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SCHEDULE I – PARENT ONLY FINANCIAL INFORMATION
 12 Months Ended
Dec. 31, 2023
Condensed Financial Information Disclosure [Abstract]  
SCHEDULE I – PARENT ONLY FINANCIAL INFORMATION

SCHEDULE I – PARENT ONLY FINANCIAL INFORMATION

 

The following presents condensed parent company only financial information of Gulf Resources, Inc.

 

Condensed Balance Sheets

 

                 
   As of December 31,
   2023  2022
       
Current Assets          
Prepayments and deposits  $—   $— 
Total Current Assets   —    — 
Non-Current Assets          
Interests in subsidiaries   144,749,406    210,790,285 
Amounts due from group companies   62,288,744    62,642,639 
Total non-current assets   207,038,150    273,432,924 
Total Assets  $207,038,150   $273,432,924 
           
Liabilities and Stockholders’ Equity          
Current Liabilities          
Other payables and accrued expenses  $185,042   $209,908 
Amounts due to related parties   1,462,110    1,462,110 
Amounts due to group companies   142,702    142,701 
Total Current Liability   1,789,854    1,814,719 
           
Total Liabilities  $1,789,854   $1,814,719 
　          
Stockholders’ Equity          
PREFERRED STOCK; $0.001 par value; 1,000,000 shares authorized; none outstanding  $—   $— 
COMMON STOCK; $0.0005 par value; 80,000,000 shares authorized; 11,012,754 and 10,717,754 shares issued; and  10,726,924 and 10,431,924 shares outstanding as of December 31, 2023 and December 31, 2022   24,623    24,476 
Treasury stock; 285,830  shares as of December 31, 2023and December 31, 2022 at cost   (1,372,673)   (1,372,673)
Additional paid-in capital   101,688,262    101,237,059 
Retained earnings unappropriated   96,294,256    158,089,535 
Retained earnings appropriated   26,667,097    26,667,097 
Cumulative translation adjustment   (18,053,269)   (13,027,289)
Total Stockholders’ Equity   205,248,296    271,618,205 
Total Liabilities and Stockholders’ Equity  $207,038,150   $273,432,924 

 

 

Condensed Statements of Comprehensive Loss

 

                 
   Years Ended December 31,
   2023  2022
       
OPERATING EXPENSES          
General and administrative expenses  $(780,379)  $(1,057,893)
TOTAL OPERATING EXPENSES   (780,379)   (1,057,893)
OTHER EXPENSES          
Interest expense   —    — 
TOTAL OTHER EXPENSES   —    — 
TOTAL EXPENSES   (780,379)   (1,057,893)
Equity in net Loss of subsidiaries   (61,014,900)   11,117,343 
LOSS BEFORE INCOME TAXES   (61,795,279)   10,059,450 
INCOME TAXES   —    — 
NET LOSS  $(61,795,279)  $10,059,450 

 

Condensed Statements of Cash Flows

 

                 
   Years Ended December 31,
   2023  2022
       
CASH FLOWS FROM OPERATING ACTIVITIES   　    　 
Net Loss  $(61,795,279)  $10,059,450 
Adjustments to reconcile net Loss to
net cash used in operating activities:		          
Equity Loss in unconsolidated subsidiaries   61,014,900    11,117,343 
Stock-based compensation expense-options   451,350    668,000 
Shares issued from treasury stock for services   —    — 
Changes in assets and liabilities:          
Other payables and accrued expenses   (23,152)   (869,375)
Net cash used in operating activities   (352,181)   (1,259,268)
CASH FLOWS FROM FINANCING ACTIVITIES          
Advances from group companies   352,181    1,259,268 
Net cash provided by financing activities   352,181    1,259,268 
NET INCREASE IN CASH AND CASH EQUIVALENTS   —    — 
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR   —    — 
CASH AND CASH EQUIVALENTS - END OF YEAR  $—   $— 

 

 

  (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, 2023, 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 into US Dollars.