Company: GURE
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001193805-25-001184
Chunk: 15

Company: GULF RESOURCES, INC.
Filing Date: 2025-08-13
Form: 10-Q
Item: Item 1
Chunk 15
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 an amount we deem adequate for doubtful accounts. If management were to make different
judgments or utilize different estimates, material differences in the amount of our reported operating expenses could result.

(g)  Concentration
of Credit Risk

The Company is exposed to credit risk in the normal
course of business, primarily related to accounts receivable and cash and cash equivalents. Substantially all of the Company’s cash
and cash equivalents are maintained with financial institutions in the PRC, namely, Industrial and Commercial Bank of China Limited, China
Merchants Bank Company Limited and Sichuan Rural Credit Union, which are not insured or otherwise protected. The Company placed $7,736,081
and $10,075,162 with these institutions as of June 30, 2025 and December 31, 2024, respectively.  The Company has not experienced
any losses in such accounts in the PRC.

Concentrations of credit risk with respect to accounts receivable exists
as the Company sells a substantial portion of its products to a limited number of customers. However, such concentrations of credit risks
are limited since the Company performs ongoing credit evaluations of its customers’ financial condition and extends credit terms
as and when appropriate.

    8 

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

(Expressed in U.S. dollars)

(UNAUDITED)

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

(h)  Property,
Plant and Equipment

Property, plant and equipment are stated at cost
less accumulated depreciation and any impairment losses. Expenditures for new facilities or equipment, and major expenditures for betterment
of existing facilities or equipment are capitalized and depreciated, when available for intended use, using the straight-line method at
rates sufficient to depreciate such costs less 5% residual value over the estimated productive lives. All other ordinary repair and maintenance
costs are expensed as incurred.

Mineral rights are recorded at cost less accumulated
depreciation and any impairment losses. Mineral rights are amortized ratably over the term of the lease, or the equivalent term under
the units of production method, whichever is shorter.

Construction in process primarily represents direct
costs of construction of property, plant and equipment. Costs incurred are capitalized and transferred to