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<SEC-DOCUMENT>0001193805-07-001629.txt : 20070611
<SEC-HEADER>0001193805-07-001629.hdr.sgml : 20070611
<ACCEPTANCE-DATETIME>20070611121539
ACCESSION NUMBER:		0001193805-07-001629
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20070608
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:		20070611
DATE AS OF CHANGE:		20070611

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:		07911692

	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>e602256_8k-gulf.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):
                                  June 8, 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.

Item 2.01 Completion of Acquisition or Disposition of Assets

      On June 8, 2007, Gulf Resources, Inc. (the "Registrant"), Shuoguang City
Haoyuan Chemical Company Limited ("SCHC"), the Registrant's wholly-owned
subsidiary, and Dong Hua Yang ("Seller") completed an Asset Purchase Agreement
(the "Agreement") pursuant to which SCHC acquired substantially all of the
assets owned by the Seller in the Dong Ying City Liu Hu Area (the "Assets") in a
stock and cash transaction valued at $6,667,538. Pursuant to the Agreement, in
exchange for the Assets, the Seller received 409,795 newly issued shares of the
Registrant's common stock, $4,837,233 in cash and interest-free promissory note
in the aggregate principal amount of $889,005, with a maturity date of July 8,
2007. A copy of the Agreement is filed as Exhibit 10.1 to this Current Report.

      The Registrant, SCHC and the Seller made customary representations,
warranties and covenants in the Agreement.

      The Assets include a 50-year mineral rights and land lease covering
2,317.85 acres of real property, with annual production of 4,000 tons of bromine
being serviced by 405 wells. The assets acquired include the 405 wells and 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 June 8, 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 $889,005, which is
due and payable on July 8, 2007, and which contains customary terms and
conditions. A copy of the form of the promissory note is filed as Exhibit 10.2
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 409,795 shares of
the Registrant's common stock.

      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
<PAGE>

      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.

      10.1  Asset Purchase Agreement

      10.2  Form of Promissory Note

      99.1  Press Release dated June 11 , 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: June 10, 2007

                                       GULF RESOURCES, INC.

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


                                       4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>e602256_ex10-1.txt
<DESCRIPTION>ASSET PURCHASE AGREEMENT
<TEXT>

                            ASSET PURCHASE AGREEMENT

                                     BETWEEN

                 SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED

                                       AND

                                  DONG HUA YANG

                                   DATED AS OF

                                  JUNE 8, 2007

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

INDEX OF SCHEDULES AND EXHIBITS

 Exhibits:

A. Form of Promissory Note Schedules:

1. Dong Ying City Liu Hu Area Asset Checklist

2. Leased Property Description

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

This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of June 8,
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 validly existing
under the laws of China ("SCHC"), a subsidiary of Gulf Resources, Inc.("GUFR");
and

(2) DONG HUA YANG, ("YANG"), an individual resident of China who owns private
land located in the Dong Ying City Liu Hu Area.

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


                                       1
<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 YANG, both have reached an AGREEMENT reciprocally
as follows:

1. CERTAIN DEFINITIONS

"Ordinary Course of Business" shall mean an action taken by YANG 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 June 8, 2007 and in
no event later than June 8, 2007 (the "Closing Date").

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

"GUFR Common Stock" shall mean the 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 YANG 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 YANG's right, title and interest in and to all
assets owned by YANG located at the Dong Ying City Liu Hu 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, YANG 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 YANG 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 YANG the
Purchase Price Shares (as hereinafter defined) within 45 days after the Closing
and (b) SCHC shall pay to YANG the sum of $4,575,761 in cash or readily
available funds within 5 days after the Closing. At Closing, SCHC shall issue to
YANG a promissory note in the principal amount of $889,005 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 $6,667,538
(the "Purchase Price") and that the Purchase Price is based upon an approximate
valuation of the Dong Ying City Liu Hu Area at $6,667,538. The number of
"Purchase Price Shares" shall be equal to the result obtained by dividing


                                       2
<PAGE>

$941,300 by the average closing price of GUFR Common Stock (the "Market Price")
as quoted by the OTC Bulletin Board during the 15 trading days immediately
preceding the Closing Date. The parties hereby agree that the Market Price is
$2.297 and that the number of Purchase Price Shares to be issued pursuant hereto
is 409,795.

2.3 As a result of Agreement, the Purchased Assets including, without
limitation, annual estimated bromine production capacity of 4,000 tons,
buildings, equipment, wells, pipelines, and power circuits will be owned by
SCHC; provided, however, that any and all debts, obligations and liabilities of
YANG relating to the Purchased Assets and the Leased Property are specifically
excluded.

2.4 YANG covenants that the $653,680 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 YANG to SCHC,
will be YANG's full responsibility.

2.5 Upon execution of this Agreement by each of SCHC and YANG, SCHC shall
deliver to YANG a security deposit of $261,472 (the "Security Deposit"), to be
held in escrow by YANG pending the Closing. At Closing the Security Deposit
shall be released to YANG, 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 YANG shall return the
Security Deposit to SCHC within 30 days, provided, however, that YANG 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 YANG 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 YANG represents and warrants to SCHC the following:

(a) Authority. YANG 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 YANG 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. YANG 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,


                                       3
<PAGE>

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.

(d) Disclosure. No representation or warranty by YANG 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
YANG 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 YANG represents and warrants respectively to the other as
follows:

(a) Each of SCHC and YANG 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 YANG 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 YANG
made in this Agreement, any other agreement or instrument delivered by YANG at
the Closing;

(b) any damages or claims asserted against the Purchaser on account of any
liability of YANG 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 YANG, arising out
of his business, or the use, operation or possession of the Purchased Assets,
through the Closing, or thereafter.


                                       4
<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 YANG 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
YANG 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.


                                       5
<PAGE>

IN WITNESS HEREOF, SCHC and YANG 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


YANG: Sole owner of Dong Ying City Liu Hu Area

Signed by: /s/ Dong Hua Yang
           ---------------------------------
Name:      Dong Hua Yang


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


                                       6
<PAGE>

Schedule 1

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Dong Ying City Liu Hu Area Asset checklist

Checked Time               Fixed Asset                       Unit                              Quantity

<S>                        <C>                               <C>                               <C>
May/9/2007                 Bromine Area                      Acre                              2317.85
May/9/2007                 Plant                             6,500 square meter                1
May/9/2007                 Garage                                                              1
May/9/2007                 Boiler                            0.2 ton                           1
May/9/2007                 Underwater pump                                                     23
May/9/2007                 Power cable                                                         275 meter
May/9/2007                 Water container                   4.5 square meter                  1
May/9/2007                 Generator                                                           1
May/9/2007                 Stove                                                               1
May/9/2007                 PVC pipe                                                            650 meter
May/9/2007                 Vaporizer                                                           2
May/9/2007                 Stove Operating Room                                                1
May/9/2007                 Shower Room                                                         1
May/9/2007                 Sulfur stove                                                        1
May/9/2007                 Washing Tower                                                       1
May/9/2007                 Precipitation Cylinder                                              1
May/9/2007                 Water Pump                                                          1
May/9/2007                 sulfuric acid container           15 cubic meter                    1
May/9/2007                 Liquid Chlorine cylinder                                            20
May/9/2007                 brimstone storage                                                   3
May/9/2007                 Control Room                                                        1
May/9/2007                 Laboratory                                                          1
May/9/2007                 Blowing Tower                                                       1
May/9/2007                 Receiving Tower                                                     1
May/9/2007                 Motor                                                               1
May/9/2007                 Brine Pool                        10,000 cubic meter                1
May/9/2007                 High-Voltage wire set                                               1
May/9/2007                 Bromine well                                                        405
May/9/2007                 convey trench                                                       8,730meter

                           Raw Material

May/9/2007                 Sulfuric Acid                     ton                               8.2
May/9/2007                 Brimstone                         ton                               17.45
May/9/2007                 Coal                              ton                               30.15
May/9/2007                 Liquid Chlorine                   ton                               13.00
- ---------------------------------------------------------------------------------------------------------
</TABLE>

Checker:Min Li                                               Owner:Dong Hua Yang


                                       7
<PAGE>

Schedule 2
Leased Property Description

Dong Ying City Liu Hu Area

Area: 2317.85 Acre
Lease Period: 50 years (April/30/2003-April/29/2052)
Lease Payment: (Annual Rent of $5.64/ Acre, totaled $653,680)
Payment terms: One-time payment paid off by YANG.
Ownership: The properties and mining rights of the lands above and underground
120 meters are belonged to owner.


                                       8
<PAGE>

EXHIBIT A
FORM OF PROMISSORY NOTE

SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED

PROMISSORY NOTE

                NO.  1                     $                              , 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
Dong Hua Yang (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 __ Wo Pu Town, Qing He Oil
Extraction Plant 2nd Living District, Shouguang City, Shandong Province, China.

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.


                                       9
<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


                                       10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>e602256_ex10-2.txt
<DESCRIPTION>FORM OF PROMISSORY NOTE
<TEXT>

PROMISSORY NOTE

SHOUGUANG CITY HAOYUAN CHEMICAL COMPANY LIMITED

PROMISSORY NOTE

                NO.  1                     $  889,005            June 8th, 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
Dong Hua Yang (the "Payee"), the principal amount of $889,005, 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 July 8th , 2007 (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 __ Wo Pu Town, Qing He Oil
Extraction Plant 2nd Living District, Shouguang City, Shandong Province, China.

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-99.1
<SEQUENCE>4
<FILENAME>e602256_ex99-1.txt
<DESCRIPTION>PRESS RELEASE
<TEXT>

      Gulf Resources Announces Asset Purchase of Dong Ying City Liu Hu Area

  Acquisition of 2,318 acres is expected to yield approximately 3,700 tons of
annual bromine production equating to $6.85 million in revenue and $1.8 million
                                 in net income

LOS ANGELES and SHENZHEN, China, June 11, 2007 -- 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 that on June 8, 2007 it
completed an asset purchase agreement with Dong Hua Yang, an individual who
controls bromine production property in the Dong Ying City Liu Hu area, for
approximately $6.7 million in total consideration.

The key asset includes a 50-year property lease covering approximately 2,318
acres, or 9.38 square kilometers, which is located in close proximity to SCHC.
The lease is paid in full through maturation on April 30, 2052. The property
maintains proven reserves of approximately 235,000 tons of bromine. Additional
assets to be conveyed in this purchase include the existing bromine production
infrastructure, wells, pipelines, power circuits, and other equipment, as well
as the existing buildings on the property. The property and assets carry a book
value of approximately $7.5 million, which management believes is approximately
seventy percent of the current market value.

The facility is currently producing approximately 3,700 tons of bromine
annually, which equates to $6.85 million in revenues and $1.8 million in net
income at current market prices and is operating at 69 percent capacity
utilization. Gulf Resources plans to invest approximately $3.3 million in new
equipment and property improvements during 2007. These improvements are expected
to increase overall production output by 21.6 percent to more than 4,500 tons of
bromine annually with a target plant utilization rate of between 84 to 89
percent.

"The acquisition of the Dong Ying City Liu Hu area is expected to increase
SCHC's overall bromine production output by approximately 24 percent to over
19,100 tons annually, and salt production by approximately 23.4 percent to
97,500 tons annually and be accretive to 2007 earnings," stated Ming Yang, CEO
of Gulf Resources, Inc. "This acquisition is consistent with our stated plan to
acquire and consolidate local bromine producers while expanding our collective
production capacity and overall output. As the government continues to closely
monitor unlicensed operators, the bromine production and distribution licenses
we maintain have enabled the Company to purchase new reserves at attractive
valuations while providing owners with a way to monetize under utilized assets,
a true win-win for both parties. In addition, this acquisition is expected to
increase our proven bromine reserves to approximately 1.05 million tons. Given
the long duration of these associated land leases, we are building a recurring
business model with attractive margins and strong cash flow, which management
expects will drive significant shareholder value in the coming years."

<PAGE>

Consideration for the asset purchase includes approximately $4.6 million in cash
at closing, a promissory note for approximately $900,000 and 409,795 shares of
restricted Gulf Resources (GUFR) common stock valued at $941,300 based on a
stock price of $2.30 per share.

This acquisition was completed on June 8, 2007 and further details on the terms
of this transaction can be found in the Company's 8-K to be filed with the
Securities and Exchange Commission on June 11, 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 Dong Ying City Liu Hu 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 (310) 470-2886
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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