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].

Financial Performance - Revenues for the third quarter of 2024 were $2,242,365, a decline of 61.8% compared to the same period in 2023[2] - The net loss for the third quarter was $3,492,883, resulting in a basic and diluted loss of $0.33 per share[3] - For the nine months ended September 30, 2024, total revenues were $5,932,596, a decline of 74.4% compared to the same period in 2023[5] - The net loss for the nine months was $40,582,933, with a basic and diluted loss of $3.78 per share[6] - Net loss for the period ended September 30, 2024, was $3,492,883 compared to a net loss of $1,775,797 for the same period in 2023, representing an increase in loss of approximately 96.7%[20] - Total operating costs and expenses for the nine-month period were $27,185,348, a decrease from $20,930,621 in the previous year, indicating a reduction of about 30.5%[20] - Cash flows from operating activities showed a net cash used of $293,463, a significant decline from net cash provided of $9,869,612 in the same period last year[22] - The company reported a loss on disposal of equipment amounting to $29,169,008, which was not present in the previous year's results[22] - Cash and cash equivalents at the end of the period were $11,237,493, down from $103,774,977 at the end of the same period in 2023, reflecting a decrease of approximately 89.2%[22] - The company paid $1,013,382 in taxes during the nine-month period, compared to $4,930,601 in the same period last year, indicating a decrease of about 79.5%[23] Asset and Cash Position - Cash position decreased to $11,237,493 from $72,223,894 as of December 31, 2023[8] - Total assets at the end of the third quarter were $193,885,294, down from $226,671,708 at the end of 2023[9][17] Strategic Management and Future Outlook - Management is postponing the final delivery of equipment for the chemical factory to assess industry recovery and new opportunities[11] - The company is seeking additional land for salt fields and bromine wells, anticipating strong returns in the coming years[11] - Management expressed optimism about future opportunities as the Chinese economy begins to recover and bromine prices improve[12] - Future product development and market acceptance are subject to various risks, including competition and economic conditions in China, as outlined in the forward-looking statements[25] - The company undertakes no duty to revise or update any forward-looking statements, emphasizing the uncertainty of future results[25] Production and Operations - The company is one of the largest producers of bromine in China, with operations through four wholly-owned subsidiaries focusing on chemical production and resource development[24] Investment Activities - The company’s cash flows from investing activities included a significant purchase of property, plant, and equipment totaling $60,526,213, compared to $15,197,648 in the previous year[22]

Financial Performance - For the three months ended September 30, 2024, revenues were $2,242,365, a decline of 61.8% compared to the same period in 2023 [2] - The net loss for the third quarter was $3,492,883, with a basic and diluted loss of $0.33 per share [2] - For the nine months ended September 30, 2024, revenues were $5,932,596, a decline of 74.4% compared to the same period in 2023 [3] - The net loss for the nine months was $40,582,933, with a basic and diluted loss of $3.78 per share [3] Segment Performance - Bromine revenues for the third quarter declined by 68% to $1,571,313, while crude salt revenues declined by 26% to $654,039 [2] - Losses from operations for bromine were $13,475,400 and for crude salt were $47,725 for the nine months ended September 30, 2024 [3] - The company incurred a loss of $29,169,008 from the disposition of equipment and purchased $60,526,213 worth of new equipment [3] Cash Position and Assets - Cash position declined to $11,237,493 from $72,223,894 as of December 31, 2023 [3] - Total assets at the end of the third quarter were $193,885,294, down from $226,671,708 at the end of 2023 [3][9] Management Commentary - The CEO expressed confidence in China's economic recovery and the company's return to profitability, while acknowledging the postponement of equipment delivery for the chemical factory due to lack of short-term profitability [5] - The company is seeking the best strategy for its natural gas business and is participating in a government-required flood prevention program [5] - Management is optimistic about future opportunities as bromine prices begin to improve [6] Conference Call - Gulf Resources management will host a conference call on November 20, 2024, to discuss its unaudited financial results for the nine and three months ended September 30, 2024 [6][7]

Company Operations - The Company operates through four segments: bromine, crude salt, chemical products, and natural gas[153]. - The Company is one of the largest producers of bromine in China, with significant applications in various industries[154]. - The Company plans to proceed with applications for natural gas and brine project approvals following governmental planning finalization[166]. Acquisitions and Approvals - On June 26, 2024, the Company entered into an acquisition agreement to purchase 2,380,000 square meters of crude salt field for a total price of RMB129,472,000[168]. - The Company has received governmental approvals to resume operations at several bromine factories, including Factory No. 1 and No. 7 in April 2019[159]. - The Company is awaiting governmental approval for factories No. 2 and No. 10, which may require modifications to current wells and aqueducts[164]. Financial Performance - Net revenue for the three-month period ended September 30, 2024, was $2,242,365, a decrease of 62% compared to $5,865,615 for the same period in 2023[182]. - Net revenue for the nine-month period ended September 30, 2024 was $5,932,596, a 74% decrease from $23,173,404 in the same period in 2023[211]. - The gross profit for the nine-month period ended September 30, 2024 was a loss of $5,370,923, compared to a profit of $2,708,986 in the same period in 2023, reflecting a gross profit margin decrease from 12% to 91%[225]. - Net loss for the three-month period ended September 30, 2024 was $3,492,883, compared to a net loss of $1,775,797 in the same period in 2023[210]. - The net loss for the nine-month period ended September 30, 2024, was $40,582,933, compared to a net loss of $3,015,360 in the same period in 2023[241]. Segment Performance - The bromine segment's net revenue decreased to $1,571,313, down 68% from $4,908,152 in the prior year, due to a 57% decrease in tonnes sold and a 26% decrease in average selling price[183]. - The crude salt segment reported net revenue of $654,039, a decrease of 26% from $889,556, primarily due to a 20% decrease in tonnes sold[184]. - The equipment lease segment reported net revenue of $17,013, down 75% from $67,907 in the same period in 2023[188]. - The net revenue from the chemical products segment was $0 for the nine-month period ended September 30, 2024, due to the closure of chemical factories since September 1, 2017[215]. Cost and Expenses - Direct labor and factory overheads incurred during the plant shutdown amounted to $1,736,345 for the three-month period ended September 30, 2024, compared to $1,007,689 in the same period in 2023, reflecting a 72% increase[202]. - General and administrative expenses increased to $1,002,529 for the three-month period ended September 30, 2024, up 31% from $762,884 in the same period in 2023[203]. - Direct labor and factory overhead costs incurred during the plant shutdown amounted to $7,185,537 for the nine-month period ended September 30, 2024, compared to $4,471,954 for the same period in 2023[233]. - General and administrative expenses increased by $143,697 (or 6%) to $2,409,957 for the nine-month period ended September 30, 2024, compared to $2,266,260 in 2023[234]. Loss from Operations - Loss from operations in the bromine segment was $4,029,999 for the three-month period ended September 30, 2024, compared to a loss of $2,143,203 in the same period in 2023, driven by a 57% decrease in tonnes sold and a 26% decrease in average selling price[206]. - Loss from operations in the crude salt segment was $102,657 for the three-month period ended September 30, 2024, compared to income of $500,469 in the same period in 2023, due to a 20% decrease in tonnes sold and an 8% decrease in average selling price[207]. - Loss from operations was $14,998,025 for the nine-month period ended September 30, 2024, compared to an income of $4,011,944 in the same period in 2023[235]. - The bromine segment reported a loss from operations of $13,475,400 for the nine-month period ended September 30, 2024, compared to a loss of $3,340,404 in 2023, attributed to a decrease in the average selling price of bromine from $3,493 per ton to $2,423 per ton[237]. Cash Flow and Assets - Net cash used in operating activities was approximately $293,463 for the nine-month period ended September 30, 2024, compared to cash provided of $9,869,612 in 2023[246]. - Cash and cash equivalents decreased to $11,237,493 as of September 30, 2024, from $72,223,894 as of December 31, 2023, reflecting a decrease of $60,986,401[245]. - The overall accounts receivable balance decreased by $3,678,816 as of September 30, 2024, compared to December 31, 2023[252]. - Inventory decreased by $149,390 as of September 30, 2024, compared to the net inventory level as of December 31, 2023[253]. - Approximately $60.5 million was used to acquire property, plant, and equipment during the nine-month period ended September 30, 2024[256]. Compliance Issues - The Company has been notified by Nasdaq regarding non-compliance with filing requirements, with a deadline to regain compliance by October 14, 2024[173]. - The Company received a notice from Nasdaq for not meeting the Minimum Bid Price Requirement, with a compliance deadline of May 5, 2025[175].

Company Operations - The Company operates through four segments: bromine, crude salt, chemical products, and natural gas, with significant production output in bromine, making it one of the largest producers in China[130]. - The Company plans to acquire 2,380,000 square meters of crude salt field for a total transfer price of RMB129,472,000, with 80% payable upon execution of the agreement[141]. - The Company has entered into four additional acquisition agreements for crude salt fields totaling approximately 2,761,000 square meters, with prices ranging from RMB54.00 to RMB55.70 per square meter[142][143]. - The Company temporarily halted production at its bromine facilities from December 10, 2022, to February 1, 2023, and resumed operations as planned[138]. - The Company is awaiting governmental approval for factories No. 2 and No. 10, which may require modifications to current wells and aqueducts[138]. - The Company has secured land use rights for its new chemical plant at Bohai Marine Fine Chemical Industrial Park, with construction expected to take approximately one year[139]. - The Company commenced trial production at its natural gas well field in Daying, Sichuan Province, in January 2019, but is currently awaiting necessary project approvals[140]. Financial Performance - Net revenue for the three-month period ended June 30, 2024, was $2,383,169, a decrease of 70% compared to $8,005,782 in the same period of 2023[153]. - Bromine segment net revenue decreased to $1,859,234, down 75% from $7,356,347, with a 67% reduction in tonnes sold and a 22% decrease in average selling price[156]. - Crude salt segment net revenue was $523,935, a 19% decrease from $649,435, primarily due to a 33% drop in average selling price[156]. - Gross loss for the three-month period was $2,728,889, representing a gross loss margin of 115%, compared to a gross profit of $684,340 and a margin of 9% in the same period of 2023[163]. - Loss from operations was $5,146,997 for the three-month period ended June 30, 2024, compared to a loss of $919,098 in the same period of 2023[170]. - Cost of net revenue was $5,112,058, a decrease of 30% from $7,321,442, reflecting the significant drop in net revenue[159]. - Direct labor and factory overheads during the plant shutdown amounted to $1,714,503 for the three-month period ended June 30, 2024, compared to $1,055,529 in the same period of 2023[169]. - General and administrative expenses increased to $689,972, up 16% from $593,325 in the same period of 2023[170]. - The bromine segment's gross loss margin was 154% for the three-month period ended June 30, 2024, compared to a gross profit margin of 4% in the same period of 2023[166]. - Income tax benefit for the three-month period was $1,208,110, a 527% increase from $192,699 in the same period of 2023[170]. - The net loss for the three-month period ended June 30, 2024, was $33,097,918, compared to a net income of $681,816 in the same period in 2023[176]. - Net revenue for the six-month period ended June 30, 2024, was $3,690,231, a decrease of 79% from $17,307,789 in the same period in 2023[177]. - The gross loss for the six-month period ended June 30, 2024, was $3,541,672, representing 96% of net revenue, compared to a gross profit of $3,217,273, or 19% of net revenue, in the same period in 2023[186]. - Loss from operations for the bromine segment was $9,445,401 for the six-month period ended June 30, 2024, compared to a loss of $1,197,201 in the same period in 2023, attributed to a 72% decrease in tonnes sold[193]. - The cost of net revenue for the bromine segment decreased to $6,801,811 for the six-month period ended June 30, 2024, from $13,192,124 in the same period in 2023, a reduction of 48%[183]. - General and administrative expenses were $1,407,428 for the six-month period ended June 30, 2024, a decrease of 6% from $1,503,376 in the same period in 2023[191]. - Other income, net for the three-month period ended June 30, 2024, was $9,977, a decrease of approximately 78% compared to the same period in 2023[176]. - The average selling price of bromine decreased to $2,438 per ton in the six-month period ended June 30, 2024, from $3,580 per ton in the same period in 2023[188]. - The utilization ratio for bromine production capacity dropped to 4% for the six-month period ended June 30, 2024, from 34% in the same period in 2023, a variance of 30%[185]. - The net revenue from the crude salt segment decreased to $640,606 for the six-month period ended June 30, 2024, compared to $1,398,116 in the same period in 2023, a decrease of 54%[181]. - Crude salt segment reported income from operations of $54,932 for the six-month period ended June 30, 2024, a significant improvement from a loss of $404,013 in the same period in 2023[194]. - Chemical products segment experienced a loss from operations of $654,078 for the six-month period ended June 30, 2024, reduced from a loss of $833,892 in the same period in 2023[196]. - Natural gas segment reported a loss from operations of $101,482 for the six-month period ended June 30, 2024, compared to an income of $9,855 in the same period in 2023[197]. - Net loss for the six-month period ended June 30, 2024, was $37,090,050, compared to a net loss of $1,239,563 in the same period in 2023[197]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $10,367,539 as of June 30, 2024, down from $72,223,894 as of December 31, 2023, reflecting a decrease of $61,856,355[198]. - Cash flow used in operating activities was approximately $812,141 for the six-month period ended June 30, 2024, compared to cash provided of $11,011,556 in the same period in 2023[199]. - Total accounts receivable decreased by $3,129,401 as of June 30, 2024, compared to December 31, 2023, with cash collections significantly impacting overall liquidity[202]. - Inventory decreased by $163,469 (or 28%) as of June 30, 2024, compared to the net inventory level as of December 31, 2023[204]. - Approximately $60.5 million was used in investing activities during the six months ended June 30, 2024, primarily for acquiring property, plant, and equipment[206]. Compliance and Regulatory Matters - The Company received a notice from Nasdaq regarding non-compliance due to delayed filings, with a deadline to submit a compliance plan by June 17, 2024[144]. - The Company has been granted an exception by Nasdaq to regain compliance, with a requirement to file delinquent reports by October 14, 2024[145]. Strategic Focus - The company intends to focus on expanding its segments within the Chinese market, including SCHC, SYCI, SHSI, and DCHC[207].

Company Operations - The company operates through four segments: bromine, crude salt, chemical products, and natural gas[128]. - The company plans to acquire 2,380,000 square meters of crude salt field for a total transfer price of RMB129,472,000, with 80% payable upon execution of the agreement[140]. - The company has entered into four additional acquisition agreements for crude salt fields totaling 2,761,000 square meters, with total transfer prices ranging from RMB20,790,000 to RMB45,785,400[141]. - The company resumed production at its bromine facilities in February 2023 after a temporary closure due to government regulations[135]. - The company is awaiting governmental approval for factories No.2 and No.10, which may require modifications to current wells and aqueducts[135]. - The company plans to start installation of equipment for its new chemical facilities by the end of 2023 or early 2024[137]. - The company has secured land use rights for its new chemical plant in Bohai Marine Fine Chemical Industrial Park, with construction expected to be completed in 2023[137]. - The company is required to obtain project approvals for its natural gas and brine water project in Sichuan Province, which has temporarily halted trial production[138]. Financial Performance - Net revenue for the three-month period ended March 31, 2024, was $1,307,062, a decrease of 86% compared to $9,302,007 for the same period in 2023[152]. - The gross loss for the three-month period ended March 31, 2024, was $812,783, representing 62% of net revenue, compared to a gross profit of $2,532,933, or 27% of net revenue, for the same period in 2023[163]. - The bromine segment's net revenue decreased to $1,146,197, an 86% decline from $8,470,372 in the prior year, driven by a 78% decrease in tonnes sold and a 39% decrease in average selling price[154]. - The crude salt segment reported net revenue of $116,671, down 84% from $748,681, due to an 80% decrease in tonnes sold and a 22% decrease in average selling price[155]. - Loss from operations for the three-month period ended March 31, 2024, was $5,269,419, a significant increase from a loss of $799,558 in the same period in 2023[169]. - The total cost of net revenue for the three-month period ended March 31, 2024, was $2,119,845, a decrease of 69% from $6,769,074 in the same period in 2023[158]. - The bromine segment's gross loss margin was 81% for the three-month period ended March 31, 2024, compared to a gross profit margin of 27% in the same period in 2023[165]. - The equipment lease segment generated net revenue of $44,194, a decrease of 47% from $82,954 in the prior year[157]. - The loss from operations in the chemical products segment was $314,824 for Q1 2024, an improvement from a loss of $417,873 in Q1 2023[173]. - The natural gas segment reported a loss of $27,709 for Q1 2024, compared to an income of $12,685 in Q1 2023[174]. - The net loss for Q1 2024 was $3,992,132, significantly higher than the net loss of $557,747 in Q1 2023[174]. Cash Flow and Financial Position - Cash and cash equivalents decreased to $70,761,796 as of March 31, 2024, down from $72,223,894 as of December 31, 2023[176]. - Cash flow used in operating activities was approximately $1.33 million in Q1 2024, compared to cash provided of approximately $4.83 million in Q1 2023[178]. - Accounts receivable increased by $394,358 to $5,260,054 as of March 31, 2024, with 35% aged 91-120 days[180]. - Inventory increased by $56,898 (or 10%) to $634,127 as of March 31, 2024, with finished goods making up 96% of total inventory[183]. - The company did not engage in any financing activities for the three-month periods ended March 31, 2024, and 2023[183]. - The company does not anticipate paying cash dividends in the foreseeable future and will focus on expanding its segments within the Chinese market[184]. - There are no significant contractual obligations not fully recorded or disclosed in the financial statements as of March 31, 2024[187]. Compliance and Corporate Actions - The company received a notice from Nasdaq regarding non-compliance due to delayed filings, with a deadline to submit a compliance plan by June 17, 2024[143]. - The company completed a 1-for-5 reverse stock split on January 28, 2020, adjusting all shares referenced in the report[139]. - General and administrative expenses decreased by 21% to $717,456 for the three-month period ended March 31, 2024, down from $910,051 in the prior year[169].

Corporate Structure and Acquisitions - Gulf Resources owns 100% of Upper Class Group Limited, which in turn owns 100% of Hong Kong Jiaxing, SCHC, and SYCI, reflecting a linear corporate structure[13] - On February 4, 2015, Gulf Resources issued 7,268,011 shares at a closing market price of $1.84 per share to acquire SCRC, a leading manufacturer of antibiotic materials in China[14] - The acquisition of SCRC was based on a valuation of $10.00 per share, representing a 73% premium at the time of the agreement[16] - On June 26, 2024, Gulf Resources' subsidiary SHSI agreed to purchase 2,380,000 square meters of crude salt field for a total price of RMB129,472,000, at RMB54.40 per square meter[19] - SHSI entered into four additional acquisition agreements on June 27, 2024, for a total transfer price of RMB151,300,000 for various crude salt fields[20] Regulatory Compliance and Challenges - The Company received a notice from Nasdaq on April 18, 2024, for failing to timely file its Annual Report, impacting compliance with listing requirements[21] - Nasdaq granted an exception on June 26, 2024, allowing the Company until October 14, 2024, to file delinquent reports to regain compliance[22] - The Company believes it is not required to fulfill filing procedures with the CSRC for its overseas listings as of the date of the annual report[29] - Recent regulatory developments in China may impact the Company's operations, but it does not believe it is directly subject to the new regulations[28] - The company may face challenges in remitting foreign currency for dividend payments due to PRC capital controls and regulations[36] Financial Performance and Dividends - The company does not expect to pay any cash dividends for the foreseeable future, as no cash or asset transfers have occurred among its subsidiaries[33] - PRC regulations require subsidiaries to pay dividends only from accumulated profits and to set aside at least 10% of after-tax profits for statutory reserves until they reach 50% of registered capital[34] - The company incurred a loss of $18,644,473 from the write-off of property, plant, and equipment due to the closure of three bromine factories in 2018[43] - The company has incurred relocation costs of approximately $45,584,344 for its new chemical factory, with total estimated costs for the relocation process around $69 million[48] Production and Operations - The company anticipates that the upcoming chemical factory could generate sales and profits, especially as many competitors may have reduced production capacity[50] - The company is exploring acquisition opportunities in the bromine sector due to potential attractive prospects following the closure of smaller producers[46] - The company is awaiting governmental approval for its Factories No. 2 and No. 10, which may be delayed due to ongoing regulatory requirements[51] - The company has received verbal notification to resume production at Factory No. 8, which began contributing revenue in Q4 2022[45] - The company is engaged in discussions with the government regarding a joint venture for the exploration and production of natural gas and brine products in Sichuan[49] Sales and Market Position - The company reported that sales to its three largest bromine customers in 2023 totaled $10,866,228, accounting for approximately 40.36% of total net revenue from bromine sales[66] - The annual production capacity of chemical products at Shouguang Yuxin Chemical Industry Company Limited was over 26,000 tons for oil and gas field exploration products and over 5,000 tons for papermaking-related chemical products[64] - The company’s chemical products segment reported net revenue of $0 for both 2023 and 2022, indicating no sales activity in this area[67] - The company holds a license for bromine extraction in Shandong Province and plans to acquire smaller unlicensed producers to expand downstream chemical operations[55] - The company’s production of crude salt is derived from the evaporation of wastewater after bromine production, which is widely used in various industries[61] Employee and Operational Management - The company has a total of 7 in-house sales staff who manage customer orders based on production schedules and inventory[65] - The company has approximately 380 full-time employees as of December 31, 2023, with 29% in management and 4% in sales and procurement[88] - The company incurred approximately $681,540 in expenses related to social insurance for its employees in fiscal year 2023[89] Environmental and Safety Regulations - The company is subject to stringent environmental regulations, leading to the closure or relocation of non-compliant facilities[85] - The company has implemented health and safety programs for employees, including flexible health benefits and measures in response to the COVID-19 pandemic[91] Strategic Planning and Future Considerations - The company is considering repurposing its chemical factory for Sodium-Ion battery production if economic weakness in China persists[81] - Construction of the new chemical facilities at Bohai Marine Fine Chemical Industrial Park began in June 2020, with civil engineering works completed by the end of June 2021, but equipment delivery and installation faced delays due to supply chain issues and electricity restrictions[81] - The company has been working on expanding production capacity by exploring new underground brine water resources in Sichuan Province, with trial production at its first natural gas well commencing in January 2019[71] - The company incurred $16,243,677 in rectification and improvements of plant and equipment for bromine and crude salt factories during the fiscal year ended December 31, 2018, with a cumulative total of $34,182,329 as of December 31, 2018[75]