SCHEDULE I - PARENT ONLY FINANCIAL INFORMATION

12 Months Ended

Dec. 31, 2020

Condensed Financial Information Disclosure [Abstract]

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,
	2020			2019
Current Assets
Prepayments and deposits	$	—		$	—
Total Current Assets		—			—
Non-Current Assets
Interests in subsidiaries		214,505,860			200,057,813
Amounts due from group companies		62,987,953			63,546,235
Total non-current assets		277,493,813			263,604,048
Total Assets	$	277,493,813		$	263,604,048
Liabilities and Stockholders’ Equity
Current Liabilities
Other payables and accrued expenses	$	326,839		$	354,247
Amounts due to group companies		142,701			142,701
Total Current Liability		469,540			496,948
Total Liabilities	$	469,540		$	496,948
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; 10,043,307and 9,563,257 shares issued; and 9,997,477 and 9,517,427 shares outstanding as of December 31, 2020 and December 31, 2019		24,139			23,904
Treasury stock; 45,830 and 45,830  shares as of December 31, 2020 and December 31, 2019 at cost		(510,329	)		(510,329	)
Additional paid-in capital		97,435,316			95,043,388
Retained earnings unappropriated		151,388,356			159,808,400
Retained earnings appropriated		24,233,544			24,233,544
Cumulative translation adjustment		4,453,247			(15,491,807	)
Total Stockholders’ Equity		277,024,273			263,107,100
Total Liabilities and Stockholders’ Equity	$	277,493,813		$	263,604,048

Condensed Statements of Comprehensive Loss

	Years Ended December 31,
	2020			2019
OPERATING EXPENSES
General and administrative expenses	$	(2,922,671	)	$	(642,151	)
TOTAL OPERATING EXPENSES		(2,922,671	)		(642,151	)
OTHER EXPENSES
Interest expense		(369	)		(385	)
TOTAL OTHER EXPENSES		(369	)		(385	)
TOTAL EXPENSES		(2,923,040	)		(642,536	)
Equity in net Loss of subsidiaries		(5,497,004	)		(25,157,509	)
LOSS BEFORE INCOME TAXES		(8,420,044	)		(25,800,045	)
INCOME TAXES		—			—
NET LOSS	$	(8,420,044	)	$	(25,800,045	)

Condensed Statements of Cash Flows

	Years Ended December 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(8,420,044	)	$	(25,800,045	)
Adjustments to reconcile net Loss to net cash used in operating activities:
Equity Loss in unconsolidated subsidiaries		5,497,004			25,157,509
Stock-based compensation expense-options		2,350,250			45,900
Shares issued from treasury stock for services		—			21,600
Changes in assets and liabilities:
Other payables and accrued expenses		14,508			103,754
Net cash used in operating activities		(558,282	)		(471,282	)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from group companies		558,282			471,282
Net cash provided by financing activities		558,282			471,282
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, 2020, 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.