Company: GURE
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001193805-25-000461
Chunk: 37

Company: GULF RESOURCES, INC.
Filing Date: 2025-04-11
Form: 10-K
Item: Item 1A
Chunk 37
---
 and non- compliance. The occurrence of such incidents
could negatively impact our business operations and our relationships with customers and employees, and damage our reputation. If we or
our third-party service providers are unable to avert security breaches and cyber- attacks, we could incur significantly higher costs,
including remediation costs to repair damage caused by the breach, costs to deploy additional personnel and network protection technologies,
train employees and engage third-party experts and consultants, as well as litigation costs resulting from the incident. These costs,
which could be material, could adversely impact our results of operations in the period in which they are incurred and may not meaningfully
limit the success of future attempts to breach our information technology systems.

Uncertainties with respect
to the PRC legal system could adversely affect us.

The PRC legal
system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system
may be cited for reference but have limited precedential value.

In 1979,
the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters generally. The overall
effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investments
in the PRC. However, the PRC has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently
cover all aspects of economic activities in the PRC. In particular, the interpretation and enforcement of these laws and regulations involve
uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions
and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection
we enjoy. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual
rights or tort claims. In addition, these regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats
in attempts to extract payments or benefits from us.

Furthermore,
the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or
at all and may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime
after the violation. In addition, any administrative and court proceedings in the PRC may be protracted, resulting in substantial costs
and diversion of resources and management attention.

If the Chinese government
were