Company: GURE
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001193805-25-001184
Chunk: 23

Company: GULF RESOURCES, INC.
Filing Date: 2025-08-13
Form: 10-Q
Item: Item 1
Chunk 23
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 of each anniversary date. These leases
have no purchase option at the end of the lease term and were classified as operating leases prior to and as of January 1, 2019 when the
new lease standard was adopted. Prior to January 2019, the prepaid land lease was amortized on a straight line basis. As of January 1,
2019, all the leases in which term has commenced and were in use were classified as operating lease right-of-use assets (“ROU”).
See Note 8.

In December 2017, the Company paid a one lump
sum upfront amount of $8,883,165 for a 50-year lease of a parcel of land at Bohai Marine Fine Chemical Industrial Park (“Bohai”)
for the new chemical factory under construction. There is no purchase option at the end of the lease term. This was classified as an
operating lease prior to and as of January 1, 2019. The land use certificate was issued on October 25, 2019. The lease term expires on
August 12, 2069. The amount paid was recorded as prepaid land leases, net of current portion in the consolidated balance sheet as of
June 30 2025 and December 31, 2024. As of June 30, 2025, the prepaid land lease increased to $9,242,933 due to an additional amount paid
for stamp duty and related land use rights fees. Amortization of this prepaid land lease will commence when the chemical factory is completed
and placed in service.

    13 

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

 (Expressed in U.S. dollars)

(UNAUDITED)

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, NET

    June 30, 2025 
    December 31, 2024
  
    At cost: 

    Mineral rights 
    $2,694,068  
    $2,682,882 
  
    Buildings 
     29,542,729  
     68,476,868 
  
    Plant and machinery 
     144,439,139  
     143,839,420 
  
    Furniture, fixtures and office equipment 
     1,441,073  
     1,435,090