NASDAQ: GURE

Upper Class Group Limited, incorporated
in the British Virgin Islands in July 2006, acquired all the outstanding stock of Shouguang City Haoyuan Chemical Company Limited (“SCHC”),
a company incorporated in Shouguang City, Shandong Province, the People’s Republic of China (the “PRC”), in May 2005.
At the time of the acquisition, members of the family of Mr. Ming Yang, our president and former chief executive officer, owned approximately
63.20% of the outstanding shares of Upper Class Group Limited. Since the ownership of Upper Class Group Limited and SCHC was then substantially
the same, the acquisition was accounted for as a transaction between entities under common control, whereby Upper Class Group Limited
recognized the assets and liabilities transferred at their carrying amounts.

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On December 12, 2006, our Company,
then known as Diversifax, Inc., a public “shell” company, acquired Upper Class Group Limited and SCHC. Under the terms of
the agreement, the stockholders of Upper Class Group Limited received 13,250,000 (restated for the 2- for-1 stock split in 2007 and the
1-for-4 stock split in 2009) shares of our voting common stock in exchange for all outstanding shares of Upper Class Group Limited. Members
of the Yang family received approximately 62% of our common stock as a result of the acquisition. Under accounting principles generally
accepted in the United States, the share exchange is considered to be a capital transaction rather than a business combination. That is,
the share exchange is equivalent to the issuance of stock by Upper Class Group Limited for the net assets of Gulf Resources, Inc., accompanied
by a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the share exchange is identical
to that resulting from a reverse acquisition, except no goodwill is recorded. Under reverse takeover accounting, the post reverse acquisition
comparative historical consolidated financial statements of the legal acquirer, Diversifax, Inc., are those of the legal acquiree, Upper
Class Group Limited. Share and per share amounts stated have been retroactively adjusted to reflect the share exchange. On February 20,
2007, we changed our corporate name to Gulf Resources, Inc.

On February 5, 2007, we
acquired Shouguang Yuxin Chemical Industry Co., Limited (“SYCI”), a company incorporated in the People’s Republic
of China. Under the terms of the acquisition agreement, the stockholders of SYCI received a total of 8,094,059 (restated for the
2-for-1 stock split in 2007 and the 1-for-4 stock split in 2009) shares of common stock of Gulf Resources, Inc. in exchange for all
outstanding shares of SYCI’s common stock. Simultaneously with the completion of the acquisition, a dividend of $2,550,000 was
paid to the former stockholders of SYCI. At the time of the acquisition, approximately 49.1% of the outstanding shares of SYCI were
owned by Ms. Yu, Mr. Yang’s wife, and the remaining 50.9% of the outstanding shares of SYCI were owned by SCHC, all of whose
outstanding shares were owned by Mr. Yang and his wife. Since the ownership of Gulf Resources, Inc. and SYCI are substantially the
same, the acquisition was accounted for as a transaction between entities under common control, whereby Gulf Resources, Inc.
recognized the assets and liabilities of SYCI at their carrying amounts. Share and per share amounts have been retroactively
adjusted to reflect the acquisition.

To satisfy certain ministerial requirements
necessary to confirm certain government approvals required in connection with the acquisition of SCHC by Upper Class Group Limited, all
of the equity interest of SCHC were transferred to a newly formed Hong Kong corporation named Hong Kong Jiaxing Industrial Limited (“Hong
Kong Jiaxing”) all of the outstanding shares of which are owned by Upper Class Group Limited. The transfer of all of the equity
interest of SCHC to Hong Kong Jiaxing received approval from the local State Administration of Industry and Commerce on December 10, 2007.

As a result of the transactions
described above, our corporate structure is linear. That is Gulf Resources owns 100% of the outstanding shares of Upper Class Group Limited,
which owns 100% of the outstanding shares of Hong Kong Jiaxing, which owns 100% of the outstanding shares of SCHC, which owns 100% of
the outstanding shares of SYCI. Further, as a result of our acquisitions of SCHC and SYCI, our historical consolidated financial statements,
as contained in our Consolidated Financial Statements and Management’s Discussion and Analysis, appearing elsewhere in the report,
reflect the accounts of SCHC and SYCI.

On January 12, 2015, the Company
and SCHC entered into an Equity Interest Transfer Agreement with Shouguang City Rongyuan Chemical Co., Ltd (“SCRC”), pursuant
to which SCHC agreed to acquire SCRC and all rights, title and interest in and to all assets owned by SCRC, a leading manufacturer of
materials for human and animal antibiotics in China and other parts of Asia.

On February 4, 2015, the Company
closed the transactions contemplated by the agreement between the Company, SCHC and SCRC. On the closing Date, the Company issued 7,268,011
shares of its common stock, par value $0.0005 per share (the “Shares”), at the closing market price of $1.84 per Share on
the closing date to the four former equity owners of SCRC .The issuance of the Shares was exempt from registration pursuant to Regulation
S of the Securities Act of 1933, as amended. On the Closing Date, the Company entered into a lock-up agreement with the four former equity
owners of SCRC. In accordance with the terms of the lock-up agreement, the shareholders agreed not to sell or transfer the Shares for
five years from the date the stock certificates evidencing the Shares were issued.

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The sellers of SCRC agreed as part
of the purchase price to accept the Shares, based on a valuation of $10.00 (restated for the 1-for-5 reverse stock split in January 2020),
which was a 73% premium to the price on the day the agreement was reached. 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.
The price difference between the original sale price of $10.00 (restated for the 1-for-5 reverse stock split in January 2020) and the
$9.20 (restated for the 1-for-5 reverse stock split in January 2020) closing price of our stock on the closing date of the agreement is
solely for accounting purposes. There has been no change in the number of shares issued.

On November 24, 2015, Gulf Resources,
Inc., a Delaware corporation, consummated a merger with and into its wholly-owned subsidiary, Gulf Resources, Inc., a Nevada corporation.
As a result of the reincorporation, the Company is now a Nevada corporation.

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. DCHC was established
to further explore and develop natural gas and brine resources (including bromine and crude salt) in China.

On September 2, 2016, the Company
announced the planned merger of two of its 100% owned subsidiaries, SYCI and SCRC. On March 24, 2017, the legal process of the merger
was completed and SCRC was officially deregistered on March 28, 2017. The results of these two subsidiaries were reported under SYCI in
the fiscal year 2018.

On January 27, 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. All shares of common stock referenced in this report have been adjusted to reflect the stock
split figures. On January 28, 2020, our shares began trading on the NASDAQ Global Select Market under the new CUSIP # 40251W.

In April 2022, Shouguang Hengde
Salt Industry Co. Ltd, our subsidiary, was incorporated in Shandong Province, China, for crude salt production and trading.

On October 27, 2025, the Company
completed a 1-for-10 reverse stock split of our common stock, such that for each ten shares outstanding prior to the stock split there
was one share outstanding after the reverse stock split. All shares of common stock referenced in this report have been adjusted to reflect
the stock split figures. On October 27, 2025, our shares began trading on the NASDAQ Global Select Market under the new CUSIP # 40251W507.

On May 6, 2025, the Company was
notified by the Listing Qualifications Staff of The Nasdaq Stock Market LLC that the Staff granted the Company’s request to transfer
the listing of its common stock, par value $0.0005 per share, from The Nasdaq Global Select Market tier to The Nasdaq Capital Market tier.
On October 27, 2025, our shares began trading on the Nasdaq Capital Market under the same symbol “GURE”.

Recent Developments

On November 12, 2025, the Company
issued a press release providing certain updates on its hearing scheduling process with the Nasdaq Hearings Panel. The Company has received
a hearing notification letter from Nasdaq scheduling an oral hearing for December 9, 2025. As of November 10, 2025, the Company’s
common stock had maintained the requisite closing bid price in compliance with Listing Rule 5550(a)(2). In light of the above and in accordance
with the instructions provided by the hearing notification letter, the Company has submitted a request to cancel the hearing, subject
to the Company’s Listing Analyst review and confirmation.

On December 1, 2025, the Company
received a letter from The Nasdaq Stock Market, LLC stating that the Company had regained compliance with the minimum bid price requirement
for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2). Consequently, the hearing before the
Hearings Panel scheduled to take place on December 9, 2025 has been cancelled. The Company’s securities will continue to be listed
and traded on The Nasdaq Stock Market.

On December 2, 2025, the Company issued a press release announcing
that it has regained compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market.

On December 10,
2025, Shouguang City Haoyuan Chemical Company Limited, an indirect wholly owned subsidiary of Gulf Resources, Inc. (the “Company”),
entered into an equity transfer agreement to sell 100% of the equity interests in Shouguang Yuxin Chemical Industry Co., Limited to Shandong
Rongyuan Pharmaceutical Co., Ltd. for aggregate consideration of RMB 21.2 million, payable in instalments through 2028. The Company’s
board of directors reviewed and affirmed the terms of the transaction, concluding that the sale is fair to and in the best interests of
the Company and its shareholders. The disposition removes the operational and financial burdens associated with the prolonged suspension
of the Yuxin Chemical facility and enables the Company to reallocate resources to its other, more profitable business segments. The transaction
closed on December 22, 2025 following completion of the required governmental registration changes.

On December 18,
2025, the Company announced that, pursuant to a notice dated December 15, 2025 from the Shouguang Municipal People’s Government
Office (the “Government of Shouguang City”), it would temporarily suspend relevant operations in Shouguang City to comply
with local regulatory requirements. The Company characterized the suspension as seasonal in nature and aligned with the Government of
Shouguang City’s objectives for the orderly extraction, effective utilization, and comprehensive development of brine resources,
as well as the protection of the ecological environment. The Company further noted that bromine demand typically declines during the Chinese
New Year holiday period and that crude salt processing becomes more difficult in winter due to lower temperatures, which mitigated the
commercial impact of the temporary shutdown. Operations in Shouguang City subsequently resumed on March 2, 2026 in compliance with the
same government notice.

On December 22,
2025, the transaction previously announced on December 10, 2025 to sell 100% of the equity interests in Shouguang Yuxin Chemical Industry
Co., Limited by Shouguang City Haoyuan Chemical Company Limited, an indirect wholly owned subsidiary of Gulf Resources, Inc. (the “Company”),
to Shandong Rongyuan Pharmaceutical Co., Ltd. closed following completion of the industrial and commercial change registration by the
relevant Administration for Market Regulation (AMR), which recorded the Purchaser as the sole shareholder of the Target Company. The Company
had previously disclosed the terms of the equity transfer agreement and related matters in its Current Report on Form 8-K filed with the
SEC on December 15, 2025.

On March 2, 2026,
the Company announced that as previously reported on its Form 8-K filed on December 18, 2025, it had temporarily suspended certain operations
in Shouguang City in compliance with a seasonal government notice (the “Notice”) issued by the Government of Shouguang City
to support the orderly extraction, effective utilization, and comprehensive development of brine resources and the protection of the ecological
environment, and that such operations have now resumed in compliance with the Notice.

On January 26, 2026, March 5,
2026, March 19, 2026 and March 28, 2026, respectively, the Company entered into equity financing agreements (individually the “Private
Placement Agreement”; collectively the “Private Placement Agreements”), with four individual investors (individually
the “Private Placement Purchaser”; collectively “Private Placement Purchasers”), pursuant to which the Company
agreed to issue new shares of common stock to such investors that in aggregate accounted for approximately 18% of the total shares issued
and outstanding of the Company as of December 31, 2025. The purchase price per share under the Private Placement Agreement dated January
26, 2026, was set at 90% of the average closing price of the Company’s common stock for the five trading days prior to the date
of such agreement, while the purchase prices under the Private Placement Agreements executed in March 2026 were set at 85% of, or 15%
off, the closing price of the Company’s common stock on the trading day immediately preceding the respective agreement dates, as
quoted on the Nasdaq Stock Market. For more information, see the Current Report on Form 8-K of the Company filed with the Securities Exchange
Commission, or the SEC.

On April 23,
2026, the Company received a notice (the “Initial Notice”) from the Listing Qualifications Department of The Nasdaq Stock
Market LLC (“Nasdaq”) 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, 2025 (the “Form 10-K”), with the SEC, the Company was not in compliance with Nasdaq’s
continued listing requirements under Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule 5250(c)(1) 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 26, 2026 due to the Company’s non-compliance with the Listing Rule 5250(c)(1) 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, 2026(the “First Quarter Form 10-Q”,
together with the Form 10-K, the “Delinquent Reports”). The May Notice states that the Company had until June 22, 2026 to
submit to Nasdaq a plan to regain compliance with the Rule.

On May 26, 2026,
Gulf Resources (the “Company”) received a notice (the “Notice”) from the Listing Qualifications Department of The
Nasdaq Stock Market LLC (“Nasdaq”), indicating that, as a result of not having timely filed its quarterly report on Form 10-Q
for the quarter ended March 31, 2026 (the “Form 10-Q”), and the Company remains delinquent in filing its annual report on
Form 10-K for the year ended December 31, 2025 (the “Initial Delinquent Filing”), the Company is in non-compliance with Nasdaq
Listing Rule 5250(c)(1), which requires timely filing all required periodic financial reports with the Securities Exchange Commission.

On June 1, 2026,
Gulf Resources (the “Company”), following the Company’s ongoing dialogue with the staff of the United States Securities
and Exchange Commission, concluded that the Company will amend its fiscal year 2024 Form 10-K (the “FY2024 Form 10-K”) and
Form 10-Qs for the first, second and third quarters of 2025 (collectively, the “Q1, Q2 and Q3 2025 Form 10-Qs”) to restate
the disclosures (Note 6, Note 7 and Note 12 included in the FY2024 Form 10-K and the Q1, Q2 and Q3 2025 Form 10-Qs) to revise the previous
recognition of buildings without ownership certificates as fixed assets in the balance sheets and to reclassify such buildings as right-of-use
(ROU) assets based on lease agreements and ASC 842 Leases, for each of the periods included in those filing, including fiscal years 2023
and 2024 in the FY2024 Form 10-K and each of the quarterly and year-to-date periods included in the Q1, Q2 and Q3 FY2025 Form 10-Qs (collectively,
the “Prior Filings”). The Prior Filings should no longer be relied upon because of errors identified in such financial statements,
as described above.

In connection
with the identification of the above mentioned restatement, the Company delayed the completion of its fiscal year 2025 Form 10-K and Quarterly
Report on Form 10-Q for the quarter ended March 31, 2026, and filed a Form 12b-25 (Notice of Late Filing) with the Securities and Exchange
Commission to provide notice of such delay to the SEC and its shareholders.

On June 25, 2026, 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 17, 2026, Nasdaq determined
to grant an exception to enable the Company to regain compliance with the Listing Rule 5250(c)(1) Rule. The terms of the exception were
as follows: on or before August 31, 2026, the Company must file the Delinquent Reports, as required by the Listing Rule 5250(c)(1) 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.

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Corporate Structure

Our current corporate structure chart is set forth in the
following diagram:

4

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; and (iv) Shouguang Hengde Salt
Industry Co. Limited, or SHSI, each a PRC company.

On December 10, 2025, Shouguang
City Haoyuan Chemical Company Limited (the “Seller”), an indirect wholly owned subsidiary of Gulf Resources, Inc. (the “Company”),
entered into an equity transfer agreement (the “SPA”) with Shandong Rongyuan Pharmaceutical Co., Ltd. (the “Purchaser”)
to sell 100% of the equity interests in Shouguang Yuxin Chemical Industry Co., Limited (the “Target Company”) for RMB 21.2
million, payable in instalments through 2028. The Company’s board of directors reviewed and approved the SPA, determining that its
terms, including the consideration and payment arrangements, are fair and in the best interests of the Company and its shareholders. Given
the prolonged suspension of operations at the Yuxin Chemical facility and its adverse impact on performance, the Board believes that completing
the sale will relieve the Company of related burdens and allow it to focus on more profitable business segments.

As previously reported, on December
10, 2025, Shouguang City Haoyuan Chemical Company Limited (the “Seller”), an indirect wholly owned subsidiary of Gulf Resources,
Inc. (the “Company”), entered into an equity transfer agreement (the “SPA”) with Shandong Rongyuan Pharmaceutical
Co., Ltd. (the “Purchaser”) to sell 100% of the equity interest in Shouguang Yuxin Chemical Industry Co., Limited (the “Target
Company”). The industrial and commercial registration reflecting the Purchaser as the sole shareholder of the Target Company was
completed by the relevant governmental authority on December 22, 2025, marking the closing of the transaction. In connection with the
closing, the Company filed a Current Report on Form 8-K on December 29, 2025, which includes the Company’s audited financial statements
for the year ended December 31, 2024, and unaudited financial statements for the nine months ended September 30, 2025, together with related
notes and pro forma financial information filed as Exhibit 99.1 of the aforementioned Form 8-K filed on December 29, 2025.

Our executive offices are located at Level 11,
Vegetable Building, Industrial Park of the East in Shouguang City, Shandong Province, P.R.C. Our telephone number is +86 (536)
5670008. Our website address is www.gulfresourcesinc.com. The information contained on or accessed through our website is not
intended to constitute and shall not be deemed to constitute part of this Form 10-K.

Enforcement of Civil Liabilities
under United States Federal Securities Laws

Although the Company is a Nevada
corporation, most of the Company’s operations are and will be located outside of the United States and all Company directors and
officers reside outside the United States. Moreover, a majority of Company assets are located outside the United States. Since a majority
of the assets owned by the Company are located outside the United States, any judgment obtained in the United States against the Company
may not be collectible within the United States. There is no treaty between the United States and China providing for the reciprocal recognition
and enforcement of judgments in civil and commercial matters and a final judgment for the payment of money rendered by any federal or
state court in the United States based on civil liability, whether or not predicated solely upon the federal securities laws, would, therefore,
not be automatically enforceable in China. Under the PRC Civil Procedure Law, foreign shareholders may originate actions based on PRC
law against the Company in the PRC, if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other
procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete
claim, a factual basis and a cause for the suit.

There is uncertainty as to whether
the courts of China would (1) recognize or enforce judgments of United States courts obtained against the Company or its directors or
officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States,
or (2) entertain original actions brought in each respective jurisdiction against the Company or its directors or officers predicated
upon the securities laws of the United States or any state in the United States.

The recognition and enforcement
of foreign judgments are provided for under the PRC Civil Procedure Law. PRC courts may recognize and enforce foreign judgments in accordance
with the requirements of the PRC Civil Procedure Law based either on treaties between China and the country where the judgment is made
or on principles of reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity with the United States
that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedure Law,
courts in China will not enforce a foreign judgment against the Company or its directors and officers if they decide that the judgment
violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether and
on what basis a PRC court would enforce a judgment rendered by a court in the United States. Under the PRC Civil Procedure Law, foreign
shareholders may originate actions based on PRC law against the Company in the PRC, if they can establish sufficient nexus to the PRC
for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct
interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit.

In addition, it will be difficult
for U.S. shareholders to originate actions against us in China in accordance with PRC laws because we are incorporated under the laws
of State of Nevada and it will be difficult for U.S. shareholders, holding our common stock, to establish a connection to China for a
PRC court to have jurisdiction as required under the PRC Civil Procedure Law.

Recent Regulatory Developments in China

We face various legal and operational
risks and uncertainties associated with having all of our operations in China and the complex and evolving PRC laws and regulations.
The Chinese government has significant authority in regulating our operations and may intervene or influence our operations at any time,
which could result in a material adverse change in our operations and the value of our securities. The PRC government has recently indicated
its intent to exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers.
Such actions could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause
the value of such securities to significantly decline or be worthless. For example, anti-monopoly regulators in China have promulgated
new anti-monopoly and competition laws and regulations and strengthened the enforcement under these laws and regulations. There remain
uncertainties as to how the laws, regulations and guidelines recently promulgated will be implemented and whether these laws, regulations
and guidelines will have a material impact on our business, financial condition, results of operations and prospects. If any non-compliance
is identified by relevant authorities, we may be subject to fines and other penalties. See “