock split. All shares of common stock referenced in this report have been adjusted to reflect the stock split figures. On October 27, 2025, our shares began trading on the NASDAQ Global Select Market under the new CUSIP # 40251W507. On November 4, 2025, the Company received a delist determination letter from Nasdaq staff stating that the Company had not regained compliance with the minimum bid price requirement by the November 3, 2025, deadline and that its securities would be scheduled for delisting from The Nasdaq Capital Market on November 11, 2025. The Company subsequently effected a one-for-ten reverse stock split on October 27, 2025, and filed an appeal with the Nasdaq Hearings Panel on November 7, 2025, and expects that these actions will enable it to regain compliance with Listing Rule 5550(a)(2) and continue trading on The Nasdaq Capital Market under the symbol “GURE” . On November 12, 2025, the Company issued a press release providing certain updates on its hearing process with the Nasdaq Hearings Panel. The Company has received a hearing notification letter from Nasdaq scheduling an oral hearing for December 9, 2025. As of Monday, November 10, 2025, the Company’s common stock had maintained a closing bid price at or above $1.00 for more than ten consecutive trading days. In light of the above and in accordance with the instructions provided by the hearing notification letter, the Company has submitted a request to cancel the hearing, subject to the Company’s Listing Analyst review and confirmation. On December 1, 2025, the Company received a letter from The Nasdaq Stock Market, LLC stating that the Company had regained compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2). Consequently, the hearing before the Hearings Panel scheduled to take place on December 9, 2025, has been cancelled. The Company’s securities will continue to be listed and traded on The Nasdaq Stock Market. On December 2, 2025, the Company issued a press release announcing that it has regained compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market.  23 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 21 - SUBSEQUENT EVENT – Continued On December 10, 2025, Shouguang City Haoyuan Chemical Company Limited (the “Seller”), a company incorporated in the PRC and an indirect wholly owned subsidiary of the Company, entered into an equity transfer agreement (the “SPA”) with Shandong Rongyuan Pharmaceutical Co., Ltd. (the “Purchaser”) and Shouguang Yuxin Chemical Industry Co., Limited (the “Target Company”).Pursuant to the SPA, the Seller agreed to sell, and the Purchaser agreed to purchase, 100 % of the equity interests in the Target Company for an aggregate consideration of RMB 21.2 million (payable in instalments through 2028), subject to the terms and conditions set forth in the SPA (“Sale”). The Company’s board of directors (“Board”) reviewed the terms of the SPA, including the consideration, conditions and payment arrangements. The Board affirmed the Seller’s entry into the SPA and affirmed that the SPA and the transaction thereunder are fair to, and in the best interests of, the Company and its shareholders as a whole. On December 18, 2025, the Company announced that it had received the notification from the Shouguang Municipal People’s Government Office (the “Government of Shouguang City”) dated on December 15, 2025. To comply with the notice issued by the Government of Shouguang City, the Company expects to temporarily suspend the relevant operations in Shouguang City during the aforementioned period. On March 2, 2026, the Company announced that its relevant operations in Shouguang City had been resumed in compliance with the Notice. 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. Under 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. Because the Company had not filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, Nasdaq notified the Company on August 28, 2026 that the Company had incurred an additional delinquency under Nasdaq Listing Rule 5250(c)(1) (the “Rule”). On August 28, 2026, the Company submitted an updated compliance plan to Nasdaq requesting additional time to file this Quarterly Report. On September 2, 2026, Nasdaq granted the Company an additional exception period and required the Company to file this Quarterly Report on or before October 12, 2026. Nasdaq stated that, if the Company failed to file this Quarterly Report by that date, Nasdaq Staff may provide written notification that the Company’s securities are subject to delisting. The Company may have the right to appeal a delisting determination to a Nasdaq Hearings Panel. There were no other subsequent events requiring recognition or disclosure in these condensed consolidated financial statements. NOTE 22 – RESTATEMENT The Company restates its previously released unaudited condensed consolidated financial statements for the three months ended March 31, 2025, and incorporate them into the 2025 Quarterly Report “10-Q 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. 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 ASC 842. The Company revised the financial statements and accounted for these usage rights as leases in accordance with the provisions of ASC 842. 24 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 22 –RESTATEMENT – Continued The effects of the restatement on the consolidated balance sheet as of December 31, 2024, are summarized in the following table: SCHEDULE OF RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS December 31, 2024 As Previously Reported Restatement Note As Restated Current Assets Cash $ 10,075,162 — $ 10,075,162 Accounts receivable, net 564,523 — 564,523 Inventories, net 315,371 — 315,371 Prepayments and deposits, net 6,376,656 — 6,376,656 Amount due from related parties 25,040 — 25,040 Other receivables 94,074 — 94,074 Total current assets 17,450,826 — 17,450,826 Non-Current Assets Property, plant and equipment, net 136,143,177 ( 46,712,127 ) (b) 89,431,050 Finance lease right-of-use assets 76,868 45,078,420 (b) 45,155,288 Operating lease right-of-use assets 6,169,855 — 6,169,855 Prepaid land leases, net of current portion 9,615,269 — 9,615,269 Deferred tax assets, net — — — Total non-current assets 152,005,169 ( 1,633,707 ) 150,371,462 Total Assets 169,455,995 ( 1,633,707 ) 167,822,288 Liabilities and Stockholders’ Equity Current Liabilities Short-term bank borrowing Accounts payable and accrued expenses $ 14,323,458 ( 7,878,181 ) (c) $ 6,445,277 Taxes payable-current 113,999 — 113,999 Amount due to related parties 2,584,808 — 2,584,808 Finance lease liabilities, current portion 217,743 3,124,550 (c) 3,342,293 Operating lease liabilities, current portion 491,850 — 491,850 Total current liabilities 17,731,858 ( 4,753,631 ) 12,978,227 Non-Current Liabilities Finance lease liabilities, net of current portion 1,075,865 4,014,019 (c) 5,089,884 Operating lease liabilities, net of current portion 6,941,602 — 6,941,602 Long-term bank borrowing Total non-current liabilities 8,017,467 4,014,019 12,031,486 Total Liabilities 25,749,325 ( 739,612 ) 25,009,713 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 24,623 ( 24,063 ) (a) 560 Treasury stock; 28,583 shares as of December 31, 2024 at cost ( 1,372,673 ) — ( 1,372,673 ) Additional paid-in capital 101,688,262 24,063 (a) 101,712,325 Share to be issued 194,700 — 194,700 Retained earnings unappropriated 37,358,804 ( 964,920 ) (d) 36,393,884 Retained earnings appropriated 26,667,097 — 26,667,097 Accumulated other comprehensive loss ( 20,854,143 ) 70,825 (e) ( 20,783,318 ) Total Stockholders’ Equity 143,706,670 ( 894,095 ) 142,812,575 Total Liabilities and Stockholders’ Equity $ 169,455,995 ( 1,633,707 ) $ 167,822,288 25 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 22 –RESTATEMENT – Continued The effects of the restatement on the consolidated balance sheet as of March 31, 2025 are summarized in the following table: March 31, 2025 As Previously Reported Restatement Note As Restated Current Assets Cash $ 8,523,045 — $ 8,523,045 Accounts receivable, net 2,114,222 — 2,114,222 Inventories, net 455,059 — 455,059 Prepayments and deposits, net 6,393,161 — 6,393,161 Amount due from related parties 25,076 — 25,076 Other receivables 126,050 — 126,050 Total current assets 17,636,613 — 17,636,613 Non-Current Assets Property, plant and equipment, net 132,341,321 ( 46,006,663 ) (b) 86,334,658 Finance lease right-of-use assets 75,721 44,369,063 (b) 44,444,784 Operating lease right-of-use assets 6,050,429 — 6,050,429 Prepaid land leases, net of current portion 9,625,855 — 9,625,855 Deferred tax assets, net — — — Total non-current assets 148,093,326 ( 1,637,600 ) 146,455,726 Total Assets 165,729,939 ( 1,637,600 ) 164,092,339 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable and accrued expenses $ 11,656,665 ( 4,788,640 ) (c) $ 6,868,025 Taxes payable-current 276,516 — 276,516 Amount due to related parties 2,586,422 — 2,586,422 Finance lease liabilities, current portion 239,771 — 239,771 Operating lease liabilities, current portion 498,483 — 498,483 Total current liabilities 15,257,857 ( 4,788,640 ) 10,469,217 Non-Current Liabilities Finance lease liabilities, net of current portion 1,077,412 4,058,910 (c) 5,136,322 Operating lease liabilities, net of current portion 6,809,843 — 6,809,843 Total non-current liabilities 7,887,255 4,058,910 11,946,165 Total Liabilities 23,145,112 ( 729,730 ) 22,415,382 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; 1,382,114 shares issued; and 1,353,531 shares outstanding as of March 31, 2025 25,934 ( 25,243 ) (a) 691 Treasury stock; 28,583 shares as of March 31, 2025 at cost ( 1,372,673 ) — ( 1,372,673 ) Additional paid-in capital 105,167,292 25,243 (a) 105,192,535 Retained earnings unappropriated 32,729,304 ( 1,005,600 ) (d) 31,723,704 Retained earnings appropriated 26,667,097 — 26,667,097 Accumulated other comprehensive loss ( 20,632,127 ) 97,730 (e) ( 20,534,397 ) Total Stockholders’ Equity 142,584,827 ( 907,870 ) 141,676,957 Total Liabilities and Stockholders’ Equity $ 165,729,939 ( 1,637,600 ) $ 164,092,339 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 $ 45,078,720 . As of March 31, 2025, in the fixed assets, the original value of the buildings subject to reclassification amounted to $ 68,575,318 . 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 $ 3,512,410 . The leased portion was reclassified as finance lease right-of-use assets, with an original value of $ 64,281,876 , accumulated amortization of $ 19,912,813 , and a net value of $ 44,369,063 . (c) As of December 31, 2024, the amount of $ 7,878,181 in accounts payable and accrued expenses was reclassified as finance lease liability relating to the salt pans. The reclassified amount of finance lease liabilities including the current portion of $ 3,124,550 and the non-current portion of $ 4,014,019 . As of March 31, 2025, the amount of $ 4,769,747 in accounts payable and accrued expenses was reclassified as finance lease liability relating to the salt pans. The reclassified amount of finance lease liabilities including the non-current portion of $ 4,058,910 . (d) Regarding the decrease in retained earnings unappropriated, the main reasons was the increase in expenses. The increase in expenses is mainly due to the reclassification of the financial 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. (e) The change in the accumulated other comprehensive loss represents the foreign currency translation differences in the financial statements. 26 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 22 –RESTATEMENT – Continued The effects of the restatement on the consolidated statement of operations income (loss) for the three months ended March 31, 2024, are summarized in the following table: SCHEDULE OF STATEMENT OF OPERATIONS INCOME (LOSS) March 31, 2024 As Previously Reported Restatement Note As Restated NET REVENUE $ 1,307,062 — $ 1,307,062 OPERATING COSTS AND EXPENSE Cost of revenues ( 2,119,845 ) — ( 2,119,845 ) Sales and marketing expenses ( 4,491 ) — ( 4,491 ) Direct labor and factory overheads incurred during plant shutdown ( 3,734,689 ) — ( 3,734,689 ) General and administrative expenses ( 717,456 ) — ( 717,456 ) TOTAL OPERATING COSTS AND EXPENSE ( 6,576,481 ) — ( 6,576,481 ) LOSS FROM OPERATIONS ( 5,269,419 ) — ( 5,269,419 ) OTHER INCOME (EXPENSE) Interest expense ( 24,830 ) — ( 24,830 ) Interest income 36,060 — 36,060 Other expense, net ( 4,003 ) — ( 4,003 ) TOTAL OTHER INCOME, NET 7,227 — 7,227 LOSS BEFORE INCOME TAXES ( 5,262,192 ) — ( 5,262,192 ) INCOME TAX EXPENSE 1,270,060 — 1,270,060 NET LOSS $ ( 3,992,132 ) — $ ( 3,992,132 ) COMPREHENSIVE LOSS: NET LOSS $ ( 3,992,132 ) — $ ( 3,992,132 ) OTHER COMPREHENSIVE (LOSS) INCOME - Foreign currency translation adjustments ( 393,867 ) — ( 393,867 ) TOTAL COMPREHENSIVE LOSS $ ( 4,385,999 ) — $ ( 4,385,999 ) BASIC AND DILUTED LOSS PER SHARE: $ ( 0.37 ) ( 3.29 ) (c) $ ( 3.66 ) BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES: $ 10,726,924 ( 9,635,362 ) (c) $ 1,091,562 27 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 22 –RESTATEMENT – Continued The effects of the restatement on the consolidated statement of operations income (loss) for the three months ended March 31, 2025, are summarized in the following table: March 31, 2025 As Previously Reported Restatement Note As Restated NET REVENUE $ 1,604,447 — $ 1,604,447 OPERATING COSTS AND EXPENSE Cost of revenues ( 1,594,270 ) ( 3,194 ) (a) ( 1,597,464 ) Sales and marketing expenses ( 5,053 ) — ( 5,053 ) Direct labor and factory overheads incurred during plant shutdown ( 3,225,808 ) — ( 3,225,808 ) General and administrative expenses ( 1,389,523 ) ( 37,486 ) (a) ( 1,427,009 ) TOTAL OPERATING COSTS AND EXPENSE ( 6,214,654 ) ( 40,680 ) ( 6,255,334 ) LOSS FROM OPERATIONS ( 4,610,207 ) ( 40,680 ) ( 4,650,887 ) OTHER INCOME (EXPENSE) Interest expense ( 21,722 ) — ( 21,722 ) Interest income 2,429 — 2,429 TOTAL OTHER INCOME, NET ( 19,293 ) — ( 19,293 ) LOSS BEFORE INCOME TAXES ( 4,629,500 ) ( 40,680 ) ( 4,670,180 ) INCOME TAX EXPENSE — — — NET LOSS $ ( 4,629,500 ) ( 40,680 ) $ ( 4,670,180 ) COMPREHENSIVE LOSS: NET LOSS $ ( 4,629,500 ) ( 40,680 ) $ ( 4,670,180 ) OTHER COMPREHENSIVE (LOSS) INCOME - Foreign currency translation adjustments 222,016 26,905 (b) 248,921 TOTAL COMPREHENSIVE LOSS $ ( 4,407,484 ) ( 13,775 ) $ ( 4,421,259 ) BASIC AND DILUTED LOSS PER SHARE $ ( 0.40 ) ( 3.53 ) (c) $ ( 3.93 ) BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES: 11,685,431 ( 10,498,018 ) (c) 1,187,413 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 in cost of revenue and general and administrative expenses were 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. (c) The change in basic and diluted loss per share is due to the Company’s 1-for-10 reverse stock split on October 27, 2025. 28 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 22 –RESTATEMENT – Continued The effects of the restatement on the consolidated statement of stockholders’ deficit for the three months ended March 31, 2024 are summarized in the following table: SCHEDULE OF CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT Reference issued outstanding stock Amount stock capital unappropriated appropriated Income(loss) Total Common stock Restatement Number of shares Number of shares Number of treasury Treasury Additional paid-in Retained earnings Retained earnings Accumulated other comprehensive Reference issued outstanding stock Amount stock capital unappropriated appropriated Income(loss) Total THREE MONTHS ENDED MARCH 31, 2024 (As Previously Reported) BALANCE AT DECEMBER 31, 2023 11,012,754 10,726,924 285,830 $ 24,623 $ ( 1,372,673 ) - $ 101,688,262 $ 96,294,256 $ 26,667,097 $ ( 18,053,269 ) $ 205,248,296 Currency translation adjustment — — — — — — — — ( 393,867 ) ( 393,867 ) Net loss for three months ended March 31, 2024 — — — — — - — ( 3,992,132 ) — — ( 3,992,132 ) BALANCE AT MARCH 31, 2024 11,012,754 10,726,924 285,830 $ 24,623 $ ( 1,372,673 ) - $ 101,688,262 $ 92,302,124 $ 26,667,097 $ ( 18,447,136 ) $ 200,862,297 THREE MONTHS ENDED MARCH 31, 2024 (Restatement Impact) BALANCE AT DECEMBER 31, 2023 (a) ( 9,892,609 ) ( 9,635,362 ) ( 257,247 ) $ ( 24,063 ) $ — - $ 24,063 $ — $ — $ — $ — Currency translation adjustment — — — — — — — — — — Net loss for three months ended March 31, 2024 — — — — — - — — — — — BALANCE AT MARCH 31, 2024 (a) ( 9,892,609 ) ( 9,635,362 ) ( 257,247 ) $ ( 24,063 ) $ — - $ 24,063 $ — $ — $ — $ — THREE MONTHS ENDED MARCH 31, 2024 (As Restated) BALANCE AT DECEMBER 31, 2023 1,120,145 1,091,562 28,583 $ 560 $ ( 1,372,673 ) - $ 101,712,325 $ 96,294,256 $ 26,667,097 $ ( 18,053,269 ) $ 205,248,296 Currency translation adjustment — — — — — — — — ( 393,867 ) ( 393,867 ) Net loss for three months ended March 31, 2024 — — — — — - — ( 3,992,132 ) — — ( 3,992,132 ) BALANCE AT MARCH 31, 2024 1,120,145 1,091,562 28,583 $ 560 $ ( 1,372,673 ) - $ 101,712,325 $ 92,302,124 $ 26,667,097 $ ( 18,447,136 ) $ 200,862,297 29 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 22 –RESTATEMENT – Continued The effects of the restatement on the consolidated statement of stockholders’ deficit for the three months ended March 31, 2025 are summarized in the following table: Reference issued outstanding stock Amount stock issued capital unappropriated appropriated Income(loss) Total Common stock Number Number Number Accumulated Restatement of shares of shares of treasury Treasury Share to be Additional paid-in Retained earnings Retained earnings other comprehensive Reference issued outstanding stock Amount stock issued capital unappropriated appropriated Income(loss) Total THREE MONTHS ENDED MARCH 31, 2025 (As Previously Reported) BALANCE AT DECEMBER 31, 2024 11,012,754 10,726,924 285,830 $ 24,623 $ ( 1,372,673 ) $ 194,700 $ 101,688,262 $ 37,358,804 $ 26,667,097 $ ( 20,854,143 ) $ 143,706,670 Restricted shares to be issued for service 2,619,694 2,619,694 — 1,311 — ( 194,700 ) 3,479,030 — — — 3,285,641 Acquisition of assets — — — — — — — — — — — Currency translation adjustment — — — — — — — — — 222,016 222,016 Net loss for three months ended March 31, 2025 — — — — — — — ( 4,629,500 ) — — ( 4,629,500 ) BALANCE AT MARCH 31, 2025 13,632,448 13,346,618 285,830 $ 25,934 $ ( 1,372,673 ) $ — $ 105,167,292 $ 32,729,304 $ 26,667,097 $ ( 20,632,127 ) $ 142,584,827 THREE MONTHS ENDED MARCH 31, 2025 (Restatement Impact) BALANCE AT DECEMBER 31, 2024 (a)(b) ( 9,892,609 ) ( 9,635,362 ) ( 257,247 ) $ ( 24,063 ) $ — $ — $ 24,063 $ ( 964,920 ) $ — $ 70,825 $ ( 894,095 ) Restricted shares to be issued for service (d) ( 2,563,694 ) ( 2,563,694 ) — ( 1,283 ) — — ( 3,088,258 ) — — — ( 3,089,541 ) Acquisition of assets (d) 205,969 205,969 — 103 — — 3,089,438 — — — 3,089,541 Currency translation adjustment (c) — — — — — — — — — 26,905 26,905 Net loss for three months ended March 31, 2025 (b) — — — — — — — ( 40,680 ) — — ( 40,680 ) BALANCE AT MARCH 31, 2025 (a)(b) ( 12,250,334 ) ( 11,993,087 ) ( 257,247 ) $ ( 25,243 ) $ — $ — $ 25,243 $ ( 1,005,600 ) $ — $ 97,730 $ ( 907,870 ) THREE MONTHS ENDED MARCH 31, 2025 (As Restated) BALANCE AT DECEMBER 31, 2024 1,120,145 1,091,562 28,583 $ 560 $ ( 1,372,673 ) $ 194,700 $ 101,712,325 $ 36,393,884 $ 26,667,097 $ ( 20,783,318 ) $ 142,812,575 Restricted shares to be issued for service 56,000 56,000 — 28 — ( 194,700 ) 390,772 — — — 196,100 Acquisition of assets 205,969 205,969 — 103 — — 3,089,438 — — — 3,089,541 Currency translation adjustment — — — — — — — — — 248,921 248,921 Net loss for three months ended March 31, 2025 — — — — — — — ( 4,670,180 ) — — ( 4,670,180 ) BALANCE AT MARCH 31, 2025 1,382,114 1,353,531 28,583 $ 691 $ ( 1,372,673 ) $ — $ 105,192,535 $ 31,723,704 $ 26,667,097 $ ( 20,534,397 ) $ 141,676,957 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 cost of revenue and general and administrative expenses increased. The increase of 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. (c) The change in the accumulated other comprehensive loss represents the foreign currency translation differences in the financial statements. (d) The amount of $ 3,089,541 originally classified as restricted shares to be issued for service was reclassified to acquisition of assets, as the shares were issued in connection with the asset acquisition. 30 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 22 –RESTATEMENT – Continued The effects of the restatement on the consolidated statement of cash flows for the three months ended March 31, 2024, are summarized in the following table: SCHEDULE OF CONSOLIDATED STATEMENT OF CASH FLOWS March 31, 2024 As Previously Reported Restatement Note As Restated CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 3,992,132 ) — $ ( 3,992,132 ) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Amortization on capital lease 24,830 — 24,830 Depreciation and amortization 4,733,475 ( 313,941 ) (a) 4,419,534 Stock-based compensation expense Deferred tax asset ( 1,270,060 ) — ( 1,270,060 ) Amortization of operating lease right-of-use asset 217,345 — 217,345 Amortization of finance lease right-of-use asset — 313,941 (a) 313,941 Accrued interest receivable Changes in assets and liabilities Accounts receivable ( 402,545 ) — ( 402,545 ) Inventories ( 57,859 ) — ( 57,859 ) Prepayment and deposits ( 44,903 ) — ( 44,903 ) Advance from customers ( 36,222 ) — ( 36,222 ) Other receivables ( 774 ) — ( 774 ) Accounts and other payable and accrued expenses ( 17,847 ) — ( 17,847 ) Taxes payable ( 257,766 ) — ( 257,766 ) Lease liabilities ( 226,018 ) — ( 226,018 ) Net cash used in operating activities ( 1,330,476 ) — ( 1,330,476 ) CASH FLOWS FROM INVESTING ACTIVITIES Loans to third parties Net cash used in investing activities — — — CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowing Proceeds from short-term borrowing Net cash used in financing activities — — — EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ( 131,622 ) — ( 131,622 ) NET DECREASE IN CASH AND CASH EQUIVALENTS ( 1,462,098 ) — ( 1,462,098 ) CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 72,223,894 — 72,223,894 CASH AND CASH EQUIVALENTS - END OF YEAR $ 70,761,796 — $ 70,761,796 March 31, 2024 As Previously Reported Restatement Note As Restated SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for: Paid for taxes $ 481,153 — $ 481,153 Interest paid $ 24,830 — $ 24,830 31 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 22 –RESTATEMENT – Continued The effects of the restatement on the consolidated statement of cash flows for the three months ended March 31, 2025, are summarized in the following table: March 31, 2025 As Previously Reported Restatement Note As Restated CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 4,629,500 ) ( 40,680 ) (b) $ ( 4,670,180 ) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Amortization on capital lease 21,722 39,135 (a) 60,857 Depreciation and amortization 4,003,524 ( 774,157 ) (a) 3,229,367 Stock-based compensation expense 196,100 — 196,100 Amortization of operating lease right-of-use asset 217,801 — 217,801 Amortization of finance lease right-of-use asset — 775,702 (a) 775,702 Changes in assets and liabilities: Accounts receivable ( 1,549,443 ) — ( 1,549,443 ) Inventories ( 139,285 ) — ( 139,285 ) Prepayment and deposits ( 7,340 ) — ( 7,340 ) Other receivables ( 31,987 ) — ( 31,987 ) Accounts and other payable and accrued expenses 401,190 — 401,190 Taxes payable 162,411 — 162,411 Lease liabilities ( 225,321 ) — ( 225,321 ) Net cash used in operating activities ( 1,580,128 ) — ( 1,580,128 ) CASH FLOWS FROM INVESTING ACTIVITIES Net cash used in investing activities — — — CASH FLOWS FROM FINANCING ACTIVITIES Net cash used in financing activities — — — EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 28,011 — 28,011 NET DECREASE IN CASH AND CASH EQUIVALENTS ( 1,552,117 ) — ( 1,552,117 ) CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 10,075,162 — 10,075,162 CASH AND CASH EQUIVALENTS - END OF YEAR $ 8,523,045 — $ 8,523,045 March 31, 2025 As Previously Reported Restatement Note As Restated SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for: Paid for taxes $ 77,386 — $ 77,386 Interest paid $ 21,722 39,135 (a) $ 60,857 32 GULF RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2025 (Expressed in U.S. dollars) (UNAUDITED) NOTE 22 –RESTATEMENT – Continued 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 equipment. The leased portion was reclassified as finance lease right-of-use assets. (b) Regarding the increase in net loss, the main reason was that cost of revenue and general and administrative expenses increased. The increase in 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. 33