Company: GURE
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001193805-25-001627
Chunk: 24

Company: GULF RESOURCES, INC.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 1
Chunk 24
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the lease contracts were paid in one lump sum upfront and some are paid annually at the beginning 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 September 30 2025 and
December 31, 2024. As of September 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.

The above leased-land had done the impairment of
$6,991,921
based on the independent third party evaluation report , and further been auctioned by the court due to the compulsory execution
related to litigation. Please see note 16 for more details.

    9 

GULF RESOURCES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025

 (Expressed in U.S. dollars)

(UNAUDITED)

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consist of the following:

Property, Plant and Equipment, Net - Schedule of Property, Plant
and Equipment, Net

    September 30,  2025