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<SEC-DOCUMENT>0001193805-07-000994.txt : 20070410
<SEC-HEADER>0001193805-07-000994.hdr.sgml : 20070410
<ACCEPTANCE-DATETIME>20070410095941
ACCESSION NUMBER:		0001193805-07-000994
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20070404
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Completion of Acquisition or Disposition of Assets
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM INFORMATION:		Unregistered Sales of Equity Securities
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20070410
DATE AS OF CHANGE:		20070410

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GULF RESOURCES, INC.
		CENTRAL INDEX KEY:			0000885462
		STANDARD INDUSTRIAL CLASSIFICATION:	CHEMICALS & ALLIED PRODUCTS [2800]
		IRS NUMBER:				133637458
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1130

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-20936
		FILM NUMBER:		07757870

	BUSINESS ADDRESS:	
		STREET 1:		CHEMING INDUSTRIAL PARK
		STREET 2:		UNIT - HAOYUAN CHEMICAL COMPANY LIMITED
		CITY:			SHOUGUANG CITY, SHANDONG
		STATE:			F4
		ZIP:			262714
		BUSINESS PHONE:		(310) 470-2886

	MAIL ADDRESS:	
		STREET 1:		CHEMING INDUSTRIAL PARK
		STREET 2:		UNIT - HAOYUAN CHEMICAL COMPANY LIMITED
		CITY:			SHOUGUANG CITY, SHANDONG
		STATE:			F4
		ZIP:			262714

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	DIVERSIFAX INC
		DATE OF NAME CHANGE:	19940331
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>e601958_8k-gulfinc.txt
<DESCRIPTION>CURRENT REPORT
<TEXT>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                         Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                Date of Report (date of earliest event reported):
                                  April 4, 2007

                              GULF RESOURCES, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

Delaware                           000-20936                        13-3637458
- --------                           ---------                        ----------
State of                           Commission                       IRS Employer
Incorporation                      File Number                      I.D. Number

       CHEMING INDUSTRIAL PARK, UNIT - HAOYUAN CHEMICAL COMPANY LIMITED,
                     SHOUGUANG CITY, SHANDONG, CHINA 262714
       -----------------------------------------------------------------
                     Address of principal executive offices

                  Registrant's telephone number: (310)470-2886

                               Shennan Zhong Road
                                 PO Box 031-114
                             Shenzhen, China 518000
          -------------------------------------------------------------
          (Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

|_|   Written communications pursuant to Rule 425 under the Securities Act (17
      CFR 230.425)
|_|   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)
|_|   Pre-commencement communications pursuant to Rule 14d-2(b) under the
      Exchange Act (17 CFR 240.14d-2(b))
|_|   Pre-commencement communications pursuant to Rule 13e-4(c) under the
      Exchange Act (17 CFR 240.13e-4(c))


<PAGE>

Item 1.01. Entry into a Material Definitive Agreement.

      On April 4, 2007, Gulf Resources, Inc. (the "Registrant"), Shuoguang City
Haoyuan Chemical Company Limited ("SCHC"), the Registrant's wholly-owned
subsidiary, and Wenbo Yu ("Seller") entered into an Asset Purchase Agreement
(the "Agreement") pursuant to which SCHC will acquire substantially all of the
assets owned by the Seller in the Shouguang City Qinshuibo Area (the "Assets")
in a stock and cash transaction valued at approximately $5,100,000. Pursuant to
the Agreement, in exchange for the Assets, the Seller will receive an aggregate
of 799,286 newly issued shares of the Registrant's restricted common stock, and
interest-free promissory note in the aggregate principal amount of $3,051,282,
with a maturity date of April 14, 2007. A copy of the Agreement is filed as
Exhibit 99.1 to this Current Report.

      The Registrant, SCHC and the Seller have made customary representations,
warranties and covenants in the Agreement. Consummation of the transactions set
forth in the Agreement are subject to certain conditions, including, among
others, (i) final due diligence review of the Assets; (ii) applicable regulatory
approvals; and (iii) compliance with each party's covenants.

Item 2.01 Completion of Acquisition or Disposition of Assets.

      On April 7, 2007, the Registrant consummated the Agreement, pursuant to
which the Registrant acquired Assets from the Seller. Further information about
the Agreement is provided above under Item 1.01 of this Current Report.

      In exchange for transferring the Assets to SCHC, the Seller will receive
an aggregate of 799,286 newly issued shares of the Registrant's restricted
common stock and a non-interest bearing promissory note in the aggregate
principal amount of $3,051,282. Further information about the consideration is
provided above under Item 1.01 of this Current Report.

      The Assets include a 50-year mineral rights and land lease covering 1,846
acres, or 7.5 square kilometers of real property, with proven and probable
reserves of 34,400 tons of bromine being serviced by 575 wells, as well as the
related production facility, the wells, the pipelines, other production
equipment, and the buildings located on the property.

Item 2.03 Creation Of A Direct Financial Obligation Or An Obligation Under An
Off-Balance Sheet Arrangement Of A Registrant

      Pursuant to the Agreement, on April 7, 2007, in exchange for the Seller
transferring the Assets to SCHC, SCHC issued to the Seller a non-interest
bearing promissory note in the aggregate principal amount of $3,051,282, which
is due and payable on April 14, 2007, and which contains customary terms and
conditions. A copy of the form of the promissory note is filed as Exhibit 99.2
to this Current Report.

Item 3.02 Unregistered Sales of Equity Securities.

      Pursuant to the Agreement, in exchange for the transfer of the Assets by
the Seller to SCHC, the Registrant will issue to the Seller 799,286 shares of
the Registrant's common stock.


                                       2
<PAGE>

1.    Section 4(2) of the Securities Act

      The shares of the Registrant's common stock were issued to the Seller
without registration under Section 5 of the Securities Act of 1933, as amended
(the "Securities Act") in reliance on the exemption from registration contained
in Section 4(2) of the Securities Act.

      The Registrant believes that all of the requirements to qualify to use the
exemption from registration contained in Section 4(2) of the Securities Act have
been satisfied in connection with the issuance of the shares to the Seller.
Specifically, (i) the Registrant has determined that the Seller is knowledgeable
and experienced in finance and business matters and thus he is able to evaluate
the risks and merits of acquiring the Registrant's securities; (ii) the Seller
has advised the Registrant that he is able to bear the economic risk of
purchasing the Registrant's common stock; (iii) the Registrant has provided the
Seller with access to the type of information normally provided in a prospectus;
and (iv) the Registrant did not use any form of public solicitation or general
advertising in connection with the issuance of the shares.

      2. Regulation S under the Securities Act

      In addition, the shares of the Registrant's common stock were issued to
the Seller without registration under Section 5 of the Securities Act, in
reliance on the exemption from registration contained in Regulation S under the
Securities Act.

      The Registrant, which is located in the United States, believes that the
issuance of its common stock to the Seller will constitute an offshore
transaction. The Seller is a resident of China. At the time the Registrant
offered to issue its shares to the Seller, the Seller was located in China.
Furthermore, at the time the Registrant will issue its common stock to the
Seller, the Registrant reasonably believes that the Seller will be outside the
United States. As a result, the Registrant believes that these facts enable it
to also rely on Regulation S for an exemption from the registration requirements
of Section 5 of the Securities Act with respect to the issuance of its common
stock to the Seller.

Item 9.01. Financial Statements and Exhibits.

      (c)   Exhibits.

      99.1  Asset Purchase Agreement

      99.2  Form of Promissory Note

      99.3  Press Release dated April 10, 2007


                                       3
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.

Dated: April 9, 2007

                                                    GULF RESOURCES, INC.


                                                    By: /s/ Ming Yang
                                                        ------------------------
                                                        Ming Yang,
                                                        Chief Executive Officer


                                       4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>e601958_ex99-1.txt
<DESCRIPTION>ASSET PURCHASE AGREEMENT
<TEXT>

                            ASSET PURCHASE AGREEMENT

                                     BETWEEN

                 SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED

                                       AND

                                    WENBO YU

                                   DATED AS OF

                                  April 4, 2007

- --------------------------------------------------------------------------------

INDEX OF SCHEDULES AND EXHIBITS

Exhibits:


A. Form of Promissory Note

Schedules:


1. Shouguang City Qinshuibo Area Asset Checklist

2. Leased Property Description

- --------------------------------------------------------------------------------

This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of April 4,
2007 (the "Effective Date") and comes into effect on the same day by and between
the following two Parties:

(1)   SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED, a company of limited
liabilities incorporated and validly existing under the laws of China ("SCHC"),
a subsidiary of Gulf Resources, Inc.("GUFR"); and

(2)   Wenbo Yu, ("YU"), an individual who owns a private land located in
Shouguang City Qinshuibo Area.

WHEREAS: Yu wishes to sell, transfer and convey certain assets to SCHC, and SCHC
wishes to purchase and acquire the same from Yu.


<PAGE>

NOW, THEREFORE, in consideration of the mutual promises contained herein, and
for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, SCHC, and YU, both have reached an AGREEMENT reciprocally
as follows:

1.    CERTAIN DEFINITIONS

"Ordinary Course of Business" shall mean an action taken by YU if such action is
taken in normal operation, consistent with past practices.

"Closing" The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at SCHC's offices, on or before April 7, 2007 and in
no event later than April 7, 2007 (the "Closing Date").

"GUFR" shall mean Gulf Resources, Inc., a Delaware corporation and parent of
SCHC.

"GUFR Common Stock" shall mean the shares of common stock of GUFR.

"Person" shall mean any individual, Entity or Governmental Body.

"Pre-Closing Period" shall mean the period commencing as of the date of the
Agreement and ending on the Closing Date.

2.    TRANSFER OF THE ASSETS

2.1   YU agrees that, upon the Closing, he will sell, transfer and deliver unto
SCHC, its successors and assigns forever, by duly executed deed(s), bills of
sale, assignment(s) or other instrument(s) of conveyance, for the consideration
hereinafter provided, all of YU's right, title and interest in and to all assets
owned by YU located at the Shouguang City Qinshuibo Area, including, but not
limited to, machinery, equipment, inventory (raw materials, work-in-progress and
finished goods), and any warranties associated therewith; said assets to be
limited to those listed and described on Schedule 1 attached hereto and
incorporated herein by reference (the "Purchased Assets"). In addition to the
Purchased Assets, Yu agrees at Closing to convey to SCHC certain leased property
described in Schedule 2 attached hereto (the "Leased Property") and to execute
and deliver such instruments of transfer and conveyance to effect the transfer
of ownership of the Leased Property from Yu to SCHC.

2.2   As full consideration for the sale, assignment, transfer and delivery of
Purchased Assets and the Leased Property to SCHC, and upon the terms and subject
to all of the conditions contained herein, (a) GUFR shall issue to YU 779,286
shares of restricted GUFR Common Stock within three months after the Closing
(such amount of shares is based on $2.55 price per share and equals in the
aggregate $1,987,179) and (b) SCHC shall pay to YU the sum of $3,051,282 in cash
within one week after the Closing. At Closing, SCHC shall issue to YU a
promissory note in the principal amount of $3,051,282 in the form attached
hereto as Exhibit A. The parties understand and acknowledge that the total
purchase price for the Purchased Assets and the Leased Property is $5,064,102
(the "Purchase Price") and that the Purchase Price is based upon an approximate
valuation of Qingshuibo Area at $5,064,102.


<PAGE>

2.3   As a result of Agreement, the Purchased Assets including, without
limitation, annual estimated bromine production capacity of 4,700 tons,
infrastructures, equipments, wells, pipelines, and power circuits will be owned
by SCHC; provided, however, that any and all debts and liabilities of YU
relating to the Purchased Assets and the Leased Property are specifically
excluded.

2.4   YU covenants that the $957,692 lease payment due under the 50-year land
lease for the Leased Property has been paid-off. Any economic losses or legal
disputes relating to the ownership of the Leased Property, whether arising prior
to or after the transfer of ownership of the Leased Property from YU to SCHC,
will be YU's full responsibility.

2.5   Upon execution of this Agreement by each of SCHC and YU, SCHC shall
deliver to YU a security deposit of $25,641 (the "Security Deposit"), to be held
in escrow by YU pending the Closing. At Closing the Security Deposit shall be
released to YU, and shall be applied to the Purchase Price due by SCHC at
Closing. If the transactions contemplated hereunder are not consummated by the
Closing Date, this Agreement shall terminate, and each party shall have no
further obligation to the other party, except that YU shall return the Security
Deposit to SCHC, provided, however, that YU shall be entitled to retain the
Security Deposit if the transactions contemplated hereunder are not consummated
due to the material default or breach on the part of SCHC.

2.6 Three days after the Effective Date, SCHC and YU will both establish an
asset assessment team to assess all of the Purchased Assets and the Leased
Property for transfer and conveyance to SCHC.

3.    REPRESENTATIONS AND WARRANTIES

3.1   YU represents and warrants to SCHC the following:

(a)   Authority. YU has the power and authority to execute and deliver this
Agreement and to perform his obligations hereunder, and to consummate the
transactions hereby, and upon the execution and delivery of the instruments and
documents specified herein, no further action will be required of YU to vest
legal title to and possession of the Purchased Assets and the Leased Property in
the Purchaser, its successors and assigns forever.

(b)   Title to Assets. YU has good and marketable title to the Purchased Assets
and the Leased Property, free and clear of liens or encumbrances of any kind and
no person, firm or corporation has any undisclosed adverse interest therein.

(c)   Condition of Purchased Assets. The Purchased Assets are in operating
condition and repair, ordinary wear and tear excepted, and are suitable for
continued use by SCHC in the production of bromine. The material buildings,
plants, machinery and equipment necessary of in connection with the production
of bromine located on the Leased Property as presently conducted are
structurally sound, are in good operating condition and repair and are adequate
for the uses to which they are being put or would be put in the Ordinary Course
of Business, in each case, taken as a whole, and none of such buildings, plants,
machinery or equipment is in need of maintenance or repairs, except for
ordinary, routine maintenance and repairs that are not material in nature or
cost.


<PAGE>

(d)   Disclosure. No representation or warranty by YU contained in this
Agreement or any written statement furnished to SCHC pursuant hereto, contains
any untrue statement of a material fact, or omits to state a material fact
necessary to make the statement contained herein true and not misleading.

(e)   Reliance. The foregoing representations and warranties have been made by
YU with the knowledge and expectation that SCHC is placing reliance thereon, and
all such representations and warranties shall survive the Closing for a period
of one (1) year.

3.2   Each of SCHC and YU represents and warrants respectively to the other as
follows:

(a)   Each of SCHC and YU warrants that has taken all necessary actions for the
execution and performance of this Agreement.

(b)   The performance of the transaction contemplated hereunder is not subject
to the consent, approval or order of any governmental authorities or any other
third parties, nor is it subject to any conditions precedent as registration
with, qualification verification by or document delivery to any governmental
authorities or any other third parties.

4.    INDEMNIFICATION

4.1   YU agrees to indemnify, hold harmless and reimburse the Purchaser at all
times after the Closing, against and with respect to:

(a)   any damage or deficiency resulting from any misrepresentation, breach of
warranty or non-fulfillment of any covenant or agreement on the part of YU made
in this Agreement, any other agreement or instrument delivered by Yu at the
Closing;

(b)   any damages or claims asserted against the Purchaser on account of any
liability of YU in connection with his ownership of the Purchased Assets and the
Leased Property ; and

(c)   all actions, suits, proceedings, demands, assessments, judgments, costs
and expenses, including reasonable attorneys' fees, incident to the foregoing.

5.    MISCELLANEOUS PROVISIONS.

5.1   No Assumption of Liabilities. Except as specifically set forth in this
Agreement, nothing in this Agreement shall be construed to impose upon SCHC the
assumption of any claim against or liability or obligation of YU, arising out of
his business, or the use, operation or possession of the Purchased Assets,
through the Closing, or thereafter.


<PAGE>

5.2   Books and Records. Those books and records reasonably deemed primarily to
relate to the Purchased Assets and maintained separately from the other records
of YU shall be delivered to and become the property of SCHC.

5.3   Expenses of Negotiation and Transfer. Each party to this Agreement shall
pay its own expenses and other costs incidental to or resulting from this
Agreement, whether or not the transactions contemplated hereby are consummated.

5.4   Entire Agreement. This Agreement, along with the documents and agreements
to be executed in connection herewith, constitutes the full understanding of the
parties, a complete allocation of risks between them and a complete and
exclusive statement of the terms and conditions of their agreement relating to
the subject matter hereof and supersedes any and all prior agreements, whether
written or oral, that may exist between the parties with respect thereto. Except
as otherwise specifically provided in this Agreement, no conditions, usage of
trade, course of dealing or performance, understanding or agreement purporting
to modify, vary, explain or supplement the terms or conditions of this Agreement
shall be binding unless hereafter made in writing and signed by the party to be
bound, and no modification shall be effected by the acknowledgment or acceptance
of documents containing terms or conditions at variance with or in addition to
those listed in this Agreement. No waiver by any party with respect to any
breach or default or of any right or remedy and no course of dealing shall be
deemed to constitute a continuing waiver of any other breach or default or of
any other right or remedy, unless such waiver be expressed in writing signed by
the party to be bound. Failure of a party to exercise any right shall not be
deemed a waiver of such right or rights in the future.

5.5   Binding Effect. All of the covenants, conditions, agreements and
undertakings set forth in this Agreement shall extend to and be binding upon YU
and SCHC and their respective successors and assigns.

5.6   Assignability. Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof nor any of the documents
executed in connection herewith may be assigned by any party without the consent
of the other parties

5.7   Headings. Headings as to the contents of particular Sections are for
convenience only and are in no way to be construed as part of this Agreement or
as a limitation of the scope of the particular Sections to which they refer.

5.8   Exhibits and Schedules. The Exhibits and Schedules (and any appendices
thereto) referred to in this Agreement are and shall be incorporated herein and
made a part hereof.

5.9   Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together will constitute an integral
party of this Agreement.


<PAGE>

IN WITNESS HEREOF, SCHC and YU have caused this Agreement to be executed by
their duly authorized representatives as of the date first hereinabove
mentioned.

SCHC: SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED


Signed by: /s/ Ming Yang
           ---------------------------------
           Name:      Ming Yang
           Position:  CEO

YU: Sole owner of Shouguang City Qingshuibo Area


Signed by: /s/ Wenbo Yu
           ---------------------------------
           Name:      Wenbo Yu

As to Section 2.2(a) only:

AGREED as of the date first above written:

GUFR: GULF RESOURCES, INC.


Signed by: /s/ Ming Yang
           ---------------------------------
           Name:      Ming Yang
           Position:  CEO


<PAGE>

Schedule 1

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Shouguang City Qinshuibo Area Asset checklist

Checked Time               Fixed Asset                       Unit                           Quantity
- ------------               -----------                       ----                           --------
<S>                        <C>                               <C>                            <C>
February/9/2007            Office                                                           21
February/9/2007            Plant                             6,720 square meter             1
February/9/2007            Garage                                                           1
February/9/2007            Boiler                            0.2 ton                        1
February/9/2007            Underwater pump                                                  23
February/9/2007            Power cable                                                      100 meter
February/9/2007            Water container                   4.5 square meter               1
February/9/2007            Generator                                                        1
February/9/2007            Stove                                                            1
February/9/2007            PVC pipe                                                         500 meter
February/9/2007            Vaporizer                                                        2
February/9/2007            Stove Operating Room                                             1
February/9/2007            Shower Room                                                      1
February/9/2007            Sulfur stove                                                     1
February/9/2007            Washing Tower                                                    1
February/9/2007            Precipitation Cylinder                                           1
February/9/2007            Water Pump                                                       1
February/9/2007            Clean water processing pool       60 cubic meter                 1
February/9/2007            Finalized pool                    210 cubic meter                1
February/9/2007            sulfuric acid container           13 cubic meter                 1
February/9/2007            Liquid Chlorine cylinder                                         20
February/9/2007            brimstone storage                                                3
February/9/2007            Control Room                                                     1
February/9/2007            Laboratory                                                       1
February/9/2007            Blowing Tower                                                    1
February/9/2007            Receiving Tower                                                  1
February/9/2007            Motor                                                            1
February/9/2007            Brine Pool                        6000 cubic meter               1
February/9/2007            High-Voltage wire set                                            5
February/9/2007            Bromine well                                                     575
February/9/2007            convey trench                                                    13,451meter

<CAPTION>
                           Raw Material
                           ------------
<S>                        <C>                               <C>                            <C>
February/9/2007            Sulfuric Acid                     ton                            5.8
February/9/2007            Brimstone                         ton                            22.5
February/9/2007            Coal                              ton                            26.57
February/9/2007            Liquid Chlorine                   ton                            15
- -------------------------------------------------------------------------------------------------------
</TABLE>

Checker:Min Li             Witness:JinLiang Xu               Owner: Wenbo Yu


<PAGE>

Schedule 2
Leased Property Description

Shouguang City Qinshuibo Area

Area: 7.47 square-kilometers
Lease Period: 50 years (1/1/2003-12/31/2052)
Lease Payment: (Annual Rent of $2,564.1/ square-kilometer, totaled $957,692)
Payment terms: One-time payment paid off by YU.
Ownership: The properties and mining rights of the lands above and underground
120 meters are belonged to owner.


<PAGE>

EXHIBIT A
FORM OF PROMISSORY NOTE

SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED

PROMISSORY NOTE

NO. ___                      $____________               ______, 2007

FOR VALUE RECEIVED, the undersigned, Shouguang City Haoyuan Chemical Company
Limited, a company of limited liabilities incorporated and validly existing
under the laws of China (the "Maker"), hereby promises to pay to the order of
Wenbo Yu (the "Payee"), the principal amount of _________________, all in
accordance with the provisions of this Promissory Note.

1. Payment of Principal. The full amount of the principal shall be due and
payable on or before__________________ (the "Maturity Date").

2. No Interest. Under no circumstances shall interest accrue or be charged on
the unpaid principal balance of this Promissory Note.

3. Method of Payment. Payments hereunder shall be in lawful money of the United
States and shall be made to Payee at the following address or at such other
place as Payee may designate to Maker in writing: c/o
____________________________________________________.

4. Unconditional Payment Obligation. No provision of this Promissory Note shall
alter or impair the obligation of the Maker, which is absolute and
unconditional, to pay the principal of this security deposit at the time and
place and in the currency herein prescribed.

5. Governing Law. This promissory note shall be construed in accordance with the
laws of the State of New York, without regard to its conflicts of laws rules.

6. Notices. All notices, requests, demands and other communications with respect
to this security deposit shall be given in person or forwarded by mail, postage
prepaid, registered or certified mail, with return receipt requested, addressed
to the party's address. Any notice, request, demand or communication shall be
deemed validly given and received upon delivery if given in person, and on the
5th business day after deposit in the mail if given by mail as provided for in
the preceding sentence.


<PAGE>

IN WITNESS WHEREOF, the Maker has executed and delivered this Promissory Note
effective as of , 2007.

                                 SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED


                                 By:
                                     -------------------------------------------
                                     Ming Yang
                                     Chief Executive Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>3
<FILENAME>e601958_ex99-2.txt
<DESCRIPTION>FORM OF PROMISSORY NOTE
<TEXT>

                            FORM OF PROMISSORY NOTE

SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED

PROMISSORY NOTE

NO. ___                      $____________               ______, 2007

FOR VALUE RECEIVED, the undersigned, Shouguang City Haoyuan Chemical Company
Limited, a company of limited liabilities incorporated and validly existing
under the laws of China (the "Maker"), hereby promises to pay to the order of
Wenbo Yu (the "Payee"), the principal amount of _________________, all in
accordance with the provisions of this Promissory Note.

1. Payment of Principal. The full amount of the principal shall be due and
payable on or before__________________ (the "Maturity Date").

2. No Interest. Under no circumstances shall interest accrue or be charged on
the unpaid principal balance of this Promissory Note.

3. Method of Payment. Payments hereunder shall be in lawful money of the United
States and shall be made to Payee at the following address or at such other
place as Payee may designate to Maker in writing: c/o
____________________________________________________.

4. Unconditional Payment Obligation. No provision of this Promissory Note shall
alter or impair the obligation of the Maker, which is absolute and
unconditional, to pay the principal of this security deposit at the time and
place and in the currency herein prescribed.

5. Governing Law. This promissory note shall be construed in accordance with the
laws of the State of New York, without regard to its conflicts of laws rules.

6. Notices. All notices, requests, demands and other communications with respect
to this security deposit shall be given in person or forwarded by mail, postage
prepaid, registered or certified mail, with return receipt requested, addressed
to the party's address. Any notice, request, demand or communication shall be
deemed validly given and received upon delivery if given in person, and on the
5th business day after deposit in the mail if given by mail as provided for in
the preceding sentence.

<PAGE>

IN WITNESS WHEREOF, the Maker has executed and delivered this Promissory Note
effective as of , 2007.

                                 SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED

                                 By:
                                     -------------------------------------------
                                     Ming Yang
                                     Chief Executive Officer


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>4
<FILENAME>e609158_ex99-3.txt
<DESCRIPTION>PRESS RELEASE DATED APRIL 10, 2007
<TEXT>

                Gulf Resources Announces Asset Purchase Agreement
                       with Shouguang City Qinshuibo Area

 Acquisition expected to add approximately 5,300 tons of potential incremental
     annual bromine production capacity equating to $10 million in revenue

LOS ANGELES and SHENZHEN, China, April 10, 2007 /Xinhua-PRNewswire/ -- Gulf
Resources, Inc. (the "Company") (OTC Bulletin Board: GUFR - News) a leading
producer of Bromine and crude salt in China through its wholly-owned subsidiary
Shuoguang City Haoyuan Chemical Company Limited (SCHC), announced today it
signed a definitive agreement to acquire substantially all of the assets of
Shouguang City Qinshuibo Area, a bromine producer located in close proximity to
SCHC for approximately $5.1 million in total consideration.

The assets include a 50-year mineral rights and land lease covering 1,846 acres,
or 7.5 square kilometers of property, with proven reserves of 34,400 of bromine
being serviced by 575 wells. Additional assets to be conveyed with the purchase
include the related production facility, pipelines and other production
equipment, as well as the current buildings and other assets on the property.
The Company executed an asset purchase agreement with Mr. WENBO YU, the sole
owner, on April 4th, 2007.

The facility is currently producing approximately 3,500 tons of bromine
annually, which equates to $6.5 million in revenues at current market prices.
Gulf Resources will implement a new processing facility and associated pipelines
during 2007. These improvements are budgeted at approximately $1 million and are
expected to initially increase the annual bromine production output to 4,700
tons, ultimately reaching 5,300 tons during 2008. In addition, the Company
estimates the property will yield approximately 125,000 tons of annual crude
salt production, adding $1.3 million in incremental revenue potential.

"The acquisition of Shouguang City Qinshuibo Area is expected to ultimately
increase our overall bromine production capacity by approximately 50 percent, to
over 15,000 tons annually and be accretive to 2007 earnings," stated Ming Yang,
CEO, Gulf Resources, Inc. This acquisition is consistent with our strategic plan
to acquire other local bromine producers and their reserves, while increasing
output by expanding and improving production facilities. We will leverage our
valuable production and distribution licenses, while leveraging economies of
scale and a stronger distribution platform for future margin enhancements. The
fifty year lease has been paid in full and significantly increases our total
bromine reserves and crude salt production capabilities."

Consideration for the asset purchase includes approximately $3 million in cash,
which will be secured by a promissory note and approximately $2 million worth of
restricted Gulf Resources (GUFR) common stock equating to approximately 780,000
shares based on an April 4, 2007 closing share price of $2.55 per share.


<PAGE>

The acquisition is subject to various conditions, including applicable
regulatory approvals, and transaction was formerly closed on April 7, 2007.
Further details on the terms of this transaction can be found in the Company's
8-K filed with the Securities and Exchange Commission on April 10, 2007.

Gulf Resources, Inc.

Gulf Resources, Inc, operates through two wholly-owned subsidiaries: SCHC which
is engaged in manufacturing and trading Bromine and Crude Salt in China. Bromine
is used to manufacture a wide variety of bromine compounds used in industry and
agriculture, and SYCI which manufactures and sells chemical products utilized in
oil & gas field explorations and as papermaking chemical agents. For more
information, please visit http://www.gulfresourcesco.com.

Safe Harbor Statement:

Certain statements in this news release may contain forward-looking information
about Gulf Resources and its subsidiaries business and products within the
meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the
Securities Exchange Act of 1934, and are subject to the safe harbor created by
those rules. The actual results may differ materially depending on a number of
risk factors including, but not limited to, the following: the ability of Gulf
to complete the asset purchase of Shouguang City Qinshuibo Area, the general
economic and business conditions in the PRC, product development and production
capabilities, shipments to end customers, market acceptance of new and existing
products, additional competition from existing and new competitors for bromine
and crude salt, changes in technology, and various other factors beyond its
control. All forward-looking statements are expressly qualified in their
entirety by this Cautionary Statement and the risks factors detailed in the
Company's reports filed with the Securities and Exchange Commission. Gulf
Resources undertakes no duty to revise or update any forward-looking statements
to reflect events or circumstances after the date of this release.

Investor Relations Contact:
Ethan Chuang (714) 858-1147
Ethan@gulfresourcesco.com

Matthew Hayden
HC International, Inc.
(858) 704-5065
matt@haydenir.com


Source: Gulf Resources, Inc.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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