[Executive Summary](index=1&type=section&id=Executive%20Summary) This section provides an overview of Gulf Resources, Inc.'s Q2 2025 unaudited financial results and the CEO's strategic outlook, highlighting improvements in core segments and future focus [Q2 2025 Unaudited Financial Results Overview](index=1&type=section&id=Q2%202025%20Unaudited%20Financial%20Results%20Overview) Gulf Resources, Inc. announced its unaudited financial results for the second quarter ended June 30, 2025, highlighting significant improvements in revenue and reduced losses, primarily driven by the bromine and crude salt segments. The Chemicals & Natural Gas segments, though non-operational, also saw a reduced combined loss - Gulf Resources, Inc. announced its unaudited financial results for the three months ended June 30, 2025[1](index=1&type=chunk) - The Chemicals & Natural gas segments, neither of which was operational, combined lost **$388,202** in Q2 2025, an improvement from a loss of $413,027 in the previous year[2](index=2&type=chunk) [CEO's Outlook and Strategic Focus](index=1&type=section&id=CEO%27s%20Outlook%20and%20Strategic%20Focus) CEO Mr. Liu Xiaobin expressed growing optimism for the business, citing signs of stabilization in the Chinese economy, reduced competition, and increasing demand and prices in the bromine and crude salt sectors. The company's immediate strategy focuses on generating profits and free cash flow from these two core segments, while other segments remain on hold pending improved market conditions and regulatory clarity - CEO Mr. Liu Xiaobin is optimistic about the business, seeing signs of stabilization in the Chinese economy, reduced competition, and increasing demand and prices in bromine and crude salt[6](index=6&type=chunk) - The Company anticipates that the bromine price recovery, coupled with increasing overall demand, represents a potentially sustainable market trend[3](index=3&type=chunk) - Management is focused on generating profits and free cash flow from the bromine and crude salt segments in the near future[7](index=7&type=chunk) [Business Operations Update](index=1&type=section&id=Business%20Operations%20Update) This section details the operational status and market conditions for Gulf Resources' bromine, crude salt, chemicals, and natural gas segments [Bromine Segment Update](index=1&type=section&id=Bromine%20Segment%20Update) The bromine market experienced significant price volatility during Q2 2025, with prices fluctuating widely. However, prices have shown consistent recovery since the end of the quarter, and the company anticipates a sustainable market trend driven by increasing demand - Bromine pricing exhibited significant volatility during Q2 2025, with prices ranging from **RMB 29,000 to RMB 37,500** and then declining to **RMB 23,100 per tonne**[3](index=3&type=chunk) - At the end of Q2 2025, bromine was priced at **RMB 24,686 per tonne**, and has since increased consistently to **RMB 29,200 per tonne** by August 12[3](index=3&type=chunk) [Crude Salt Segment Update](index=1&type=section&id=Crude%20Salt%20Segment%20Update) Gulf Resources has commenced development activities on crude salt fields acquired in the previous year. These new assets are expected to boost both salt and bromine production capacity and may facilitate the reopening of two temporarily closed manufacturing facilities - Development activities have begun on crude salt fields acquired in the prior year[3](index=3&type=chunk) - These new assets are expected to enhance salt and bromine production capacity and may help reopen manufacturing facilities 2 and 10[3](index=3&type=chunk) [Chemicals Segment Update](index=1&type=section&id=Chemicals%20Segment%20Update) Operations in the chemicals segment remain suspended due to challenging market conditions and profitability concerns. Management has decided to postpone the completion of the remaining chemical factory construction until market conditions improve to ensure sustainable profitability - Chemicals segment operations remain suspended due to challenging profitability environment[4](index=4&type=chunk) - Completion of remaining chemical factory construction is deferred until market conditions present opportunities for sustainable profitability[4](index=4&type=chunk) [Natural Gas Segment Update](index=1&type=section&id=Natural%20Gas%20Segment%20Update) Natural gas operations are currently inactive, awaiting the completion of provincial planning initiatives in Sichuan Province. The company continues to monitor regulatory developments and evaluate potential joint venture opportunities in this sector, driven by increasing natural gas demand in China - Natural gas operations remain inactive, awaiting completion of provincial planning initiatives in Sichuan Province[5](index=5&type=chunk) - The Company is monitoring regulatory developments and evaluating potential joint venture opportunities in the natural gas sector due to increasing demand[5](index=5&type=chunk) [Financial Performance Highlights](index=1&type=section&id=Financial%20Performance%20Highlights) This section provides a detailed overview of Gulf Resources' consolidated and segment-wise financial performance for Q2 2025 and the six-month period [Consolidated Financial Highlights](index=1&type=section&id=Consolidated%20Financial%20Highlights) For the three months ended June 30, 2025, Gulf Resources reported a substantial increase in net revenue and a significant reduction in net loss and loss per share compared to the prior year. The company also transitioned from a gross loss to a gross profit. For the six-month period, negative cash flow was sharply reduced Consolidated Financial Highlights (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------------- | :---------- | :---------- | :--------- | | Net Revenue | $8,343,785 | $2,383,169 | 250% | | Gross Profit | $986,655 | ($2,728,889) | N/A (from loss to profit) | | Loss from Operations | ($750,686) | ($5,146,997) | 85.4% reduction | | Net Loss | ($773,777) | ($33,097,918) | 97.7% reduction | | Loss per Share | ($0.06) | ($3.09) | 98.1% reduction | Consolidated Cash Flow Highlights (6 Months Ended June 30) | Metric | 6 Months 2025 | 6 Months 2024 | Change | | :----------------------- | :-------------- | :-------------- | :------- | | Negative Cash Flow | ($2,339,081) | ($61,856,355) | 96.2% reduction | [Segment-wise Financial Performance](index=1&type=section&id=Segment-wise%20Financial%20Performance) The bromine segment demonstrated strong growth in sales and volume, leading to a significant improvement in gross profit and a reduced net loss. The crude salt segment also saw increased revenues and volumes, with a substantial rise in gross profit, despite recording a net loss for the quarter. The non-operational chemicals and natural gas segments incurred a combined loss, albeit reduced from the prior year [Bromine Segment Financials](index=1&type=section&id=Bromine%20Segment%20Financials) This subsection details the financial performance of the bromine segment, including sales, volume, cost of revenue, gross profit, and net loss for Q2 2025 compared to Q2 2024 Bromine Segment Financials (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------------- | :---------- | :---------- | :--------- | | Sales | $7,676,374 | $1,859,234 | 313% | | Volume (tonnes) | 1,972 | 782 | 152% | | Cost of Net Revenue | $7,016,815 | $4,729,059 | 48% | | Gross Profit | $659,559 | ($2,869,825) | N/A (from loss to profit) | | Net Loss for the Quarter | ($130,381) | ($4,662,586) | 97.2% reduction | [Crude Salt Segment Financials](index=1&type=section&id=Crude%20Salt%20Segment%20Financials) This subsection presents the financial results for the crude salt segment, covering revenues, volume, cost of revenue, gross profit, and net loss for Q2 2025 versus Q2 2024 Crude Salt Segment Financials (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------------- | :---------- | :---------- | :--------- | | Revenues | $667,411 | $523,935 | 27% | | Volume (tonnes) | 25,934 | 24,852 | 4% | | Cost of Revenue | $340,315 | $382,999 | (11%) | | Gross Profit | $327,096 | $140,936 | 132% | | Net Loss for the Quarter | ($147,489) | $130,024 | N/A (from profit to loss) | [Chemicals & Natural Gas Segment Financials](index=1&type=section&id=Chemicals%20%26%20Natural%20Gas%20Segment%20Financials) This subsection outlines the combined financial performance of the non-operational chemicals and natural gas segments, detailing their losses for Q2 2025 compared to the prior year - The Chemicals & Natural Gas segments, neither of which was operational, combined lost **$388,202** in Q2 2025[2](index=2&type=chunk) - This loss compares to a loss of $413,027 in the previous year, indicating a slight improvement[2](index=2&type=chunk) [Condensed Consolidated Financial Statements](index=3&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section provides the condensed consolidated balance sheets, statements of loss and comprehensive loss, and statements of cash flows for Gulf Resources [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Gulf Resources reported a slight decrease in total assets, primarily due to a reduction in non-current assets, despite an increase in current assets driven by accounts receivable and prepayments. Total liabilities also decreased, mainly from a reduction in current liabilities Condensed Consolidated Balance Sheets (Key Figures) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | Change | | :-------------------------- | :-------------------------- | :-------------------------- | :----- | | Total Current Assets | $20,275,976 | $17,450,826 | +$2,825,150 | | Total Non-Current Assets | $144,355,597 | $152,005,169 | -$7,649,572 | | Total Assets | $164,631,573 | $169,455,995 | -$4,824,422 | | Total Current Liabilities | $14,790,088 | $17,731,858 | -$2,941,770 | | Total Non-Current Liabilities | $7,626,660 | $8,017,467 | -$390,807 | | Total Liabilities | $22,416,748 | $25,749,325 | -$3,332,577 | | Total Stockholders' Equity | $142,214,825 | $143,706,670 | -$1,491,845 | - Cash decreased from **$10,075,162** at December 31, 2024, to **$7,736,081** at June 30, 2025[8](index=8&type=chunk) - Accounts receivable, net, significantly increased from **$564,523** to **$3,150,850**[8](index=8&type=chunk) [Condensed Consolidated Statements of Loss and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss) For Q2 2025, net revenue surged by 250% year-over-year, leading to a substantial reduction in loss from operations and net loss. The six-month period also showed strong revenue growth and a significant decrease in net loss and loss per share, largely due to the absence of a major loss on disposal of property, plant and equipment recorded in the prior year Consolidated Statements of Loss (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------------- | :---------- | :---------- | :------- | | Net Revenue | $8,343,785 | $2,383,169 | +250% | | Total Operating Costs and Expense | ($9,094,471) | ($7,530,166) | +20.8% | | Loss from Operations | ($750,686) | ($5,146,997) | -85.4% | | Net Loss | ($773,777) | ($33,097,918) | -97.7% | | Basic and Diluted Loss Per Share | ($0.06) | ($3.09) | -98.1% | Consolidated Statements of Loss (6 Months 2025 vs. 2024) | Metric | 6 Months 2025 | 6 Months 2024 | Change | | :-------------------------------- | :-------------- | :-------------- | :------- | | Net Revenue | $9,948,232 | $3,690,231 | +169.6% | | Total Operating Costs and Expense | ($15,309,125) | ($14,106,647) | +8.5% | | Loss from Operations | ($5,360,893) | ($10,416,416) | -48.6% | | Net Loss | ($5,403,277) | ($37,090,050) | -85.5% | | Basic and Diluted Loss Per Share | ($0.43) | ($3.46) | -87.6% | - The significant reduction in net loss for both periods is partly attributable to the absence of a **$29,169,008** loss on disposal of property, plant and equipment recorded in Q2 and 6 months 2024[9](index=9&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities increased. However, the absence of significant investing activities compared to the prior year led to a sharp reduction in the overall net decrease in cash and cash equivalents Consolidated Statements of Cash Flows (6 Months Ended June 30) | Metric | 6 Months 2025 | 6 Months 2024 | Change | | :------------------------------------------ | :-------------- | :-------------- | :------- | | Net Cash Used in Operating Activities | ($2,139,435) | ($812,141) | +163.4% | | Net Cash Provided by (Used in) Investing Activities | $0 | ($60,526,213) | N/A (no activity vs outflow) | | Net Cash Used in Financing Activities | ($260,997) | ($264,094) | -1.2% | | Net Decrease in Cash and Cash Equivalents | ($2,339,081) | ($61,856,355) | -96.2% | | Cash and Cash Equivalents - End of Period | $7,736,081 | $10,367,539 | -25.4% | - The significant reduction in net decrease in cash is primarily due to the absence of large property, plant and equipment purchases in 2025 compared to 2024[10](index=10&type=chunk) - Adjustments to reconcile net loss to net cash used in operating activities included depreciation and amortization of **$7,997,410** and stock-based compensation expense of **$196,100** in 2025[10](index=10&type=chunk) [Supplemental Cash Flow Information](index=6&type=section&id=Supplemental%20Cash%20Flow%20Information) Supplemental disclosures for the six-month period ended June 30, 2025, detail cash payments for taxes and interest on finance lease obligations Supplemental Cash Flow Information (6 Months Ended June 30, 2025) | Item | Amount | | :-------------------------------- | :------- | | Cash paid for taxes | $811,828 | | Interest on finance lease obligation | $43,396 | [Company Information](index=6&type=section&id=Company%20Information) This section provides an overview of Gulf Resources, Inc.'s business operations, subsidiaries, and the nature of its forward-looking statements [About Gulf Resources, Inc.](index=6&type=section&id=About%20Gulf%20Resources%2C%20Inc.) Gulf Resources, Inc. operates through four wholly-owned subsidiaries in China, positioning itself as a leading producer of bromine, which is essential for various industrial and agricultural applications. The company also manufactures specialty chemical products, crude salt, and is involved in the exploration and development of natural gas and brine resources - Gulf Resources, Inc. operates through four wholly-owned subsidiaries: Shouguang City Haoyuan Chemical Company Limited, Shouguang Yuxin Chemical Industry Co., Limited, Daying County Haoyuan Chemical Company Limited, and Shouguang Hengde Salt Industry Co. Ltd[12](index=12&type=chunk) - The Company believes that it is one of the largest producers of bromine in China, used to manufacture a wide variety of compounds utilized in industry and agriculture[12](index=12&type=chunk) - Through its subsidiaries, the Company manufactures chemical products for applications like oil and gas field explorations and papermaking, sells crude salt, and explores natural gas and brine resources[12](index=12&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements that are subject to various risk factors, including general economic conditions in China, the impact of the COVID-19 pandemic, future product development, market acceptance, competition, technological changes, and the ability to acquire future bromine assets. The company explicitly states it has no obligation to update these statements - Forward-looking statements are subject to various risk factors, including general economic and business conditions in the PRC, the risks associated with the COVID-19 pandemic outbreak, future product development and production capabilities, and market acceptance[13](index=13&type=chunk) - Other risks include additional competition, changes in technology, the ability to make future bromine asset purchases, and various other factors beyond its control[13](index=13&type=chunk) - Gulf Resources undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release[13](index=13&type=chunk)

Core Viewpoint - Gulf Resources, Inc. reported significant improvements in financial performance for the three months ended June 30, 2025, with a notable increase in net revenue and a reduction in net loss compared to the previous year [5][10]. Financial Performance - Net revenue increased by 250% to $8,343,785 from $2,383,169 in the previous year [5]. - Gross profits rose to $986,655 from a loss of $2,728,889 [5]. - The loss from operations was $750,686 compared to a loss of $5,146,997 in the previous year [5]. - The net loss was $773,777 versus a net loss of $33,097,918 in the previous period [5]. - Loss per share improved to $0.06 from $3.09 in the previous period [5]. - Negative cash flow for the first six months of 2025 was sharply reduced from $61,856,355 to $2,339,081 [5]. Segment Performance - Bromine sales increased by 313% to $7,676,374 from $1,859,234, with volume rising by 152% to 1,972 tonnes from 782 tonnes [5]. - Crude salt revenues increased by 27% to $667,411 from $523,935, with volume increasing by 4% to 25,934 tonnes from 24,852 tonnes [5]. Market Conditions - Bromine pricing showed significant volatility, with prices fluctuating from RMB 29,000 per tonne at the end of Q1 2025 to RMB 24,686 per tonne at the end of Q2 2025, before recovering to RMB 29,200 per tonne by August 12, 2025 [2]. - The company anticipates that the price recovery and increasing overall demand may represent a sustainable market trend [2]. Operational Updates - The chemicals segment operations remain suspended pending improved market conditions, with management deferring the completion of remaining chemical factory construction [3]. - Natural gas operations are inactive while awaiting completion of provincial planning initiatives in Sichuan Province [4]. - Development activities on crude salt fields acquired in the prior year have been initiated, expected to enhance production capacity [2]. Management Outlook - The CEO expressed optimism about the business, citing signs of stabilization in the Chinese economy and increasing demand for bromine and crude salt [6]. - The company is focused on generating profits and free cash flow from bromine and crude salt segments while exploring opportunities in chemicals and natural gas [6].

PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's condensed consolidated financial statements, including balance sheets, statements of loss, stockholders' equity, and cash flows, with detailed notes on accounting policies and segment performance [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show total assets decreased to **$164.63 million** and total liabilities to **$22.42 million** as of June 30, 2025 | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :-------------- | :---------------- | :----- | | Total Current Assets | $20,275,976 | $17,450,826 | +$2,825,150 | | Total Non-Current Assets | $144,355,597 | $152,005,169 | -$7,649,572 | | **Total Assets** | **$164,631,573** | **$169,455,995** | **-$4,824,422** | | Total Current Liabilities | $14,790,088 | $17,731,858 | -$2,941,770 | | Total Non-Current Liabilities | $7,626,660 | $8,017,467 | -$390,807 | | **Total Liabilities** | **$22,416,748** | **$25,749,325** | **-$3,332,577** | | Total Stockholders' Equity | $142,214,825 | $143,706,670 | -$1,491,845 | [Condensed Consolidated Statements of Loss and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss) The company reported a significant reduction in net loss for both the three-month and six-month periods ended June 30, 2025, driven by substantial revenue growth | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Net Revenue | $8,343,785 | $2,383,169 | +250% | $9,948,232 | $3,690,231 | +170% | | Total Operating Costs and Expense | $(9,094,471) | $(7,530,166) | +21% | $(15,309,125) | $(14,106,647) | +8.5% | | Loss from Operations | $(750,686) | $(5,146,997) | -85% | $(5,360,893) | $(10,416,416) | -49% | | Loss before taxes | $(773,777) | $(34,306,028) | -98% | $(5,403,277) | $(39,568,220) | -86% | | **Net Loss** | **$(773,777)** | **$(33,097,918)** | **-98%** | **$(5,403,277)** | **$(37,090,050)** | **-85%** | | Basic and Diluted Loss Per Share | $(0.06) | $(3.09) | -98% | $(0.43) | $(3.46) | -88% | [Condensed Consolidated Statement of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders'%20Equity) The statement details changes in stockholders' equity for the six-month period ended June 30, 2025, including net loss and issuance of restricted shares | Metric | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Common Stock (Amount) | $25,934 | $24,623 | | Treasury Stock | $(1,372,673) | $(1,372,673) | | Additional Paid-in Capital | $105,167,292 | $101,688,262 | | Retained Earnings Unappropriated | $31,955,527 | $37,358,804 | | Retained Earnings Appropriated | $26,667,097 | $26,667,097 | | Accumulated Other Comprehensive Income | $(20,228,352) | $(20,854,143) | | **Total Stockholders' Equity** | **$142,214,825** | **$143,706,670** | - During the six months ended June 30, 2025, the Company issued **2,619,694 restricted shares** for services, increasing common stock by **$1,311** and additional paid-in capital by **$3,479,030**[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company experienced a net decrease in cash and cash equivalents of **$2.34 million** for the six months ended June 30, 2025, primarily from operating and financing activities | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(2,139,435) | $(812,141) | | Net cash provided by (used in) investing activities | $0 | $(60,526,213) | | Net cash used in financing activities | $(260,997) | $(264,094) | | Effects of exchange rate changes on cash | $61,351 | $(253,907) | | **Net Decrease in Cash and Cash Equivalents** | **$(2,339,081)** | **$(61,856,355)** | | Cash and Cash Equivalents - End of Period | $7,736,081 | $10,367,539 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on accounting policies, business segments, going concern considerations, and loss contingencies - The company's financial statements are prepared on a going concern basis, but management acknowledges significant doubts about its ability to continue operations due to sustained losses and the need for additional funds. Measures are being taken to control costs, shift business focus, and seek financing[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - The company operates in four segments: bromine, crude salt, chemical products, and natural gas, all located in the PRC. Production in the chemical and natural gas segments has been temporarily halted or suspended due to government regulations and relocation requirements[23](index=23&type=chunk)[29](index=29&type=chunk)[34](index=34&type=chunk) - The company is exposed to credit risk from accounts receivable and cash held in PRC financial institutions. As of June 30, 2025, **$7,736,081** in cash was held in PRC institutions[38](index=38&type=chunk) - The company has significant loss contingencies related to land use and planning approvals for its bromine factories, with administrative penalties and court rulings issued in 2018-2019. However, the company believes enforcement is remote due to ongoing discussions with local government and new regulations[146](index=146&type=chunk)[147](index=147&type=chunk)[150](index=150&type=chunk) - On July 3, 2025, the Company filed a Form S-3 registration statement for an aggregate offering price not to exceed **$10,000,000** of common stock, preferred stock, and warrants, which has not yet been declared effective[151](index=151&type=chunk)[152](index=152&type=chunk) | Segment | 3 Months Ended June 30, 2025 Net Revenue | 3 Months Ended June 30, 2024 Net Revenue | Change (YoY) | 6 Months Ended June 30, 2025 Net Revenue | 6 Months Ended June 30, 2024 Net Revenue | Change (YoY) | | :---------------- | :----------------------------------- | :----------------------------------- | :----------- | :----------------------------------- | :----------------------------------- | :----------- | | Bromine | $7,676,374 | $1,859,234 | +313% | $9,158,243 | $3,005,431 | +205% | | Crude Salt | $667,411 | $523,935 | +27% | $789,989 | $640,606 | +23% | | Chemical Products | $0 | $0 | — | $0 | $0 | — | | Natural Gas | $0 | $0 | — | $0 | $44,194 | -100% | | **Total** | **$8,343,785** | **$2,383,169** | **+250%** | **$9,948,232** | **$3,690,231** | **+170%** | | Segment | 3 Months Ended June 30, 2025 Loss from Operations | 3 Months Ended June 30, 2024 Loss from Operations | Change (YoY) | 6 Months Ended June 30, 2025 Loss from Operations | 6 Months Ended June 30, 2024 Loss from Operations | Change (YoY) | | :---------------- | :---------------------------------------- | :---------------------------------------- | :----------- | :---------------------------------------- | :---------------------------------------- | :----------- | | Bromine | $(130,381) | $(4,662,586) | -97% | $(3,501,217) | $(9,445,401) | -63% | | Crude Salt | $(147,489) | $130,024 | -213% | $(701,551) | $54,932 | -1377% | | Chemical Products | $(344,947) | $(339,254) | +1.7% | $(703,576) | $(654,078) | +7.5% | | Natural Gas | $(43,255) | $(73,773) | -41% | $(88,099) | $(101,482) | -13% | | Corporate Costs | $(84,614) | $(201,408) | -58% | $(366,450) | $(270,387) | +35% | | **Total Loss from Operations** | **$(750,686)** | **$(5,146,997)** | **-85%** | **$(5,360,893)** | **$(10,416,416)** | **-49%** | - The company sold **65.2%** of its products to its top five customers and purchased **100%** of its raw materials from its top three suppliers during the six-month period ended June 30, 2025, indicating significant customer and supplier concentration[142](index=142&type=chunk)[145](index=145&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, liquidity, and capital resources, highlighting changes in revenue, expenses, operational challenges, and recent developments [Overview](index=37&type=section&id=Overview) Gulf Resources operates through China-based subsidiaries in bromine, crude salt, chemical products, and natural gas segments, facing government-mandated production halts and relocations - The company operates four segments: bromine, crude salt, chemical products, and natural gas, all in China[155](index=155&type=chunk) - Bromine and crude salt factories (No. 1, 4, 7, 8, 9) have resumed operations after government inspections and temporary closures, with Factory No. 8 contributing revenue since Q4 2022. Factories No. 2 and 10 are still awaiting governmental approval[161](index=161&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk) - Chemical production plants were ordered to relocate to Bohai Marine Fine Chemical Industrial Park in 2017 due to environmental concerns. Construction of new facilities began in June 2020 but has been delayed, and the company is reviewing its chemical products strategy[165](index=165&type=chunk) - Natural gas trial production in Daying, Sichuan Province, commenced in January 2019 but was halted in May 2019 due to requirements for project, safety, environmental, and land approvals. The company plans to proceed with applications once governmental planning is finalized[166](index=166&type=chunk) [Recent Developments](index=39&type=section&id=Recent%20Developments) Recent developments include significant crude salt field acquisition agreements in 2024 and the company's transfer to the Nasdaq Capital Market in 2025 to regain **$1.00** bid price compliance [Acquisition Agreements](index=39&type=section&id=Acquisition%20Agreements) SHSI acquired approximately **5.14 million square meters** of crude salt fields for **RMB 260.77 million** in 2024, with payments in cash and common stock, closing on February 28, 2025 - SHSI acquired approximately **5.14 million square meters** of crude salt fields from five sellers in June and December 2024[168](index=168&type=chunk)[170](index=170&type=chunk) - The total transfer price for the crude salt fields was **RMB 260,767,000** (approximately **$35.87 million** at RMB/US$:7.27)[168](index=168&type=chunk)[170](index=170&type=chunk) - Payments were structured as **80% cash upfront** and **20% in a combination of common stock and cash**, with **2,059,694 shares** issued at **$1.50 per share** on February 28, 2025[169](index=169&type=chunk)[177](index=177&type=chunk) - The issuance of shares is subject to a **19.9% Nasdaq Listing Rule threshold**, requiring shareholder approval if exceeded[175](index=175&type=chunk) [Nasdaq Compliance](index=42&type=section&id=Nasdaq%20Compliance) The company transferred its listing to The Nasdaq Capital Market on May 8, 2025, and has until November 3, 2025, to regain compliance with the **$1.00** minimum bid price requirement - On May 6, 2025, Nasdaq granted the company's request to transfer its common stock listing to The Nasdaq Capital Market tier[178](index=178&type=chunk) - The company received a second 180-calendar day period, until November 3, 2025, to regain compliance with the **$1.00** minimum bid price requirement (Nasdaq Listing Rule 5550(a)(2))[178](index=178&type=chunk) - The company intends to monitor its bid price and may effect a reverse stock split if needed to cure the deficiency[182](index=182&type=chunk) [RESULTS OF OPERATIONS](index=46&type=section&id=RESULTS%20OF%20OPERATIONS) The company significantly improved financial performance for both the three-month and six-month periods ended June 30, 2025, primarily driven by substantial increases in bromine sales [Comparison of the Three-Month Period Ended June 30, 2025 and 2024](index=46&type=section&id=Comparison%20of%20the%20Three-Month%20Period%20Ended%20June%2030,%202025%20and%202024) For the three months ended June 30, 2025, net revenue surged by **250% to $8.34 million**, resulting in a gross profit of **$0.99 million** and a **98% decrease in net loss** | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Percent Change | | :--------------------------------------- | :--------------------------- | :--------------------------- | :------------- | | Net Revenue | $8,343,785 | $2,383,169 | 250% | | Cost of Net Revenue | $(7,357,130) | $(5,112,058) | 44% | | Gross Profit (Loss) | $986,655 | $(2,728,889) | 136% | | Loss from Operations | $(750,686) | $(5,146,997) | (85%) | | Loss on disposal of property, plant and equipment | $0 | $(29,169,008) | (100%) | | Net Loss | $(773,777) | $(33,097,918) | (98%) | | Segment | 3 Months Ended June 30, 2025 Net Revenue | 3 Months Ended June 30, 2024 Net Revenue | Percent Change | | :---------------- | :----------------------------------- | :----------------------------------- | :------------- | | Bromine | $7,676,374 | $1,859,234 | 313% | | Crude Salt | $667,411 | $523,935 | 27% | | Chemical Products | $0 | $0 | — | | Natural Gas | $0 | $0 | — | - Bromine sales volume increased by **152%** and average selling price by **64%** YoY for the three-month period ended June 30, 2025[190](index=190&type=chunk) - Crude salt average selling price increased by **22%** YoY for the three-month period ended June 30, 2025[191](index=191&type=chunk) - Gross profit margin for bromine segment improved from **-154% in 2024 to 9% in 2025**, and for crude salt from **27% to 49%**[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) [Comparison of the Six-Month Period Ended June 30, 2025 and 2024](index=51&type=section&id=Comparison%20of%20the%20Six-Month%20Period%20Ended%20June%2030,%202025%20and%202024) For the six months ended June 30, 2025, net revenue grew by **170% to $9.95 million**, resulting in a gross profit of **$0.99 million** and an **85% decrease in net loss** | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Percent Change | | :--------------------------------------- | :--------------------------- | :--------------------------- | :------------- | | Net Revenue | $9,948,232 | $3,690,231 | 170% | | Cost of Net Revenue | $(8,951,400) | $(7,231,903) | 24% | | Gross Profit (Loss) | $996,832 | $(3,541,672) | (128%) | | Loss from Operations | $(5,360,893) | $(10,416,416) | (49%) | | Loss on disposal of property, plant and equipment | $0 | $(29,169,008) | (100%) | | Net Loss | $(5,403,277) | $(37,090,050) | (85%) | | Segment | 6 Months Ended June 30, 2025 Net Revenue | 6 Months Ended June 30, 2024 Net Revenue | Percent Increase | | :---------------- | :----------------------------------- | :----------------------------------- | :--------------- | | Bromine | $9,158,243 | $3,005,431 | 205% | | Crude Salt | $789,989 | $640,606 | 23% | | Chemical Products | $0 | $0 | — | | Natural Gas | $0 | $44,194 | -100% | - Bromine sales volume increased by **93%** and average selling price by **58%** YoY for the six-month period ended June 30, 2025[231](index=231&type=chunk)[239](index=239&type=chunk) - Crude salt segment's loss from operations increased significantly due to depreciation from new asset acquisitions in 2024[240](index=240&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=55&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's cash and cash equivalents decreased by **$2.34 million** to **$7.74 million** as of June 30, 2025, primarily due to cash used in operating and financing activities | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :-------------- | :---------------- | :----- | | Cash and Cash Equivalents | $7,736,081 | $10,075,162 | -$2,339,081 | | Net cash used in operating activities | $(2,139,435) | $(812,141) | +$1,327,294 | | Net cash used in investing activities | $0 | $(60,526,213) | +$60,526,213 | | Net cash used in financing activities | $(260,997) | $(264,094) | +$3,097 | - The overall accounts receivable balance increased by **$2,586,327** to **$3,150,850** as of June 30, 2025, with **100%** aged 1-30 days[250](index=250&type=chunk) - Net inventory increased by **$199,642 (63%)** to **$515,013** as of June 30, 2025, driven by growth in current sales volume[251](index=251&type=chunk) - The company spent **$0** on investing activities in the first six months of 2025, a significant decrease from **$60.5 million** in 2024 which was for property, plant, and equipment acquisitions[255](index=255&type=chunk) - Management believes available funds and cash flows from operations will be sufficient for the next twelve months[256](index=256&type=chunk) - The company has no significant off-balance sheet arrangements[260](index=260&type=chunk) - Critical accounting policies and estimates include accounts receivable, inventories, long-lived assets, leases, revenue recognition, and income taxes[261](index=261&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a "smaller reporting company," Gulf Resources is not required to provide quantitative and qualitative disclosures about market risk - The company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a "smaller reporting company"[262](index=262&type=chunk) [Item 4. Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The CEO and CFO evaluated the effectiveness of disclosure controls and procedures and concluded they were effective as of June 30, 2025[264](index=264&type=chunk) - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[265](index=265&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in legal proceedings related to administrative penalties for land use violations and a subsidiary has a civil mediation statement to pay **RMB 226,825.44** for goods - SCHC faces administrative penalties and court rulings from 2018-2019 for illegal land use of several bromine factories, with monetary penalties and orders to restore land and demolish facilities[266](index=266&type=chunk) - The company believes enforcement of these penalties is remote due to ongoing discussions with local government and new regulations, and the Bureau has withdrawn enforcement applications for some factories[148](index=148&type=chunk)[150](index=150&type=chunk) - SCHC is obligated to pay Shouguang Chengyu Trading Co., Ltd. **RMB 226,825.44** for goods, with monthly payments of **RMB 50,000** starting April 2025[268](index=268&type=chunk) [Item 1A. Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) A primary risk factor is the company's non-compliance with Nasdaq's minimum bid price requirement, with a deadline of November 3, 2025, to regain compliance - The company is not in compliance with Nasdaq's **$1.00** minimum bid price requirement and faces delisting if compliance is not regained by November 3, 2025[270](index=270&type=chunk)[273](index=273&type=chunk) - The company transferred its listing to The Nasdaq Capital Market tier on May 8, 2025, to qualify for a second 180-day grace period[270](index=270&type=chunk)[271](index=271&type=chunk) - A reverse stock split is being considered as a potential measure to cure the bid price deficiency[274](index=274&type=chunk) [Item 2. Unregistered Sale of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sale%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds occurred[275](index=275&type=chunk) [Item 3. Defaults Upon Senior Securities](index=60&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[276](index=276&type=chunk) [Item 4. Mine Safety Disclosures](index=60&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[277](index=277&type=chunk) [Item 5. Other Information](index=60&type=section&id=Item%205.%20Other%20Information) No directors or officers informed the company of the adoption or termination of Rule 10b5-1 trading arrangements during the quarter - No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the fiscal quarter ended June 30, 2025[278](index=278&type=chunk) [Item 6. Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications, XBRL financial statements, and the interactive data file - The exhibits include CEO and CFO certifications (31.1, 31.2), Section 906 certification (32.1), XBRL financial statements (101), and the Cover Page Interactive Data File (104)[279](index=279&type=chunk) [Signatures](index=61&type=section&id=Signatures) The report is duly signed on behalf of Gulf Resources, Inc. by its Chief Executive Officer, Xiaobin Liu, and Chief Financial Officer, Min Li, on August 13, 2025 - The report was signed by Xiaobin Liu (CEO) and Min Li (CFO) on August 13, 2025[282](index=282&type=chunk)

Financial Performance - Net revenues for the first quarter of 2025 increased by 23% to $1,604,447 from $1,307,062 in the previous year[2] - Cost of revenue decreased by 25% to $1,594,270 compared to $2,119,845 in the prior year, resulting in a gross profit of $10,177 compared to a gross loss of ($812,783)[2] - The loss from operations improved by 13% to ($4,610,207) from ($5,269,419) year-over-year[2] - The net loss for the quarter was ($4,629,500), compared to a net loss of ($3,992,132) in the previous year, resulting in a net loss per share of ($0.40) compared to ($0.37)[3] - For the three-month period ended March 31, 2025, Gulf Resources reported a net loss of $4,629,500, compared to a net loss of $3,992,132 for the same period in 2024, indicating a year-over-year increase in losses of approximately 16%[16] - Net cash used in operating activities for the three-month period was $1,580,128, an increase from $1,330,476 in the prior year, reflecting a 19% rise in cash outflow[16] - Cash and cash equivalents at the end of the period were $8,523,045, down from $70,761,796 at the end of the same period in 2024, representing a significant decrease of approximately 88%[16] - The cash paid for taxes during the three-month period was $77,386, a significant decrease from $481,153 in the same period last year, reflecting a reduction of approximately 84%[16] - Interest on finance lease obligations decreased slightly to $21,722 from $24,830 year-over-year, showing a reduction of about 13%[16] Revenue Breakdown - Bromine revenues rose by 29% to $1,481,869, with an average selling price increase of 45% to $3,684 per tonne[7] - Crude salt revenues increased by 5% to $122,578, with sales volume rising to 4,733 tonnes from 4,071 tonnes[9] Assets and Liabilities - As of March 31, 2025, total assets were $165,729,939, with total liabilities of $23,145,112 and shareholders' equity of $142,584,827[6] Strategic Initiatives - The company is exploring joint-venture opportunities in the chemicals sector and has postponed the completion of its chemical factory until a clear path to profitability is identified[11] - Management has made significant capital expenditures for flood prevention and acquiring additional crude salt fields to capitalize on future demand[11] - The company is in discussions with local governments in Sichuan Province to develop natural gas and brine resources, indicating potential future growth opportunities[11] - Gulf Resources operates through four subsidiaries, positioning itself as one of the largest producers of bromine in China, which is essential for various industrial applications[17] - The company is focused on developing natural gas and brine resources, including bromine and crude salt, through its subsidiary DCHC[17] Risks and Outlook - Gulf Resources faces risks including economic conditions in China, competition in the bromine market, and potential impacts from the COVID-19 pandemic, which could affect future performance[18] - The company has not made any forward-looking statements regarding new product developments or market expansions in this release[18]

Core Viewpoint - Gulf Resources, Inc. reported a net revenue increase of 23% for Q1 2025, despite ongoing operational challenges and losses, indicating potential recovery in the bromine market [2][3][11]. Financial Performance - Net revenues for the quarter ended March 31, 2025, were $1,604,447, up from $1,307,062 in the same period last year, marking a 23% increase [2]. - Cost of revenue decreased by 25% to $1,594,270 from $2,119,845, leading to a gross profit of $10,177 compared to a gross loss of ($812,783) [2]. - General and administrative expenses surged by 94% to $1,389,523 from $717,456, while sales and marketing expenses rose by 13% [2]. - The loss from operations improved by 13% to ($4,610,207) from ($5,269,419) year-over-year [2]. Segment Reporting - Bromine revenues increased to $1,481,869 from $1,146,197, with an average selling price rising by 45% to $3,684 from $2,540 [7]. - Crude salt revenues rose by 5% to $122,578, with sales volume increasing to 4,733 tonnes from 4,071 tonnes, although the price declined by 9.6% [9]. - Chemical products reported no revenues, with an operating loss of ($358,629) [10]. Cash Flow and Balance Sheet - As of March 31, 2025, cash was $8,523,045, with total assets amounting to $165,729,939 and total liabilities at $23,145,112 [6][12]. - Net cash used in operations was ($1,580,128), compared to ($1,330,476) in the previous year [5]. Management Commentary - The Chairman and CEO highlighted ongoing investments in flood prevention and crude salt fields, anticipating improved demand and pricing for bromine [11]. - The company is exploring joint-venture opportunities and potential natural gas projects in Sichuan Province, indicating a strategic focus on resource development [11].

Company Operations - The company operates through four segments: bromine, crude salt, chemical products, and natural gas[142]. - The company is one of the largest producers of bromine in China, with significant applications in various industries[143]. - In June 2024, the company entered into acquisition agreements for crude salt fields totaling approximately 4,000,000 square meters, with total transfer prices ranging from RMB20,790,000 to RMB129,472,000[155][156][157][158][159][160]. - The company resumed bromine production in March 2020 after receiving government approvals, which were critical for meeting the demand for bromide products during the epidemic[149]. - Factory No. 8 started contributing revenue in Q4 2022 after receiving government approval to resume production in August 2022[150]. - The company is awaiting governmental approval for factories No. 2 and No. 10, which may require modifications to current wells and aqueducts[151]. - The company has secured land use rights for its new chemical plant at Bohai Marine Fine Chemical Industry Park, with construction expected to take approximately one year[152]. - The company plans to proceed with applications for natural gas and brine project approvals after governmental planning is finalized in Sichuan Province[153]. Financial Performance - Net revenue for the three-month period ended March 31, 2025, was $1,604,447, representing a 23% increase compared to $1,307,062 for the same period in 2024[171]. - Gross profit for the three-month period ended March 31, 2025, was $10,177, a significant improvement from a gross loss of $812,783 in the same period in 2024[183]. - The bromine segment generated net revenue of $1,481,869 for the three-month period ended March 31, 2025, up 29% from $1,146,197 in 2024, despite an 11% decrease in tonnes sold[173]. - The crude salt segment reported net revenue of $122,578 for the three-month period ended March 31, 2025, a 5% increase from $116,671 in 2024, driven by a 16% increase in tonnes sold[174]. - The cost of net revenue decreased by $525,575 (25%) to $1,594,270 for the three-month period ended March 31, 2025, compared to $2,119,845 in 2024[177]. - The gross profit margin for the bromine segment improved to -3.5% in the three-month period ended March 31, 2025, from -81% in the same period in 2024[185]. - Direct labor and factory overheads incurred during the plant shutdown amounted to $3,225,808 for the three-month period ended March 31, 2025, down from $3,734,689 in 2024[188]. - Loss from operations decreased to $4,610,207 for the three-month period ended March 31, 2025, from a loss of $5,269,419 in the same period in 2024[190]. - The bromine segment reported a loss from operations of $3,370,836, a decrease from $4,782,815 in the same period in 2024, attributed to a 45% increase in average selling price despite an 11% decrease in tonnes sold[192]. - The crude salt segment experienced a loss from operations of $554,062, compared to a loss of $75,092 in the same period in 2024, with sales rising by 16%[193]. - Net loss for the three-month period ended March 31, 2025, was $4,629,500, compared to a net loss of $3,992,132 in the same period in 2024[196]. Cash Flow and Financial Position - Cash and cash equivalents decreased to $8,523,045 as of March 31, 2025, from $10,075,162 as of December 31, 2024, reflecting a decrease of $1,552,117[197]. - Cash flow used in operating activities was approximately $1.58 million for the three-month period ended March 31, 2025, primarily due to a net loss of $4.62 million and an increase in accounts receivable of $1.5 million[199]. - The overall accounts receivable balance increased by $1,549,699 as of March 31, 2025, compared to December 31, 2024, with 85% aged 1-30 days[202]. - Net inventory level increased by $139,688 (or 44%) as of March 31, 2025, compared to December 31, 2024, indicating an estimate of rising market demand[204]. Regulatory and Compliance Matters - The company has been granted a second 180-calendar day period until November 3, 2025, to regain compliance with the $1.00 bid price requirement on Nasdaq[163]. - The company intends to consider a reverse stock split if necessary to cure the bid price deficiency during the compliance period[167]. - The transfer of the company's common stock listing from The Nasdaq Global Select Market to The Nasdaq Capital Market took effect on May 8, 2025[163]. Administrative Expenses and Future Plans - General and administrative expenses increased by $672,067 (or 94%) to $1,389,523 for the three-month period ended March 31, 2025, compared to $717,456 in the same period in 2024[189]. - The company does not anticipate paying cash dividends in the foreseeable future and intends to focus on expanding its segments within the Chinese market[209]. - The company believes that government regulations aim to improve environmental standards rather than close all plants, indicating a focus on compliance and sustainability[146].

Core Viewpoint - Gulf Resources, Inc. has reported significant losses in its bromine segment for 2024, primarily due to depressed bromine prices and reduced sales volume, but there are signs of recovery in early 2025 with rising prices [2][3][6]. Financial Performance - In 2024, the bromine segment incurred a net loss of $8,200,236 on revenues of $5,549,815, with bromine prices averaging RMB 17,561, a decline of 27.1% from 2023 and 67.3% from 2022 [2][5]. - Sales volume dropped by 71.7% year-over-year, leading to an 83.4% increase in cost per tonne due to fixed costs being spread over a smaller production base [3][4]. Bromine Price Trends - Bromine prices have shown a significant increase in early 2025, rising from RMB 21,900 per tonne in February to RMB 37,500 per tonne by mid-April, marking a 61.9% increase since the beginning of 2025 [6][7]. - Historical price data indicates that bromine prices were significantly higher in 2021 and 2022, with a peak of RMB 69,500 per tonne in October 2021 [7]. Production Capacity and Market Conditions - The overall bromine production capacity in China is believed to be lower than in previous years due to government-mandated closures for environmental compliance [9]. - The company is optimistic about reopening additional factories and has made investments in infrastructure to support increased production capacity [8]. Company Overview - Gulf Resources, Inc. operates through four wholly-owned subsidiaries and is one of the largest producers of bromine in China, with a diverse product range including specialty chemicals and crude salt [10].

Corporate Structure and Acquisitions - The company owns 100% of Upper Class Group Limited, which in turn owns 100% of Hong Kong Jiaxing, SCHC, and SYCI, reflecting a linear corporate structure[20] - On February 4, 2015, the company issued 7,268,011 shares at a closing market price of $1.84 per share to acquire SCRC, a leading manufacturer of materials for antibiotics in China[22] - The purchase price for SCRC shares was based on a valuation of $10.00, representing a 73% premium to the price on the day the agreement was reached[23] - The company established a new subsidiary, Daying County Haoyuan Chemical Company Limited, with registered capital of RMB50,000,000 to explore natural gas and brine resources in China[25] - In June 2024, the company entered into acquisition agreements for crude salt fields, with a total transfer price of RMB129,472,000 for 2,380,000 square meters from Seller A[29] - The company agreed to pay 80% of the transfer price upfront and the remaining 20% in common stock within three months after inspection and acceptance of the crude salt fields[30] - On February 28, 2025, the company closed the transactions related to the acquisition agreements, issuing a total of 2,059,694 shares at a price of $1.50 per share[37] Compliance and Regulatory Issues - The company received a notice from Nasdaq on April 18, 2024, for failing to timely file its Annual Report on Form 10-K, impacting its compliance with listing requirements[38] - Nasdaq granted an exception on June 26, 2024, allowing the company until October 14, 2024, to file delinquent reports to regain compliance[39] - The company successfully filed the required reports by October 15, 2024, and was determined to be in compliance with Nasdaq listing rules[41] - The Company received a Nasdaq Price Deficiency Letter due to its common stock bid price closing below $1.00 per share for 34 consecutive business days, with a compliance deadline until May 5, 2025[42] - The Company has the option to regain compliance by closing at $1.00 or more for 10 consecutive business days before the deadline[42] - The Company is subject to the Holding Foreign Companies Accountable Act, which may lead to delisting if the PCAOB cannot inspect audit documentation located in China[64] - The PCAOB has secured complete access to inspect and investigate PCAOB-registered public accounting firms in China, but future access remains uncertain[64] - Recent regulatory developments in China may impact the Company's operations and ability to offer securities to investors[49] Financial Performance and Revenue - The Company wrote off a net book value of $18,644,473 for the demolition of three bromine factories in 2018, along with an impairment loss of $1,284,832 on related mineral rights[67] - The Company incurred relocation costs of approximately $45,584,344 for the new chemical factory as of December 31, 2024[72] - The Company expects to generate sales and earnings in the chemical segment at levels well above previous periods due to reduced capacity in the industry[74] - Sales to the three largest bromine customers in 2024 totaled $1,969,624, representing approximately 35% of total net revenue from bromine sales[92] - In 2024, sales to the three largest crude salt customers totaled $2,049,988, representing approximately 100% of total net revenue from crude salt sales, with the largest customer accounting for 38%[94] - Net revenue from natural gas decreased from $150,861 in 2023 to $61,207 in 2024, indicating a decline of approximately 59%[96] Operational Developments - The Company has secured land for a new chemical factory and construction commenced in June 2020, although the opening has been postponed due to COVID-19[72] - The Company anticipates potential acquisition opportunities in the bromine sector as smaller producers struggle with capital for required rectifications[71] - The Company’s annual production capacity for oil and gas field exploration products was over 26,000 tons, with papermaking-related chemicals at over 5,000 tons[89] - The Company’s bromine production facilities were temporarily closed from December 15, 2024, until February 12, 2025, in compliance with government regulations[70] - The Company is awaiting governmental approval for Factories No. 2 and No. 10, which are critical for future operations[76] - The Company has established a subsidiary for crude salt production in response to new government policies, indicating strategic adaptation to regulatory changes[75] - The company completed a flood prevention project in December 2023 to safeguard its bromine facilities[106] - The company is engaged in ongoing discussions with the government of Daying County regarding a joint venture for the exploration and production of natural gas and brine products in Sichuan[100] - The company’s factories No. 7 and No. 1 resumed trial production in March 2020 and commenced commercial production on April 3, 2020, after receiving necessary approvals[104] Human Resources and Talent Management - As of December 31, 2024, the company employed approximately 367 full-time employees, with 28% in management and 4% in sales and procurement[120] - The company emphasizes developing talent from within while also hiring externally to foster loyalty and commitment among employees[123] - The talent acquisition team focuses on recruiting highly skilled workers in the PRC and encourages employee referrals for open positions[123] Dividend and Profit Regulations - The Company has not made any cash or asset transfers among its subsidiaries, nor has it distributed dividends to shareholders in the reporting periods presented[58] - Current PRC regulations allow dividends to be paid only from accumulated profits, and at least 10% of after-tax profits must be set aside for statutory reserves[59] - The PRC government has implemented capital control measures that may affect the ability of the Company's subsidiaries to remit foreign currency for dividend payments[61] - A withholding tax of 10% applies to dividends payable by Chinese companies to non-PRC-resident enterprises, which may be reduced to 5% under certain conditions[62] Reporting and Disclosure - The company provides free access to its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K through its website[124] - As a smaller reporting company, the company is not required to disclose certain market risk information as per Regulation S-K[284]

Core Viewpoint - Gulf Resources, Inc. is expanding its operations by acquiring additional salt fields and bromine production capabilities, which is expected to enhance crude salt production and increase the number of bromine wells drilled, aligning with the anticipated recovery of the Chinese economy [1][2][3]. Group 1: Acquisition Details - The company has reached agreements to acquire five salt fields totaling 5,141,000 square meters for an aggregate purchase price of RMB 280,762,400, with 80% paid in cash and 20% in stock [2]. - The management anticipates cash-on-cash returns that may provide a payback within four to five years, which is considered a strong return on investment [3]. Group 2: Strategic Outlook - The CEO of Gulf Resources expressed confidence in the acquisitions, stating that they are positioned to maximize returns as the Chinese economy begins to recover [3]. - The company has postponed the delivery of equipment for its chemical plant due to a lack of anticipated short-term returns, contrasting this with the expected strong returns from the new salt fields and additional bromine wells [3]. Group 3: Company Overview - Gulf Resources operates through four wholly-owned subsidiaries and is one of the largest producers of bromine in China, with applications in various industries including agriculture and oil and gas [4]. - The company manufactures chemical products for diverse applications, including materials for human and animal antibiotics, and is focused on exploring natural gas and brine resources [4].

Core Viewpoint - Gulf Resources, Inc. is experiencing significant fluctuations in its bromine segment due to changes in pricing and sales volume, impacting overall performance and profitability [1][2]. Pricing Trends - The price of bromine saw a dramatic increase during the COVID-19 pandemic, rising from RMB 28,017 per tonne in Q3 2020 to a peak of RMB 69,500 in October 2021. However, prices have since declined to RMB 17,323 in Q3 2024, with a recent recovery to RMB 22,400 as of November 17, 2024 [2][3][7]. Sales Volume and Utilization - Bromine sales have significantly decreased from 2,655 tonnes in Q3 2022 to only 655.8 tonnes in Q3 2024, leading to a drop in utilization rates from 34% in 2022 to 8% in 2024 [5][6]. - The reduction in sales volume has resulted in a 105.9% increase in the cost per tonne, rising from $2,773 to $5,709, primarily due to fixed costs being spread over a smaller production volume [6][9]. Financial Performance - The financial results reflect the impact of declining sales and prices, with revenues dropping from $19.8 million in Q3 2022 to only $1.57 million in Q3 2024, indicating a 92.1% decrease [9]. - The company reported a loss of $4.03 million in Q3 2024, compared to a loss of $2.14 million in Q3 2023, highlighting the ongoing challenges in the bromine segment [9]. Strategic Response - In response to declining prices and sales, the company has opted to limit sales to protect its mineral assets, anticipating a future price rebound [4][8].