Company: GURE
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001193805-25-000461
Chunk: 126

Company: GULF RESOURCES, INC.
Filing Date: 2025-04-11
Form: 10-K
Item: Item 1B
Chunk 126
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    CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 
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    CASH AND CASH EQUIVALENTS - END OF YEAR 
    $—  
    $— 

    S-2 

(i)Basis of presentation

In the condensed parent-company-only
financial statements, the Company’s investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries
since the date of acquisition. The Company’s share of net loss of its subsidiaries is included in condensed statements of comprehensive
loss using the equity method. These condensed parent- company-only financial statements should be read in connection with the consolidated
financial statements and notes thereto.

As of December 31, 2024, the
Company itself has no purchase commitment, capital commitment and operating lease commitment.

(ii)Restricted Net Assets

Schedule I of Rule 5-04 of Regulation
S-X requires the condensed financial information of registrant shall be filed when the restricted net assets of consolidated subsidiaries
exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of the above test,
restricted net assets of consolidated subsidiaries shall mean that amount of the registrant’s proportionate share of net assets
of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred
to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party (i.e., lender,
regulatory agency, foreign government, etc.).

The condensed parent company
financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X as the restricted net assets of the
subsidiaries of Gulf Resources, Inc. exceed 25% of the consolidated net assets of Gulf Resources, Inc. The ability of the Company’s
Chinese operating subsidiaries to pay dividends may be restricted due to the foreign exchange control policies and availability of cash
balances of the Chinese operating subsidiaries. Because a significant portion of the Company’s operations and revenues are conducted
and generated in China, a significant portion of the revenues being earned and currency received are denominated in RMB. RMB is subject
to the exchange control regulation in China, and, as a result, the Company may be unable to distribute any dividends outside of China
due to PRC exchange control regulations that restrict the Company’s ability to convert RMB