RESTATEMENT

3 Months Ended

Mar. 31, 2025

Accounting Changes and Error Corrections [Abstract]

NOTE 22 –RESTATEMENT

The Company restates its previously released unaudited condensed consolidated financial statements for the three months ended March 31, 2025, and incorporate them into the 2025 Quarterly Report “10-Q Form Report” (the “Restatement”). This restatement is due to the discovery of errors related to the reclassification of buildings without property ownership certificates in fixed assets.

As the Company does not have property ownership certificates, the acquisition of the 20-year usage rights for this land, buildings, and salt pan conforms to the definition of a lease as stated in ASC 842. The Company revised the financial statements and accounted for these usage rights as leases in accordance with the provisions of ASC 842.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S. dollars)

(UNAUDITED)

NOTE 22 –RESTATEMENT – Continued

The effects of the restatement on the consolidated balance sheet as of December 31, 2024, are summarized in the following table:


	December 31, 2024
	As Previously Reported			Restatement			Note	As Restated
Current Assets
Cash	$	10,075,162			—			$	10,075,162
Accounts receivable, net		564,523			—				564,523
Inventories, net		315,371			—				315,371
Prepayments and deposits, net		6,376,656			—				6,376,656
Amount due from related parties		25,040			—				25,040
Other receivables		94,074			—				94,074
Total current assets		17,450,826			—				17,450,826
Non-Current Assets
Property, plant and equipment, net		136,143,177			(46,712,127	)	(b)		89,431,050
Finance lease right-of-use assets		76,868			45,078,420		(b)		45,155,288
Operating lease right-of-use assets		6,169,855			—				6,169,855
Prepaid land leases, net of current portion		9,615,269			—				9,615,269
Deferred tax assets, net		—			—				—
Total non-current assets		152,005,169			(1,633,707	)			150,371,462
Total Assets		169,455,995			(1,633,707	)			167,822,288

Liabilities and Stockholders’ Equity
Current Liabilities
Short-term bank borrowing
Accounts payable and accrued expenses	$	14,323,458			(7,878,181	)	(c)	$	6,445,277
Taxes payable-current		113,999			—				113,999
Amount due to related parties		2,584,808			—				2,584,808
Finance lease liabilities, current portion		217,743			3,124,550		(c)		3,342,293
Operating lease liabilities, current portion		491,850			—				491,850
Total current liabilities		17,731,858			(4,753,631	)			12,978,227
Non-Current Liabilities
Finance lease liabilities, net of current portion		1,075,865			4,014,019		(c)		5,089,884
Operating lease liabilities, net of current portion		6,941,602			—				6,941,602
Long-term bank borrowing
Total non-current liabilities		8,017,467			4,014,019				12,031,486
Total Liabilities		25,749,325			(739,612	)			25,009,713

Commitment and Contingencies		—			—				—

Stockholders’ Equity
PREFERRED STOCK; $0.001 par value; 1,000,000 shares authorized; none outstanding		—			—				—
COMMON STOCK; $0.0005 par value; 80,000,000 shares authorized; 1,120,145 shares issued; and 1,091,562 shares outstanding as of December 31, 2024		24,623			(24,063	)	(a)		560
Treasury stock; 28,583 shares as of December 31, 2024 at cost		(1,372,673	)		—				(1,372,673	)
Additional paid-in capital		101,688,262			24,063		(a)		101,712,325
Share to be issued		194,700			—				194,700
Retained earnings unappropriated		37,358,804			(964,920	)	(d)		36,393,884
Retained earnings appropriated		26,667,097			—				26,667,097
Accumulated other comprehensive loss		(20,854,143	)		70,825		(e)		(20,783,318	)
Total Stockholders’ Equity		143,706,670			(894,095	)			142,812,575
Total Liabilities and Stockholders’ Equity	$	169,455,995			(1,633,707	)		$	167,822,288

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S. dollars)

(UNAUDITED)

NOTE 22 –RESTATEMENT – Continued

The effects of the restatement on the consolidated balance sheet as of March 31, 2025 are summarized in the following table:


	March 31, 2025
	As Previously Reported			Restatement			Note	As Restated
Current Assets
Cash	$	8,523,045			—			$	8,523,045
Accounts receivable, net		2,114,222			—				2,114,222
Inventories, net		455,059			—				455,059
Prepayments and deposits, net		6,393,161			—				6,393,161
Amount due from related parties		25,076			—				25,076
Other receivables		126,050			—				126,050
Total current assets		17,636,613			—				17,636,613
Non-Current Assets
Property, plant and equipment, net		132,341,321			(46,006,663	)	(b)		86,334,658
Finance lease right-of-use assets		75,721			44,369,063		(b)		44,444,784
Operating lease right-of-use assets		6,050,429			—				6,050,429
Prepaid land leases, net of current portion		9,625,855			—				9,625,855
Deferred tax assets, net		—			—				—
Total non-current assets		148,093,326			(1,637,600	)			146,455,726
Total Assets		165,729,939			(1,637,600	)			164,092,339

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued expenses	$	11,656,665			(4,788,640	)	(c)	$	6,868,025
Taxes payable-current		276,516			—				276,516
Amount due to related parties		2,586,422			—				2,586,422
Finance lease liabilities, current portion		239,771			—				239,771
Operating lease liabilities, current portion		498,483			—				498,483
Total current liabilities		15,257,857			(4,788,640	)			10,469,217
Non-Current Liabilities
Finance lease liabilities, net of current portion		1,077,412			4,058,910		(c)		5,136,322
Operating lease liabilities, net of current portion		6,809,843			—				6,809,843
Total non-current liabilities		7,887,255			4,058,910				11,946,165
Total Liabilities		23,145,112			(729,730	)			22,415,382

Commitment and Contingencies		—			—				—

Stockholders’ Equity
PREFERRED STOCK; $0.001 par value; 1,000,000 shares authorized; none outstanding		—			—				—
COMMON STOCK; $0.0005 par value; 80,000,000 shares authorized; 1,382,114 shares issued; and 1,353,531 shares outstanding as of March 31, 2025		25,934			(25,243	)	(a)		691
Treasury stock; 28,583 shares as of March 31, 2025 at cost		(1,372,673)			—				(1,372,673)
Additional paid-in capital		105,167,292			25,243		(a)		105,192,535
Retained earnings unappropriated		32,729,304			(1,005,600	)	(d)		31,723,704
Retained earnings appropriated		26,667,097			—				26,667,097
Accumulated other comprehensive loss		(20,632,127	)		97,730		(e)		(20,534,397	)
Total Stockholders’ Equity		142,584,827			(907,870	)			141,676,957
Total Liabilities and Stockholders’ Equity	$	165,729,939			(1,637,600	)		$	164,092,339

The following descriptions of the restatement adjustments to the balance sheet excludes a description of adjustments previously identified and concluded as immaterial that were also corrected as part of the restatement.

(a)

The change in common stock and additional paid-in capital is due to the Company’s 1-for-10 reverse stock split on October 27, 2025.

(b)

As of December 31, 2024, in the fixed assets, the original value of the buildings subject to reclassification amounted to $68,476,868. The Company reclassified them based on their acquisition methods. The self-built portion was reclassified as “leasehold improvements” in the property, plant and equipment, with an original value of $3,507,367. The leased portion was reclassified as finance lease right-of-use assets, with an original value of $64,189,590, accumulated amortization of $19,111,170, and a net value of $45,078,720.

As of March 31, 2025, in the fixed assets, the original value of the buildings subject to reclassification amounted to $68,575,318. The Company reclassified them based on their acquisition methods. The self-built portion was reclassified as “leasehold improvements” in the property, plant and equipment, with an original value of $3,512,410. The leased portion was reclassified as finance lease right-of-use assets, with an original value of $64,281,876, accumulated amortization of $19,912,813, and a net value of $44,369,063.

(c)

As of December 31, 2024, the amount of $7,878,181 in accounts payable and accrued expenses was reclassified as finance lease liability relating to the salt pans. The reclassified amount of finance lease liabilities including the current portion of $3,124,550 and the non-current portion of $4,014,019.

As of March 31, 2025, the amount of $4,769,747 in accounts payable and accrued expenses was reclassified as finance lease liability relating to the salt pans. The reclassified amount of finance lease liabilities including the non-current portion of $4,058,910.

(d)

Regarding the decrease in retained earnings unappropriated, the main reasons was the increase in expenses. The increase in expenses is mainly due to the reclassification of the financial lease right-of-use asset. Previously, depreciation was calculated after deducting 5% residual value from the fixed assets, but now there is no residual value for amortization of finance lease right-of-use asset calculation.

(e)

The change in the accumulated other comprehensive loss represents the foreign currency translation differences in the financial statements.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S. dollars)

(UNAUDITED)

NOTE 22 –RESTATEMENT – Continued

The effects of the restatement on the consolidated statement of operations income (loss) for the three months ended March 31, 2024, are summarized in the following table:


	March 31, 2024
	As Previously Reported			Restatement			Note	As Restated
NET REVENUE	$	1,307,062			—			$	1,307,062

OPERATING COSTS AND EXPENSE
Cost of revenues		(2,119,845	)		—				(2,119,845	)
Sales and marketing expenses		(4,491	)		—				(4,491	)
Direct labor and factory overheads incurred during plant shutdown		(3,734,689	)		—				(3,734,689	)
General and administrative expenses		(717,456	)		—				(717,456	)
TOTAL OPERATING COSTS AND EXPENSE		(6,576,481	)		—				(6,576,481	)

LOSS FROM OPERATIONS		(5,269,419	)		—				(5,269,419	)

OTHER INCOME (EXPENSE)
Interest expense		(24,830	)		—				(24,830	)
Interest income		36,060			—				36,060
Other expense, net		(4,003	)		—				(4,003	)
TOTAL OTHER INCOME, NET		7,227			—				7,227

LOSS BEFORE INCOME TAXES		(5,262,192	)		—				(5,262,192	)

INCOME TAX EXPENSE		1,270,060			—				1,270,060
NET LOSS	$	(3,992,132	)		—			$	(3,992,132	)

COMPREHENSIVE LOSS:
NET LOSS	$	(3,992,132	)		—			$	(3,992,132	)
OTHER COMPREHENSIVE (LOSS) INCOME
- Foreign currency translation adjustments		(393,867	)		—				(393,867	)
TOTAL COMPREHENSIVE LOSS	$	(4,385,999	)		—			$	(4,385,999	)

BASIC AND DILUTED LOSS PER SHARE:	$	(0.37	)		(3.29	)	(c)	$	(3.66	)

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES:	$	10,726,924			(9,635,362	)	(c)	$	1,091,562

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S. dollars)

(UNAUDITED)

NOTE 22 –RESTATEMENT – Continued

The effects of the restatement on the consolidated statement of operations income (loss) for the three months ended March 31, 2025, are summarized in the following table:


	March 31, 2025
	As Previously Reported			Restatement			Note	As Restated
NET REVENUE	$	1,604,447			—			$	1,604,447

OPERATING COSTS AND EXPENSE
Cost of revenues		(1,594,270	)		(3,194	)	(a)		(1,597,464	)
Sales and marketing expenses		(5,053	)		—				(5,053	)
Direct labor and factory overheads incurred during plant shutdown		(3,225,808	)		—				(3,225,808	)
General and administrative expenses		(1,389,523	)		(37,486	)	(a)		(1,427,009	)
TOTAL OPERATING COSTS AND EXPENSE		(6,214,654	)		(40,680	)			(6,255,334	)

LOSS FROM OPERATIONS		(4,610,207	)		(40,680	)			(4,650,887	)

OTHER INCOME (EXPENSE)
Interest expense		(21,722	)		—				(21,722	)
Interest income		2,429			—				2,429
TOTAL OTHER INCOME, NET		(19,293	)		—				(19,293	)

LOSS BEFORE INCOME TAXES		(4,629,500	)		(40,680	)			(4,670,180	)

INCOME TAX EXPENSE		—			—				—
NET LOSS	$	(4,629,500	)		(40,680	)		$	(4,670,180	)

COMPREHENSIVE LOSS:
NET LOSS	$	(4,629,500	)		(40,680	)		$	(4,670,180	)
OTHER COMPREHENSIVE (LOSS) INCOME
- Foreign currency translation adjustments		222,016			26,905		(b)		248,921
TOTAL COMPREHENSIVE LOSS	$	(4,407,484	)		(13,775	)		$	(4,421,259	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.40	)		(3.53	)	(c)	$	(3.93	)

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES:		11,685,431			(10,498,018	)	(c)		1,187,413

The following descriptions of the restatement adjustments to the statement of operations exclude a description of adjustments previously identified and concluded as immaterial they were also corrected as part of the restatement.

(a)

The increase in cost of revenue and general and administrative expenses were due to the reclassification of finance lease right-of-use asset. Previously, depreciation was calculated after deducting 5% residual value from the fixed assets, but now there is no residual value for amortization of finance lease right-of-use asset calculation.

(b)

The change in the accumulated other comprehensive loss represents the foreign currency translation differences in the financial statements.

(c)

The change in basic and diluted loss per share is due to the Company’s 1-for-10 reverse stock split on October 27, 2025.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S. dollars)

(UNAUDITED)

NOTE 22 –RESTATEMENT – Continued

The effects of the restatement on the consolidated statement of stockholders’ deficit for the three months ended March 31, 2024 are summarized in the following table:

	Reference		issued			outstanding			stock			Amount			stock				capital		unappropriated			appropriated		Income(loss)			Total
	Common stock
	Restatement		Number of shares			Number of shares			Number of treasury						Treasury				Additional paid-in		Retained earnings			Retained earnings		Accumulated other comprehensive
	Reference		issued			outstanding			stock			Amount			stock				capital		unappropriated			appropriated		Income(loss)			Total
THREE MONTHS ENDED MARCH 31, 2024 (As Previously Reported)
BALANCE AT DECEMBER 31, 2023				11,012,754			10,726,924			285,830		$	24,623		$	(1,372,673	)	-	$	101,688,262	$	96,294,256		$	26,667,097	$	(18,053,269	)	$	205,248,296
Currency translation adjustment				—			—			—			—			—				—		—			—		(393,867	)		(393,867	)
Net loss for three months ended March 31, 2024				—			—			—			—			—		-		—		(3,992,132	)		—		—			(3,992,132	)
BALANCE AT MARCH 31, 2024				11,012,754			10,726,924			285,830		$	24,623		$	(1,372,673	)	-	$	101,688,262	$	92,302,124		$	26,667,097	$	(18,447,136	)	$	200,862,297
THREE MONTHS ENDED MARCH 31, 2024 (Restatement Impact)
BALANCE AT DECEMBER 31, 2023		(a)		(9,892,609	)		(9,635,362	)		(257,247	)	$	(24,063	)	$	—		-	$	24,063	$	—		$	—	$	—		$	—
Currency translation adjustment				—			—			—			—			—				—		—			—		—			—
Net loss for three months ended March 31, 2024				—			—			—			—			—		-		—		—			—		—			—
BALANCE AT MARCH 31, 2024		(a)		(9,892,609	)		(9,635,362	)		(257,247	)	$	(24,063	)	$	—		-	$	24,063	$	—		$	—	$	—		$	—
THREE MONTHS ENDED MARCH 31, 2024 (As Restated)
BALANCE AT DECEMBER 31, 2023				1,120,145			1,091,562			28,583		$	560		$	(1,372,673	)	-	$	101,712,325	$	96,294,256		$	26,667,097	$	(18,053,269	)	$	205,248,296
Currency translation adjustment				—			—			—			—			—				—		—			—		(393,867	)		(393,867	)
Net loss for three months ended March 31, 2024				—			—			—			—			—		-		—		(3,992,132	)		—		—			(3,992,132	)
BALANCE AT MARCH 31, 2024				1,120,145			1,091,562			28,583		$	560		$	(1,372,673	)	-	$	101,712,325	$	92,302,124		$	26,667,097	$	(18,447,136	)	$	200,862,297

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S. dollars)

(UNAUDITED)

NOTE 22 –RESTATEMENT – Continued

The effects of the restatement on the consolidated statement of stockholders’ deficit for the three months ended March 31, 2025 are summarized in the following table:

	Reference	issued			outstanding			stock			Amount			stock			issued			capital			unappropriated			appropriated		Income(loss)			Total
		Common stock
		Number			Number			Number																				Accumulated
	Restatement	of shares			of shares			of treasury						Treasury			Share to be			Additional paid-in			Retained earnings			Retained earnings		other comprehensive
	Reference	issued			outstanding			stock			Amount			stock			issued			capital			unappropriated			appropriated		Income(loss)			Total
THREE MONTHS ENDED MARCH 31, 2025 (As Previously Reported)
BALANCE AT DECEMBER 31, 2024			11,012,754			10,726,924			285,830		$	24,623		$	(1,372,673	)	$	194,700		$	101,688,262		$	37,358,804		$	26,667,097	$	(20,854,143	)	$	143,706,670
Restricted shares to be issued for service			2,619,694			2,619,694			—			1,311			—			(194,700	)		3,479,030			—			—		—			3,285,641
Acquisition of assets			—			—			—			—			—			—			—			—			—		—			—
Currency translation adjustment			—			—			—			—			—			—			—			—			—		222,016			222,016
Net loss for three months ended March 31, 2025			—			—			—			—			—			—			—			(4,629,500	)		—		—			(4,629,500	)
BALANCE AT MARCH 31, 2025			13,632,448			13,346,618			285,830		$	25,934		$	(1,372,673	)	$	—		$	105,167,292		$	32,729,304		$	26,667,097	$	(20,632,127	)	$	142,584,827
THREE MONTHS ENDED MARCH 31, 2025 (Restatement Impact)
BALANCE AT DECEMBER 31, 2024	(a)(b)		(9,892,609	)		(9,635,362	)		(257,247	)	$	(24,063	)	$	—		$	—		$	24,063		$	(964,920	)	$	—	$	70,825		$	(894,095	)
Restricted shares to be issued for service	(d)		(2,563,694	)		(2,563,694	)		—			(1,283	)		—			—			(3,088,258	)		—			—		—			(3,089,541	)
Acquisition of assets	(d)		205,969			205,969			—			103			—			—			3,089,438			—			—		—			3,089,541
Currency translation adjustment	(c)		—			—			—			—			—			—			—			—			—		26,905			26,905
Net loss for three months ended March 31, 2025	(b)		—			—			—			—			—			—			—			(40,680	)		—		—			(40,680	)
BALANCE AT MARCH 31, 2025	(a)(b)		(12,250,334	)		(11,993,087	)		(257,247	)	$	(25,243	)	$	—		$	—		$	25,243		$	(1,005,600	)	$	—	$	97,730		$	(907,870	)
THREE MONTHS ENDED MARCH 31, 2025 (As Restated)
BALANCE AT DECEMBER 31, 2024			1,120,145			1,091,562			28,583		$	560		$	(1,372,673	)	$	194,700		$	101,712,325		$	36,393,884		$	26,667,097	$	(20,783,318	)	$	142,812,575
Restricted shares to be issued for service			56,000			56,000			—			28			—			(194,700	)		390,772			—			—		—			196,100
Acquisition of assets			205,969			205,969			—			103			—			—			3,089,438			—			—		—			3,089,541
Currency translation adjustment			—			—			—			—			—			—			—			—			—		248,921			248,921
Net loss for three months ended March 31, 2025			—			—			—			—			—			—			—			(4,670,180	)		—		—			(4,670,180	)
BALANCE AT MARCH 31, 2025			1,382,114			1,353,531			28,583		$	691		$	(1,372,673	)	$	—		$	105,192,535		$	31,723,704		$	26,667,097	$	(20,534,397	)	$	141,676,957

The following descriptions of the restatement adjustments to the consolidated statement of stockholders’ deficit excludes a description of adjustments previously identified and concluded as immaterial the were also corrected as part of the restatement.

(a)

The change in common stock and additional paid-in capital is due to the Company’s 1-for-10 reverse stock split on October 27, 2025.

(b)

Regarding the decrease in retained earnings unappropriated, the main reason was that cost of revenue and general and administrative expenses increased. The increase of expenses was due to the reclassification of finance lease right-of-use asset. Previously, depreciation was calculated after deducting 5% residual value from the fixed assets, but now there is no residual value for amortization of finance lease right-of-use asset calculation.

(c)

The change in the accumulated other comprehensive loss represents the foreign currency translation differences in the financial statements.

(d)

The amount of $3,089,541 originally classified as restricted shares to be issued for service was reclassified to acquisition of assets, as the shares were issued in connection with the asset acquisition.

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S. dollars)

(UNAUDITED)

NOTE 22 –RESTATEMENT – Continued

The effects of the restatement on the consolidated statement of cash flows for the three months ended March 31, 2024, are summarized in the following table:


	March 31, 2024
	As Previously Reported			Restatement			Note	As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,992,132	)		—			$	(3,992,132	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization on capital lease		24,830			—				24,830
Depreciation and amortization		4,733,475			(313,941	)	(a)		4,419,534
Stock-based compensation expense
Deferred tax asset		(1,270,060	)		—				(1,270,060	)
Amortization of operating lease right-of-use asset		217,345			—				217,345
Amortization of finance lease right-of-use asset		—			313,941		(a)		313,941
Accrued interest receivable
Changes in assets and liabilities
Accounts receivable		(402,545	)		—				(402,545	)
Inventories		(57,859	)		—				(57,859	)
Prepayment and deposits		(44,903	)		—				(44,903	)
Advance from customers		(36,222	)		—				(36,222	)
Other receivables		(774	)		—				(774	)
Accounts and other payable and accrued expenses		(17,847	)		—				(17,847	)
Taxes payable		(257,766	)		—				(257,766	)
Lease liabilities		(226,018	)		—				(226,018	)
Net cash used in operating activities		(1,330,476	)		—				(1,330,476	)

CASH FLOWS FROM INVESTING ACTIVITIES
Loans to third parties
Net cash used in investing activities		—			—				—

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowing
Proceeds from short-term borrowing
Net cash used in financing activities		—			—				—

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(131,622	)		—				(131,622	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(1,462,098	)		—				(1,462,098	)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR		72,223,894			—				72,223,894
CASH AND CASH EQUIVALENTS - END OF YEAR	$	70,761,796			—			$	70,761,796


	March 31, 2024
	As Previously Reported		Restatement		Note	As Restated
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Paid for taxes	$	481,153		—		$	481,153
Interest paid	$	24,830		—		$	24,830

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S. dollars)

(UNAUDITED)

NOTE 22 –RESTATEMENT – Continued

The effects of the restatement on the consolidated statement of cash flows for the three months ended March 31, 2025, are summarized in the following table:


	March 31, 2025
	As Previously Reported			Restatement			Note	As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(4,629,500	)		(40,680	)	(b)	$	(4,670,180	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization on capital lease		21,722			39,135		(a)		60,857
Depreciation and amortization		4,003,524			(774,157	)	(a)		3,229,367
Stock-based compensation expense		196,100			—				196,100
Amortization of operating lease right-of-use asset		217,801			—				217,801
Amortization of finance lease right-of-use asset		—			775,702		(a)		775,702
Changes in assets and liabilities:
Accounts receivable		(1,549,443	)		—				(1,549,443	)
Inventories		(139,285	)		—				(139,285	)
Prepayment and deposits		(7,340	)		—				(7,340	)
Other receivables		(31,987	)		—				(31,987	)
Accounts and other payable and accrued expenses		401,190			—				401,190
Taxes payable		162,411			—				162,411
Lease liabilities		(225,321	)		—				(225,321	)
Net cash used in operating activities		(1,580,128	)		—				(1,580,128	)

CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities		—			—				—

CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in financing activities		—			—				—

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		28,011			—				28,011
NET DECREASE IN CASH AND CASH EQUIVALENTS		(1,552,117	)		—				(1,552,117	)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR		10,075,162			—				10,075,162
CASH AND CASH EQUIVALENTS - END OF YEAR	$	8,523,045			—			$	8,523,045


	March 31, 2025
	As Previously
	Reported		Restatement		Note	As Restated
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Paid for taxes	$	77,386		—		$	77,386
Interest paid	$	21,722		39,135	(a)	$	60,857

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(Expressed in U.S. dollars)

(UNAUDITED)

NOTE 22 –RESTATEMENT – Continued

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

The following descriptions of the restatement adjustments to the statement of cash flows excludes a description of adjustments previously identified and concluded as immaterial that were also corrected as part of the restatement.

(a)

This restatement is due to the reclassification of buildings without property ownership certificates in fixed assets. The Company reclassified them based on their acquisition methods. The self-built portion was reclassified as “leasehold improvements” in the property, plant and equipment. The leased portion was reclassified as finance lease right-of-use assets.

(b)

Regarding the increase in net loss, the main reason was that cost of revenue and general and administrative expenses increased. The increase in expenses was due to the reclassification of finance lease right-of-use asset. Previously, depreciation was calculated after deducting 5% residual value from the fixed assets, but now there is no residual value for amortization of finance lease right-of-use asset calculation.