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].
Gulf Resources(GURE) - 2024 Q2 - Quarterly Report