Company: GURE
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001193805-25-000461
Chunk: 486

Company: GULF RESOURCES, INC.
Filing Date: 2025-04-11
Form: 10-K
Item: Item 7A
Chunk 486
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 CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2024

(Expressed in U.S. dollars)

NOTE 1 – BASIS OF PRESENTATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

(ii)Chemical Segment

On November 24, 2017, the Company
received a letter from the Government of Yangkou County, Shouguang City notifying the Company to relocate its two chemical production
plants located in the second living area of the Qinghe Oil Extraction to the Bohai Marine Fine Chemical Industrial Park (“Bohai
Park”). This is because the two plants are located in a residential area and their production activities will impact the living
environment of the residents. This is as a result of the country’s effort to improve the development of the chemical industry, manage
safe production and curb environmental pollution accidents effectively, and ensure the quality of the living environment of residents.
All chemical enterprises which do not comply with the requirements of the safety and environmental protection regulations will be ordered
to shut down.

In December 2017, the Company
secured from the government the land use rights for its chemical plants located at the Bohai Park and in June 2018, the Company presented
a completed construction design draft and other related documents to the local authorities for approval. In January 2020, the Company
received the environmental protection approval by the government of Shouguang City, Shandong Province for the proposed Yuxin Chemical
factory. The Company began the construction on its new chemical facilities located at Bohai Marine Fine Chemical Industrial Park in June
2020 and basically completed the civil works by the end of June 2021. On November 15, 2021, the Company announced that due to the supply
chain issues as well as the electric restrictions in China, the delivery of some equipment, the equipment installation and testing and
beginning trial production at the chemical factory had been delayed. On February 22, 2022, the Company announced that discussions with
the government have convinced management that the electricity restrictions are being eased. Accordingly, the Company has contacted its
suppliers and will have the remainder of the equipment produced and delivered, so the Company can complete installation and begin testing
and trial production.

The Company believes this
relocation process will cost approximately $69
million in total. The Company incurred relocation costs comprising prepaid land lease, professional fees related to the design
of the new chemical factory, and progress payments