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Item 2. Management’s Discussion and Analysis

2026-09-30 compared with 2026-08-28 · 488 added, 433 removed, 41 unchanged (96% of the section changed)

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

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.

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.

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

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.

Management’s Discussion and Analysis of Financial Condition and Results of Operations Cautionary Note Regarding Forward-Looking

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.

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.

our wholly-owned subsidiary, SCHC, we produce and trade bromine, and through our wholly-owned subsidiary, SHSI, we produce and trade

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.

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.

wholly-owned subsidiary, DCHC, was established to explore and develop natural gas and brine resources (including bromine and crude salt)

in Sichuan Province, China.

and Crude Salt

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.

a result, our facilities were closed on September 1, 2017.

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.

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

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.

9 passed inspection and were allowed to resume operations.

1 unchanged sentence

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.

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.

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.

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.

The Company is awaiting governmental approval

for Factories No.

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

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

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

The Company completed its flood prevention project in December

No.8 began contributing revenue in the fourth quarter of 2022.

Company is awaiting governmental approval for Factories No.

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.

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

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.

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.

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.

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

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.

In January 2017, the Company completed

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

in January 2019.

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

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

This also includes

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

Until these approvals

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

Additionally, in compliance with

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

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

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

enterprises are allowed to participate in 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.

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

As previously announced, on November 5,

2024, the Staff notified the Company that the bid price for the Common Shares 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 Shares to The Nasdaq Capital

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 Shares from The Nasdaq Global Select Market to The Nasdaq Capital Market took effect with the

open of business on May 8, 2025.

The transfer is not expected to impact trading in the Common Shares, 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.

Our current corporate structure chart is set forth in the following

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.

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 period ended March 31, 2026

Comparison of the Three-Month Periods Ended

March 31, 2026 and 2025

Three-Month Period

Ended March 31, 2026

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.

the construction was projected to last around one year, with an additional six months for equipment installation and testing.

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.

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.

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.

April 23, 2026 and May 26, 2026, the Company received notifications from the Listing Qualifications Department of The Nasdaq Stock Market

LLC (“Nasdaq”) stating that the Company was not in compliance with the Rule, which requires the timely filing of periodic

financial reports with the Securities and Exchange Commission.

April 23, 2026 notification related to the Company’s failure to timely file its Annual Report on Form 10-K for the fiscal year

ended December 31, 2025, and the May 26, 2026 notification related to the Company’s failure to timely file its Quarterly Report

on Form 10-Q for the quarter ended March 31, 2026.

May 26, 2026, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”),

indicating that, as a result of not having timely filed its quarterly report on Form 10-Q for the quarter ended March 31, 2026 (the “Form

10-Q”), and the Company remains delinquent in filing its annual report on Form 10-K for the year ended December 31, 2025 (the “Initial

Delinquent Filing”), the Company is in non-compliance with Nasdaq Listing Rule 5250(c)(1), which requires timely filing all required

periodic financial reports with the Securities Exchange Commission.

Notice has no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Capital Market.

As previously

disclosed in the current report on Form 8-K filed by the Company on April 27, the Company must submit a plan to regain compliance with

respect to these delinquent reports no later than June 22, 2026.

If the plan is accepted by Nasdaq, then Nasdaq would grant the Company

up to 180 calendar days from the due date of the Initial Delinquent Filing, or until October 12, 2026, to regain compliance.

May 29, 2026, the Company issued a press release announcing its receipt of the Notice.

June 1, 2026, the Company, following the Company’s ongoing dialogue with the staff of the United States Securities and Exchange

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

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

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

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

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

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

the “Prior Filings”).

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

as described above.

June 17, 2026, the Company submitted a plan to Nasdaq to regain compliance with the Rule.

On June 25, 2026, Nasdaq accepted the Company’s

compliance plan and granted the Company an exception period to file the delinquent periodic reports.

Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2025 on August 17, 2026, and filed its Quarterly

Report on Form 10-Q for the quarter ended March 31, 2026 on August 28, 2026.

June 25, 2026, the 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.

August 28, 2026, Nasdaq notified the Company that the Company had incurred an additional delinquency because it had not filed its Quarterly

Report on Form 10-Q for the quarter ended June 30, 2026.

Nasdaq requested that the Company submit an update to its compliance plan.

August 28, 2026, the Company submitted an updated compliance plan to Nasdaq requesting additional time to file its Quarterly Report on

Form 10-Q for the quarter ended June 30, 2026.

September 1, 2026, the Company received a written notice from Nasdaq (the “Extension Letter”) granting the Company an additional

exception to regain compliance with Nasdaq Listing Rule 5250(c)(1) (the “Rule”).

September 2, 2026, Nasdaq granted the Company an additional exception period and required the Company to file its Quarterly Report on

Form 10-Q for the quarter ended June 30, 2026 on or before October 12, 2026.

Nasdaq stated that, if the Company failed to file the Quarterly

Report by that date, Nasdaq Staff may provide written notification that the Company’s securities are subject to delisting.

Company may have the right to appeal a delisting determination to a Nasdaq Hearings Panel.

Nasdaq notifications and exception periods do not have an 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 Nasdaq listing requirements.

Company filed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 on September 30, 2026.

As of the date of this Quarterly

Report, the Company has filed the delinquent periodic reports identified in the Nasdaq notifications and is awaiting Nasdaq’s determination

regarding whether the Company has regained compliance with Nasdaq Listing Rule 5250(c)(1).

can be no assurance that Nasdaq will determine that the Company has regained compliance with the Rule, that the Company will satisfy

all other applicable Nasdaq listing requirements, or that the Company’s common stock will continue to be listed on Nasdaq.

current corporate structure chart is set forth in the following diagram:

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.

December 22, 2025 SYCI was sold.

OF OPERATIONS

following table presents certain information derived from the condensed consolidated statements of operations, cash flows and stockholders’

equity for the three-month and six-month periods ended June 30, 2026 and 2025.

of the Three-Month Periods Ended June 30, 2026 and 2025

June 30, 2026

June 30, 2025

Change Increase/

Cost of revenue

$ (10,565,684 )

$ (7,366,702 )

and marketing expenses

labor and factory overheads incurred during plant

and administrative expenses

$ (1,025,780 )

(loss) from operations

(loss) before income taxes

income (loss)

income for the three-month period ended June 30, 2026 increased to $1,143,193 from net loss of $814,364 in the same period in 2025, mainly

due to the net revenue increased to $12,886,977 for the three-month period ended June 30, 2026 as compared to $8,343,785 in the same

period in 2025.

table below shows the changes in net revenue in the respective segments of the Company for the three-month period ended June 30, 2026

as compared to the same period in 2025:

Revenue by Segment

and crude salt segments

sold in tonnes

the three-month periods ended June 30, 2026 and 2025, the net revenue for the bromine segment was $12,244,273 and $7,676,374, respectively.

The increase of the net revenue of bromine was due to the 17% increase in tonnes sold and the 37% increase in average selling price of

bromine for the three-month period ended June 30, 2026.

the three-month periods ended June 30, 2026 and 2025, the net revenue for the crude salt segment was $642,704 and $667,411, respectively.

The decrease of net revenue of crude salt was mainly due to the 4% decrease in average selling price

of crude salt for the three-month period ended June 30, 2026.

products segment

the three-month periods ended June 30, 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.

the three-month periods ended June 30, 2026 and 2025, the net revenue for the natural gas segment was nil.

Cost of Revenue

30, 2025 (Restated)

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

$10,565,684 for the three-month period ended June 30, 2026, an increase of $3,198,982 (or 43%) as compared to the same period in 2025

due to the increase of net revenue by 54% for the three-month period ended June 30, 2026 as compared to the same period in 2025.

production capacity and utilization of our factories

table below represents the annual capacity and utilization ratios for all of our bromine producing properties:

Annual Production

Capacity (in tonnes)

period ended June 30, 2025

Three-month period

Ended March 31, 2025

ended June 30, 2026

Variance of the three-month

periods ended June 30, 2026 and 2025

Utilization ratio is calculated based on the annualized actual production volume in tonnes for the periods divided by the annual production

capacity in tonnes.

the three-month periods ended June 30, 2026 and 2025, the cost of revenue for the bromine segment was $10,046,458 and $7,017,116,

respectively.

The increase in costs is mainly due to the increase in sales volume.

the three-month periods ended June 30, 2026 and 2025, the cost of revenue for the crude salt segment was $519,226 and $349,586, respectively.

The increase in costs is mainly due to the rise in amortization of the salt pans.

products segment

of revenue for our chemical products segment for the three-month periods ended June 30, 2026 and 2025 was nil.

of revenue for our natural gas segment for the three-month periods ended June 30, 2026 and 2025 was nil.

profit was $2,321,293, or 18% of net revenue for three-month period ended June 30, 2026, representing an increase of $1,344,210, as

compared to a gross profit of $977,083, or 12% of net revenue for the same period in 2025.

Profit by Segment

30, 2025 (Restated)

the three-month period ended June 30, 2026, the gross profit margin for our bromine segment was 18%, compared to 9% in the three-month

period ended June 30, 2025.

The increase in gross profit margin was primarily attributable to the higher average selling price of bromine

of $5,328 per ton in the three-month period ended June 30, 2026 compared to $3,892 per ton in the three-month period ended June 30, 2025.

Bromine tonnes sales also increased from 1,972 tonnes for the three-month period ended June 30, 2025 to 2,298 tonnes for the three-month

period ended June 30, 2026.

the three-month period ended June 30, 2026, the gross profit margin for our crude salt segment was 19%, compared to 48% in the same

period in 2025.

The decrease in gross profit margin was mainly attributable to the rise in amortization of the salt pans.

products segment

the three-month periods ended June 30, 2026 and 2025, the gross profit margin for our chemical products segment was 0%.

the three-month periods ended June 30, 2026 and 2025, the gross profit margin for our natural gas segment was 0%.

and Marketing Expenses

and marketing expenses were $18,174 for the three-month period ended June 30, 2026, an increase of $3,372 (or 23%) as compared for

the same period in 2025.

labor and factory overheads incurred during plant shutdown

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 $452,949 and $727,774 incurred for the three-month periods ended

June 30, 2026 and 2025, respectively, of factories that have not resumed production were presented as part of the operating expense.

and Administrative Expenses

and administrative expenses were $598,003 for the three-month period ended June 30, 2026, a decrease of $427,777 (or 42%) as compared

to $1,025,780 for the same period in 2025.

The decrease was mainly due to SYCI was sold in 2025.

(loss) from Operations

from operations was $1,252,167 for the three-month period ended June 30, 2026, compared to loss from operations of $791,273 in the same

period in 2025.

(loss) from Operations by Segment

30, 2025 (Restated)

(loss) from operations before corporate costs

(loss) from operations

from operations from our bromine segment was $1,409,472 for the three-month period ended June 30, 2026, compared to loss from operations

of $134,041 in the same period in 2025.

This increase was due to the 17% increase in tonnes sold and a 37% increase in average selling

from operations from our crude salt segment was $97,230 for the three-month period ended June 30, 2026, compared to loss from operations

of $181,160 in the same period in 2025.

products segment

from operations from our chemical products segment was $0 for the three-month period ended June 30, 2026, compared to loss from operations

of $348,203 in the same period in 2025.

The reason for the reduction was due to the sale of SYCI completed in December 2025.

from operations from our natural gas segment was $40,116 for the three-month period ended June 30, 2026, compared to loss from operations

of $43,255 in the same period in 2025.

income of $18,816 mainly represented interest income from loans to third parties for the three-month period ended June

30, 2026, an increase of $17,021 as compared to the same period in 2025.

expense of $124,673 represented bank interest expense and interest on finance lease for the three-month period ended June 30, 2026, an

increase of $102,999 as compared to the same period in 2025.

the three-month period ended June 30, 2026, other expense, net decreased from $3,212 to $3,117 compared with the same period of 2025,

reflecting a 3% reduction.

Income (loss)

income was $1,143,193 for the three-month period ended June 30, 2026, compared to a net loss of $814,364 in the same period in 2025.

of the Six-Month Periods Ended June 30, 2026 and 2025

Six-Month Period

Ended June 30, 2026

Six-Month Period

Ended June 30, 2025

Percent Change

5 unchanged sentences

$ (3,196,211 )

$ (3,953,582 )

General and administrative expenses

6 unchanged sentences

Interest expense

Other expense, net

Loss before income taxes

4 unchanged sentences

$ (5,484,544 )

Net Loss for the three-month period ended March 31, 2026

decreased to $3,926,381 from $4,629,500 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.

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

March 31, 2026

March 31, 2025

of Net Revenue

Chemical Products

Bromine and crude salt segments

Three-Month Period Ended

Percentage Change

product sold in tonnes

March 31, 2026

March 31, 2025

Increase (Decrease)

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 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 gas segment

For the three-month periods ended March 31, 2026 and 2025, the net

revenue was nil.

loss for the six-month period ended June 30, 2026 decreased to $2,783,188 from $5,432,824 in the same period in 2025, mainly due to the

net revenue increased to $15,255,603 for the six-month period ended June 30, 2026 as compared to $9,948,232 in the same period in 2025.

table below shows the changes in net revenue in the respective segments of the Company for the six-month period ended June 30, 2026 as

compared to the same period in 2025:

Revenue by Segment

and crude salt segments

sold in tonnes

the six-month periods ended June 30, 2026 and 2025, the net revenue for the bromine segment was $14,494,223 and $9,158,243, respectively.

The increase of the net revenue of bromine was due to the 16% increase in tonnes sold and the 37% increase in average selling price of

bromine for the six-month period ended June 30, 2026.

the six-month periods ended June 30, 2026 and 2025, the net revenue for the crude salt segment was $761,380 and $789,989, respectively.

The decrease of net revenue of crude salt was mainly due to the 4% decrease in average selling price

of crude salt for the six-month period ended June 30, 2026.

products segment

the six-month periods ended June 30, 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.

the six-month periods ended June 30, 2026 and 2025, the net revenue for the natural gas segment was nil.

of Revenue by Segment

30, 2025 (Restated)

Cost of Revenue

Cost of Revenue by Segment

Percent Change

Three-Month Period Ended

March 31, 2026

March 31, 2025

Chemical Products

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 $759,142 (or 48%) 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

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

$12,919,096 for the six-month period ended June 30, 2026, an increase of $3,954,930 (or 44%) as compared to the same period in 2025 due

to the increase of net revenue by 53% for the six-month period ended June 30, 2026 as compared to the same period in 2025.

production capacity and utilization of our factories

table below represents the annual capacity and utilization ratios for all of our bromine producing properties:

period ended June 30, 2025

Six-month period

ended June 30, 2026

Variance of the six-month

periods ended June 30, 2026 and 2025

Utilization ratio is calculated based on the annualized actual production volume in tonnes for the periods divided by the annual production

capacity in tonnes.

Three-month period ended March 31, 2025

Three-month period ended March 31, 2026

Variance of the three-month periods ended March 31, 2026 and 2025

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 period ended March 31, 2026 and 2025 the cost of

revenue for the bromine segment was $2,283,326 and $1,533,128, respectively.

the six-month periods ended June 30, 2026 and 2025, the cost of revenue for the bromine segment was $12,329,784 and $8,550,340, respectively.

The increase in costs is mainly due to the increase in sales volume.

Crude salt segment

For the three-month period ended March 31, 2026 and 2025 the cost of

revenue for the crude salt segment was $70,086 and $61,142, respectively.

The increase in costs is mainly due to the rise in amortization

of the salt pans.

Chemical products segment

Cost of revenue for our chemical products segment for the three-month

period ended March 31, 2026 and 2025 was nil.

Natural gas segment

Cost of revenue for our natural gas segment for the three-month

period ended March 31, 2026 and 2025 was nil.

Gross Profit (Loss).

Gross profit was $15,214, or 0.6% of net revenue for three-month period ended March 31, 2026, representing an increase of $5,037, as compared

the six-month periods ended June 30, 2026 and 2025, the cost of revenue for the crude salt segment was $589,312 and $413,826, respectively.

The increase in costs is mainly due to the rise in amortization of the salt pans.

products segment

of revenue for our chemical products segment for the six-month periods ended June 30, 2026 and 2025 was nil.

of revenue for our natural gas segment for the six-month periods ended June 30, 2026 and 2025 was nil.

profit was $2,336,507, or 15% of net revenue for six-month period ended June 30, 2026, representing an increase of $1,352,441, as compared

to a gross profit of $984,066, or 10% of net revenue for the same period in 2025.

Gross Profit (Loss) by Segment

% Point Change

Three-Month Period Ended

March 31, 2026

March 31, 2025

Profit (Loss) Margin

Gross Profit (Loss) Margin

Chemical Products

Total Gross Profit (Loss)

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.

in gross loss margin was primarily attributable to the higher average selling price of bromine of $4,948 per ton in the three-month period

ended March 31, 2026 compared to $3,684 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 41%, compared to 50% in the same period in 2025, representing a 9% decrease.

Chemical products

For the three-month period ended March 31, 2026 and 2025,

the gross profit margin for our chemical products segment was 0%.

For the three-month period ended March 31, 2026 and 2025,

the gross profit margin for our natural gas segment was 0%.

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

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.

General and Administrative Expenses General and administrative

expenses were $1,323,101 for the three-month period ended March 31, 2026, a decrease of $66,422 (or 5%) as compared to $1,389,523 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 $4,610,207 in the same period

Loss from Operations by Segment

Three-Month Period Ended

March 31, 2026

Three-Month Period Ended

March 31, 2025

Profit by Segment

30, 2025 (Restated)

the six-month period ended June 30, 2026, the gross profit margin for our bromine segment was 15%, compared to 7% in the six-month period

ended June 30, 2025.

The increase in gross profit margin was primarily attributable to the higher average selling price of bromine of

$5,265 per ton in the six-month period ended June 30, 2026 compared to $3,856 per ton in the six-month period ended June 30, 2025.

tonnes sales also increased from 2,375 tonnes for the six-month period ended June 30, 2025 to 2,753 tonnes for the six-month period ended

June 30, 2026.

the six-month period ended June 30, 2026, the gross profit margin for our crude salt segment was 23%, compared to 48% in the same

period in 2025.

The decrease in gross profit margin was mainly attributable to a reduction in revenue and a notable

increase in amortization costs related to the newly purchased salt pan, which caused the cost of sales to grow more than the

revenue contraction, resulting in a lower gross margin.

products segment

the six-month periods ended June 30, 2026 and 2025, the gross profit margin for our chemical products segment was 0%.

the six-month periods ended June 30, 2026 and 2025, the gross profit margin for our natural gas segment was 0%.

and Marketing Expenses

and marketing expenses were $23,622 for the six-month period ended June 30, 2026, an increase of $3,767 (or 19%) as compared for the

same period in 2025.

labor and factory overheads incurred during plant shutdown

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 $3,196,211 and $3,953,582 incurred for the six-month periods ended

June 30, 2026 and 2025, respectively, of factories that have not resumed production were presented as part of the operating expense.

and Administrative Expenses

and administrative expenses were $1,921,104 for the six-month period ended June 30, 2026, a decrease of $531,685 (or 22%) as compared

to $2,452,789 for the same period in 2025.

The decrease was mainly due to SYCI was sold.

from Operations

from operations was $2,804,430 for the six-month period ended June 30, 2026, compared to loss from operations of $5,442,160 in the same

period in 2025.

from Operations by Segment

30, 2025 (Restated)

$ (1,658,306 )

$ (3,508,547 )

Chemical Products

Loss from operations before corporate costs

Corporate cost

Loss from operations

from operations before corporate costs

from operations

$ (2,804,430 )

$ (5,442,160 )

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 $3,370,836 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 $554,062 in the same period in 2025.

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 $358,629 in the

same period in 2025.

The reason for the reduction was due to the sale of SYCI completed by December, 2025.

Natural gas 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 represented interest

income from bank and loans made 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 for the three-month period ended March 31, 2026, an increase of $101,722 as compared to the same period in 2025.

Net loss was $3,926,381 for the three-month period

ended March 31, 2026, compared to a net loss of $4,629,500 in the same period in 2025.

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,

Net cash provided by/(used in) operating activities

from operations from our bromine segment was $1,658,306 for the six-month period ended June 30, 2026, compared to loss from operations

of $3,508,547 in the same period in 2025.

This decrease was due to the 16% increase in tonnes sold and a 37% increase in average selling

from operations from our crude salt segment was $824,909 for the six-month period ended June 30, 2026, compared to loss from operations

of $768,969 in the same period in 2025.

The main reason was due to the rise in amortization of the salt pans.

products segment

from operations from our chemical products segment was $0 for the six-month period ended June 30, 2026, compared to loss from operations

of $710,095 in the same period in 2025.

The reason for the reduction was due to the sale of SYCI completed in December 2025.

from operations from our natural gas segment was $71,925 for the six-month period ended June 30, 2026, compared to loss from operations

of $88,099 in the same period in 2025.

income of $272,476 mainly represented interest income from bank and loans to third parties for the six-month period ended June 30,

2026 an increase of $268,252 as compared to the same period in 2025.

expense of $248,117 represented bank interest expense and interest on finance lease for the six-month period ended June 30, 2026, an

increase of $204,721 as compared to the same period in 2025.

the six-month period ended June 30, 2026, other expense, net decreased from $3,212 to $3,117 compared with the same period of 2025, reflecting

a 3% reduction.

loss was $2,783,188 for the six-month period ended June 30, 2026, compared to a net loss of $5,484,544 in the same period in 2025.

AND CAPITAL RESOURCES

of June 30, 2026, cash and cash equivalents were $9,189,231 as compared to $3,793 as of December 31, 2025.

The components of this increase

of $9,185,438 are reflected below.

of Cash Flows

Six-Month Period Ended

cash used in operating activities

$ (4,241,827 )

Net cash provided by investing activities

Net cash provided by/(used in) financing activities

Effects of exchange rate changes on cash and cash equivalents

Net increase(decrease) in cash and cash equivalents

$ (2,139,734 )

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 $4.62 million, a decrease

in accounts receivable of $1.5 million, offset by a non-cash adjustment related to depreciation and amortization of property, plant and

equipment of $4 million.

cash provided by/(used in) investing activities

cash provided by/(used in) financing activities

of exchange rate changes on cash and cash equivalents

increase (decrease) in cash and cash equivalents

$ (2,339,081 )

the six-month period ended June 30, 2026, we met our working capital and capital investment requirements by using cash on hand.

Cash Used In Operating Activities

the six-month period ended June 30, 2026, cash flow used in operating activities of approximately $4.24 million was mainly due to a

net loss of $2.78 million, an increase in accounts receivable of $12.02 million, offset by a non-cash adjustment related to

depreciation and amortization of property, plant and equipment of $6.80 million, amortization of finance lease right-of-use asset of

$1.48 million, an increase in accounts payable and accrued expenses of $1.35 million and a decrease in prepayment and deposits of

$1.08 million.

the six-month period ended June 30, 2025, cash flow used in operating activities of approximately $2.14 million was mainly due to a

net loss of $5.48 million, an increase in accounts receivable of $2.58 million, an increases in prepayment and deposits of $2.33 million, and offset by a non-cash adjustment related to

depreciation and amortization of property, plant and equipment of $6.45 million, amortization of finance lease right-of-use asset of

$1.55 million.

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 June 30, 2026 and December 31, 2025.

overall accounts receivable balance as of June 30, 2026 increased by $12,205,707, as compared to those of December 31, 2025.

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.

inventory consists of the following:

net inventory level as of June 30, 2026 increased by $252,104, as compared to the net inventory level as of December 31, 2025.

materials increased by $78,265 as of June 30, 2026 as compared to December 31, 2025.

finished goods increased by $173,839 as of June 30, 2026 as compared to December 31, 2025.

Cash Provided By / (Used In) Investing Activities

the six-months ended June 30, 2026, net cash provided by investing activities was $12.75 million, mainly attributable to repayments

received on loans to third parties of $14.44 million, offset by purchases of fixed assets of $1.70 million.

We have no investing activities for the six-month

period ended June 30, 2025 .

Cash Provided By/ (Used In) Financing Activities

the six-month period ended June 30, 2026, net cash provided by financing activities was $0.28 million, attributable to proceeds from

the issuance of units pursuant to a private placement of $0.56 million, offset by $0.27 million of principal payments for obligations

under finance leases.

For the six-month period ended June 30, 2025, we used $0.3 million to fulfil finance lease obligations.

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.

had available cash of approximately $9,189,231 at June 30, 2026, all of which is in highly liquid current deposits earning no or little

We do not anticipate paying cash dividends in the foreseeable future.

intend to continue to focus our efforts on the activities of SCHC, SHSI and DCHC as these segments continue to expand within the Chinese

may not be able to identify, successfully integrate or profitably manage any businesses 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.

Obligations and Commitments

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 at June 30, 2026

is provided in the notes to our consolidated financial statements.

See “Notes to Condensed Consolidated Financial Statements”.

Off-Balance Sheet Arrangements

do not currently have any off balance sheet arrangements falling within the definition of Item 303(a) of Regulation S-K.

Accounting Policies and Estimates

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.

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

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

Aged 1-30 days

Aged 31-60 days

Aged 61-90 days

Aged 91-120 days

Aged 121-150 days

Aged 151-180 days

Aged 181-210 days

Aged 211-240 days

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.

Our inventory consists of the following:

March 31, 2026

December 31, 2025

Raw materials

Finished goods

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 $136,375 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 $5.55 million,

offset by purchases of fixed assets of $0.52 million.

We did not have investing activities for the three-month

periods ended March 31, 2025.

Net Cash Provided By / (Used In) Financing

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

We did not have financing activities for the three-month periods 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

at 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 businesses 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

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 at March 31, 2026 is provided in the notes to our consolidated financial statements.

“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.

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 six months ended June 30, 2026.

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).

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).

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis