Company: GURE
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001193805-25-001627
Chunk: 38

Company: GULF RESOURCES, INC.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 1
Chunk 38
---
472  
     14,935,081 
  
    Valuation allowance 
     (25,426,472) 
     (14,935,081)
  
    Net deferred tax asset 
    $—  
    $— 

Deferred tax assets consist of future reversals of existing taxable
temporary differences and adequate future taxable income, exclusive of reversing deductible temporary differences. As of September 30,
2025 and 2024, valuation allowances were mainly provided against deferred tax assets caused by exploration costs and net operating loss
where it was determined it was more likely than not that the benefits of the deferred tax assets will not be realized due to their continuous
losses.

The increase in valuation allowance for the three-month
period ended September 30, 2025 is $9,138,862.

The decrease in valuation allowance for the three-month
period ended September 30, 2024 is $14,209.

The increase in valuation allowance for the nine-month
period ended September 30, 2025 is $10,491,391.

The decrease in valuation allowance for the nine-month
period ended September 30, 2024 is $71,237.

There were no unrecognized tax benefits and accrual
for uncertain tax positions as of September 30, 2025 and December 31, 2024 and no amounts accrued for penalties and interest for the three
and nine months ended September 30, 2025 and 2024.

    13 

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025

 (Expressed in U.S. dollars)

(UNAUDITED)

NOTE 18 – BUSINESS SEGMENTS

The Company has four reportable segments:  bromine, crude
salt, chemical products and natural gas. The reportable segments are consistent with how management views the markets served by the Company
and the financial information that is reviewed by its chief operating decision maker.

An operating segment’s performance is primarily
evaluated based on segment operating income, which excludes share-based compensation expense, certain corporate costs and other income
not associated with the operations of the segment. These corporate costs (income) are separately stated below and also include costs that
are related to functional areas such as accounting, treasury, information technology, legal, human resources, and internal audit. The
Company believes that segment