What changed in GULF RESOURCES, INC.'s 2023 10-K compared to 2022?

Across the narrative sections we track, GULF RESOURCES, INC. (GURE) added 181 paragraphs, removed 147, and edited 128 between the 2022 and 2023 10-K filings. The biggest movers are Item 1. Business (+77/−67), Item 7. Management's Discussion & Analysis (+65/−63), Item 1A. Risk Factors (+29/−10).

Did GULF RESOURCES, INC. add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 29 new/edited paragraphs and 10 removed paragraphs versus the 2022 10-K.

What changed in GULF RESOURCES, INC.'s MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 65 new/edited paragraphs and 63 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Where does this GURE 10-K diff come from?

The source filings are GULF RESOURCES, INC.'s official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in GULF RESOURCES, INC.'s 10-K — 2022 vs 2023

Paragraph-level year-over-year comparison of GULF RESOURCES, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+181 added−147 removedSource: 10-K (2024-09-27) vs 10-K (2023-03-31)

Top changes in GULF RESOURCES, INC.'s 2023 10-K

181 paragraphs added · 147 removed · 128 edited across 5 sections

Item 1. Business+77 / −67 · 58 edited
Item 7. Management's Discussion & Analysis+65 / −63 · 54 edited
Item 1A. Risk Factors+29 / −10 · 9 edited
Item 2. Properties+5 / −5 · 5 edited
Item 5. Market for Registrant's Common Equity+5 / −2 · 2 edited

Item 1. Business

Business — how the company describes what it does

58 edited+19 added−9 removed142 unchanged

2022 filing

2023 filing

Biggest changeThe Company plans to proceed with its applications for the natural gas and brine project approvals with related government departments until after the governmental planning has been finalized the land and resource planning for Sichuan Province. 11 On September 1, 2017, the Company received notification from the Government of Yangkou Town, Shouguang City of PRC that required production at all its factories be immediately halted in order for the Company to perform rectification and improvement in accordance with the local new safety and environmental protection requirements.

Biggest changeThe Company is engaged in ongoing discussions with the government of Daying County regarding the establishment of a joint venture for the exploration and production of natural gas and brine products in Sichuan. 11 On September 1, 2017, the Company received notification from the Government of Yangkou Town, Shouguang City of PRC that production at all its factories must be halted immediately.

Pursuant to the Opinions of the Ministry of Natural Resources on Several Issues in Promoting the Reform of Mineral Resources Management (Trial) promulgated by the Ministry of Natural Resources of PRC on January 9, 2020, which came into effect on May 1, 2020, privately owned enterprises are allowed to participate in the natural gas production.

On December 15, 2015, the Company registered a new subsidiary in the Sichuan Province of the PRC named Daying County Haoyuan Chemical Company Limited (“DCHC”) with registered capital of RMB50,000,000, and there was RMB14,848,730 capital contributed by SCHC as of December 31, 2021.

On December 15, 2015, the Company incorporated a new subsidiary in the Sichuan Province of the PRC named Daying County Haoyuan Chemical Company Limited (“DCHC”) with registered capital of RMB50,000,000, and there was RMB14,848,730 capital contributed by SCHC as of December 31, 2021.

The PCAOB is continuing to demand complete access in China mainland and Hong Kong moving forward and is already making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed.

The PCAOB is continuing to demand complete access in China mainland and Hong Kong moving forward and was already making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed.

In the fiscal year ended December 31, 2018, the Company incurred $16,243,677 in the rectification and improvements of plant and equipment of the bromine and crude salt factories resulting in a cumulative amount of $34,182,329 incurred as of December 31, 2018.

During the fiscal year ended December 31, 2018, the Company incurred $16,243,677 in the rectification and improvements of plant and equipment of the bromine and crude salt factories resulting in a cumulative amount of $34,182,329 incurred as of December 31, 2018.

For accounting purposes, the Shares were valued at $9.20 (restated for the 1-for-5 reverse stock split in January 2020), which was the closing price of our stock on the closing date of the agreement.

For accounting purposes, the Shares were valued at $9.20 (restated for the 1-for-5 reverse stock split in January 2020), which was the closing price of our common stock on the closing date of the agreement.

SYCI’s annual production capacity of materials that are used for human and animal antibiotics was over 6,800 tons. Sales and Marketing We have an in-house sales staff of 9 persons. Our customers send their orders to us first. Our in-house sales staff then attempts to satisfy these orders based on our actual production schedules and inventories on hand.

SYCI’s annual production capacity of materials that are used for human and animal antibiotics was over 6,800 tons. Sales and Marketing We have an in-house sales staff of 7 persons. Our customers send their orders to us first. Our in-house sales staff then attempts to satisfy these orders based on our actual production schedules and inventories on hand.

Corporate Structure Our current corporate structure chart is set forth in the following diagram: 3 Currently, we operate our business through our wholly-owned subsidiaries in China, including (i) Shouguang City Haoyuan Chemical Company Limited, or SCHC; (ii) Shouguang Yuxin Chemical Industry Co., Limited, or SYCI; and (iii) Daying County Haoyuan Chemical Co., Ltd., or DCHC, (IV) Shouguang Hengde Salt Industry Co.

Corporate Structure Our current corporate structure chart is set forth in the following diagram: 3 Currently, we operate our business through our wholly-owned subsidiaries in China, including (i) Shouguang City Haoyuan Chemical Company Limited, or SCHC; (ii) Shouguang Yuxin Chemical Industry Co., Limited, or SYCI; (iii) Daying County Haoyuan Chemical Co., Ltd., or DCHC; ad (iv) Shouguang Hengde Salt Industry Co.

Since then, our chemical factory has been shut down. We believe this is part of the country’s efforts to improve the development of the chemical industry, facilitate safe production and curb environmental pollution, and ensure the quality of living environment of residents. The Company expects to cost approximately $64 million in total in connection with the relocation.

Since then, our chemical factory has been shut down. We believe this is part of the country’s efforts to improve the development of the chemical industry, facilitate safe production and curb environmental pollution, and ensure the quality of living environment of residents. The Company expects to cost approximately $69 million in total in connection with the relocation.

We are required to contribute to the arrangement at the rate of 16% of the average monthly salary. In addition, we are required by Chinese law to cover employees in China with other types of social insurance. We have purchased social insurance for almost allof our employees.

Senate passed the Accelerating Holding Foreign Companies Accountable Act, whichwas signed into law, and amends the HFCAA and requires the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law, and amends the HFCAA and requires the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

Our principal customers during 2022 were Shandong Morui Chemical Company Limited, Shandong Brother Technology Limited, and Shouguang Weidong Chemical Company Limited. We have ongoing policies in place to ensure that sales are made to customers who are credit-worthy.

Our principal customers during 2023 were Shandong Morui Chemical Company Limited, Shandong Brother Technology Limited, and Shouguang Weidong Chemical Company Limited. We have ongoing policies in place to ensure that sales are made to customers who are credit-worthy.

In April 2019, Factory No.1, Factory No.5 and Factory No.7 (Factory no. 5 is considered part of Factory no.7 and both are managed as one factory since 2010) restarted operations upon receipt of verbal notification from local government of Yangkou County.

In April 2019, Factory No.1, Factory No.5 and Factory No.7 (Factory no. 5 is considered part of Factory no.7 and both are managed as one factory since 2010) resumed operations upon receipt of verbal notification from local government of Yangkou County.

During the year ended December 31, 2022 and 2021, we purchased 100% of raw materials for our bromine and crude production from our top three suppliers. During the year ended December 31, 2022 and 2021, we did not purchase any raw materials for chemical products production.

During the year ended December 31, 2023 and 2022, we purchased 100% of raw materials for our bromine and crude production from our top three suppliers. During the year ended December 31, 2023 and 2022, we did not purchase any raw materials for chemical products production.

However, at the present time, all of management’s attention is focused on getting its facilities approved and in full production. Management may consider acquisition opportunities in this segment in the future if the prices were sufficiently attractive. 6 We secured the land for our new chemical factory and received the final approval regarding environmental protection assessment.

However, at the present time, all of management’s attention is focused on getting its facilities approved and in full production. Management may consider acquisition opportunities in this segment in the future if the prices were sufficiently attractive. 6 We secured the land for our upcoming chemical factory and obtained the final approval regarding environmental protection assessment.

On February 24, 2023, the CSRC, the Ministry of Finance, the National Administration of State Secrets Protection and the National Archives Administration jointly issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Confidentiality and Archives Provisions, which will take effective from March 31, 2023.

On February 17, 2023, the China Securities Regulatory Commission (‘CSRC”) released the Trial Measures for Administration of Overseas Securities Offerings and Listings by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which will come into effect on March 31, 2023.

The functional currency of the Company’s operating foreign subsidiaries is the Renminbi (“RMB”), which had an average exchange rate of $0.15501 and $0.14908 during fiscal years 2021 and 2022, respectively, the reporting currency of the Company is the United States dollar (“USD” or $”).

The functional currency of the Company’s operating foreign subsidiaries is the Renminbi (“RMB”), which had an average exchange rate of $0.14908 and $0.14204 during fiscal years 2022 and 2023, respectively, the reporting currency of the Company is the United States dollar (“USD” or $”).

The Company incurred relocation costs in the amount of $45,584,344 as of December 31, 2022. In January 2020, the Company received the environmental protection approval by the government of Shouguang City, Shandong Province for the proposed Yuxin Chemical factory.

The Company incurred relocation costs in the amount of $45,584,344 as of December 31, 2023. In January 2020, the Company received the environmental protection approval by the government of Shouguang City, Shandong Province for the planned Yuxin Chemical factory.

In January 2017, the Company completed the first brine water and natural gas well field construction in Daying located in Sichuan Province and commenced trial production in January 2019.

In January 2017, the Company completed the construction of the first brine water and natural gas well field in Daying County, Sichuan Province, and commenced trial production in January 2019.

During each of the years ended December 31, 2022 and 2021, sales to our three largest crude salt customers, based on net revenue from such customers, aggregated $6,996,553 and $6,080,241, respectively, or approximately 100% and 100% of total net revenue from sale of crude salt; and sales to our largest customer represented approximately 39% and 38%, respectively, of total net revenue from the sale of crude salt.

During each of the years ended December 31, 2023 and 2022, sales to our three largest crude salt customers, based on net revenue from such customers, aggregated $2,971,467 and $6,996,553, respectively, or approximately 100% and 100% of total net revenue from sale of crude salt; and sales to our largest customer represented approximately 38% and 39%, respectively, of total net revenue from the sale of crude salt.

SYCI paid $9,130,538 for a 50-year lease of a piece of land for its new factories at Bohai Marine Fine Chemical Industrial Park in December, 2017 and leased another piece of land from the third party for its new chemical factory.

SYCI paid $8,978,553 for a 50-year lease of a piece of land for its new factories at Bohai Marine Fine Chemical Industrial Park in December 2017 and leased another piece of land from the third party for its new chemical factory.

Expense related to social insurance was approximately $624,827 for fiscal year 2022. 14 Health and Safety The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health, safety and wellness of our employees.

Expense related to social insurance was approximately $681,540 for fiscal year 2023. 14 Health and Safety The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health, safety and wellness of our employees.

In resolving the problem, the Company purchased customized equipment for its natural gas project. The installation of such equipment, including providing piping and electricity, was completed in July 2018. The Company completed the test production at its first natural gas well in Sichuan Province and commenced trial production in January 2019.

The installation of such equipment, including providing piping and electricity, was completed in July 2018. The Company completed the test production at its first natural gas well in Sichuan Province and commenced trial production in January 2019.

We believe the new chemical factory could produce strong sales and profits. We believe there may be much less capacity in the chemical industry, as many factories may be permanently closed. In addition, other competitor factories may reduce their production capacity. We expect to have a factory that operates efficiently.

We believe there may be much less capacity in the chemical industry, as many factories may be permanently closed. In addition, other competitor factories may reduce their production capacity. We expect to have a factory that operates efficiently.

The Company understood from the local government that it has been coordinating with several government agencies to solve these three outstanding approval issues in a timely manner and that all the affected bromine plants are not allowed to commence production prior to obtaining those approvals.

The Company understood from the local government that local government were coordinating with various government agencies to solve these three outstanding approval issues in a timely manner and that all impacted bromine plants are not allowed to commence production prior to obtaining those approvals.

Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and the unfettered ability to transfer information to the SEC.

The Protocol remains unpublished and is subject to further explanation and implementation. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and the unfettered ability to transfer information to the SEC.

Our auditor, WWC, P.C., Certified Public Accountants, is a U.S.-based accounting firm registered with the PCAOB, and is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.

Our auditor, GGF CPA LTD., Certified Public Accountants, is a China-based accounting firm registered with the PCAOB, and is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.

Human Capital Resources Employee Profiles As of December 31, 2022, we employed approximately 435 full-time employees, of whom approximately 72% are with SCHC、SHSI and DCHC, and 28% are with SYCI. Approximately 6% of our employees are management personnel and 4% are sales and procurement staff. None of our employees are represented by a union.

Human Capital Resources Employee Profiles As of December 31, 2023, we employed approximately 380 full-time employees, of whom approximately 78% are with SCHC、SHSI and DCHC, and 22% are with SYCI. Approximately 29% of our employees are management personnel and 4% are sales and procurement staff. None of our employees are represented by a union.

To comply with such notification, the Company had temporarily stopped production at its bromine facilities during the aforesaid period and reopened the operating bromine and crude salt factories in February 2023 as planned. 12 ▼ Chemical Products On November 24, 2017, the Company received a letter from the Government of Yangkou County, Shouguang City notifying the Company to relocate its two chemical production plants located in the second living area of the Qinghe Oil Extraction Plant to the Bohai Marine Fine Chemical Industrial Park (the “November 2017 Letter”).

In compliance with the notification, the Company ceased production at its bromine facilities during this period and resumed operations at the bromine and crude salt factories as scheduled in February 2024. 12 ▼ Chemical Products On November 24, 2017, the Company received a letter from the Government of Yangkou County, Shouguang City notifying the Company to relocate its two chemical production plants located in the second living area of the Qinghe Oil Extraction Plant to the Bohai Marine Fine Chemical Industrial Park (the “November 2017 Letter”).

The Company’s factories No.7 and No.1 started trial production on middle of March, 2020, and commenced commercial production on April 3, 2020. The Company received an oral notification from the government for its Factory No. 8, which permitted Factory No.8 to resume production in August 2022. Factory No.8 started to contribute revenue in the fourth quarter 2022.

The Company’s factories No.7 and No.1 started trial production in middle March, 2020, and commenced commercial production on April 3, 2020. The Company received oral notification from the government regarding Factory No. 8, allowing it to resume production in August 2022. Factory No.8 began contributing revenue in the fourth quarter 2022.

Until these approvals have been received, the Company has to temporarily halt trial production at its natural gas well in Daying. In compliance with the Chinese government new policies, the Company is also required to obtain an exploration license and a mining license for bromine and natural gas, respectively.

Until these approvals are obtained, the Company must temporarily suspend trial production at its natural gas well in Daying. Additionally, in compliance with the Chinese government new policies, the Company is required to obtain an exploration license for bromine and a mining license for natural gas.

On November 23, 2015, the Company’s wholly owned subsidiary SCHC entered into an agreement with the People’s Government of Daying County in Sichuan Province for the exploration and development of natural gas and brine resources (including bromine and crude salt).

On January 30, 2015 we announced that we had found natural gas resources under our bromine well in Sichuan Province. On November 23, 2015, the Company’s subsidiary SCHC entered into an agreement with the People’s Government of Daying County in Sichuan Province for the exploration and development of natural gas and brine resources (including bromine and crude salt).

The Company commenced construction on its new chemical facilities located at Bohai Marine Fine Chemical Industrial Park in June 2020. The construction was expected to take approximately one year and an additional six months to complete the equipment installation and testing, however, due to the COVID epidemic and electrical restrictions, the opening of the chemical factory has been delayed.

Construction of the new chemical facilities located at Bohai Marine Fine Chemical Industrial Park, commenced in June 2020. Initially, the construction was projected to last around one year, with an additional six months for equipment installation and testing, However, due to the COVID epidemic and electrical restrictions, the opening of the chemical factory has been postponed.

On May 29, 2019, the Company received a verbal notice from the government of Tianbao Town ,Daying County, Sichuan Province, whereby the Company is required to obtain project approval for its well located in Daying, including the whole natural gas and brine water project, and approvals for safety production inspection, environmental protection assessment, and to solve the related land issue.

On May 29, 2019, the Company received verbal notice from the government of Tianbao Town, Daying County, Sichuan Province, mandating the need for project approval for its Daying well, encompassing the entire natural gas and brine water project. This also includes approvals for safety production inspection, environmental protection assessment, and to solve the related land issue.

During each of the years ended December 31, 2022 and 2021, the net revenue for the chemical products was $0. Principal Suppliers Our principal external suppliers are Laizhou Shengfu Chemical Company Limited, Weifang Wanhong Chemical Company Limited, Shandong Xinlong International Trade Company Limited.

During each of the years ended December 31, 2023 and 2022, the net revenue for the equipment lease was $150,861 and $132,993. Principal Suppliers Our principal external suppliers are Laizhou Shengfu Chemical Company Limited, Weifang Wanhong Chemical Company Limited, Shandong Xinlong International Trade Company Limited, Shouguang Runfeng trading Company Limited.

On August 26, 2022, the PCAOB signed the Protocol with the CSRC and the MOF of the People’s Republic of China, governing inspections and investigations of audit firms based in mainland China and Hong Kong. The Protocol remains unpublished and is subject to further explanation and implementation.

Our auditor is headquartered in the China and is subject to inspection by the PCAOB on a regular basis. On August 26, 2022, the PCAOB signed the Protocol with the CSRC and the MOF of the People’s Republic of China, governing inspections and investigations of audit firms based in mainland China and Hong Kong.

During the year ended December 31, 2021, sales to our three largest bromine customers, based on net revenue from such customers, aggregated $25,020,136 or approximately 51% of total net revenue from sale of bromine; and sales to our largest customer represented approximately 19%, respectively, of total net revenue from the sale of bromine.

During the year ended December 31, 2023, sales to our three largest bromine customers, based on net revenue from such customers, aggregated $10,866,228 or approximately 40.36% of total net revenue from sale of bromine; and sales to our largest customer represented approximately 14%, respectively, of total net revenue from the sale of bromine.

In January 2017, the Company completed the first brine water and natural gas well field construction in Sichuan Province and announced the commencement of trial production. Then later on, the Company found some issues related to the water and other potential impurities in the natural gas during trial production.

In January 2017, the Company completed the construction of the first brine water and natural gas well field in Sichuan Province. Subsequently, the Company found some issues related to the water and other potential impurities in the natural gas during trial production. In resolving the problem, the Company purchased customized equipment for its natural gas project.

The Company began the construction on its new chemical facilities located at Bohai Marine Fine Chemical Industrial Park in June 2020 and basically completed the civil works by end of June 2021.

Construction of the new chemical facilities at Bohai Marine Fine Chemical Industrial Park commenced in June 2020, with the bulk of the civil engineering works completed by the end of June 2021.

The virus outbreak slightly delayed the commencement of the operations for Factory No.1, No.4, No.7, No.9, and No.8 and it may also delay the approval for the remaining three factories include No.2, and No.10.

The outbreak of the virus resulted in slight delay in the commencement of operations for Factory No.1, No. 4, No. 7, No. 9, and No. 8, and may potentially delay the approval for the remaining two factories, including No. 2, and No. 10.

Pursuant to the notification from the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 10, 2022 until February 1, 2023 8:00 AM China Time.

Pursuant to the notification from the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 25, 2023 until February 20, 2024.

We compete based on price, our reputation for quality, on-time delivery, our relationship with suppliers and our geographical proximity to natural brine deposits in the PRC for bromine, crude salt and chemical productions.

Certain state owned and state backed competitors are more established and have more control of certain resources in terms of pricing than we do. We compete based on price, our reputation for quality, on-time delivery, our relationship with suppliers and our geographical proximity to natural brine deposits in the PRC for bromine, crude salt and chemical productions.

On May 7, 2019, the Company renamed its Subdivision Factory No. 1 to Factory No. 4; and Factory No. 5 (which was previously considered part of Factory No. 7) to Factory No. 7.

Then, on May 7, 2019, the Company renamed its Subdivision Factory No. 1 to Factory No. 4; and Factory No. 5 (previously integrated with Factory No. 7) as the new Factory No. 7.

On November 15, 2021, the company announced due to the supply chain issues as well as the electric restrictions in China, the delivery of some equipment, the equipment installation and testing and beginning trial production at the chemical factory had been be delayed.

However, due to the supply chain issues as well as the electric restrictions in China, the delivery of some equipment, along with the equipment installation and testing and beginning trial production at the chemical factory, was delayed. On February 22, 2022, the Company announced that discussions with the government had led to an easing of electricity restrictions.

The Company’s Factories No. 1 and No. 7 commenced trial production in mid-March 2020 and commercial production on April 3, 2020 and its Factories No. 4 and No. 9 commenced commercial production on May 6, 2020.

The Company’s Factories No. 1 and No. 7 commenced trial production in mid March 2020 and commercial production on April 3, 2020 and its Factories No. 4 and No. 9 commenced commercial production on May 6, 2020. The Company received verbal notification from the government regarding Factory No. 8, allowing it to recommence production in August 2022.

The Company is still waiting for governmental approval for factories #2, and #10. To our knowledge, the government is currently completing its planning process for all mining areas including that for prevention of flood.

The Company is awaiting governmental approval for Factories No. 2 and No. 10. To our knowledge, the government is finalizing plans for all mining areas, including flood prevention measures.

Pursuant to the notification from the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 10, 2022 until February 1, 2023 8:00 AM China Time.

Factory No. 8 began contributing revenue in the fourth quarter 2022. Pursuant to the notification from the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 25, 2023 until February 20, 2024.

The local governmental agencies confirmed the facts that their initial requirements for the bromine industry did not include the project approval, the planning approval and the land use rights approval and that those three additional approvals were new requirements of the provincial government.

The Shouguang City Bromine Association, on behalf of all the bromine producers in Shouguang, initiated negotiations with the local government agencies. The local governmental agencies acknowleged the facts that their initial requirements for the bromine industry did not include the project, the planning and land use rights approvals, which were later introduced by the provincial government as new requirements.

As a result, we may be required to make some modifications to our current wells and aqueducts prior to commencement of operations of these factories to satisfy the local government's requirements.

As a result, we may be required to make certain modifications to our existing wells and aqueducts prior to commencement of operations of these factories in order to satisfy the local government's requirements. The Company completed its flood prevention project in December 2023. This project was implemented for safeguarding its bromine facilities.

The total cost of building the new factory is currently estimated to be approximately $64 million. The Company incurred relocation costs in the amount of $45,584,344 and $45,584,344 as of December 31, 2022 and 2021.

The Company has received the refrigeration and air compressor units. The estimated total cost for the relocation process is approximately $69 million. As of December 31, 2023 and 2022, the Company incurred relocation costs in the amount of $45,584,344 and $45,584,344, respectively.

The Company has been working closely with the County authorities to develop rectification plans for both its bromine and crude salt businesses and had agreed on a plan in October 2017.

This was required for the Company to perform rectification and improvement in compliance with the local new safety and environmental protection requirements. The Company has worked closely with the county authorities to develop rectification plans for its bromine and crude salt businesses, reaching an agreement on a plan in October 2017.

This subsidiary was created in response to a new government policy that required bromine and crude salt companies to have separate registrations. Because many smaller producers have not had the capital to conduct the rectification required by the government, management believes there could be some extremely attractive acquisition opportunities in bromine.

In compliance with the notification, the Company ceased production at its bromine facilities during this period and resumed operations at the bromine and crude salt factories as scheduled in February 2024. Because many smaller producers have not had the capital to conduct the rectification required by the government, management believes there could be some extremely attractive acquisition opportunities in bromine.

Our marketing strategy involves developing long term ongoing working relationships with customers based on large multi-year agreements which foster mutually advantageous relationships. We compete with PRC domestic private companies and state owned companies. Certain state owned and state backed competitors are more established and have more control of certain resources in terms of pricing than we do.

Competition To date, our sales have been limited to customers within the PRC and we expect that our sales will remain primarily domestic for the immediate future. Our marketing strategy involves developing long term ongoing working relationships with customers based on large multi-year agreements which foster mutually advantageous relationships. We compete with PRC domestic private companies and state owned companies.

To comply with such notification, the Company had temporarily stopped production at its bromine facilities during the aforesaid period and reopened the operating bromine and crude salt factories in February, 2023 as planned. In April 2022, Shouguang Hengde Salt Industry Co. Ltd, our subsidiary, was incorporated in Shandong Province, China, for crude salt production and trading.

In April 2022, our subsidiary, Shouguang Hengde Salt Industry Co. Ltd, was incorporated in Shandong Province, China, specifically for crude salt production and trading. This subsidiary was established in response to a new government policy mandating separate registrations for bromine and crude salt companies. The Company is awaiting governmental approval for Factories No. 2 and No. 10.

The Company plans to proceed with its applications for the natural gas and brine project approvals with related government departments until after the governmental planning has been finalized the land and resource planning for Sichuan Province. We are not writing off any of the goodwill related to our chemicals business.

The Company is engaged in ongoing discussions with the government of Daying County regarding the establishment of a joint venture for the exploration and production of natural gas and brine products in Sichuan. We are not writing off any of the goodwill related to our chemicals business. We believe the upcoming chemical factory could produce sales and profits.

Removed

Our auditor is headquartered in the United States and is subject to inspection by the PCAOB on a regular basis with the last inspection in November 2021.

Added

Recent Developments Acquisition Agreements On June 26, 2024, a wholly owned subsidiary of the Company, Shouguang Hengde Salt Industry Co. Ltd ( “SHSI”), entered into a Crude Salt Field Acquisition Agreement (the “Acquisition Agreement”) with Shouguang Qingshuibo Farm Co., LTD.

Removed

The Company received an oral notification from the government for its Factory No. 8, which permits the Factory No. 8 to resume production in August 2022. And Factory No. 8 started contribute revenue in the fourth quarter 2022. The Company is still waiting for governmental approval for Factories No. 2 and No. 10.

Added

(“Seller A”), pursuant to which Seller A agrees to transfer to SHSI, and SHSI agrees to purchase, 2,380,000 square meters of crude salt field (including the land lease fee) for RMB54.40 per square meter, with the total transfer price of RMB129,472,000.

Removed

To our knowledge, the government is currently completing its planning process for all mining areas including that for prevention of flood. As a result, we may be required to make some modifications to our current wells and aqueducts prior to commencement of operations of these factories to satisfy the local government's requirements.

Added

The term of transfer is from June 29, 2024 to June 28, 2044. 80% of the transfer price shall be paid upon the execution of Acquisition Agreement, and the remaining 20% shall be paid in shares of common stock of the Company within three months from the date of Acquisition Agreement after SHSI has inspected the and accepted the crude salt field in writing.

Removed

The Company has received the refrigeration and air compressor units. The rest equipment is expected to be delivered by the second quarter of 2023. The Company intends to start installation of equipment and may start testing and trial production by the end of 2023 or beginning of 2024.

Added

On June 27, 2024, SHSI entered into four Crude Salt Field Acquisition Agreements (the “Agreements”) with Shouguang city Yangkou town Dingjia Zhuangzi village stock economic cooperative, Shouguang city Yangkou town Shanjia Zhuangzi village stock economic cooperative, Shouguang City Yangkou town Zhengjia Zhuangzi village stock economic cooperative, and Shouguang city Yangkou town Renjia Zhuangzi village stock economic cooperative (together, “Sellers”), pursuant to which Sellers agree to transfer to SHSI, and SHSI agrees to purchase from Sellers, 750,000, 804,000, 385,000, and 822,000 square meters of crude salt field (including the land lease fee) for RMB54.10, RMB54.90, RMB54.00, and RMB55.70 per square meter, respectively, with the total transfer price of RMB40,575,000, RMB44,139,600, RMB20,790,000, and RMB45,785,400, respectively.

Removed

There was an impairment loss on the property, plant and equipment related to the relocation of our chemical plants to Bohai Park in the amount of $16,636,322, since much of the equipment that was used in the chemical factories was relatively old. Further, even if it had been newer, we believe that it might not have passed new environmental tests.

Added

The term of transfers is from June 29, 2024 to June 28, 2044. 80% of the transfer price shall be paid upon the execution of Agreements, and the remaining 20% shall be paid in shares of common stock of the Company within three months from the date of Agreements after SHSI has inspected the and accepted the crude salt fields in writing.

Removed

On January 30, 2015 we announced that we had found natural gas resources under our bromine well in the Sichuan area.

Added

Nasdaq Compliance The Company received a notice (the “Initial Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) on April 18, 2024 notifying the Company that due to the Company’s failure to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”), with the SEC, the Company is not in compliance with Nasdaq’s continued listing requirements under Nasdaq Listing Rule 5250(c)(1) (the “Rule”), which requires the timely filing of all required periodic reports with the SEC, and the Company subsequently received a notice (the “May Notice”) from Nasdaq on May 21, 2024 due to the Company’s non-compliance with the Rule as a result of the Company’s failure to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024 (the “Form 10-Q”, together with the Form 10-K, the “Delinquent Reports”).

Removed

The Shouguang City Bromine Association, on behalf of all the bromine plants in Shouguang, has started discussions with the local government agencies.

Added

The May Notice states that the Company has until June 17, 2024 to submit to Nasdaq a plan to regain compliance with the Rule.

Removed

On February 22, 2022, the company announced that discussions with the government have convinced management that the electricity restrictions are being eased. Accordingly, the Company had contacted its suppliers and will have the remainder of the equipment produced and delivered, so the Company can complete installation and begin testing and trial production.

Added

On June 26, 2024, the Company received a letter from Nasdaq indicating that, based on its further review and the plan of compliance submitted by the Company on June 14, 2024, Nasdaq has determined to grant an exception to enable the Company to regain compliance with the Rule.

Removed

The Company has started the preparation work for its application for safety and environmental assessment recently. Competition To date, our sales have been limited to customers within the PRC and we expect that our sales will remain primarily domestic for the immediate future.

Added

The terms of the exception are as follows: on or before October 14, 2024, the Company must file the Delinquent Reports, as required by the Rule. In the event the Company does not satisfy the terms, Nasdaq will provide written notification that its securities will be delisted. At that time, the Company may appeal Nasdaq’s determination to a hearings panel.

Added

Subsequently, on August 20, 2024, the Company received a notice (the “August Notice”) from Nasdaq indicating that, because the Company is delinquent in filing its quarterly report on Form 10-Q for the period ended June 30, 2024, the Company is not in compliance with the Rule.

Added

The Notice also indicates that as a result of this additional delinquency, the Company must submit an update to its original plan to regain compliance with respect to the filing requirements. The Company has until September 4, 2024 to submit such update to Nasdaq.

Added

The August Notice has no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Global Select Market.

Added

While the Company can provide no assurance to the timing, the Company has submitted a letter to Nasdaq confirming that there has been no change to its original plan to regain compliance with respect to the filing requirements, and will continue to work diligently to complete and file its delayed SEC reports.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

9 edited+20 added−1 removed103 unchanged

2022 filing

2023 filing

Biggest changeIn 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters generally. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investments in the PRC.

Biggest changeThe overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investments in the PRC. However, the PRC has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in the PRC.

Under the Revised Measures, any “network platform operator” controlling personal information of no less than one million users which seeks to list in a foreign stock exchange should also be subject to cyber security review.

On February 17, 2023, the CSRC released the Trial Administrative Measures for Administration of Overseas Securities Offerings and Listings by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which will come into effect on March 31, 2023.

Our auditor, WWC, P.C., Certified Public Accountants, the independent registered public accounting firm that issued the audit report included in our annual report, an auditor of companies that are traded publicly in the United States and an U.S.-based accounting firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.

Our auditor, GGF CPA LTD, Certified Public Accountants, the independent registered public accounting firm that issued the audit report included in our annual report, an auditor of companies that are traded publicly in the United States and an China-based accounting firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.

Our auditor is based in the United States and is subject to inspection by the PCAOB on a regular basis with the last inspection in November 2021. However, our auditor’s working papers related to us and our subsidiaries are located in China.

Our auditor is based in the China and is subject to inspection by the PCAOB on a regular basis. However, our auditor’s working papers related to us and our subsidiaries are located in China.

Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy.

In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy.

Item 1A. Risk Factors. Pursuant to Item 301(c) of Regulation S-K (§ 229.301(c)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

Uncertainties with respect to the PRC legal system could adversely affect us. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value.

The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters generally.

Removed

However, the PRC has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in the PRC. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties.

Added

If we are unable to regain compliance with Nasdaq’s listing requirements, our securities could be delisted, which could affect our common stock’s market price and liquidity and reduce our ability to raise capital.

Added

The Company received a notice (the “Initial Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) on April 18, 2024 notifying the Company that due to the Company’s failure to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”), with the SEC, the Company is not in compliance with Nasdaq’s continued listing requirements under Nasdaq Listing Rule 5250(c)(1) (the “Rule”), which requires the timely filing of all required periodic reports with the SEC, and the Company subsequently received a notice (the “May Notice”) from Nasdaq on May 21, 2024 due to the Company’s non-compliance with the Rule as a result of the Company’s failure to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024 (the “Form 10-Q”, together with the Form 10-K, the “Delinquent Reports”).

Added

The May Notice states that the Company has until June 17, 2024 to submit to Nasdaq a plan to regain compliance with the Rule.

Added

The August Notice has no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Global Select Market.

Added

On or before October 14, 2024, we must evidence compliance with the Rule, which requires the timely filing of all required periodic reports with the SEC. If we fail to regain compliance with the Rule, or fail to evidence compliance with the Rule by October 14, 2024, we may be subject to delisting.

Added

In that event, we would have the right to a hearing before a Nasdaq hearings panel, which would stay any suspension or delisting action pending the conclusion of the hearing process and the expiration of any additional extension period granted by the panel following the hearing.

Added

We cannot assure you that we will be able to regain compliance with Nasdaq listing standards. Our failure to continue to meet these requirements would result in our common stock being delisted from Nasdaq, and if our common stock is delisted, our warrants will also be delisted.

Added

We and holders of our securities could be materially adversely impacted if our securities are delisted from Nasdaq.

Added

In particular: · we may be unable to raise equity capital on acceptable terms or at all; · we may lose the confidence of our customers, which would jeopardize our ability to continue our business as currently conducted; · the price of our common stock will likely decrease as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws; · holders may be unable to sell or purchase our securities when they wish to do so; · we may become subject to stockholder litigation; · we may lose the interest of institutional investors in our common stock; · we may lose media and analyst coverage; · our common stock could be considered a “penny stock,” which would likely limit the level of trading activity in the secondary market for our common stock; and · we would likely lose any active trading market for our common stock, as it may only be traded on one of the over-the-counter markets, if at all.

Added

The occurrence of security breaches and cyber-attacks could negatively impact our business. Information technology systems are important to our business and operations. We are subject to attempts to compromise our security and information systems, including denial of service attacks, viruses, malicious software or ransomware, and exploitations of system flaws or weaknesses.

Added

Error or malfeasance or other irregularities may also result in the failure of our or our third-party service providers' cybersecurity measures and may give rise to a cybersecurity incident.

Added

The techniques used to conduct security breaches and cyber-attacks, as well as the sources and targets of these attacks, change frequently and may not be recognized until launched against us or our third-party service providers. We or our third-party service providers may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks.

Added

The primary risks that could directly result from the occurrence of security breaches and cyber-attacks include operational interruption, financial losses, personal information leakage and non-compliance. The occurrence of such incidents could negatively impact our business operations and our relationships with customers and employees, and damage our reputation.

Added

If we or our third-party service providers are unable to avert security breaches and cyber-attacks, we could incur significantly higher costs, including remediation costs to repair damage caused by the breach, costs to deploy additional personnel and network protection technologies, train employees and engage third-party experts and consultants, as well as litigation costs resulting from the incident.

Added

These costs, which could be material, could adversely impact our results of operations in the period in which they are incurred and may not meaningfully limit the success of future attempts to breach our information technology systems. Uncertainties with respect to the PRC legal system could adversely affect us.

Item 2. Properties

Properties — owned and leased real estate

5 edited+0 added−0 removed27 unchanged

2022 filing

2023 filing

Biggest changeThe following table shows the annual bromine produced and sold for each of our production facilities and the weighted average price received for all products sold for the last two years. 2022 2021 Bromine Facility Produced (in tons) Sold (in tons) Selling price (RMB/ton) Produced (in tons) Sold (in tons) Selling price (RMB/ton) Factory No. 1 2,401 2,402 51,184 2,255 2,234 42,794 Factory No. 2 — — — — — — Factory No. 3** — — — — — — Factory No. 4** — — — — — — Factory No. 7* (originally named as No. 5 and No. 7) * 2,433 2,434 51,185 2,398 2,378 43,348 Factory No. 8 116 108 51,327 — — — Factory No. 9 1,504 1,506 51,193 1,415 1,395 42,072 Factory No. 4 (originally know Subdivision of Factory No. 1) 1,367 1,367 51,181 1,380 1,372 41,760 Factory No. 10 — — — — — — Factory No. 11** — — — — — — Total 7,821 7,817 7,448 7,379 * Bromine production for Factory No. 5 and Factory No. 7 were combined in early 2010 as both factories are located adjacent to each other., and renamed Factory No. 5 (which was previously considered part of Factory No. 7) as Factory No. 7 on May 2019. ** Factory No. 3, 4 and 11 were demolished in September 2018. 27 The following table shows the annual crude salt produced and sold for each of our production facilities and the weighted average price received for all products sold for the last two years. 2022 2021 Crude Salt Facility Produced (in tons) Sold (in tons) Selling price (RMB/ton) Produced (in tons) Sold (in tons) Selling price (RMB/ton) Factory No. 1 4,790 3,780 272 5,870 6,920 216 Factory No. 2 7,480 3,330 239 — — — Factory No. 7* (Originally Named as No. 5 and No. 7) * 111,740 109,210 258 116,080 117,100 213 Factory No. 8 17,880 17,880 256 — — — Factory No. 9 56,470 50,320 255 58,080 57,700 222 Total 198,360 184,520 180,030 181,720 * Bromine production for Factory No. 5 and Factory No. 7 were combined in early 2010 as both factories are located adjacent to each other, and renamed Factory No. 5 (which was previously considered part of Factory No. 7) as Factory No. 7 on May 2019 Our SYCI’s production facilities did not produce or sold any chemical products for the last two years.

Biggest changeThe following table shows the annual bromine produced and sold for each of our production facilities and the weighted average price received for all products sold for the last two years. 2023 2022 Bromine Facility Produced (in tons) Sold (in tons) Selling price (RMB/ton) Produced (in tons) Sold (in tons) Selling price (RMB/ton) Factory No. 1 2,223 2,220 23,760 2,401 2,402 51,184 Factory No. 2 — — — — — — Factory No. 3** — — — — — — Factory No. 4** — — — — — — Factory No. 7* (originally named as No. 5 and No. 7) * 2,403 2,405 23,783 2,433 2,434 51,185 Factory No. 8 1,314 1,300 23,574 116 108 51,327 Factory No. 9 1,142 1,147 23,715 1,504 1,506 51,193 Factory No. 4 (originally know Subdivision of Factory No. 1) 879 879 24,072 1,367 1,367 51,181 Factory No. 10 — — — — — — Factory No. 11** — — — — — — Total 7,961 7,951 7,821 7,817 * Bromine production for Factory No. 5 and Factory No. 7 were combined in early 2010 as both factories are located adjacent to each other, and renamed Factory No. 5 (which was previously considered part of Factory No. 7) as Factory No. 7 on May 2019. ** Factory No. 3, 4 and 11 were demolished in September 2018. 27 The following table shows the annual crude salt produced and sold for each of our production facilities and the weighted average price received for all products sold for the last two years. 2023 2022 Crude Salt Facility Produced (in tons) Sold (in tons) Selling price (RMB/ton) Produced (in tons) Sold (in tons) Selling price (RMB/ton) Factory No. 1 1,750 3,250 216 4,790 3,780 272 Factory No. 2 5,930 6,650 238 7,480 3,330 239 Factory No. 7* (Originally Named as No. 5 and No. 7) * 42,160 41,280 215 111,740 109,210 258 Factory No. 8 23,900 23,900 205 17,880 17,880 256 Factory No. 9 20,440 22,021 221 56,470 50,320 255 Total 94,180 97,101 198,360 184,520 * Bromine production for Factory No. 5 and Factory No. 7 were combined in early 2010 as both factories are located adjacent to each other, and renamed Factory No. 5 (which was previously considered part of Factory No. 7) as Factory No. 7 on May 2019 Our SYCI’s production facilities did not produce or sold any chemical products for the last two years.

Property Factory No. 1 – Haoyuan General Factory Area 6,442 acres Date of Acquisition February 5, 2007 Land Use Rights Lease Term Fifty Years Land Use Rights Expiration Date 2054 (for mining areas only) The number of remaining years to expiration of the of the land lease as of December 31, 2021 31.25 Years Prior fees paid for land use rights RMB8.6 million Annual Rent RMB186,633 Mining Permit No.: C3707002009056220022340 Date of Permission: July 2018, subject to renewal per three years Period of Permission: Three year Property Factory No. 4 ( originally named as Subdivision of Factory No. 1 ) – State-owned Shouguang Qinshuibo Farm Area 0.79 acres Date of Factory lease January 1, 2011 Factory Lease Term Twenty Years Factory lease Expiration Date 2030 The number of remaining years to expiration of the of the factory lease as of December 31, 2021 8.0 Years Prior Fees Paid for Land Use Rights Not applicable Annual Rent RMB5,000,000 Mining Permit No.: Under application 24 Property Factory No. 2 – Yuwenbo Area 1,846 acres Date of Acquisition April 7, 2007 Land Use Rights Lease Term Fifty Years Land Use Rights Expiration Date 2052 The number of remaining years to expiration of the of the land lease as of December 31, 2021 30 Years Prior Fees Paid For Land Use Rights RMB7.5 million Annual Rent RMB162,560 Mining Permit No.: C3707002009056220022340 Date of Permission: July 2021, subject to renewal per three years Period of Permission: Three year Property Factory No. 2 – State Operated Shouguang Qingshuibo Farm Area 568 acres Date of Acquisition December 30, 2010 Land Use Rights Lease Term Thirty Years Land Use Rights Expiration Date 2040 The number of remaining years to expiration of the of the land lease as of December 31, 2021 18.7 Years Prior Fees Paid for Land Use Rights Not applicable Annual Rent RMB172,500 (increase 5% per year) Mining Permit No.: Under application Property Factory No. 7 (originally named as No. 5)– Wangjiancai Area 2,165 acres Date of Acquisition October 25, 2007 Land Use Rights Lease Term Fifty Years Land Use Rights Expiration Date 2054 The number of remaining years to expiration of the of the land lease as of December 31, 2021 32 Years Annual Rent RMB176,441 Prior Fees Paid for Land Use Rights RMB8.3 million Mining Permit No.: Under application, written consent obtained from local land and resources departments Property Factory No. 7 – Qiufen Yuan Area 1,611 acres Date of Acquisition January 7, 2009 Land Use Rights Lease Term Fifty Years Land Use Rights Expiration Date 2059 The number of remaining years to expiration of the of the land lease as of December 31, 2021 36.17 Years Prior Fees Paid for Land Use Rights Not applicable Annual Rent RMB171,150 (increase 5% per two years) Mining Permit No.: C3707002009056220022340 Date of Permission: July 2018, subject to renewal per three years Period of Permission: Three year 25 Property Factory No. 8 – Fengxia Yuan Area 2,723 acres Date of Acquisition September 7, 2009 Land Use Rights Lease Term Fifty Years Land Use Rights Expiration Date 2059 The number of remaining years to expiration of the of the land lease as of December 31, 2021 36.66 Years Prior Fees Paid for Land Use Rights Not applicable Annual Rent RMB347,130 (increase 5% per two years) Mining Permit No.: Under application, written consent obtained from local land and resources departments Property Factory No. 9 – Jinjin Li Area 759 acres Date of Acquisition June 7, 2010 Land Use Rights Lease Term Fifty Years Land Use Rights Expiration Date 2060 The number of remaining years to expiration of the of the land lease as of December 31, 2021 37.5 Years Prior Fees Paid for Land Use Rights Not applicable Annual Rent RMB184,200 (increase 5% per two years) Mining Permit No.: Under application, written consent obtained from local land and resources departments Property Factory No. 10 – Liangcai Zhang Area 1,700 acres Date of Acquisition December 13, 2021 Land Use Rights Lease Term Ten Years Land Use Rights Expiration Date 2031 The number of remaining years to expiration of the of the land lease as of December 31, 2021 9.0 Years Prior Fees Paid for Land Use Rights Not applicable Annual Rent RMB1,376,000 Mining Permit No.: Under application Leased Facility On November 5, 2010, SCHC entered into a Lease Contract with State-Operated Shouguang Qingshuibo Farm.

Property Factory No. 1 – Haoyuan General Factory Area 6,442 acres Date of Acquisition February 5, 2007 Land Use Rights Lease Term Fifty Years Land Use Rights Expiration Date 2054 (for mining areas only) The number of remaining years to expiration of the of the land lease as of December 31, 2023 30.25 Years Prior fees paid for land use rights RMB8.6 million Annual Rent RMB186,633 Mining Permit No.: C3707002009056220022340 Date of Permission: July 2018, subject to renewal per three years Period of Permission: Three year Property Factory No. 4 ( originally named as Subdivision of Factory No. 1 ) – State-owned Shouguang Qinshuibo Farm Area 0.79 acres Date of Factory lease January 1, 2011 Factory Lease Term Twenty Years Factory lease Expiration Date 2030 The number of remaining years to expiration of the of the factory lease as of December 31, 2023 7.0 Years Prior Fees Paid for Land Use Rights Not applicable Annual Rent RMB5,000,000 Mining Permit No.: Under application 24 Property Factory No. 2 – Yuwenbo Area 1,846 acres Date of Acquisition April 7, 2007 Land Use Rights Lease Term Fifty Years Land Use Rights Expiration Date 2052 The number of remaining years to expiration of the of the land lease as of December 31, 2023 29 Years Prior Fees Paid For Land Use Rights RMB7.5 million Annual Rent RMB162,560 Mining Permit No.: C3707002009056220022340 Date of Permission: July 2021, subject to renewal per three years Period of Permission: Three year Property Factory No. 2 – State Operated Shouguang Qingshuibo Farm Area 568 acres Date of Acquisition December 30, 2010 Land Use Rights Lease Term Thirty Years Land Use Rights Expiration Date 2040 The number of remaining years to expiration of the of the land lease as of December 31, 2023 17.7 Years Prior Fees Paid for Land Use Rights Not applicable Annual Rent RMB172,500 (increase 5% per year) Mining Permit No.: Under application Property Factory No. 7 (originally named as No. 5)– Wangjiancai Area 2,165 acres Date of Acquisition October 25, 2007 Land Use Rights Lease Term Fifty Years Land Use Rights Expiration Date 2054 The number of remaining years to expiration of the of the land lease as of December 31, 2023 31 Years Annual Rent RMB176,441 Prior Fees Paid for Land Use Rights RMB8.3 million Mining Permit No.: Under application, written consent obtained from local land and resources departments Property Factory No. 7 – Qiufen Yuan Area 1,611 acres Date of Acquisition January 7, 2009 Land Use Rights Lease Term Fifty Years Land Use Rights Expiration Date 2059 The number of remaining years to expiration of the of the land lease as of December 31, 2023 35.17 Years Prior Fees Paid for Land Use Rights Not applicable Annual Rent RMB171,150 (increase 5% per two years) Mining Permit No.: C3707002009056220022340 Date of Permission: July 2018, subject to renewal per three years Period of Permission: Three year 25 Property Factory No. 8 – Fengxia Yuan Area 2,723 acres Date of Acquisition September 7, 2009 Land Use Rights Lease Term Fifty Years Land Use Rights Expiration Date 2059 The number of remaining years to expiration of the of the land lease as of December 31, 2023 35.66 Years Prior Fees Paid for Land Use Rights Not applicable Annual Rent RMB347,130 (increase 5% per two years) Mining Permit No.: Under application, written consent obtained from local land and resources departments Property Factory No. 9 – Jinjin Li Area 759 acres Date of Acquisition June 7, 2010 Land Use Rights Lease Term Fifty Years Land Use Rights Expiration Date 2060 The number of remaining years to expiration of the of the land lease as of December 31, 2023 36.5 Years Prior Fees Paid for Land Use Rights Not applicable Annual Rent RMB184,200 (increase 5% per two years) Mining Permit No.: Under application, written consent obtained from local land and resources departments Property Factory No. 10 – Liangcai Zhang Area 1,700 acres Date of Acquisition December 13, 2021 Land Use Rights Lease Term Ten Years Land Use Rights Expiration Date 2031 The number of remaining years to expiration of the of the land lease as of December 31, 2023 8.0 Years Prior Fees Paid for Land Use Rights Not applicable Annual Rent RMB1,376,000 Mining Permit No.: Under application Leased Facility On November 5, 2010, SCHC entered into a Lease Contract with State-Operated Shouguang Qingshuibo Farm.

The following is a description of the land use and mineral rights related to each of the nine properties held by SCHC as of December 31, 2022. All of the bromine factories are under rectification process without production.

The following is a description of the land use and mineral rights related to each of the nine properties held by SCHC as of December 31, 2023. All of the bromine factories are under rectification process without production.

Bromine Property Facility Acquisition Date Acres Annual Production Capacity # (in tons) 2022 Utilization Ratio 2021 Utilization Ratio Factory No. 1 — 6,442 6,681 36 % 34 % Factory No. 2 April 7, 2007 1,846 4,844 — — Factory No. 7* (originally named as No. 5 and No. 7) October 25, 2007/ January 7, 2009 3,776 6,986 35 % 34 % Factory No. 8 September 7, 2009 2,723 4,016 3 % — Factory No. 9 June 7, 2010 759 2,793 54 % 51 % Factory No.4 (originally named as Subdivision of Factory No. 1) January 1, 2011 1 3,186 43 % 43 % Factory No. 10 December 22, 2011 1,700 3,000 — — * Bromine production for Factory No. 5 and Factory No. 7 were combined in early 2010 as both factories are located adjacent to each other, and renamed Factory No. 5 (which was previously considered part of Factory No. 7) as Factory No. 7 on May 2019.

Bromine Property Facility Acquisition Date Acres Annual Production Capacity # (in tons) 2023 Utilization Ratio 2022 Utilization Ratio Factory No. 1 — 6,442 6,681 33 % 36 % Factory No. 2 April 7, 2007 1,846 4,844 — — Factory No. 7* (originally named as No. 5 and No. 7) October 25, 2007/ January 7, 2009 3,776 6,986 34 % 35 % Factory No. 8 September 7, 2009 2,723 4,016 33 % 3 % Factory No. 9 June 7, 2010 759 2,793 41 % 54 % Factory No.4 (originally named as Subdivision of Factory No. 1) January 1, 2011 1 3,186 28 % 43 % Factory No. 10 December 22, 2011 1,700 3,000 — — * Bromine production for Factory No. 5 and Factory No. 7 were combined in early 2010 as both factories are located adjacent to each other, and renamed Factory No. 5 (which was previously considered part of Factory No. 7) as Factory No. 7 on May 2019.

The annual lease payment for the property is RMB 5.0 million, approximately $784,250, per year and shall be paid by SCHC no later than June 30th of each year. The term of the Lease Contract is for twenty years commencing January 1, 2011.

The annual lease payment for the property is RMB 5.0 million, approximately $705,950, per year and shall be paid by SCHC no later than June 30th of each year. The term of the Lease Contract is for twenty years commencing January 1, 2011.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+3 added−0 removed4 unchanged

2022 filing

2023 filing

Biggest changeOur Equity Compensation Plans The following table provides information as of December 31, 2022 about our equity compensation plans and arrangements.

Biggest changeAll shares of common stock under the 2019 Plan, as amended, including shares originally authorized by equity holders and shares remaining for future issuance as of December 31, 2023, have been reserved. Our Equity Compensation Plans The following table provides information as of December 31, 2023 about our equity compensation plans and arrangements.

Equity Compensation Plan Information -as of December 31, 2022 Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders -- -- 856,801 Equity compensation plans not approved by security holders -- -- -- Total -- -- 856,801 Purchases of Equity Securities by the Company and Affiliated Purchasers None.

Equity Compensation Plan Information -as of December 31, 2023 Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders -- -- 561,801 Equity compensation plans not approved by security holders -- -- -- Total -- -- 561,801 Purchases of Equity Securities by the Company and Affiliated Purchasers None.

Added

Equity Compensation Plan Information 2019 Incentive Stock Plan On December 18, 2019, the Company’s Annual General Meeting adopted and approved the 2019 Omnibus Equity Incentive Plan of Gulf Resources, Inc.(the”2019 Plan”).

Added

Under the 2019 Plan, the Company has reserved a total of 2,068,398 shares of common stock for issuance as or under awards to be made to the directors, officers, employees and/or consultants of the Company and its subsidiaries.

Added

On November 30, 2021, the Company’s Annual General Meeting approved to amend the 2019 Plan to increase the number of shares of common stock authorized for issuance under the plan by 900,000 shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

54 edited+11 added−9 removed41 unchanged

2022 filing

2023 filing

Biggest changeYear ended December 31, 2022 as compared to year ended December 31, 2021 Years ended December 31, 2022 December 31, 2021 Percent Change Increase/ (Decrease) Net Revenue $ 66,094,486 $ 55,030,586 20 % Cost of Net Revenue $ (28,669,152 ) $ (27,132,372 ) 6 % Gross Profit $ 37,425,334 $ 27,898,214 34 % Sales, Marketing and Other Operating Expense $ (62,871 ) $ (62,964 ) (0.15 %) Direct labor and factory overheads incurred during plant shutdown $ (12,002,629 ) $ (10,718,605 ) 12 % General and Administrative Expenses $ (6,028,079 ) $ (9,525,235 ) (37 %) Other Operating Expense $ (2,850,059 ) $ (2,380,540 ) 20 % Profit from Operations $ 16,481,696 $ 5,210,870 216 % Other Income, Net $ 164,739 $ 162,230 1 % Income before Taxes $ 16,646,435 $ 5,373,500 210 % Income Tax Expense (Benefit) $ (6,586,985 ) $ (6,298,218 ) 5 % Net Income $ 10,059,450 $ (924,718 ) 1088 % Net Income of $10,059,450 was mainly due to higher sales, improved margins and lower compensation costs, and the compensation costs $668,000 for shares issued to company employees, officers and consultant for year 2022 .

Biggest changeYear ended December 31, 2023 as compared to year ended December 31, 2022 Years ended December 31, 2023 December 31, 2022 Percent Change Increase/ (Decrease) Net Revenue $ 30,043,790 $ 66,094,486 (55 %) Cost of Net Revenue $ (28,089,953 ) $ (28,669,152 ) (2 %) Gross Profit $ 1,953,837 $ 37,425,334 (95 %) Sales, Marketing and Other Operating Expense $ (59,055 ) $ (62,871 ) (6 %) Direct labor and factory overheads incurred during plant shutdown $ (9,544,675 ) $ (12,002,629 ) (20 %) General and Administrative Expenses $ (4,240,832 ) $ (6,028,079 ) (30 %) Other Operating Expense $ $ (2,850,059 ) (100 %) (Loss)/Profit from Operations $ (11,890,725 ) $ 16,481,696 (172 %) Other Income, Net $ 144,919 $ 164,739 (12 %) Expenditure on water pollution treatment $ (46,510,856 ) $ N/A (Loss) /Income before Taxes $ (58,256,662 ) $ 16,646,435 (450 %) Income Tax Expense (Benefit) $ (3,538,617 ) $ (6,586,985 ) (46 %) Net (Loss) /Income $ (61,795,279 ) $ 10,059,450 (714 %) Net Loss of $61,795,279 was mainly attributable to decreased sales, reduced margins.

Net Cash Provided by Operating Activities During the year ended December 31, 2022, cash flow provided by operating activities of approximately $51.1 million was mainly due to a net income of $10.06 million, a decrease in accounts receivable of $8.2 million, a decrease in accounts payable of $0.8 million, an decrease in deferred taxes of $6.59 million, and a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $26.78 million, offset by increases in operating leases, and prepayments.

During the year ended December 31, 2022, cash flow provided by operating activities of approximately $51.1 million was mainly due to a net income of $10.06 million, a decrease in accounts receivable of $8.2 million, a decrease in accounts payable of $0.8 million, a decrease in deferred taxes of $6.59 million, and a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $26.78 million, offset by an increases in operating leases and prepayments.

As disclosed in the Company’s Current Report on Form 8-K filed on September 8, 2017, the Company received, on September 1, 2017, letters from the Yangkou County, Shouguang City government addressed to each of its subsidiaries, SCHC and SYCI, which stated that in an effort to improve the safety and environmental protection management level of chemical enterprises, the plants are requested to immediately stop production and perform rectification and improvements in accordance with the country’s new safety and environmental protection requirements.

Bromine and Crude Salt As disclosed in the Company’s Current Report on Form 8-K filed on September 8, 2017, the Company received, on September 1, 2017, letters from the Yangkou County, Shouguang City government addressed to each of its subsidiaries, SCHC and SYCI, which stated that in an effort to improve the safety and environmental protection management level of chemical enterprises, the plants are requested to immediately stop production and perform rectification and improvements in accordance with the country’s new safety and environmental protection requirements.

Bromine production capacity and utilization of our factories The table below represents the annual capacity and utilization ratios for all of our bromine producing properties: Annual Production Capacity (in tonnes) Utilization Ratio (i) Fiscal year 2022 31,506 25 % Fiscal year 2021 31,506 25 % Variance of the fiscal year 2022 and 2021 0 0 % (i) Utilization ratio is calculated based on the annualized actual production volume in tonnes for the periods divided by the annual production capacity in tonnes.

Bromine production capacity and utilization of our factories The table below represents the annual capacity and utilization ratios for all of our bromine producing properties: Annual Production Capacity (in tonnes) Utilization Ratio (i) Fiscal year 2023 31,506 25 % Fiscal year 2022 31,506 25 % Variance of the fiscal year 2023 and 2022 0 0 % (i) Utilization ratio is calculated based on the annualized actual production volume in tonnes for the periods divided by the annual production capacity in tonnes.

On November 24, 2017, Gulf Resources received a letter from the People’s Government of Yangkou County, Shouguang City notifying the Company that due to the new standards and regulations relating to safety production and environmental pollution, from certain local governmental departments, such as the municipal environmental protection department, the security supervision department and the fire department, its chemical enterprises would have to be relocated to a new industrial park called Bohai Marine Fine Chemical Industry Park.

Chemical Products On November 24, 2017, the Company received a letter from the People’s Government of Yangkou County, Shouguang City notifying the Company that due to the new standards and regulations relating to safety production and environmental pollution, from certain local governmental departments, such as the municipal environmental protection department, the security supervision department and the fire department, its chemical enterprises would have to be relocated to a new industrial park called Bohai Marine Fine Chemical Industry Park.

As a result of our acquisitions of SCHC and SYCI, our historical consolidated financial statements and the information presented below reflects the accounts of SCHC、SYCI and DCHC, the consolidated financial statements and the information presented below as of and for the year ended December 31, 2022.

Accounts receivable Cash collections on our accounts receivable had a major impact on our overall liquidity. The following table presents the aging analysis of our accounts receivable as of December 31, 2022 and 2021.

The increase in direct labor and factory overhead costs was primarily attributable to the factories operation status during the fiscal year 2022 and year 2021, respectively. These four factories (including No.1,No.4,No.7,No.8 and No.9)were in production during the year 2022. General and Administrative Expenses.

The increase in direct labor and factory overhead costs was primarily attributable to the factories operation status during the fiscal year 2023 and year 2022, respectively. These five factories (including No.1,No.4,No.7,No.8 and No.9)were in production during the year 2023. General and Administrative Expenses.

Chemical products segment Cost of net revenue for our chemical products segment for the fiscal year 2022 and 2021 was $0. Natural gas segment Cost of net revenue for our natural gas segment for the year ended December 31, 2022 and 2021 was $414 and $0. 34 Gross Profit.

Chemical products segment Cost of net revenue for our chemical products segment for the fiscal year 2023 and 2022 was $0. Natural gas segment Cost of net revenue for our natural gas segment for the year ended December 31, 2023 and 2022 was $679 and $414. 34 Gross Profit.

In January 2017, the Company completed the first brine water and natural gas well field construction in Daying located in Sichuan Province and commenced trial production in January 2019.

In January 2017, the Company completed the construction of the first brine water and natural gas well field in Daying County, Sichuan Province, and commenced trial production in January 2019.

In addition, the Company believes that the Shandong provincial government wants to assure that each of its regional and county governments has applied the Notice in a consistent manner. The Shouguang City Bromine Association, on behalf of all the bromine plants in Shouguang, started discussions with the local government agencies.

In addition, the Company believes that the Shandong provincial government wants to assure that each of its regional and county governments has applied the Notice in a consistent manner. The Shouguang City Bromine Association, on behalf of all the bromine producers in Shouguang, initiated negotiations with the local government agencies.

In February 2019, the Company received a notification from the local government of Yangkou County that its Factory No. 1, No.4, No. 7 and No. 9 had passed inspection and could resume operations. In April 2019, Factory No. 1 and No. 7 resumed operations.

In February 2019, the Company received a notification from the local government of Yangkou County that its Factories No. 1, No. 4, No. 7 and No. 9 passed inspection and were allowed to resume operations. In April 2019, Factory No. 1 and No. 7 resumed operations.

For the fiscal year 2021, we used approximately $30 million for investing activities. Net Cash Used In Financing Activities For the fiscal year 2022 and 2021, we used $0.3 million to repay finance lease obligations.

For the fiscal year 2022, we used approximately $37.6 million for investing activities. Net Cash Used In Financing Activities For the fiscal year 2023 and 2022, we used $0.3 million to repay finance lease obligations.

We believe that our available funds and cash flows generated from operations will be sufficient to meet our anticipated ongoing operating needs for the next twelve months. We had available cash of approximately $108 million at December 31, 2022, all of which is in highly liquid current deposits which earn no or little interest.

We believe that our available funds and cash flows generated from operations will be sufficient to meet our anticipated ongoing operating needs for the next twelve months. As of December 31, 2023, we had approximately $72 million in available cash, all of which is in highly liquid current deposits yielding minimal or no interest.

As such, direct labor and factory overhead costs (including depreciation of plant and machinery) amounted $12,002,629 and $10,718,605 for fiscal years 2022 and 2021, which were presented as operating expenses instead of in cost of revenue.

As such, direct labor and factory overhead costs (including depreciation of plant and machinery) amounted $9,544,675 and $12,002,629 for fiscal years 2023 and 2022, which were presented as operating expenses instead of in cost of revenue.

The Company understood from the local government that it has been coordinating with several government agencies to solve these three outstanding approval issues in a timely manner and that all the affected bromine plants willnot be allowed to commence production prior to obtaining those approvals.

The Company understood from the local government that local government were coordinating with various government agencies to solve these three outstanding approval issues in a timely manner and that all impacted bromine plants will not be allowed to commence production prior to obtaining those approvals.

Subsequently, it received another approval from the Shouguang Yangkou People’s Government dated on March 5, 2020 to resume production at its bromine factories No.1, No. 4, No.7 and No. 9 in order to meet the needs of bromide products for epidemic prevention and control. With these two approvals, the Company was allowed to resume production at all four bromine factories.

Further, the Company received another approval from the Shouguang Yangkou People’s Government dated on March 5, 2020 to resume production at its bromine factories No.1, No. 4, No.7 and No. 9 in order to meet the needs of bromide products for epidemic prevention and control (the “March 2020 Approval”).

Natural gas segment Loss from operations from our natural gas segment was $148,099 for the fiscal year 2022, compared to a loss of $167,139 in the same period in 2021. Other Income, Net .

Natural g as segment Loss from operations from our natural gas segment was $86,284 for the fiscal year 2023, compared to a loss of $148,099 in the same period in 2022. Other (Expense)/Income, Net .

Crude salt segment For the year ended December 31, 2022 the cost of net revenue for the crude salt segment was $3,581,567.The cost of net revenue for our crude salt segment for the year ended December 31, 2021 was $4,284,024.

Crude salt segment For the year ended December 31, 2023, the cost of net revenue for the crude salt segment was $1,567,993.The cost of net revenue for our crude salt segment for the year ended December 31, 2022 was $3,581,567.

Equipment Lease For the year ended December 31, 2022, and December 31, 2021, the net revenue for the equipment lease was $132,993 and $78,948.

Equipment Lease For the year ended December 31, 2023, and December 31, 2022, the net revenue for the equipment lease was $150,861 and $132,993.

Gross profit was $37,425,334, or 57%, of net revenue for the year ended December 31, 2022 compared to $27,898,214, or 51%, of net revenue for the same period in 2021.

Gross profit was $1,953,837, or 7%, of net revenue for the year ended December 31, 2023, compared to $37,425,334, or 57%, of net revenue for the same period in 2022.

This adjustment impacts all balance sheet translations into U.S. dollars. 36 LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2022, cash and cash equivalents were $108,226,214 as compared to $95,767,263 as of December 31, 2021. The components of this increase of $12,458,951 are reflected below.

This adjustment impacts all balance sheet translations into U.S. dollars. 36 LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2023, cash and cash equivalents were $72,223,894 as compared to $108,226,214 as of December 31, 2022. The components of this decrease of $36,002,320 are reflected below.

The local governmental agencies acknowledged the facts that their initial requirements for the bromine industry did not include the project, the planning and the land use rights approvals, which were later introduced by the provincial government as new requirements.

Bromine segment For the year ended December 31, 2022 the cost of net revenue for the bromine segment was $25,087,171. For the year ended December 31, 2021 the cost of net revenue for the bromine segment was $22,848,348.

Bromine segment For the year ended December 31, 2023, the cost of net revenue for the bromine segment was $26,521,281. For the year ended December 31, 2022, the cost of net revenue for the bromine segment was $25,087,171.

Foreign Currency Translation Adjustment For the fiscal year 2022, the Company had a negative foreign currency translation adjustment of $24,886,118 versus a positive adjustment of $7,405,582 in the previous year.

Foreign Currency Translation Adjustment For the fiscal year 2023, the Company had a negative foreign currency translation adjustment of $5,025,980 versus a negative adjustment of $24,886,118 in the previous year.

This increase was due to increases in crude salt unit price of 13% and an increase in volume of 1.5% Chemical products segment For the years ended December 31, 2022 and December 31, 2021, the net revenue for the chemical products segment was $0 due to the closure of our chemical factories since September 1, 2017. 33 Natural gas segment For the years ended December 31, 2022, and December 31, 2021, the net revenue for the natural gas production was $0.

Chemical products segment For the years ended December 31, 2023 and December 31, 2022, the net revenue for the chemical products segment was $0 due to the closure of our chemical factories since September 1, 2017. 33 Natural gas segment For the years ended December 31, 2023, and December 31, 2022, the net revenue for the natural gas production was $0.

The Company began the construction on its new chemical facilities located at Bohai Marine Fine Chemical Industrial Park in June 2020. The construction was expected to take approximately one year and an additional six months to complete the equipment installation and testing, however due to the COVID epidemic and electrical restrictions, the opening of the chemical factory has been delayed.

Construction of the new chemical facilities at Bohai Marine Fine Chemical Industrial Park commenced in June 2020. Initially, the construction was projected to last around one year, with an additional six months for equipment installation and testing. However, due to the COVID epidemic and electrical restrictions, the opening of the chemical factory has been postponed.

Raw materials decreased by $16,361 as of December 31, 2022 as compared to December 31, 2021. Finished goods increased by $923,822 as of December 31, 2022 as compared to December 31, 2021. Net Cash Used In Investing Activities For the fiscal year 2022, we used approximately $37.6 million for investing activities.

Raw materials increased by $6,648 as of December 31, 2023, as compared to December 31, 2022. Finished goods decreased by $1,027,991 as of December 31, 2023, as compared to December 31, 2022. Net Cash Used In Investing Activities For the fiscal year 2023, we used $0 for investing activities.

Statement of Cash Flows Years Ended December 31 2022 2021 Net cash (used in) provided by operating activities $ 51,149,065 $ 23,311,169 Net cash used in investing activities $ (37,560,932 ) $ (30,093,140 ) Net cash used in financing activities $ (264,863 ) $ (290,597 ) Effects of exchange rate changes on cash and cash equivalents $ (864,319 ) $ 8,617,293 Net increase in cash and cash equipment $ 12,458,951 $ 1,544,725 For the fiscal years 2022 and 2021, we met our working capital and capital investment requirements by using cash flows from operations and cash on hand.

Statement of Cash Flows Years Ended December 31 2023 2022 Net cash (used in) provided by operating activities $ (32,751,851 ) $ 51,149,065 Net cash used in investing activities $ $ (37,560,932 ) Net cash used in financing activities $ (267,810 ) $ (264,863 ) Effects of exchange rate changes on cash and cash equivalents $ (2,982,659 ) $ (864,319 ) Net decrease in cash and cash equipment $ (36,002,320 ) $ 12,458,951 For the fiscal years 2023 and 2022, we met our working capital and capital investment requirements by using cash flows from operations and cash on hand.

For the year ended December 31, 2021, the gross profit margin for our bromine segment was 53%. Crude salt segment For the year ended December 31, 2022, the gross profit margin for our crude salt segment was 49%, compared to 30% in the year ended December 31, 2021, representing a 19% increase.

Crude salt segment For the year ended December 31, 2023, the gross profit margin for our crude salt segment was 47%, compared to 49% in the preceding year, representing a 2% decrease.

Income (loss) from Operations by Segment Year ended December 31, 2022 Year ended December 31, 2021 Segment: % of total % of total Bromine $ 17,905,181 99 % $ 13,364,649 140 % Crude Salt $ 2,301,885 13 % $ (1,078,320 ) (11 %) Chemical Products $ (1,953,230 ) (11 %) $ (2,550,561 ) (27 %) Natural Gas $ (148,099 ) (1 %) $ (167,139 ) (2 %) Profit (Loss) from operations before corporate costs $ 18,105,737 100 % $ 9,568,629 100 % Corporate costs $ (1,060,405 ) $ (3,575,099 ) Unrealized gain (loss) on translation of intercompany balance $ (563,636 ) $ (782,660 ) Profit (loss) from operations before taxes $ 16,481,696 $ 5,210,870 Bromine segment Income from operations from our bromine segment was $17,905,181 for the fiscal year 2022, compared to an income of $13,364,649 in the same period in 2021.

Income (loss) from Operations by Segment Year ended December 31, 2023 Year ended December 31, 2022 Segment: % of total % of total Bromine $ (10,005,755 ) 90.1 % $ 17,905,181 99.0 % Crude Salt $ 640,309 (5.8 %) $ 2,301,885 12.7 % Chemical Products $ (1,653,349 ) 14.9 % $ (1,953,230 ) (10.8 %) Natural Gas $ (86,284 ) 0.7 % $ (148,099 ) (0.9 %) Profit (Loss) from operations before corporate costs $ (11,105,079 ) 100 % $ 18,105,737 100 % Corporate costs $ (785,646 ) $ (1,060,405 ) Unrealized gain (loss) on translation of intercompany balance $ — $ (563,636 ) (Loss)/ Profit from operations before taxes $ (11,890,725 ) $ 16,481,696 Bromine segment Loss from operations from our bromine segment was $10,005,755 for the fiscal year 2023, compared to an income of $17,905,181 in the same period in 2022.

December 31, 2022 December 31, 2021 % of total % of total Aged 1-30 days $ 2,792,156 52 % $ 4,097,207 28 % Aged 31-60 days 2,571,010 48 % 5,164,840 36 % Aged 61-90 days — — 5,263,760 36 % Aged 91-120 days — — — — Aged 121-150 days — — — — Aged 151-180 days — — — — Aged 181-210 days — — — — Aged 211-240 days — — — — Total $ 5,363,166 100 % $ 14,525,807 100 % The overall accounts receivable balance as of December 31, 2022 decreased by $9,162,641, as compared to those of December 31, 2021.

December 31, 2023 December 31, 2022 % of total % of total Aged 1-30 days $ 2,040,377 42 % $ 2,792,156 52 % Aged 31-60 days 2,460,233 51 % 2,571,010 48 % Aged 61-90 days 365,086 7 % — — Aged 91-120 days — — — — Aged 121-150 days — — — — Aged 151-180 days — — — — Aged 181-210 days — — — — Aged 211-240 days — — — — Total $ 4,865,696 100 % $ 5,363,166 100 % The overall accounts receivable balance as of December 31, 2023 decreased by $497,470, compared to those of December 31, 2022.

Additional information regarding our contractual obligations and commitments at December 31, 2022 is provided in the notes to our consolidated financial statements.

Contractual Obligations and Commitments We have no significant contractual obligations not fully recorded on our consolidated balance sheets or fully disclosed in the notes to our consolidated financial statements. Additional information regarding our contractual obligations and commitments at December 31, 2023 is provided in the notes to our consolidated financial statements.

Cost of Net Revenue Cost of Net Revenue by Segment % Change Year Ended Year Ended of Cost of December 31, 2022 December 31, 2021 Net Revenue Segment % of total % of total Bromine $ 25,087,171 88 % $ 22,848,348 84 % 10 % Crude Salt 3,581,567 12 % 4,284,024 16 % (16 %) Chemical Products — — — — — Natural Gas 414 — — — 100 % Total $ 28,669,152 100 % $ 27,132,372 100 % 6 % Cost of net revenue reflects mainly the raw materials consumed and the direct salaries and benefits of staff engaged in the production process, electricity, depreciation and amortization of manufacturing plant and machinery and other manufacturing costs.

Cost of Net Revenue Cost of Net Revenue by Segment % Change Year Ended Year Ended of Cost of December 31, 2023 December 31, 2022 Net Revenue Segment % of total % of total Bromine $ 26,521,281 94 % $ 25,087,171 88 % 5.7 % Crude Salt 1,567,993 6 % 3,581,567 12 % (56.2 %) Chemical Products — — — — — Natural Gas 679 — 414 — 64.0 % Total $ 28,089,953 100 % $ 28,669,152 100 % (2.0 %) Cost of net revenue primarily includes costs of the raw materials consumed, the direct salaries and benefits for production staff, electricity costs, depreciation and amortization of manufacturing plant and machinery, and other manufacturing-related costs.

Net Revenue The table below shows the changes in net revenue in the respective segment of the Company for the fiscal year 2022 compared to the same period in 2021: Net Revenue by Segment Year Ended Year Ended Percent Increase (Decrease) December 31, 2022 December 31, 2021 of Net Revenue Segment % of total % of total Bromine $ 58,964,941 89.2 % $ 48,871,396 88.9 % 21 % Crude Salt 6,996,552 10.6 % 6,080,242 11 % 15 % Chemical Products — — — — — Natural Gas — — — — — Bromine $ 25,087,171 88 % $ 22,848,348 84 % 10 % Equipment Lease 132,993 0.2 % 78,948 0.1 % 0.1 % Total sales $ 66,094,486 100 % $ 55,030,586 100 % 20 % Years Ended December 31 Percent Change Bromine and crude salt segments product sold in tonnes 2022 2021 Increase Bromine (excluded volume sold to SYCI) 7,817 7,379 6 % Crude Salt 184,520 181,720 1.5 % 32 Bromine segment Net revenue from our bromine segment increased by 21% to $58,964,941 for the year ended December 31, 2022, compared to $48,871,396 for the year ended December 31, 2021.

Net Revenue The table below shows the changes in net revenue in the respective segment of the Company for the fiscal year 2023 compared to the same period in 2022: Net Revenue by Segment Year Ended Year Ended Percent Increase (Decrease) December 31, 2023 December 31, 2022 of Net Revenue Segment % of total % of total Bromine $ 26,921,462 89.6 % $ 58,964,941 89.2 % (54.3 %) Crude Salt 2,971,467 9.9 % 6,996,552 10.6 % (57.5 %) Chemical Products — — — — — Natural Gas — — — — — Total $ 29,892,929 99.5 % $ 65,961,493 99.8 % (54.7 %) Equipment Lease 150,861 0.5 % 132,993 0.2 % 13.4 % Total sales $ 30,043,790 100.0 % $ 66,094,486 100.0 % (54.5 %) Years Ended December 31 Percent Change Bromine and crude salt segments product sold in tonnes 2023 2022 Increase Bromine (excluded volume sold to SYCI) 7,951 7,817 2 % Crude Salt 97,101 184,520 (47 %) 32 Bromine segment Net revenue from our bromine segment decreased by 54.3% to $26,921,462 for the year ended December 31, 2023, compared to $58,964,941 for the year ended December 31, 2022.

Net Income Per Share For the fiscal year 2022, net income per share was $1.00 compared to an income of $0.09 in the same period in 2021. There were 10,431,924 shares outstanding compared to 10,471,924 shares.

Net loss was $61,795,279 for the fiscal year 2023, compared to net income of $10,059,450 in the preceding year. Net (Loss)/Income Per Share For the fiscal year 2023, net loss per share was $5.92 compared to net income of $1.00 in the preceding year. There were 10,726,924 shares outstanding compared to 10,431,924 shares.

We perform ongoing credit evaluation on the financial condition of our customers. 37 Inventory Our inventory consists of the following: December 31, 2022 December 31, 2021 % of total % of total Raw materials $ 26,192 2 % $ 42,553 6 % Finished goods 1,572,380 98 % 648,558 94 % Total $ 1,598,572 100 % $ 691,111 100 % The net inventory level as of December 31, 2022 increased by $907,461, as compared to the net inventory level as of December 31, 2021.

We perform ongoing credit evaluation on the financial condition of our customers. 37 Inventory Our inventory consists of the following: December 31, 2023 December 31, 2022 % of total % of total Raw materials $ 32,840 5 % $ 26,192 2 % Finished goods 544,389 95 % 1,572,380 98 % Total $ 577,229 100 % $ 1,598,572 100 % The net inventory level as of December 31, 2023 decreased by $1,021,343, as compared to the net inventory level as of December 31, 2022, one of the main reasons for the reduction in inventories was the decline in sales.

Gross Profit (Loss) by Segment % Point Change Year Ended Year Ended of Gross December 31, 2022 December 31, 2021 Profit Margin Segment Gross Profit (loss) Margin Gross Profit (loss) Margin Bromine $ 33,877,770 58 % $ 26,023,048 53 % 5 % Crude Salt 3,414,985 49 % 1,796,218 30 % 19 % Chemical Products — — — — — Natural Gas — — — — — Equipment Lease 132,579 100 % 78,948 100 0 % Total Gross Profit $ 37,425,334 57 % $ 27,898,214 51 % 6 % Bromine segment For the year ended December 31, 2021, the gross profit margin for our bromine segment was 58%, representing a 5% increase.

Gross Profit (Loss) by Segment % Point Change Year Ended Year Ended of Gross December 31, 2023 December 31, 2022 Profit Margin Segment Gross Profit (loss) Margin Gross Profit (loss) Margin Bromine $ 400,181 2 % $ 33,877,770 58 % (56 %) Crude Salt 1,403,474 47 % 3,414,985 49 % (2 %) Chemical Products — — — — — Natural Gas — — — — — Equipment Lease 150.182 100 % 132,579 100 % 0 % Total Gross Profit $ 1,953,837 7 % $ 37,425,334 57 % (50 %) Bromine segment For the year ended December 31, 2023, gross profit margin for our brom ine segment was 2% compared to 58% in the previous year.

The increase in income was primarily due to a 14% increase in average selling price partially offset by additional cost allocations from the new divisional structure. Crude salt segment Income from operations from our crude salt segment was $2,301,885 for fiscal year 2022, compared to a loss of $1,078,320 in the same period in 2021.

The decrease in income was primarily due to a 55% decrease in average selling price. Crude salt se g ment Income from operations from our crude salt segment was $640,309 for fiscal year 2023, compared to an income of $2,301,885 in the same period in 2022.

The improved income was due to a higher price for crude salt and lower cost allocations from the new divisional structure. Chemical products segment Loss from operations from our chemical products segment was $1,953,230 for the fiscal year 2022, compared to a loss of $2,550,561 in the same period in 2021.

Chemical products segment Loss from operations from our chemical products segment was $1,653,349 for the fiscal year 2023, compared to a loss of $1,953,230 in the same period in 2022.

This increase was due to the 6% increase in tonnes sold and a 14% increase in average selling price. Crude salt segment Net revenue from our crude salt segment increased by 15% to $6,996,552 for the year ended December 31, 2022 compared $6,080,242 for the same period in 2021.

This decrease was due to a 55% decrease in average selling price. Crude salt se g ment Net revenue from our crude salt segment decreased by 57.5% to $2,971,467 for the year ended December 31, 2023, compared to $6,996,552 for the last year.

To its knowledge, the government is currently completing its planning process for all mining areas including that for prevention of flood. As a result, the Company may be required to make some modifications to our current wells and aqueducts prior to commencement of operations of these factories to satisfy the local government's requirements.

This increase was primarily attributable to the higher average selling price of crude salt of $38 per ton in the year ended December 31, 2022 compared to $34 per ton in the year ended December 31, 2021 as well as to the changes in accounting related to our new crude salt subsidiary.

This decrease was primarily attributable to the lower average selling price of crude salt of $31 per ton in the year ended December 31, 2023 compared to $38 per ton in the year ended December 31, 2022 。 Direct labor and factory overheads incurred during plant shutdown.

This increase was primarily attributable to the higher average selling price of bromine of $7.543 per ton in the year ended December 31, 2022 compared to $6,623 per ton in the year ended December 31, 2021. Offset by changes in accounting related to our new Salt subsidiary created in April 2022.

This decrease was primarily attributable to the lower average selling price of bromine of $3,386 per ton in the year ended December 31, 2023, compared to $7,543 per ton in the year ended December 31, 2022. For the year ended December 31, 2022, the gross profit margin for our bromine segment was 58%.

During the year ended December 31, 2021, cash flows provided by operating activities of approximately $23.3 million was mainly due to non-cash adjustments related to depreciation and amortization of property, plant and equipment of $21 million, unrealized translation loss of $0.8 million and stock-based compensation expense of $3.1 million reduced by net loss of $6.1 million.

Net Cash (Used in)/Provided by Operating Activities During the year ended December 31, 2023, cash flow used in operating activities of approximately $32.75 million was mainly due to a net loss of $61.8 million, offset by a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $27.13 million and an increase in accounts and other payable and accrued expenses of $1.11 million.

On February 28, 2020, the Company announced that it received an approval from the government to resume bromine production after winter temporary closure.

Subsequently, the Company received an approval dated on February 27, 2020 issued by the local governmental authority which allows us to resume production after the winter temporary closure.

Our inability to implement and manage our expansion strategy successfully may have a material adverse effect on our business and future prospects. Contractual Obligations and Commitments We have no significant contractual obligations not fully recorded on our consolidated balance sheets or fully disclosed in the notes to our consolidated financial statements.

Our inability to implement and manage our expansion strategy successfully may have a material adverse effect on our business and future prospects. Going Concern Consideration There is no significant uncertainty about the continuing operations of the Company.

General and administrative expenses were $6,028,079 for the year ended December 31, 2022, representing a decrease of $3,497,156 (or 37%) as compared to$9,525,235 for the same period in 2021, the major reason for this was due to the cost of approximately $3.1 million for stock grants in the second quarter of year 2021 offset by a stock grant of approximately $668,000 in 2022. 35 Profit from Operations.

General and administrative expenses were $4,240,832 for the year ended December 31, 2023, representing a decrease of $1,787,247 (or 30%) as compared to$6,028,079 for the same period in 2022. 35 (Loss)/Profit from Operations. Operating loss was $11,890,725 for the fiscal year 2023, compared to a profit of $16,481,696 in the same period in 2022.

Pursuant to the notification from the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 10, 2022 until February 1, 2023 8:00 AM China Time.

Pursuant to the notification from the government of Shouguang City, all bromine facilities in Shouguang City were temporarily closed from December 25, 2023 until February 20, 2024. In compliance with the notification, the Company ceased production at its bromine facilities during this period and resumed operations at the bromine and crude salt factories as scheduled in February 2024.

Other income, net, which represent bank interest income, net of finance lease interest expense was $164,739 for the fiscal year 2022, an increase of $2,109 (or approximately 1%) as compared to the same period in 2021. Net Income (loss). Net income was $10,059,450 for the fiscal year 2022, compared to net loss of $924,718 in the same period in 2021.

Other income, net, which represent bank interest income, net of finance lease interest expense was $144,919 for the fiscal year 2023, representing a decrease of $19,820 (or approximately 12%) as compared to the preceding year. Expenditure on water pollution treatment. Expenditure on water pollution treatment was $46,510,856 in the fiscal year 2023. Net (Loss)/Income.

In May 2022, we separated the bromine and the crude salt business to conform with government regulations. This separation required different allocation of costs. The net impact was to increase the cost allocations to bromine and decrease the cost allocations to crude salt.

Our cost of net revenue was $28,089,953 for the year ended December 31, 2023, representing a $579,199 (or 2%) decrease compared to the preceding year. In May 2022, we separated the bromine and the crude salt business to comply with government regulations.

The Company received an oral notification from the government for its Factory No. 8, which permitted Factory No.8 to resume production in August 2022. Factory No.8 started to contribute revenue in the fourth quarter 2022.

The Company’s factories No.7 and No.1 started trial production in middle-March, 2020, and commenced commercial production on April 3, 2020. The Company received oral notification from the government regarding Factory No. 8, allowing it to resume production in August 2022.

Removed

Added

Factory No.8 began contributing revenue in the fourth quarter 2022. 30 The Company is awaiting governmental approval for Factories No. 2 and No. 10. To our knowledge, the government is finalizing plans for all mining areas, including flood prevention measures .

Removed

The Company has received the refrigeration and air compressor units. The rest equipment is expected to be delivered by the second quarter of 2023. The Company intends to start installation of equipment and may start testing andtrial production by the end of 2023 or beginning of 2024.

Added

The Company has received the refrigeration and air compressor units. Additionally, the procurement of the final equipment for our chemical factory has been postponed until we have a better understanding of the potential for derivative bromine products. We anticipate proceeding with the completion of its chemical factory in due course.

Removed

Added

However, in the event that the Chinese economy persists in its weakness and if we perceives this trend to be ongoing, there is a possibility that the chemical factory could be repurposed for the production of Sodium-Ion batteries.

Removed

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report. On January 28, 2020 we completed a 1-for-5 reverse stock split of our common stock, such that for each five shares outstanding prior to the stock split there was one share outstanding after the reverse stock split.

Added

Removed

All shares of common stock referenced in this report have been adjusted to reflect the stock split figures. 31 RESULTS OF OPERATIONS.

Added

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report. Flood Prevention Project In August 2023, the Company initiated its preventive measures for safeguarding its bromine facilities.

Removed

If we do not consider these unexpected nonrecurring and non-operational factors, and the impairments and write-offs for total $5,319,707, our net income would be adjusted back to $15,379,157 for fiscal year 2022.

Added

Our strategy involves the renovation of the channels of four major rivers within our mining area, encompassing the tributary of the Mihe River. The aim is to prevent flooding that could harm the wells, aqueducts and crude salt pans at our plant. In December 2023, the Company completed this flood prevention project.

Removed

Our cost of net revenue was $28,669,152 for the year ended December 31, 2022, an increase of $1,536,780(or 6%) as compared to the same period in 2021 due to the increase of net revenue by 21% for the year ended December 31, 2022 as compared to the same period in 2021 .

Added

As of December 31, 2023, we incurred $ 46,510,856 in other expenses for the project. The cost incurred for four major rivers are: (1) Liansigou Section for $8,057,722;(2) Mi River Section for $20,168,321;(3) Ta River Section $10,070,033 ; (4) Weitan River Section for $8,214,780 . 31 RESULTS OF OPERATIONS.

Removed

Direct labor and factory overheads incurred during plant shutdown.

Added

Additionally, the compensation expenses amounted to $451,350 for shares issued to company employees, officers and consultant for the year 2023 . The Company also incurred losses of $46,510,856 on a flood prevention project.

Removed

Operating profits were $16,481,696 for the fiscal year 2022, compared to a loss of $5,210,870 in the same period in 2021.

Added

This decrease was due to a decrease in crude salt unit price of 19% and a decrease in volume of 47%.

Added

This separation required a reevaluation of cost allocations, resulting in increased allocations to bromine and decreased allocations to crude salt.

Added

The main reason for the decline in crude salt in 2023 compared with 2022 is that the unit price of sales is down by 19%, and the sales volume is also down by 47%.

Other GURE 10-K year-over-year comparisons

GURE 10-K 2023 vs 2024