Company: GURE
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001193805-25-000461
Chunk: 207

Company: GULF RESOURCES, INC.
Filing Date: 2025-04-11
Form: 10-K
Item: Item 3
Chunk 207
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 follows:

Level 1 inputs to the valuation methodology
are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation
methodology include quoted prices for identical or similar assets and liabilities in active markets or in inactive markets, and inputs
that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 inputs to the valuation methodology
are unobservable and significant to the fair value.

The carrying amounts of the Company’s
financial instruments approximate their fair values because of their short-term nature. The Company’s financial instruments include
cash, accounts receivable, amounts due to related parties, accounts payable and other current payables. There were no material unrecognized
financial assets and liabilities as of December 31, 2024 and 2023.

(v)      Loss Contingencies

The Company accrues for loss contingencies
relating to legal matters, including litigation defense costs, claims and other contingent matters, including liquidated damage liabilities,
when such liabilities become probable and reasonably able to be estimated. Such estimates may be based on advice from third parties or
on management’s judgment, as appropriate. Revisions to accruals are reflected in income (loss) in the period in which different
facts or information become known or circumstances change that affect the Company’s previous assumptions with respect to the likelihood
or amount of loss. Amounts paid upon the ultimate resolution of such liabilities may be materially different from previous estimates.

(w)      Stock-based Compensation

The Company accounts for stock-based
compensation under the provisions of FASB ASC 718, Compensation Stock Compensation, which requires the measurement and recognition
of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The
Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of
the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.
In June 2018, the FASB issued ASU No. 201807, Compensation - Stock Compensation (Topic 7I8), Improvements to Nonemployee
Share-Based Payment Accounting. The amendments in this Update expand the scope of Topic 718 to include share-based payment transactions
for acquiring goods and services from nonemployees. Prior to this Update, Topic 718 applied only to share-based transactions to