GULF RESOURCES, INC. 10-Q/A

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Cautionary Note Regarding Forward-Looking Statements The discussion below contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act. We have used words such as “believes,” “intends,” “anticipates,” “expects” and similar expressions to identify forward-looking statements. These statements are based on information currently available to us and are subject to a number of risks and uncertainties that may cause our actual results of operations, financial condition, cash flows, performance, business prospects and opportunities and the timing of certain events to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances, or for any other reason. Overview We are a Nevada holding company which conducts operations through our wholly-owned China-based subsidiaries. Our business is conducted and reported in four segments, namely, bromine, crude salt, chemical products and natural gas. Through our wholly-owned subsidiary, SCHC, we produce and trade bromine, and through our wholly-owned subsidiary, SHSI, we produce and trade crude salt. We are one of the largest producers of bromine in China, as measured by production output. Elemental bromine is used to manufacture a wide variety of bromine compounds used in industry and agriculture. Bromine also is used to form intermediary chemical compounds such as Tetramethylbenzidine. Bromine is commonly used in brominated flame retardants, fumigants, water purification compounds, dyes, medicines and disinfectants. Crude salt is the principal material in alkali production as well as chlorine alkali production and is widely used in the chemical, food and beverage, and other industries. Through our wholly-owned subsidiary, SYCI, we manufacture and sell chemical products used in oil and gas field exploration, oil and gas distribution, oil field drilling, papermaking chemical agents, inorganic chemicals and materials that are used for human and animal antibiotics. Our wholly-owned subsidiary, DCHC, was established to explore and develop natural gas and brine resources (including bromine and crude salt) in Sichuan Province, China. Bromine and Crude Salt As disclosed in the Company’s Current Report on Form 8-K filed on September 8, 2017, the Company received, on September 1, 2017, letters from the Yangkou County, Shouguang City government addressed to each of its subsidiaries, SCHC and SYCI, which stated that in an effort to improve the safety and environmental protection management level of chemical enterprises, the plants are requested to immediately stop production and perform rectification and improvements in accordance with the country’s new safety and environmental protection requirements. In the Company’s press release of August 11, 2017 and on its conference call of August 14, 2017, the Company addressed concerns that increased government enforcement of stringent environmental rules that were adopted in early 2017 to ensure corporations bring their facilities up to necessary standards so that pollution and other negative environmental issues are limited and remediated, could have an impact on our business in both the short and long-term. The Company also expressed that although it believed its facilities were fully compliant at the time, the Company did not know how its facilities would fare under the new rules. Teams of inspectors from the government were sent to many provinces to inspect all mining and manufacturing facilities. The local government requested that facilities be closed, so that the facilities could undergo the inspection and analysis in the most efficient manner by inspectors’ team. As a result, our facilities were closed on September 1, 2017. The Company believes that this is another step by the government to improve the environment. It further believes the goal of the government is not to close all plants, but rather to codify the regulations related to project approval, land use, planning approval and environmental protection assessment approval so that illegal plants are not able to open in the future and so that plants close to population centers do not cause serious environmental damage. In addition, the Company believes that the Shandong provincial government wants to assure that each of its regional and county governments has applied the Notice in a consistent manner. The Shouguang City Bromine Association, on behalf of all the bromine producers in Shouguang, initiated negotiations with the local government agencies. The local governmental agencies acknowledged the fact that their initial requirements for the bromine industry did not include the project, the planning and the land use rights approvals, which were later introduced by the provincial government as new requirements. The Company understood from the local government that local government was coordinating with various government agencies to solve these three outstanding approval issues in a timely manner and that all impacted bromine plants will not be allowed to commence production prior to obtaining those approvals. In February 2019, the Company received a notification from the local government of Yangkou County that its Factories No. 1, No. 4, No. 7 and No. 9 passed inspection and were allowed to resume operations. In April 2019, Factory No. 1 and No. 7 resumed operations. Subsequently, the Company received approval dated February 27, 2020, issued by the local governmental authority which allows us to resume production after the winter temporary closure. Further, the Company received another approval from the Shouguang Yangkou People’s Government dated on March 5, 2020, 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.7 and No.1 started trial production in middle-March 2020, and commenced commercial production on April 3, 2020. The Company received oral notification from the government regarding Factory No. 8, allowing it to resume production in August 2022. Factory No.8 began contributing revenue in the fourth quarter of 2022. 28 The Company is awaiting governmental approval for Factories No. 2 and No. 10. To our knowledge, the government is finalizing plans for all mining areas, including flood prevention measures. As a result, we may be required to make certain modifications to our existing wells and aqueducts prior to commencement of operations of these factories in order to satisfy the local government’s requirements. The Company completed its flood prevention project in December 2023. This project was implemented for safeguarding its bromine facilities. Pursuant to the notification from the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 15, 2024, until February 12, 2025. In compliance with the notification, the Company ceased production at its bromine facilities during this period and resumed preparation operations at the bromine and crude salt factories as scheduled in February 2025. Chemical Products On November 24, 2017, the Company received a letter from the People’s Government of Yangkou County, Shouguang City notifying the Company that due to the new standards and regulations relating to safety production and environmental pollution, from certain local governmental departments, such as the municipal environmental protection department, the security supervision department and the fire department, its chemical enterprises would have to be relocated to a new industrial park called Bohai Marine Fine Chemical Industry Park. Although our chemical companies were in compliance with regulations, they were also close to a residential area. As a result, the government determined we should relocate to the Bohai park. Chemical companies that are not being asked to move into the park are being permanently closed. Since our factories closed, the Company has secured from the government the land use rights for its chemical plant. On January 6, 2020, the Company received the environmental protection approval by the government of Shouguang City, Shandong Province for the proposed Yuxin Chemical factory. Construction of the new chemical facilities at Bohai Marine Fine Chemical Industrial Park commenced in June 2020. Initially, the construction was projected to last around one year, with an additional six months for equipment installation and testing. However, due to the COVID epidemic and electrical restrictions, the opening of the chemical factory has been postponed. The Company has received the refrigeration and air compressor units. Additionally, the procurement of the final equipment for our chemical factory has been postponed until we have a better understanding of the potential for derivative bromine products. We anticipate proceeding with the completion of its chemical factory in due course. Natural Gas In January 2017, the Company completed the construction of the first brine water and natural gas well field in Daying County, Sichuan Province, and commenced trial production in January 2019. On May 29, 2019, the Company received verbal notice from the government of Tianbao Town, Daying County, Sichuan Province, mandating the need for project approval for its Daying well, encompassing the entire natural gas and brine water project. This also includes approvals for safety production inspection, environmental protection assessment, and to solve the related land issue. Until these approvals are obtained, the Company must temporarily suspend trial production at its natural gas well in Daying. Additionally, in compliance with the Chinese government new policies, the Company is required to obtain an exploration license for bromine and a mining license for natural gas. Pursuant to the Opinions of the Ministry of Natural Resources on Several Issues in Promoting the Reform of Mineral Resources Management (Trial) promulgated by the Ministry of Natural Resources of PRC on January 9, 2020, which came into effect on May 1, 2020, privately owned enterprises are allowed to participate in natural gas production. The Company is engaged in ongoing discussions with the government of Daying County regarding the establishment of a joint venture for the exploration and production of natural gas and brine products in Sichuan. 29 Nasdaq Compliance The Company received a notice (the “Initial Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) on April 18, 2024 notifying the Company that due to the Company’s failure to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, with the SEC, the Company is not in compliance with Nasdaq’s continued listing requirements under Nasdaq Listing Rule 5250(c)(1) (the “Rule”), which requires the timely filing of all required periodic reports with the SEC, and the Company subsequently received a notice (the “May Notice”) from Nasdaq on May 21, 2024 due to the Company’s non-compliance with the Rule as a result of the Company’s failure to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024. The May Notice states that the Company has until June 17, 2024 to submit to Nasdaq a plan to regain compliance with the Rule. As previously announced, on November 5, 2024, the Staff notified the Company that the bid price for the Common Stocks no longer satisfied Nasdaq Listing Rule 5450(a) (1), the minimum bid price requirement applicable to The Nasdaq Global Select Market issuers. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company was afforded an initial 180-calendar day grace period, through May 5, 2025, to regain compliance with the minimum bid price requirement. Issuers listed on The Nasdaq Global Select Market are not eligible for a second 180-day grace period under the Nasdaq Listing Rules. However, based upon the Company’s compliance with the various criteria required under Nasdaq Listing Rule 5810(c)(3)(A)(ii) to obtain a second 180-day grace period applicable to issuers listed on The Nasdaq Capital Market, the Company applied to transfer the listing of its Common Stocks to The Nasdaq Capital Market. On May 6, 2025, the Company was notified by the Nasdaq that the Company’s request to transfer the listing of its Common Stock, from The Nasdaq Global Select Market tier to The Nasdaq Capital Market tier has been granted, and that the Company was granted a second 180-calendar day period, or until November 3, 2025 (the “Second Compliance Period”), to regain compliance with the requisite bid price requirement, as set forth in Nasdaq Listing Rule 5550(a)(2). The transfer of the listing of the Common Stocks from The Nasdaq Global Select Market to The Nasdaq Capital Market took effect with the opening of business on May 8, 2025. The transfer is not expected to impact trading in the Common Stocks, which will continue to trade on Nasdaq under the symbol “GURE.” On November 12, 2025, the Company issued a press release providing certain updates on its hearing scheduling process with the Nasdaq Hearings Panel. The hearing did not take place because the Company subsequently regained compliance with the applicable Nasdaq listing requirement. 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 continues 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. Our current corporate structure chart is set forth in the following diagram: As a result of our acquisition of SCHC, our historical financial statements and the information presented below reflects the accounts of SCHC, SHSI, SYCI and DCHC. The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto appearing elsewhere in this report. On December 22, 2025 SYCI was sold. 30 RESULTS OF OPERATIONS The following table presents certain information derived from the condensed consolidated statements of operations, cash flows and stockholders’ equity for the three-month periods ended March 31, 2026 and 2025. Comparison of the Three-Month Periods Ended March 31, 2026 and 2025 Percent Change Three-Month Period Three-Month Period Increase/ Ended March 31, 2026 Ended March 31, 2025(Restated) (Decrease) Net revenue $ 2,368,626 $ 1,604,447 48 % Cost of revenue $ (2,353,412 ) $ (1,597,464 ) 47 % Gross profit $ 15,214 $ 6,983 118 % Sales and marketing expenses $ (5,448 ) $ (5,053 ) 8 % Direct labor and factory overheads incurred during plant shutdown $ (2,743,262 ) (3,225,808 ) (15 )% General and administrative expenses $ (1,323,101 ) $ (1,427,009 ) (7 )% Loss from operations $ (4,056,597 ) $ (4,650,887 ) (13 )% Interest expense $ (123,444 ) $ (21,722 ) (468 )% Interest income $ 253,660 $ 2,429 10,342 % Loss before income taxes $ (3,926,381 ) $ (4,670,180 ) (16 )% Income tax expense $ — $ — — Net loss $ (3,926,381 ) $ (4,670,180 ) (16 )% Net Loss for the three-month period ended March 31, 2026 decreased to $3,926,381 from $4,670,180 in the same period in 2025, mainly due to the net revenue increased to $2,368,626 for the three-month period ended March 31, 2026 as compared to $1,604,447 in the same period in 2025. Net Revenue. The table below shows the changes in net revenue in the respective segments of the Company for the three-month period ended March 31, 2026 as compared to the same period in 2025: Net Revenue by Segment Percent Change Three-Month Period Ended Three-Month Period Ended Increase March 31, 2026 March 31, 2025 of Net Revenue Segment % of total % of total Bromine $ 2,249,950 95 % $ 1,481,869 92 % 52 % Crude Salt 118,676 5 % 122,578 8 % (3 )% Chemical Products — — — — — Natural Gas — — — — — Total sales $ 2,368,626 100 % $ 1,604,447 100 % 48 % Three-Month Period Ended Percentage Change Increase Bromine and crude salt segments product sold in tonnes March 31, 2026 March 31, 2025 (Decrease) Bromine 455 402 13 % Crude Salt 4,659 4,733 (2 )% Bromine segment For the three-month periods ended March 31, 2026 and 2025, the net revenue for the bromine segment was $2,249,950 and $1,481,869, respectively. The increase of the net revenue of bromine was due to the 13% increase in tonnes sold and the 34% increase in average selling price of bromine. Crude salt segment For the three-month periods ended March 31, 2026 and 2025, the net revenue for the crude salt segment was $118,676 and $122,578, respectively. The decrease of net revenue of crude salt was mainly due to the 2% decrease in tonnes sold and the 2% decrease in average selling price of crude salt for the three-month period ended March 31, 2026. Chemical products segment For the three-month periods ended March 31, 2026 and 2025, the net revenue for the chemical products segment was nil due to the closure of our chemical factories since September 1, 2017. Natural g as segment For the three-month periods ended March 31, 2026 and 2025, the net revenue for the natural gas segment was nil. 31 Cost of Revenue Cost of Revenue by Segment Percent Change Three-Month Period Ended Three-Month Period Ended of Cost of March 31, 2026 March 31, 2025(Restated) Revenue Segment % of total % of total Bromine $ 2,283,326 97 % $ 1,533,224 96 % 49 % Crude Salt 70,086 3 % 64,240 4 % 9 % Chemical Products — — — — — Natural Gas — — — — — Total $ 2,353,412 100 % $ 1,597,464 100 % 47 % Cost of revenue reflects mainly the raw materials consumed and the direct salaries and benefits of staff engaged in the production process, electricity, depreciation and amortization of manufacturing plants and machinery and other manufacturing costs. Our cost of revenue was $2,353,412 for the three-month period ended March 31, 2026, an increase of $755,948 (or 47%) as compared to the same period in 2025 due to the increase of net revenue by 48% for the three-month period ended March 31, 2026 as compared to the same period in 2025. Bromine production capacity and utilization of our factories The table below represents the annual capacity and utilization ratios for all of our bromine producing properties: Annual Production Capacity (in tonnes) Utilization Ratio (i) Three-month period ended March 31, 2025 31,506 15 % Three-month period ended March 31, 2026 31,506 16 % Variance of the three-month periods ended March 31, 2026 and 2025 — 1 % (i) Utilization ratio is calculated based on the annualized actual production volume in tonnes for the periods divided by the annual production capacity in tonnes. Bromine segment For the three-month periods ended March 31, 2026 and 2025 the cost of revenue for the bromine segment was $2,283,326 and $1,533,224, respectively. The increase in costs is mainly due to the increase in sales volume. Crude salt segment For the three-month periods ended March 31, 2026 and 2025 the cost of revenue for the crude salt segment was $70,086 and $64,240, respectively. The increase in costs is mainly due to the unit cost of raw salt issued increased. Chemical products segment Cost of revenue for our chemical products segment for the three-month periods ended March 31, 2026 and 2025 was nil. Natural g as segment Cost of revenue for our natural gas segment for the three-month periods ended March 31, 2026 and 2025 was nil. 32 Gross Profit. Gross profit was $15,214, or 0.6% of net revenue for three-month period ended March 31, 2026, representing an increase of $8,231, as compared to a gross profit of $6,983, or 0.4% of net revenue for the same period in 2025. Gross Profit (Loss) by Segment % Point Change of Gross Three-Month Period Ended Three-Month Period Ended Profit (Loss) March 31, 2026 March 31, 2025(Restated) Margin Segment Gross Profit (Loss) Margin Gross Profit (Loss) Margin Bromine $ (33,376 ) (1.5 )% $ (51,355 ) (3.5 )% 2 % Crude Salt $ 48,590 40.9 % $ 58,338 47.6 % (6.6 )% Chemical Products $ — — $ — — — Natural Gas $ — — $ — — — Total Gross Profit $ 15,214 0.6 % $ 6,983 0.4 % 0.2 % Bromine segment For the three-month period ended March 31, 2026, the gross loss margin for our bromine segment was 1.5%, compared to 3.5% in the three-month period ended March 31, 2025. The decrease in gross loss margin was primarily attributable to the higher average selling price of bromine of $4,945 per ton in the three-month period ended March 31, 2026 compared to $3,686 per ton in the three-month period ended March 31, 2025. Bromine tonnes sales also increased from 402 tonnes for the three-month period ended March 31, 2025 to 455 tonnes for the three-month period ended March 31, 2026. Crude salt segment For the three-month period ended March 31, 2026, the gross profit margin for our crude salt segment was 40.9%, compared to 47.6% in the same period in 2025, representing a 6.6% decrease. For the three-month period ended March 31, 202 6, the average selling price of raw salt decreased by 2% compared to the three-month period ended March 31, 2025. Chemical products segment For the three-month periods ended March 31, 2026 and 2025, the gross profit margin for our chemical products segment was 0%. Natural g as segment For the three-month periods ended March 31, 2026 and 2025, the gross profit margin for our natural gas segment was 0%. Sales and Marketing Expenses . Sales and marketing expenses were $5,448 for the three-month period ended March 31, 2026, an increase of $395 (or 8%) as compared to $5,053 for the same period in 2025 Direct labor and factory overheads incurred during plant shutdown. On September 1, 2017, the Company received notification from the government of Yangkou County, Shouguang City of PRC that stated that production at all its bromine and crude salt and chemical factories should be halted with immediate effect in order for the Company to perform rectification and improvement in accordance with the county’s new safety and environmental protection requirements. 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 Plant to Bohai Park. As a result, direct labor and factory overhead costs (including depreciation of plant and machinery) in the amount of $2,743,262 and $3,225,808 incurred for the three-month periods ended March 31, 2026 and 2025, respectively, of factories that have not resumed production were presented as part of the operating expense. 33 General and Administrative Expenses. General and administrative expenses were $1,323,101 for the three-month period ended March 31, 2026, a decrease of $103,908 (or 7%) as compared to $1,427,009 for the same period in 2025. Loss from Operations. Loss from operations was $4,056,597 the three-month period ended March 31, 2026, compared to loss from operations of $4,650,887 in the same period in 2025. Loss from Operations by Segment Three-Month Period Ended March 31, 2026 Three-Month Period Ended March 31, 2025(Restated) Segment: % of total % of total Bromine $ (3,067,778 ) 80.2 % $ (3,374,506 ) 77.2 % Crude Salt (727,679 ) 19.0 % (587,809 ) 13.5 % Chemical Products — — (361,892 ) 8.3 % Natural Gas (31,809 ) 0.8 % (44,844 ) 1 % Loss from operations before corporate costs (3,827,266 ) 100 % (4,369,051 ) 100 % Corporate cost (229,331 ) (281,836 ) Loss from operations $ (4,056,597 ) $ (4,650,887 ) Bromine segment Loss from operations from our bromine segment was $3,067,778 for the three-month period ended March 31, 2026, compared to loss from operations of $3,374,506 in the same period in 2025. This decrease was due to the 13% increase in tonnes sold and a 34% increase in average selling price. Crude salt segment Loss from operations from our crude salt segment was $727,679 for the three-month period ended March 31, 2026, compared to loss from operations of $587,809 in the same period in 2025. The main reason was due to the rise in amortization of the salt pans. Chemical products segment Loss from operations from our chemical products segment was $0 for the three-month period ended March 31, 2026, compared to loss from operations of $361,892 in the same period in 2025. The reason for the reduction was due to the sale of SYCI completed by December, 2025. Natural g as segment Loss from operations from our natural gas segment was $31,809 for the three-month period ended March 31, 2026, compared to loss from operations of $44,844 in the same period in 2025. Interest Income. Interest income of $253,660 mainly represented interest income from loans to third parties for the three-month period ended March 31, 2026, an increase of $251,231 as compared to the same period in 2025. Interest Expenses. Interest expense of $123,444 represented bank interest expense and interest on finance lease for the three-month period ended March 31, 2026, an increase of $101,722 as compared to the same period in 2025. Net Loss. Net loss was $3,926,381 for the three-month period ended March 31, 2026, compared to a net loss of $4,670,180 in the same period in 2025. 34 LIQUIDITY AND CAPITAL RESOURCES As of March 31, 2026, cash and cash equivalents were $6,537,505 as compared to $3,793 as of December 31, 2025. The components of this increase of $6,533,712 are reflected below. Statement of Cash Flows Three-Month Period Ended March 31, 2026 2025(Restated) Net cash provided by/(used in) operating activities $ 1,090,974 $ (1,580,128 ) Net cash provided by investing activities $ 5,029,397 $ — Net cash provided by financing activities $ 287,367 $ — Effects of exchange rate changes on cash and cash equivalents $ 125,974 $ 28,011 Net increase(decrease) in cash and cash equivalents $ 6,533,712 $ (1,552,117 ) For the three-month period ended March 31, 2026, we met our working capital and capital investment requirements by using cash on hand. Net Cash provided by (used in) Operating Activities During the three-month period ended March 31, 2026, cash flow provided by operating activities of approximately $1.09 million was mainly due to a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $3.36 million, amortization of finance lease right-of-use asset of $0.73 million, an increase in accounts receivable of $0.65 million, offset by a net loss of $3.93 million. During the three-month period ended March 31, 2025, cash flow used in operating activities of approximately $1.58 million was mainly due to a net loss of $4.67 million, an increase in accounts receivable of $1.55 million, offset by a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $3.23 million, and amortization of finance lease right-of-use asset of $0.78 million and an increase in accrued expenses and other payable of $0.40 million. Accounts receivable Cash collections on our accounts receivable had a major impact on our overall liquidity. The following table presents the aging analysis of our accounts receivable as of March 31, 2026 and December 31, 2025. March 31, 2026 December 31, 2025 % of total % of total Aged 1-30 days $ 2,674,441 100 % $ 1,409,269 43 % Aged 31-60 days — — 1,860,151 57 % Aged 61-90 days — — — — Aged 91-120 days — — — — Aged 121-150 days — — — — Aged 151-180 days — — — — Aged 181-210 days — — — — Aged 211-240 days — — — — Total $ 2,674,441 100 % $ 3,269,420 100 % The overall accounts receivable balance as of March 31, 2026 decreased by $594,979, as compared to those of December 31, 2025. We have policies in place to ensure that sales are made to customers with an appropriate credit history. We perform ongoing credit evaluation on the financial condition of our customers. 35 Inventories Our inventory consists of the following: March 31, 2026 December 31, 2025 % of total % of total Raw materials $ 56,109 13 % $ 20,079 4 % Finished goods 388,363 87 % 542,738 96 % Total $ 444,472 100 % $ 562,817 100 % The net inventory level as of March 31, 2026 decreased by $118,345, as compared to the net inventory level as of December 31, 2025. Raw materials increased by $36,030 as of March 31, 2026 as compared to December 31, 2025. Our finished goods decreased by $154,375 as of March 31, 2026 as compared to December 31, 2025. Net Cash Provided By Investing Activities During the three months ended March 31, 2026, net cash provided by investing activities was $5.03 million, attributable to repayments received on loans to third parties of $5.54 million, offset by purchases of fixed assets of $0.52 million. We have no investing activities for the three-month period ended March 31, 2025. Net Cash Provided By Financing Activities For the three-month period ended March 31, 2026, net cash provided by financing activities was $0.29 million, primarily due to proceeds from the issuance of units pursuant to a private placement. We have no financing activities for the three-month period ended March 31, 2025. We believe that our available funds and cash flows generated from operations will be sufficient to meet our anticipated ongoing operating needs and our obligations as they become due in the next twelve (12) months. We had available cash of approximately $6,537,505 on March 31, 2026, all of which is in highly liquid current deposits earning no or little interest. We do not anticipate paying cash dividends in the foreseeable future. We intend to continue to focus our efforts on the activities of SCHC, SHSI and DCHC as these segments continue to expand within the Chinese market. We may not be able to identify, successfully integrate or profitably manage any business or business segment we may acquire, or any expansion of our business. An expansion may involve a number of risks, including possible adverse effects on our operating results, diversion of management’s attention, inability to retain key personnel, risks associated with unanticipated events, risks associated with the pandemic and the financial statement effect of potential impairment of acquired intangible assets, any of which could have a materially adverse effect on our condition and results of operations. In addition, if competition for acquisition candidates or operations were to increase, the cost of acquiring businesses could increase materially. We may effect an acquisition with a target business which may be financially unstable, under-managed, or in its early stages of development or growth. Our inability to implement and manage our expansion strategy successfully may have a material adverse effect on our business and future prospects. Contractual Obligations and Commitments We have no significant contractual obligations not fully recorded on our consolidated balance sheets or fully disclosed in the notes to our consolidated financial statements. Additional information regarding our contractual obligations and commitments as of March 31, 2026 is provided in the notes to our consolidated financial statements. See “Notes to Condensed Consolidated Financial Statements. Material Off-Balance Sheet Arrangements We do not currently have any off balance sheet arrangements falling within the definition of Item 303(a) of Regulation S-K. Critical Accounting Policies and Estimates Our 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. We base its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions. We have identified the following critical accounting policies and estimates used by us in the preparation of our financial statements: accounts receivable and allowance for doubtful accounts, inventories and allowance for obsolescence, assets retirement obligation, property, plant and equipment, recoverability of long-lived assets, mineral rights, leases, revenue recognition, income taxes, and loss contingencies. These policies and estimates are described in the Company’s Form 10-Q for the three months ended March 31, 2026. Item 3. Quantitative and Qualitative Disclosures About Market Risk Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1). 36