Fourth Quarter 2012 Results

Gulf Resources' revenue was $22.0 million for the fourth quarter of 2012, a decrease of 27.8% from $30.5 million for the fourth quarter of 2011. The decrease in net revenue was primarily attributable to the decline in selling price and sales volume in the bromine segment. Revenue from the bromine and crude salt segments was $11.4 million and $2.7 million, respectively, representing a decrease of 42.1% and increase of 12.3% for bromine and crude salt segments, respectively. The total revenue of both bromine and crude salt business segments represented 64% of sales revenue for the fourth quarter of 2012.

Revenue from the chemical products segment was $7.9 million, or 36% of total revenue, for the fourth quarter of 2012, a decrease of 7% from $8.5 million in the corresponding period in 2011. The decrease in revenue from this product segment was mainly due to a drop in sales volume for pesticide manufacturing additives, which offset the incremental benefit arising from the increase in chemical product prices for oil field and exploration additives and a higher sales volume for paper manufacturing additives, as compared to the same quarter last year.

Gross profit for the fourth quarter of 2012 was $4.2 million, a decrease of 59.5% from $10.4 million from the fourth quarter of 2011, and gross profit margin for the three months ended December 31, 2012 was 19.1%, as compared to 34.1% for the corresponding period last year. The decrease in gross margin was mainly due to the decrease in selling prices in bromine segments, as compared to the same period last year.

Sales, marketing and other operating expenses for the fourth quarter of 2012 were $21,204, as compared with $19,075 for the corresponding quarter last year.

General and administrative expenses for the fourth quarter of 2012 were $1.0 million, as compared to $6.4 million for the fourth quarter of 2011. The lower general and administrative expenses for the fourth quarter in 2012 were mainly due to the lower expenses incurred related to management expenses and exploration costs.

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