GULF RESOURCES, INC.
For the period ended Mar 31, 2025. Filed May 13, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 13, 2025
GURE$3.15+3.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-19.
0001193805-24-001395
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-13.
0001193805-25-000638
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 110 previous paragraphs and 97 current paragraphs.
30 unchanged; 24 reworded; 42 added; 49 removed; 7 previous and 1 current paragraphs rearranged.
Tables are not compared: 17 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (42)
Current report
On December 17, 2024, SHSI entered into an amendment to the acquisition agreement with Seller B, pursuant to which the Article 2. 2 of the agreement has been amended as follows: (80%) of the total amount, equaling RMB32,460,000 had been paid on the date of signing the contract by both parties. The remaining RMB8,115,000 shall be paid in a combination of common stock of the Company and cash as follows: (1) RMB3,246,000 shall be paid in shares, calculated on a per share price of US$1.5, using the exchange rate RMB/US$:7.27. These shares shall be issued by the Company to Seller B or Seller B’s designated parties within three months after SHSI has inspected and accepted the crude salt field in writing; (2) the balance shall be paid in cash before December 31, 2028.
Current report
On December 17, 2024, SHSI entered into an amendment to the acquisition agreement with Seller C, pursuant to which the Article 2. 2 of the agreement has been amended as follows: Eighty percent (80%) of the total amount, equaling RMB35,311,680 had been paid on the date of signing the contract by both parties. The remaining RMB8,827,920 shall be paid in a combination of common stock of the Company and cash as follows: (1) RMB3,531,168 shall be paid in shares, calculated on a per share price of US$1.5 per, using the exchange rate RMB/US$:7.27. These shares shall be issued by the Company to Seller C or Seller C's designated parties within three months after SHSI has inspected and accepted the crude salt field in writing; (2) the balance shall be paid in cash before December 31, 2028.
Current report
On December 17, 2024, SHSI entered into an amendment to the acquisition agreement with Seller D, pursuant to which the Article 2. 2 of the agreement has been amended as follows: Eighty percent (80%) of the total amount, equaling RMB 16,632,000 had been paid on the date of signing the contract by both parties. The remaining RMB 4,158,000 shall be paid in a combination of common stock of the Company and cash as follows: (1) RMB1,663,200 shall be paid in shares, calculated on a per share price ofUS$1.5, using the exchange rate RMB/US$:7.27. These shares shall be issued by the Company to Seller D or Seller D's designated parties within three months after SHSI has inspected and accepted the crude salt field in writing; (2) the balance shall be paid in cash before December 31, 2028.
Current report
On December 17, 2024, SHSI entered into an amendment to the acquisition agreement with Seller E, pursuant to which the Article 2. 2 of the agreement has been amended as follows: Eighty percent (80%) of the total amount, equaling RMB36,628,320 had been paid on the date of signing the contract by both parties. The remaining RMB9,157,080 shall be paid in a combination of common stock of the Company and cash as follows: (1) RMB3,662,832 shall be paid in shares, calculated on a per share price of US$1.5, using the exchange rate RMB/US$:7.27. These shares shall be issued by the Company to Seller E or Seller E's designated party within three months after SHSI has inspected and accepted the crude salt field in writing; (2) the balance shall be paid in cash by SHSI to Seller E before December 31, 2028.
Current report
In accordance to each amendment, the parties also acknowledged and agreed that, in compliance with the Nasdaq Listing Rule 5635, the issuance of shares pursuant to the agreement may not exceed 19.9% of the total outstanding shares of common stock of the Company prior to the issuance of the shares (the “19.9% Threshold”), unless such issuance is approved by the shareholders of the Company in accordance with the Nasdaq rules and regulations. SHSI shall cause the Company to take all necessary steps to obtain such shareholder approval if the issuance of shares under the agreement exceeds the 19.9% Threshold.
Current report
On December 30, 2024, SHSI and each of the sellers mutually acknowledged and confirmed that the salt land provided by each seller meets the acquisition criteria, is in the anticipated usable condition, and has been accepted and handed over to SHSI.
Current report
On May 6, 2025, the Company was notified by the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) that the Staff granted the Company’s request to transfer the listing of its common stock, par value $0.0005 per share (the “Common Shares”), from The Nasdaq Global Select Market tier to The Nasdaq Capital Market tier, and that the Staff granted the Company’s request for a second 180-calendar day period, or until November 3, 2025 (the “Second Compliance Period”), to regain compliance with the $1.00 bid price requirement, as set forth in Nasdaq Listing Rule 5550(a)(2). To regain compliance with such minimum price requirement, the Company must evidence a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days. The transfer of the listing of the Common Shares from The Nasdaq Global Select Market to The Nasdaq Capital Market took effect with the open of business on May 8, 2025. The transfer is not expected to impact trading in the Common Shares, which will continue to trade on Nasdaq under the symbol “GURE.”
Current report
As previously announced, on November 5, 2024, the Staff notified the Company that the bid price for the Common Shares had closed below $1.00 per share for 30 consecutive business days and, as a result, the Company no longer satisfied Nasdaq Listing Rule 5450(a)(1), the minimum bid price requirement applicable to The Nasdaq Global Select Market issuers. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company was afforded an initial 180-calendar day grace period, through May 5, 2025, to regain compliance with the minimum bid price requirement.
Current report
Issuers listed on The Nasdaq Global Select Market are not eligible for a second 180-day grace period under the Nasdaq Listing Rules. However, based upon the Company’s compliance with the various criteria required under Nasdaq Listing Rule 5810(c)(3)(A)(ii) to obtain a second 180-day grace period applicable to issuers listed on The Nasdaq Capital Market, the Company applied to transfer the listing of its Common Shares to The Nasdaq Capital Market. As noted above, the Staff approved the Company’s transfer application on May 6, 2025.
Current report
The Company intends to closely monitor the closing bid price for its Common Shares and consider all available options to timely remedy the bid price deficiency. If at any time during the Second Compliance Period, the closing bid price of the Common Shares is at least $1.00 per share for a minimum of 10 consecutive business days, the Staff will provide the Company with written confirmation of compliance and the matter will be closed, unless the Staff exercises its discretion to extend this ten-day period pursuant to Nasdaq Listing Rule 5810(c)(3)(H).
Current report
The Company can give no assurance that it will regain or demonstrate compliance during the Second Compliance Period. If the Company is not able to demonstrate compliance with the minimum bid price requirement by November 3, 2025, or the Company does not comply with the terms of the extension, the Staff will provide written notification to the Company that the Common Shares will be delisted. At that time, the Company may appeal the Staff’s determination to the Nasdaq Hearings Panel (the “Panel”). The Company’s appeal request would stay any delisting action by the Staff at least pending a hearing before the Panel and the expiration of any extension that may be granted by the Panel to the Company following the hearing.
Current report
For the three-month periods ended March 31, 2025 and 2024, the net revenue for the bromine segment was $1,481,869 and $1,146,197. This increase was due to the 11% decrease in tonnes sold and a 45% increase in average selling price.
Current report
For the three-month periods ended March 31, 2025 and 2024, the net revenue for the crude salt was $122,578 and $116,671. This increase was due to the 16% increase in tonnes sold and a 10% decrease in average selling price.
Current report
Cost of net revenue for our bromine segment for the three-month period ended March 31, 2025 and 2024 was $1,533,128 and $2,072,752.
Current report
Cost of net revenue for our crude salt segment for the three-month period ended March 31, 2025 and 2024 was $61,142 and $46,894.
Current report
Gross Profit (Loss) Gross profit was $10,177, or 0.6%, of net revenue for three-month period ended March 31, 2025 compared to loss $812,783, or 62% of net revenue for three-month period ended March 31, 2024.
Current report
For the three-month period ended March 31, 2025, the gross profit margin for our crude salt segment was 50%, compared to 60% in the same period in 2024, representing a 10% decrease.
Current report
For the three-month period ended March 31, 2025, the gross profit margin for our crude salt segment was 0%, compared to 100% in the same period in 2024.
Current report
Loss from operations from our bromine segment was $3,370,836 for the three-month period ended March 31, 2025, compared to loss from operations of $4,782,815 in the same period in 2024. This decrease was due to the a 45% increase in average selling price partially offset by a decrease of 11% in tonnes sold.
Current report
Loss from operations from our crude salt segment was $554,062 for the three-month period ended March 31, 2025, compared to loss from operations of $75,092 in the same period in 2024. The main reason for the increase in raw salt in 2024 compared to 2023 is that sales also rose by 16%.
Current report
Loss from operations from our chemical products segment was $358,629 for the three-month period ended March 31, 2025, compared to loss from operations of $314,824 in the same period in 2024.
Current report
Net Cash Provided by (Used in) Operating Activities
Current report
The overall accounts receivable balance as of March 31, 2025 increased by $1,549,699, as compared to those of December 31, 2024. We have policies in place to ensure that sales are made to customers with an appropriate credit history. We perform ongoing credit evaluation on the financial condition of our customers.
Current report
Inventory
Current report
Our inventory consists of the following:
Current report
The net inventory level as of March 31, 2025 increased by $139,688(or 44%), as compared to the net inventory level as of December 31, 2024. The increase in inventory goods is an estimate that market demand may rise .
Current report
Raw materials increased by $31,255 as of March 31, 2025 as compared to December 31, 2024.
Current report
Our finished goods increased by $108,433 as of March 31, 2025 as compared to December 31, 2024.
Current report
Net Cash Provided by (Used in) Investing Activities
Current report
We have no investing activities for the three-month periods ended March 31, 2025 and 2024.
Current report
Net Cash Provided by (Used in) Financing Activities
Current report
We have no financing activities for the three-month periods ended March 31, 2025 and 2024.
Current report
We believe that our available funds and cash flows generated from operations will be sufficient to meet our anticipated ongoing operating needs and our obligations as they full due in the next twelve (12) months.
Current report
We had available cash of approximately $8.52 million at March 31, 2025, most of which is in highly liquid current deposits which earn no or little interest. We do not anticipate paying cash dividends in the foreseeable future.
Current report
We intend to continue to focus our efforts on the activities of SCHC, SYCI, SHSI and DCHC as these segments continue to expand within the Chinese market.
Current report
We may not be able to identify, successfully integrate or profitably manage any businesses or business segment we may acquire, or any expansion of our business. An expansion may involve a number of risks, including possible adverse effects on our operating results, diversion of management’s attention, inability to retain key personnel, risks associated with unanticipated events and the financial statement effect of potential impairment of acquired intangible assets, any of which could have a materially adverse effect on our condition and results of operations. In addition, if competition for acquisition candidates or operations were to increase, the cost of acquiring businesses could increase materially. We may effect an acquisition with a target business which may be financially unstable, under-managed, or in its early stages of development or growth. Our inability to implement and manage our expansion strategy successfully may have a material adverse effect on our business and future prospects.
Current report
Contractual Obligations and Commitments
Current report
We have no significant contractual obligations not fully recorded on our condensed consolidated balance sheets or fully disclosed in the notes to our condensed consolidated financial statements. Additional information regarding our contractual obligations and commitments at March 31, 2025 is provided in the notes to our condensed consolidated financial statements.
Current report
Material Off-Balance Sheet Arrangements
Current report
We do not currently have any off -balance sheet arrangements falling within the definition of Item 303(a) of Regulation S-K.
Showing the first 40 of 42 passages. Open the source sections for the rest.
Removed paragraphs (49)
Previous report
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. 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.
Previous report
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”). The May Notice states that the Company has until June 17, 2024 to submit to Nasdaq a plan to regain compliance with the Rule.
Previous report
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. The terms of the exception were 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.
Previous report
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 was not in compliance with the Rule. 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. On October 15, 2024, the Company received written notice from the Staff that, as a result of the Company filing the Delinquent Filings with the SEC, the Staff has determined that the Company complies with the Rule and considers the matter to be closed.
Previous report
The Nasdaq Price Deficiency Letter has no immediate impact on the listing of the Company’s common stock, which will continue to be listed and traded on The Nasdaq Global Select Market, subject to the Company’s compliance with the other continued listing requirements of The Nasdaq Stock Market.
Previous report
For the three-month periods ended September 30, 2024 and 2023, the net revenue for the bromine segment was $1,571,313 and $4,908,152, respectively. The decrease of the net revenue of bromine was due to the 57% decrease in tonnes sold and the 26% decrease in average selling price of bromine in the third quarter of 2024. The average selling price of bromine in the third quarter of 2024 was $2,396 compared to the average selling price of bromine in the third quarter of 2023 of $3,237 (calculated by dividing revenue by tonnes).
Previous report
For the three-month periods ended September 30, 2024 and 2023, the net revenue for the crude salt was $654,039 and $889,556, respectively. The decrease of net revenue of crude salt was mainly due to the 20% decrease in tonnes sold and the 8% decrease in average selling price of crude salt for the three-month period ended September 30, 2024.
Previous report
For the three-month period ended September 30, 2024 and 2023, the net revenue for the equipment lease was $17,013 and $67,907.
Previous report
For the three-month period ended September 30, 2024, the bromine segment had a net cost of revenue of $3,794,088.
Previous report
For the three-month period ended September 30, 2023 the cost of net revenue for the bromine segment was $5,995,496.
Previous report
For the three-month period ended September 30, 2024 the cost of net revenue for the crude salt segment was $277,451.
Previous report
For the three-month period ended September 30, 2023 the cost of net revenue for the crude salt segment was $378,100.
Previous report
***Gross Profit.***Gross loss was $1,829,251 or 82%, of net revenue for three-month period ended September 30, 2024, representing an decrease of $1,320,964, as compared to a gross profit of $508,287 or 9%, of net revenue for the same period in 2023.
Previous report
For the three-month period ended September 30, 2024, the gross loss for our bromine segment was 141%, compared to 22% in the three-month period ended September 30, 2023. The increase in gross loss margin was primarily attributable to the lower average selling price of bromine of $2,396 per ton in the three-month period ended September 30, 2024 compared to $3,237 per ton in the three-month period ended September 30, 2023.
Previous report
For the three-month period ended September 30, 2024, the gross profit margin for our crude salt segment was 58%.
Previous report
For the three-month period ended September 30, 2023, the gross profit margin for our crude salt segment was 57%.
Previous report
Income (loss) from Operationsloss from operations was $4,581,609 for the three-month period ended September 30, 2024, compared to income of $2,293,288 in the same period in 2023.
Previous report
Loss from operations from our bromine segment was $4,029,999 for the three-month period ended September 30, 2024, compared to loss from operations of $2,143,203 in the same period in 2023. The decrease of the net revenue of bromine was due to the 57% decrease in tonnes sold and the 26% decrease in average selling price of bromine in the third quarter of 2024.
Previous report
Loss from operations from our crude salt segment was $102,657 for the three-month period ended September 30, 2024, compared to income from operations of $500,469 in the same period in 2023. The decrease of net revenue of crude salt was mainly due to the 20% decrease in tonnes sold and the 8% decrease in average selling price of crude salt for the three-month period ended September 30, 2024.
Previous report
Loss from operations from our chemical products segment was $339,038 for the three-month period ended September 30, 2024, compared to loss from operations of $397,410 in the same period in 2023.
Previous report
Other Income(loss), Net Other loss, net of $14,971 represented bank interest income, net of capital lease interest expense for the three -month period ended September 30, 2024, a decrease of $48,938 as compared to the same period in 2023.
Previous report
Comparison of the Nine-Month Period Ended September 30, 2024 and 2023
Previous report
Net revenue from our bromine segment decreased to $4,576,744 for the nine-month period ended September 30, 2024 compared to $20,734,871 for the same period in 2023 respectively, due to the lower selling price and selling quantity.
Previous report
Net revenue from our crude salt segment decreased to $1,294,645 for the nine-month period ended September 30, 2024 compared $2,287,672 for the same period in 2023, respectively, due to the lower selling price and selling quantity.
Previous report
Equipment Lease
Previous report
For the nine-month period ended September 30, 2024 and 2023, the net revenue for the equipment lease was $61,207 and $150,861.
Previous report
Cost of Net Revenue
Previous report
For the nine-month period ended September 30, 2024 the cost of net revenue for the bromine segment was $10,595,899.
Previous report
For the nine-month period ended September 30, 2023 the cost of net revenue for the bromine segment was $19,187,620.
Previous report
For the nine-month period ended September 30, 2024 the cost of net revenue for the crude salt segment was $707,344. The cost of net revenue for our crude salt segment for the nine-month period ended September 30, 2023 was $1,276,119.
Previous report
The reason for the decrease is that there is that with the creation of SHSI, some costs formerly allocated to crude sale were allocated to bromine.
Previous report
Cost of net revenue for our natural gas segment for the nine-month period ended September 30, 2024 and 2023 was $276 and $679.
Previous report
Gross Profit. Loss profit was $5,370,923, or 91%, of net revenue for nine-month period ended September 30, 2024 compared to $2,708,986, or 12%, of net revenue for the same period in 2023.
Previous report
For the nine-month period ended September 30, 2024, the gross loss margin for our bromine segment was 132%, compared to 7% in the nine-month period ended September 30, 2023. The increase in gross loss margin was primarily attributable to the lower average selling price of bromine of $2,423 per ton in the nine-month period ended September 30, 2024 compared to $3,493 per ton in the nine-month period ended September 30, 2023.
Previous report
For the nine-month period ended September 30, 2023, the gross profit margin for our bromine segment was 7%.
Previous report
For the nine-month period ended September 30, 2024, the gross profit margin for our crude salt segment was 45%.
Previous report
For the nine-month period ended September 30, 2023 the gross profit margin for our crude salt segment was 44%.
Previous report
For the nine-month period ended September 30, 2024, the gross profit margin for our chemical segment was 0% due to the closure of our chemical products plant. As a result of the closure, there were no chemical products for sale for the nine-month period ended September 30, 2024.
Previous report
General and Administrative Expenses. General and administrative expenses were $2,409,957 for the nine-month period ended September 30, 2024, a increase of $143,697 (or 6%) as compared to $2,266,260 for the same period in 2023. The increase was mainly due to the unrealized foreign currency transaction loss on intercompany balance recorded in nine-month period ended September 30, 2024 compared to an unrealized foreign currency transaction gain on intercompany balance recorded in the same period in the previous year.
Previous report
Loss from operations from our bromine segment was $13,475,400 for the nine-month period ended September 30, 2024, compared to a loss of $3,340,404 in the same period in 2023. The increase in gross loss margin was primarily attributable to the lower average selling price of bromine of $2,423 per ton in the nine-month period ended September 30, 2024 compared to $3,493 per ton in the nine-month period ended September 30, 2023.
Showing the first 40 of 49 passages. Open the source sections for the rest.
Reworded paragraphs (24)
Previous wording
The Company is still waiting for governmental approval for factories No. 2 and No. 10. 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 in order to satisfy the local government's requirements.
Current wording
The Company is still waiting for governmental approval for factories No.2 and No.10. 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.
Previous wording
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. Although our chemical companies were in compliance with regulations, they were also close to a residential area. As a result, the government determined we should relocate to the Bohai park. Chemical companies that are not being asked to move into the park are being permanently closed. Since our factories closed, the Company has secured from the government the land use rights for its chemical plant. On January 6, 2020, the Company received the environmental protection approval by the government of Shouguang City, Shandong Province for the proposed Yuxin Chemical factory. 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. The Company has received the refrigeration and air compressor units. On July 26, 2023, the Company announced that the delivery of the remaining equipment for its Yuxin chemical factory has been temporarily delayed and the Company will re-evaluate its chemical products strategy.
Current wording
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. Although our chemical companies were in compliance with regulations, they were also close to a residential area. As a result, the government determined we should relocate to the Bohai park. Chemical companies that are not being asked to move into the park are being permanently closed. Since our factories closed, the Company has secured from the government the land use rights for its chemical plant. On January 6, 2020, the Company received the environmental protection approval by the government of Shouguang City, Shandong Province for the proposed Yuxin Chemical factory. 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. The Company has received the refrigeration and air compressor units. The company decided to delay the delivery of the rest undelivered equipment and the opening of the factory until financial conditions in China improved and until it had visibility as to which products would produce the best returns.
Previous wording
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. 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. 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. 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. 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.
Current wording
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. 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. Until these approvals have been received, the Company has had 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. 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. The Company plans to proceed with its applications for the natural gas and brine project approvals with related government departments after the governmental planning has finalized the land and resource planning for Sichuan Province.
Previous wording
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. (“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. 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.
Current wording
On June 26, 2024, SHSI entered into an acquisition agreement with 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. 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 the agreement, and the remaining 20% shall be paid in shares of common stock of the Company within three months from the date of the agreement after SHSI has inspected the and accepted the crude salt field in writing. Subsequently, on December 17, 2024, the parties entered into an amendment to the agreement, pursuant to which the Article 2. 2 of the agreement has been amended as follows: eighty percent (80%) of the total amount, equaling RMB103,577,600 had been paid on the date of signing the contract by both parties. The remaining RMB25,894,400 shall be paid in a combination of common stock of the Company and cash as follows: (1) RMB10,357,800 shall be paid in shares, calculated on a per share price of US$1.5, using the exchange rate RMB/US$:7.27. These shares shall be issued by the Company to Seller A or Seller A's designated parties within three months after SHSI has inspected and accepted the crude salt field in writing; (2) the balance shall be paid in cash before December 31, 2028.
Previous wording
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. 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.
Current wording
On June 27, 2024, SHSI entered into an acquisition agreement with each Seller B, Seller C, Seller D and Seller E, respectively, pursuant to which the sellers agreed to transfer to SHSI, and SHSI agrees to purchase from the 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. 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 the agreements, and the remaining 20% shall be paid in shares of common stock of the Company within three months from the date of the agreements after SHSI has inspected the and accepted the crude salt fields in writing.
Previous wording
On November 5, 2024, the Company received a notice in the form of a letter (“Price Deficiency Letter”) from Nasdaq stating that the Company was not in compliance with Nasdaq Listing Rule 5450(a)(1) because the bid price for the Company’s common stock had closed below $1.00 per share for the previous 34 consecutive business days (the “Minimum Bid Price Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been given 180 calendar days, or until May 5, 2025, to regain compliance with the Minimum Bid Price Requirement. If at any time before May 5, 2025, the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Staff will provide written confirmation that the Company has achieved compliance. In the event the Company does not regain compliance, the Company may be eligible for additional time. To qualify for the additional compliance period, the Company will be required to (i) submit, no later than the expiration date, an on-line Transfer Application, (ii) submit a non-refundable $5,000 application fee, (iii) meet the continued listing requirement for the market value of its publicly held shares and all other continued listing standards for The Nasdaq Stock Market, with the exception of the bid price requirement, and (iv) will need to provide written notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split if necessary. As part of its review process, the Staff will make a determination of whether they believe the Company will be able to cure this deficiency. Should the Staff conclude that the Company will not be able to cure the deficiency, or should the Company determine not to submit a transfer application or make the required representation, the Staff will provide notice that the Company’s securities will be subject to delisting.
Current wording
The Company has provided written notice to Nasdaq of its intention to cure the deficiency during the Second Compliance Period by effecting a reverse stock split, if necessary.
Previous wording
The following table presents certain information derived from the condensed consolidated statements of operations, cash flows and stockholders equity for the three-month and nine-month periods ended September 30, 2024 and 2023.
Current wording
The following table presents certain information derived from the condensed consolidated statements of income, cash flows and stockholders’ equity for the three-month periods ended March 31, 2025 and 2024.
Previous wording
Comparison of the Three-Month Period Ended September 30, 2024 and 2023
Current wording
Comparison of the Three-Month Periods Ended March 31, 2025 and 2024
Previous wording
Net revenue. The table below shows the changes in net revenue in the respective segment of the Company for the three-month period ended September 30, 2024 as compared to the same period in 2023:
Current wording
Net revenue The table below shows the changes in net revenue in the respective segment of the Company for the three-month period ended March 31, 2025 compared to the same period in 2024:
Previous wording
For the nine-month period ended September 30, 2024 and 2023, the net revenue for the natural gas was $0.
Current wording
For the three-month period ended March 31, 2025 and 2024, the net revenue for the natural gas production was $0 and $44,194, respectively.
Previous wording
Cost** **of net revenue reflects mainly the raw materials consumed, 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.
Current wording
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. Our cost of net revenue was $1,594,270 for the three-month period ended March 31, 2025, representing a $525,575 (or 25%) decrease compared to the preceding year.
Previous wording
(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 of all the seven factories including those that have not commenced operations.
Current wording
(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.
Previous wording
Cost of net revenue for our natural gas segment for the three-month period ended September 30, 2024 and 2023 was $77 and 306, respectively.
Current wording
Cost of net revenue for our natural gas segment for the three-month period ended March 31, 2025 and 2024 was $0 and $199.
Previous wording
For the three-month period ended September 30, 2023, the gross loss margin for our bromine segment was 22%.
Current wording
For the three-month period ended March 31, 2025, the gross loss margin for our bromine segment was 3.5%, compared to 81% in the three-month period ended March 31, 2024. The decrease in gross loss margin was primarily attributable to the higher average selling price of bromine of $3,684 per ton in the three-month period ended March 31, 2025 compared to $2,541 per ton in the three-month period ended March 31, 2024. Bromine tonnes sales also decreased from 451 tonnes for the three month period ended March 31, 2024 to 402 tonnes for the three month period ended March 31, 2025.
Previous wording
Direct labor and factory overheads incurred during plant shutdownOn September 1, 2017, the Company received notification from the government of Yangkou County, Shouguang City of PRC that stated that production at all its bromine and crude salt and chemical factories should be halted with immediate effect in order for the Company to perform rectification and improvement in accordance with the county’s new safety and environmental protection requirements. On November 24, 2017, the Company received a letter from the Government of Yangkou County, Shouguang City notifying the Company to relocate its two chemical production plants located in the second living area of the Qinghe Oil Extraction Plant to Bohai Park. As a result, direct labor and factory overhead costs (including depreciation of plant and machinery) in the amount of $1,736,345 and $1,007,689 incurred for the three-month periods ended September 30, 2024 and 2023, respectively, of factories that have not resumed production were presented as part of the operating expense.
Current wording
Direct labor and factory overheads incurred during plant shutdown On September 1, 2017, the Company received notification from the government of Yangkou County, Shouguang City of PRC that stated that production at all its bromine and crude salt and chemical factories should be halted with immediate effect in order for the Company to perform rectification and improvement in accordance with the county’s new safety and environmental protection requirements. On November 24, 2017, the Company received a letter from the Government of Yangkou County, Shouguang City notifying the Company to relocate its two chemical production plants located in the second living area of the Qinghe Oil Extraction Plant to Bohai Park. As a result, direct labor and factory overhead costs (including depreciation of plant and machinery) in the amount of $3,225,808 and $3,734,689 incurred for the three-month periods ended March 31, 2025 and 2024, respectively, of factories that have not resumed production were presented as part of the operating expense.
Previous wording
General and Administrative Expenses General and administrative expenses were $1,002,529 for the three-month period ended September 30, 2024, representing an increase of $239,645 as compared to $762,884 for the same period in 2023.
Current wording
General and Administrative Expenses General and administrative expenses were $1,389,523 for the three-month period ended March 31, 2025, an increase of $672,067 (or 94%) as compared to $717,456 for the same period in 2024.
Previous wording
***Income (Loss) from Operations.***Loss from operations was $14,998,025 for the nine-month period ended September 30, 2024, compared to an income of $4,011,944 in the same period in 2023.
Current wording
Loss from Operations Loss from operations was $4,610,207 the three-month period ended March 31, 2025, compared to loss from operation of $5,269,419 in the same period in 2024.
Previous wording
Loss from operations from our natural gas segment was $39,072 for the three -month period ended September 30, 2024, compared to an income of $4,156 in the same period in 2023.
Current wording
Loss from operations from our natural gas segment was $44,844 for the three -month period ended March 31, 2025, compared to loss from operations of $27,709 in the same period in 2024.
Previous wording
Other Income, Net. Other income, net of $6,236 represented bank interest income, net of capital lease interest expense for the nine -month period ended September 30, 2024, a decrease of $113,569, (or approximately 95%) as compared to the same period in 2023.
Current wording
Other Income(Expense) Net Other expense, net of $19,293 represented bank interest income, net of finance lease interest expense for the three -month period ended March 31, 2025, an increase of $26,520 (or approximately 367%) as compared to the same period in 2024.
Previous wording
***Net Income (loss)***Net loss was $3,492,883 for the three-month period ended September 30, 2024, compared to a net loss of $1,775,797 in the same period in 2023.
Current wording
Net Loss Net loss was $4,629,500 for the three-month period ended March 31, 2025, compared to a net loss of $3,992,132 in the same period in 2024.
Previous wording
As of September 30, 2024, cash and cash equivalents were $11,237,493 as compared to $72,223,894 as of December 31, 2023. The components of this decrease of $60,986,401 are reflected below.
Current wording
As of March 31, 2025, cash and cash equivalents were $8,523,045 as compared to $10,075,162 as of December 31, 2024. The components of this decrease of $1,552,117 are reflected below.
Previous wording
For the nine-month period ended September 30, 2024, we met our working capital and capital investment requirements by using cash on hand.
Current wording
For the three-month period ended March 31, 2025, we met our working capital and capital investment requirements mainly by using cash on hand.
Previous wording
During the nine-month period ended September 30, 2023, cash flow provided by operating activities of approximately $9.9 million was mainly due to a non-cash adjustment for depreciation and amortization expense of $15.4 million and offset by a net loss of $3.02 million and an increase in prepayments and deposits of $3.95 million.
Current wording
During the three -month period ended March 31, 2025, cash flow used in operating activities of approximately $1.58 million was mainly due to a net loss of $4.62 million, an increase in accounts receivable of $1.5 million, offset by a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $4 million.
Previous wording
During the six-month period ended September 30, 2024, cash flow used in by operating activities of approximately $0.29 million was mainly due to a net loss of $40.58 million, a decrease in deferred taxes of $3.62 million and offset by depreciation and amortization expense of $14.04 million and loss on disposal of equipment of $29.17 million.
Current wording
During the three-month period ended March 31, 2024, cash flow used in operating activities of approximately $1.33 million was mainly due to a net loss of $3.99 million, an increase in accounts receivable of $0.4 million, a non-cash adjustment related to deferred taxes of $1.27 million, offset by depreciation and amortization expenses of $4.73 million.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
In June 2024, a wholly owned subsidiary of the Company, Shouguang Hengde Salt Industry Co. Ltd ( “SHSI”) entered into crude salt field acquisition agreements with Shouguang Qingshuibo Farm Co., LTD. (“Seller A”), Shouguang city Yangkou town Dingjia Zhuangzi village stock economic cooperative (“Seller B”), Shouguang city Yangkou town Shanjia Zhuangzi village stock economic cooperative (“Seller C”), Shouguang City Yangkou town Zhengjia Zhuangzi village stock economic cooperative (“Seller D”), and Shouguang city Yangkou town Renjia Zhuangzi village stock economic cooperative (“Seller E”), respectively, as amended in December 2024. A summary of these agreements are set forth below:
Rearranged previous paragraphs (7)
Previous report — wording carried elsewhere
For the three-month period ended September 30, 2024 and 2023, the net revenue was $0.
Previous report — wording carried elsewhere
Net revenue. The table below shows the changes in net revenue in the respective segment of the Company for the nine-month period ended September 30, 2024 as compared to the same period in 2023:
Previous report — wording carried elsewhere
For the nine-month period ended September 30, 2024 and 2023, the net revenue for the chemical products segment was $0 due to the closure of our chemical factories since September 1, 2017.
Previous report — wording carried elsewhere
Cost** **of net revenue reflects mainly the raw materials consumed-direct salaries and benefits of staff engaged in the production process, electricity, depreciation and amortization of manufacturing plant and machinery and other manufacturing costs.
Previous report — wording carried elsewhere
Bromine production capacity and utilization of our factories
Previous report — wording carried elsewhere
The table below represents the annual capacity and utilization ratios for all of our bromine producing properties:
Previous report — wording carried elsewhere
Direct labor and factory overheads incurred during plant shutdownOn September 1, 2017, the Company received notification from the government of Yangkou County, Shouguang City of PRC that stated that production at all its bromine and crude salt and chemical factories should be halted with immediate effect in order for the Company to perform rectification and improvement in accordance with the county’s new safety and environmental protection requirements. On November 24, 2017, the Company received a letter from the Government of Yangkou County, Shouguang City notifying the Company to relocate its two chemical production plants located in the second living area of the Qinghe Oil Extraction Plant to Bohai Park. As a result, direct labor and factory overhead costs (including depreciation of plant and machinery) in the amount of $7,185,537 and $4,471,954 incurred for the nine-month periods ended September 30, 2024 and 2023, respectively, for the factories that have not resumed production were presented as part of the operating expense.