Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 19, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | KIWA BIO-TECH PRODUCTS GROUP CORP | |
Entity Central Index Key | 0001159275 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 19,484,375 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 10,099 | $ 7,859 |
Accounts receivable, net | 3,523,166 | 6,751,113 |
Prepaid expenses | 1,839,940 | 2,259,565 |
Rent deposits and other receivables | 366,460 | 323,362 |
Advance to suppliers | 23,007,464 | 15,763,198 |
Due from related parties - non-trade | 18,244 | 12,108 |
Inventories | 114,618 | 1,643,033 |
Deferred cost of goods sold | 2,517,777 | 4,929,855 |
Total current assets | 31,397,768 | 31,690,093 |
Property, plant and equipment, net | 117,785 | 93,181 |
Rent deposits-non current | 613 | |
Deposit for long-term investment | 728,268 | 727,155 |
Total non-current assets | 846,053 | 820,949 |
Total assets | 32,243,821 | 32,511,042 |
Current liabilities | ||
Accounts payable | 2,551,161 | 1,611,273 |
Advances from customers | 476,902 | 580,720 |
Due to related parties | 291,311 | 570,921 |
Convertible notes payable, net of discount of $631,050 and $99,907 of June 30, 2019 and December 31, 2018, respectively | 1,811,718 | 971,086 |
Derivative liabilities | 68,591 | 6,621 |
Notes payable | 138,000 | 360,000 |
Salary payable | 1,259,675 | 1,024,959 |
Income taxes payable | 4,170,911 | 2,946,926 |
Interest payable | 2,158,422 | 2,020,821 |
Other payables and accruals | 2,840,484 | 2,940,088 |
Deferred revenue | 3,373,486 | 6,751,113 |
Total current liabilities | 19,140,661 | 19,784,528 |
Total liabilities | 19,140,661 | 19,784,528 |
STOCKHOLDERS' EQUITY | ||
Preferred stock - $0.001 par value, Authorized 20,000,000 shares. Series A - Issued and outstanding 500,000 and 500,000 shares (liquidationpreference in $1,000,000) at June 30, 2019 and December 31, 2018, respectively; Series B - Issued and outstanding 811,148 and 811,148 shares (liquidation preference in $1,054,492) at June 30, 2019 and December31, 2018, respectively. | 1,311 | 1,311 |
Common stock - $0.001 per value. Authorized 100,000,000 shares. Issued and outstanding 19,484,375 and 16,885,860 shares atJune 30, 2019 and December 31, 2018, respectively. | 19,485 | 16,886 |
Additional paid-in capital | 29,283,029 | 27,047,457 |
Statutory Reserve | 1,022,605 | 1,022,605 |
Accumulated deficit | (16,658,597) | (14,803,530) |
Accumulated other comprehensive loss | (564,673) | (558,215) |
Total stockholders' equity | 13,103,160 | 12,726,514 |
Total liabilities and stockholders' equity | $ 32,243,821 | $ 32,511,042 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Convertible notes payable, discount current | $ 631,050 | $ 99,907 |
Preferred Stock, par value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 20,000,000 | 20,000,000 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 19,484,375 | 16,885,860 |
Common Stock, shares outstanding | 19,484,375 | 16,885,860 |
Series A Preferred Stock [Member] | ||
Preferred Stock, shares issued | 500,000 | 500,000 |
Preferred Stock, shares outstanding | 500,000 | 500,000 |
Preferred stock, liquidation preference | $ 1,000,000 | $ 1,000,000 |
Series B Preferred Stock [Member] | ||
Preferred Stock, shares issued | 811,148 | 811,148 |
Preferred Stock, shares outstanding | 811,148 | 811,148 |
Preferred stock, liquidation preference | $ 1,054,492 | $ 1,054,492 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenue | $ 10,924,978 | $ 5,334,830 | $ 20,467,976 | $ 14,086,221 |
Cost of goods sold | (7,752,728) | (3,873,502) | (15,119,315) | (10,180,066) |
Gross Profit | 3,172,250 | 1,461,328 | 5,348,661 | 3,906,155 |
Operating expenses | ||||
Provision for deferred cost of goods sold | 2,448,764 | 2,448,764 | ||
Selling expenses | 63,501 | 161,256 | 101,307 | 345,567 |
Research and development expenses | 39,230 | 78,543 | ||
General and administrative expenses | 1,403,172 | 1,514,298 | 2,362,766 | 3,079,028 |
Total operating expenses | 3,915,437 | 1,714,784 | 4,912,837 | 3,503,138 |
Operating income (loss) | (743,187) | (253,456) | 435,824 | 403,017 |
Other income/(expenses), net | ||||
Change in fair value of derivative liabilities | 27,943 | 72,433 | 33,174 | 202,371 |
Interest expense | (835,545) | (152,564) | (1,139,513) | (307,927) |
Other income/(expenses) | (2,920) | 51,768 | (905) | |
Exchange gain (loss) | 22,021 | 56,285 | (1,410) | 18,253 |
Total other income/(expenses), net | (788,501) | (23,846) | (1,055,981) | (88,208) |
Income (loss) from operations before income taxes | (1,531,688) | (277,302) | (620,157) | 314,809 |
(Provision) benefit for income taxes | ||||
Current | (714,002) | (358,066) | (1,234,910) | (897,209) |
Deferred | ||||
Total provision for income taxes | (714,002) | (358,066) | (1,234,910) | (897,209) |
Net loss | (2,245,690) | (635,368) | (1,855,067) | (582,400) |
Other comprehensive loss | ||||
Foreign currency translation adjustment | (418,670) | (781,013) | (6,458) | (281,707) |
Total comprehensive loss | $ (2,664,360) | $ (1,416,381) | $ (1,861,525) | $ (864,107) |
Earnings per share: | ||||
Basic | $ (0.12) | $ (0.04) | $ (0.10) | $ (0.04) |
Diluted | $ (0.12) | $ (0.04) | $ (0.10) | $ (0.04) |
Weighted average number of common shares outstanding - basic and diluted | 19,343,881 | 16,479,316 | 18,272,950 | 16,201,020 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Statutory Reserve [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Gain/(Loss) | Total |
Balance at Dec. 31, 2017 | $ 1,311 | $ 15,203 | $ 24,455,291 | $ 458,334 | $ (14,583,080) | $ 323,776 | $ 10,670,835 |
Balance, shares at Dec. 31, 2017 | 1,311,148 | 15,202,965 | |||||
Issuance of common shares for consulting service | $ 918 | 1,759,082 | 1,760,000 | ||||
Issuance of common shares for consulting service, shares | 917,500 | ||||||
Net loss | 52,968 | 52,968 | |||||
Foreign currency translation adjustments | 499,306 | 499,306 | |||||
Balance at Mar. 31, 2018 | $ 1,311 | $ 16,121 | 26,214,373 | 458,334 | (14,530,112) | 823,082 | 12,983,109 |
Balance, shares at Mar. 31, 2018 | 1,311,148 | 16,120,465 | |||||
Balance at Dec. 31, 2017 | $ 1,311 | $ 15,203 | 24,455,291 | 458,334 | (14,583,080) | 323,776 | 10,670,835 |
Balance, shares at Dec. 31, 2017 | 1,311,148 | 15,202,965 | |||||
Net loss | (582,400) | ||||||
Balance at Jun. 30, 2018 | $ 1,311 | $ 16,578 | 26,717,774 | 458,334 | (15,165,480) | 42,069 | 12,070,586 |
Balance, shares at Jun. 30, 2018 | 1,311,148 | 16,577,017 | |||||
Balance at Mar. 31, 2018 | $ 1,311 | $ 16,121 | 26,214,373 | 458,334 | (14,530,112) | 823,082 | 12,983,109 |
Balance, shares at Mar. 31, 2018 | 1,311,148 | 16,120,465 | |||||
Issuance of common shares for Cash | $ 188 | 235,412 | 235,600 | ||||
Issuance of common shares for Cash, shares | 187,700 | ||||||
Issuance of common shares for consulting service | $ 136 | 181,914 | 182,050 | ||||
Issuance of common shares for consulting service, shares | 136,300 | ||||||
Issuance of common shares to employee | $ 7 | 7,802 | 7,809 | ||||
Issuance of common shares to employee, shares | 6,507 | ||||||
Conversion of convertible note | $ 126 | 78,273 | 78,399 | ||||
Conversion of convertible note, shares | 126,045 | ||||||
Net loss | (635,368) | (635,368) | |||||
Foreign currency translation adjustments | (781,013) | (781,013) | |||||
Balance at Jun. 30, 2018 | $ 1,311 | $ 16,578 | 26,717,774 | 458,334 | (15,165,480) | 42,069 | 12,070,586 |
Balance, shares at Jun. 30, 2018 | 1,311,148 | 16,577,017 | |||||
Balance at Dec. 31, 2018 | $ 1,311 | $ 16,886 | 27,047,457 | 1,022,605 | (14,803,530) | (558,215) | 12,726,514 |
Balance, shares at Dec. 31, 2018 | 1,311,148 | 16,885,260 | |||||
Issuance of common shares for consulting service | $ 180 | 161,820 | 162,000 | ||||
Issuance of common shares for consulting service, shares | 180,000 | ||||||
Issuance of common shares as convertible note issuance costs | $ 58 | 46,917 | 46,975 | ||||
Issuance of common shares as convertible note issuance costs, shares | 57,500 | ||||||
Issuance of common shares for Liabilities settlement | $ 300 | 221,700 | 222,000 | ||||
Issuance of common shares for Liabilities settlement, shares | 300,000 | ||||||
Issuance of common shares for convertible notes | $ 1,040 | (1,040) | |||||
Issuance of common shares for convertible notes, shares | 1,040,000 | ||||||
Issuance of common shares to employee | $ 10 | 8,859 | 8,869 | ||||
Issuance of common shares to employee, shares | 10,078 | ||||||
Fair value of beneficial conversion feature of convertible note | 1,200,281 | 1,200,281 | |||||
Conversion of convertible note | $ 396 | 78,004 | 78,400 | ||||
Conversion of convertible note, shares | 395,959 | ||||||
Net loss | 390,623 | 390,623 | |||||
Foreign currency translation adjustments | 412,212 | 412,212 | |||||
Balance at Mar. 31, 2019 | $ 1,311 | $ 18,870 | 28,763,998 | 1,022,605 | (14,412,907) | (146,003) | 15,247,874 |
Balance, shares at Mar. 31, 2019 | 1,311,148 | 18,868,797 | |||||
Balance at Dec. 31, 2018 | $ 1,311 | $ 16,886 | 27,047,457 | 1,022,605 | (14,803,530) | (558,215) | 12,726,514 |
Balance, shares at Dec. 31, 2018 | 1,311,148 | 16,885,260 | |||||
Net loss | (1,855,067) | ||||||
Balance at Jun. 30, 2019 | $ 1,311 | $ 19,485 | 29,283,029 | 1,022,605 | (16,658,597) | (564,673) | 13,103,160 |
Balance, shares at Jun. 30, 2019 | 1,311,148 | 19,484,375 | |||||
Balance at Mar. 31, 2019 | $ 1,311 | $ 18,870 | 28,763,998 | 1,022,605 | (14,412,907) | (146,003) | 15,247,874 |
Balance, shares at Mar. 31, 2019 | 1,311,148 | 18,868,797 | |||||
Issuance of common shares for consulting service | $ 605 | 510,244 | 510,849 | ||||
Issuance of common shares for consulting service, shares | 604,999 | ||||||
Issuance of common shares to employee | $ 10 | 8,787 | 8,797 | ||||
Issuance of common shares to employee, shares | 10,579 | ||||||
Net loss | (2,245,690) | (2,245,690) | |||||
Foreign currency translation adjustments | (418,670) | (418,670) | |||||
Balance at Jun. 30, 2019 | $ 1,311 | $ 19,485 | $ 29,283,029 | $ 1,022,605 | $ (16,658,597) | $ (564,673) | $ 13,103,160 |
Balance, shares at Jun. 30, 2019 | 1,311,148 | 19,484,375 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from continuing operating activities: | ||
Net loss | $ (1,855,067) | $ (582,400) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 10,588 | 20,451 |
Bad debt expense | 365,188 | |
Provision for deferred cost of goods sold | 2,448,764 | |
Accrued interest | 137,601 | 307,927 |
Stock compensation expense | 1,122,712 | 1,276,269 |
Gain on derivative liabilities | (33,174) | (202,371) |
Changes in continuing operating assets and liabilities: | ||
Accounts receivable | (151,482) | (7,241,877) |
Prepaid expenses | 419,569 | 36,793 |
Rent deposit and other receivables | (184,778) | (431,569) |
Advance to suppliers | (7,535,571) | 6,608,056 |
Due from related party - non-trade | (33,462) | (4,957) |
Inventory | 1,549,368 | 1,034,641 |
Deferred cost of goods sold | (5,294,537) | |
Accounts payable | 948,712 | (926,055) |
Salary payable | 235,244 | 203,670 |
Taxes payable | 1,234,161 | 877,180 |
Advances from customers | (105,969) | 64,943 |
Other payables and accruals | (103,367) | 770,480 |
Deferred revenue | 7,241,877 | |
Net cash provided by (used in) operating activities | (1,530,963) | 3,758,521 |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (38,890) | (3,488) |
Payment of deposit for long-term investment | ||
Net cash used in investing activities | (38,890) | (3,488) |
Cash flows from financing activities: | ||
Borrowings from related parties, net | (252,733) | 209,111 |
Proceeds from sale of common stock | 235,600 | |
Proceeds from convertible notes | 1,247,256 | |
Net cash provided by financing activities | 994,523 | 444,711 |
Effect of exchange rate change | 577,570 | (201,693) |
Cash and cash equivalents: | ||
Net increase | 2,240 | 3,998,051 |
Balance at beginning of period | 7,859 | 1,083,539 |
Balance at end of period | 10,099 | 5,081,590 |
Non-cash financing activities: | ||
Issuance of common stock for consulting services | 672,849 | 1,942,050 |
Issuance of common stock for financing related services | 46,975 | |
Issuance of common stock for debts settlement | 222,000 | |
Conversion of convertible note | 78,400 | |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for interest | ||
Cash paid for income taxes | $ 3,803 |
Description of Business and Org
Description of Business and Organization | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Organization | 1. Description of Business and Organization Organization Kiwa Bio-Tech Products Group Corporation (“the Company”) is the result of a share exchange transaction accomplished on March 12, 2004 between the shareholders of Kiwa Bio-Tech Products Group Ltd. (“Kiwa BVI”), a company originally organized under the laws of the British Virgin Islands on June 5, 2002 and Tintic Gold Mining Company (“Tintic”), a corporation originally incorporated in the state of Utah on June 14, 1933 to perform mining operations in Utah. The share exchange resulted in a change of control of Tintic, with former Kiwa BVI stockholders owning approximately 89% of Tintic on a fully diluted basis and Kiwa BVI surviving as a wholly-owned subsidiary of Tintic. Subsequent to the share exchange transaction, Tintic changed its name to Kiwa Bio-Tech Products Group Corporation. On July 21, 2004, the Company completed its reincorporation in the State of Delaware. On March 8, 2017, the Company completed its reincorporation in the State of Nevada. The Company operates through a series of subsidiaries in the Peoples Republic of China as detailed in the following Organizational Chart. The Company currently mainly operates its business through Kiwa Baiao Bio-Tech (Beijing) Co., Ltd. (“Kiwa Beijing”), which was incorporated in China in January 2016, Kiwa Bio-Tech Products (Shenzhen) Co., Ltd. (“Kiwa Shenzhen”), which was incorporated in China in November 2016, Kiwa Bio-Tech Products (Hebei) Co., Ltd. (“Kiwa Hebei”), which was incorporated in China in December 2016, Kiwa Bio-Tech Products (Shenzhen) Co., Ltd. Xian Branch Company, (“Kiwa Xian”), which was incorporated in China in December 2017, Kiwa Bio-Tech (Yangling) Co., Ltd. (“Kiwa Yangling”), which incorporated in March 2018, and The Institute of Kiwa-Yangling Ecological Agriculture and Environment Research Co., Ltd. (“Kiwa Institute”), which incorporated in March 2018. In July 2017, the Company established Kiwa Bio-Tech Asia Holding (Shenzhen) Ltd. (“Kiwa Asia”) to be the direct holding company of Kiwa Beijing, Kiwa Shenzhen, Kiwa Xian, Kiwa Institue and Kiwa Hebei. Business The Company develops, manufactures, distributes and markets innovative, cost-effective and environmentally safe bio-technological products for agricultural use. The Company’s products are designed to enhance the quality of human life by increasing the value, quality and productivity of crops and decreasing the negative environmental impact of chemicals and other wastes. |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | 2. Going concern The Company’s unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of June 30, 2019, and December 31, 2018, the Company had an accumulated deficit of $16,658,597 and $14,803,530, respectively, and the Company incurred net loss of $1,855,067 and $582,400 for the six months ended June 30, 2019 and 2018, respectively, and had negative operating cash flow of $1,530,963 for the six months ended June 30, 2019. These circumstances, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The unaudited condensed financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company has assessed its ability to continue as a going concern for a period of one year from the date of the issuance of these unaudited condensed financial statements. In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. As of June 30, 2019, Kiwa Hebei is committed to pay a RMB10, 000,000 based on the payment milestone in an equity purchase agreement. The Company engages in the business for organically bio-fertilizer and its customers are mainly agricultural cooperative company and distributors who then resell its products to individual farmers. Because the crop growing cycle usually takes approximately 3 to 9 months in the agricultural industry, it will take approximately similar time frame of 3 to 9 months for farmers to harvest crops and to realize profits to repay the Company’s distributors. The Company’s current payment terms on these customers are ranging from 60 days to 9 months after receipts of the goods depending on the creditworthiness of these customers. As a result, the Company’s accounts receivable turnover ratio is normally low due to the nature of the Company’s business. In addition, the Company’s business is capital intensive as the Company needs to make advance payment to its suppliers to secure timely delivery and current market price of raw materials. Debt financing in the form of notes payable and loans from related parties have been utilized to finance the working capital requirements of the Company. The Company sold Convertible Promissory Notes (“Notes”) in the aggregate principal amount of $1,665,000 in February and March 2019. As of June 30, 2019, the Company’s working capital was approximately $12.3 million and the Company had only cash of approximately $10,000, with remaining current assets mainly composed of advance to suppliers, accounts receivable, prepaid expenses, and deferred cost of goods sold. Although the Company believes that it can realize its current assets in the normal course of business, the Company’s ability to repay its current obligations will depend on the future realization of its current assets and the future operating revenues generated from its products. Because the Chinese Government is continuously to promote green environment and implement quality standards and environmentally sensitive policies in the Agricultural industry, the Company expects its revenues from its innovated and highly effective products, Compound Microbial Fertilizer and Bio-Water Soluble Fertilizer, will continue to grow in its business. In addition, the Company’s marketing team is expanding to the Western areas of China and Hainan province and it expects its revenues will continue to grow in 2019. Meanwhile, the Company expects to continue to gain market shares in its existing sales channel bases in the Northern and the Southern areas of China due to the good quality of the products and better reputation in the industry. Management has considered its historical experience, the economic environment, trends in the Agricultural industry, the realization of the accounts receivables and advance to suppliers as of June 30, 2019. The Company expects to realize the balance of its current assets within the normal operating cycle of a twelve-month period. If the Company is unable to realize its current assets within the normal operating cycle of a twelve-month period, the Company may have to consider supplementing its available sources of funds through the following sources: ● the Company will continuously seek additional equity financing to support its working capital; ● other available sources of financing from PRC banks and other financial institutions; ● financial support and credit guarantee commitments from the Company’s major shareholder. Based on the above considerations, management is of the opinion that it does not have sufficient funds to meet its working capital requirements and debt obligations as they become due one year from the date of this report. If the Company can’t raise enough funds, it might be unable to fund its future cash requirement on a timely basis and under acceptable terms and conditions and may not have sufficient liquidity to maintain operations and repay its liabilities for the next twelve months. As a result, the Company may be unable to implement its current plans for expansion, repay its debt obligations or respond to competitive pressures, any of which would have a material adverse effect on its business, prospects, financial condition and results of operations. |
Summaries of Significant Accoun
Summaries of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summaries of Significant Accounting Policies | 3. Summaries of Significant Accounting Policies Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for information pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary to give a fair presentation have been included. Interim results are not necessarily indicative of results of a full year. The information in this Form 10-Q should be read in conjunction with information included in the annual report for the fiscal year ended December 31, 2018 on Form 10-K filed with the SEC on April 12, 2019. Principle of Consolidation These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries, Kiwa BVI, Kiwa Asia Holdings Company, Kiwa Beijing, Kiwa Shenzhen, Kiwa Hebei, Kiwa Asia, Kiwa Yangling, and Kiwa Institute. All significant inter-company balances or transactions are eliminated on consolidation. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates include the valuation of securities issued, derivative liabilities, deferred tax assets and related valuation allowance. Certain of the Company’s estimates, including evaluating the collectability of accounts receivable and the fair market value of long-lived assets, could be affected by external conditions, including those unique to the Company’s industry, and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates that could cause actual results to differ from its estimates. The Company re-evaluates all of the Company’s accounting estimates annually based on these conditions and record adjustments when necessary. Cash and Cash Equivalents Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these investments, the carrying amounts approximate their fair value. Restricted cash is excluded from cash and cash equivalents. Accounts receivable and allowance for doubtful accounts Accounts receivable represent customer accounts receivables. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience, the economic environment, trends in the microbial fertilizer industry, and a review of the current status of trade accounts receivable. Management reviews its accounts receivable each reporting period to determine if the allowance for doubtful accounts is adequate. Such allowances, if any, would be recorded in the period the impairment is identified. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. Uncollectible accounts receivable are charged against the allowance for doubtful accounts when all reasonable efforts to collect the amounts due have been exhausted. Inventory Inventories are stated at the lower of cost, determined on the weighted average method, and net realizable value. Work in progress and finished goods are composed of direct materials, direct labor and a portion of manufacturing overhead. Net realizable value is the estimated based on selling price in the ordinary course of business, less estimated costs to complete and dispose. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of property, plant and equipment are capitalized. These capitalized costs may include structural improvements, equipment and fixtures. All ordinary repair and maintenance costs are expensed as incurred. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows: Useful Life (In years) Buildings 30 - 35 Machinery and equipment 5 - 10 Automobiles 8 Office equipment 2 - 5 Computer software 3 Leasehold improvement The shorter of the Lease The Company adopted ASU 2016-02 on January 1, 2019 and determined that the effect of recognizing additional right of use (“ROU”) assets and operating liabilities under current leasing standards for existing operating leases with a term longer than 12 months are immaterial to its consolidated financial statements for the period beginning January 1, 2019. As a result, no such recognition ROU and operating labilities has been made on January 1, 2019. As of June 30, 2019, future lease payments are summarized below: Twelve months ending June 30, 2020 $ 18,556 Twelve months ending June 30, 2021 23,891 Twelve months ending June 30, 2022 18,582 Thereafter - Total minimum lease payment $ 61,029 Impairment of Long-Lived Assets The Company’s long-lived assets consist of property, plant and equipment. The Company evaluates its investment in long-lived assets, including property and equipment, for recoverability whenever events or changes in circumstances indicate the net carrying amount may not be recoverable. It is possible that these assets could become impaired as a result of legal factors, market conditions, operational performance indicators, technological or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Financial Instruments The Company analyzes all financial instruments with features of both liabilities and equity under FASB Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” and FASB ASC Topic 815 “Derivatives and Hedging”. Embedded conversion features of convertible debentures not considered to be derivative instruments The embedded conversion features of convertible debentures not considered to be derivative instruments provide for a rate of conversion that is below market value. Such feature is normally characterized as a “beneficial conversion feature” (“BCF”). The relative fair values of the BCF were recorded as discounts from the face amount of the respective debt instrument. The Company amortized the discount using the straight-line method which approximates the effective interest method through maturity of such instruments. Embedded conversion features of convertible debentures that are classified as derivative liabilities The embedded conversion features of convertible debentures that are classified as derivative liabilities are recorded at fair value as a discount from the face amount of the respective debt instrument. The discount is being amortized to interest expense over the life of the note using the straight-line method, which approximates the effective interest method. These instruments are accounted for as derivative liabilities and marked-to-market each reporting period. The change in the value of the derivative liabilities is charged against or credited to income in the captioned “change in fair value of derivative liabilities” in the accompanying consolidated statements of operations and comprehensive income. Fair Value of Financial Instruments The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value with U.S. GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: ● Level 1: quoted market prices available in active markets for identical assets or liabilities as of the reporting date. ● Level 2: pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. ● Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalent, prepaid expenses, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments. Derivative instruments are carried at fair value, estimated using the Black Scholes Merton model. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not however practical to determine the fair value of advances from stockholders, if any, due to their related party nature. Revenue Recognition On January 1, 2018 we adopted Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (FASB ASC Topic 606) using the modified retrospective method for contracts that were not completed as of January 1, 2018. This did not result in an adjustment to the retained earnings upon adoption of this new guidance as the Company’s revenue was recognized based on the amount of consideration we expect to receive in exchange for satisfying the performance obligations. The core principle underlying the revenue recognition ASU is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company’s revenue streams are recognized at a point in time. The ASU requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. Upon adoption, the Company evaluated its revenue recognition policy for all revenue streams within the scope of the ASU under previous standards and using the five-step model under the new guidance and confirmed that there were no differences in the pattern of revenue recognition. The Company continues to derive its revenues from sales contracts with its customers with revenues being recognized upon delivery of products. Persuasive evidence of an arrangement is demonstrated via sales contract and invoice; and the sales price to the customer is fixed upon acceptance of the sales contract and there is no separate sales rebate, discount, or volume incentive. The Company recognizes revenue when title and ownership of the goods are transferred upon shipment to the customer by the Company to consider control of goods are transferred to its customer and collectability of payment is reasonably assured. The Company’s revenues are recognized at a point in time after all performance obligations are satisfied. The Company’s customers are mainly agricultural cooperative company and distributors who then resell the Company’s products to individual farmers. Because the crop growing cycle usually takes approximately 3 to 9 months in the agricultural industry, for some co-ops and distributors, it will take approximately similar time frame of 3 to 9 months for farmers to harvest crops and to realize profits to repay them. As a result, for the sales contracts with these customers, the collectability of payment is highly dependent on the successful harvest of corps and the customers’ ability to collect money from farmers. The Company deemed the collectability of payment may not be reasonably assured until after the Company get paid. Collectability is a necessary condition for the contract to be accounted for to meet the criteria of the first step “identifying the contract with the customer” under the new revenue guidance in ASC 606. As a result, these sales contracts are not considered a contract under ASC 606, thus the shipments under these contracts are not recognized as revenue until all criteria for “identifying the contract with the customer” and revenue recognition are met using the five-step model. Deferred Revenue and Deferred Cost of Goods Sold Deferred revenue and deferred cost of goods sold result from transactions where the Company has shipped product for which all revenue recognition criteria under the five-step model have not yet been met. Though these contracts are not considered a contract under ASC 606, they are legally enforceable, and the Company has an unconditional and immediate right to payment after the Company has shipped products, therefore, the Company recognizes a receivable and a corresponding deferred revenue upon shipment. Deferred cost of goods sold includes direct inventory costs. Once all revenue recognition criteria under the five-step model have been met, the deferred revenues and associated cost of goods sold are recognized. The Company’s provision for deferred cost of goods sold is made based on historical collection experience on such related accounts receivable and realizability of deferred revenue . The Company made provision of $2,448,764 and nil for deferred cost of goods sold for the six months ended June 30, 2019 and 2018, respectively. Income Taxes The Company accounts for income taxes under the provisions of FASB ASC Topic 740, “Income Tax,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the difference between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company establishes a valuation allowance when it is more likely than not that the assets will not be recovered. FASB ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes,” defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. United States federal, state and local income tax returns prior to 2015 are not subject to examination by any applicable tax authorities. PRC tax returns filed for 2015, 2016 and 2017 are subject to examination by any applicable tax authorities. Stock Based Compensation The Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that share-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period. The Company records stock-based compensation expense at fair value on the grant date and recognizes the expense over the employee’s requisite service period. The Company’s expected volatility assumption is based on the historical volatility of Company’s stock. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the Company’s current and expected dividend policy. The Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, “Equity-Based Payments to Non-employees”. Under FASB ASC Topic 718 and FASB ASC Subtopic 505-50, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received. Foreign Currency Translation and Other Comprehensive Income The Company uses United States dollars (“US Dollar” or “US$” or “$”) for financial reporting purposes. However, the Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”) and Hong Kong Dollar (“HKD”), being the functional currency of the economic environment in which its operations are conducted. In general, the Company translates its assets and liabilities into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statement of comprehensive loss and the statement of cash flow are translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income. Other comprehensive income for the three and six months ended June 30, 2019 and 2018 represented foreign currency translation adjustments and were included in the unaudited condensed consolidated statements of operations and comprehensive income. The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the unaudited condensed consolidated financial statements were as follows: As of As of Balance sheet items, except for equity accounts 6.8656 6.8761 Three months ended June 30, 2019 2018 Items in the statements of comprehensive income 6.8210 6.3726 Six months ended June 30, 2019 2018 Items in the statements of comprehensive income 6.7839 6.3659 The exchange rates used to translate amounts in HKD into U.S. Dollars for the purposes of preparing the consolidated financial statements were as follows: As of As of Balance sheet items, except for equity accounts 7.8121 7.8297 Three months ended June 30, 2019 2018 Items in the statements of comprehensive income 7.8396 7.8476 Six months ended June 30, 2019 2018 Items in the statements of comprehensive income 7.8426 7.8372 Earnings Per Common Share Net income per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. Common stock equivalents having an anti-dilutive effect on earnings per share are excluded from the calculation of diluted earnings per share. Commitments and Contingencies The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unassured claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unassured claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. Cash Flow Reporting The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of : (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments; (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification. Recent Accounting Pronouncements In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this Update affect any entity that is required to apply the provisions of Topic 220, Income Statement – Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company does not believe the adoption of this ASU would have a material effect on the Company’s consolidated financial statements. In August 2018, the FASB Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company does not expect this guidance will have a material impact on its condensed consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s consolidated financial statement presentation or disclosures. |
Accounts Receivable, Net
Accounts Receivable, Net | 6 Months Ended |
Jun. 30, 2019 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Accounts Receivable, Net | 4. Accounts Receivable, net As of June 30, 2019 and December 31, 2018, we had $3.5 million and $6.8 million, respectively, of accounts receivable from the Company’s customers. The Company’s current payment terms on these customers are ranging typically from 60 days to 9 months after receipts of the goods depending on the creditworthiness of these customers. These customers are either agricultural cooperative company or distributors who then resell the Company’s products to individual farmers. The Company’s provision on allowance for doubtful accounts is based on historical collection experience, the economic environment, trends in the microbial fertilizer industry, and a review of the current status of trade accounts receivable and come up with an aging allowance method. The Company’s management has continued to evaluate the reasonableness of the valuation allowance policy and update it if necessary. Accounts receivable consisted of the following: June 30, 2019 December 31, 2018 Accounts receivable $ 3,523,166 $ 6,751,113 Less: Allowance for doubtful accounts - - Accounts receivable, net $ 3,523,166 $ 6,751,113 |
Prepaid Expense
Prepaid Expense | 6 Months Ended |
Jun. 30, 2019 | |
Prepaid Expense - Schedule Of Prepaid Expenses Details | |
Prepaid Expense | 5. Prepaid Expense Prepaid expenses consisted of the following: Notes June 30, 2019 December 31, 2018 Prepaid office rent $ 2,457 $ 4,921 Prepaid Packaging Expense 10,009 Prepaid government filing expense 12,000 7,000 Prepaid consulting expenses (1) 1,798,356 2,230,553 Others 17,118 17,091 Total $ 1,839,940 $ 2,259,565 (1) Prepaid consulting expenses represent issuance of common stock for prepaid services. As of June 30, 2019, the Company evaluated the performance of the consultants and concluded all the contracts were on schedule of delivery. The company amortized the consulting fee over the service periods per agreements based on the progress of services delivered. For the three months ended June 30, 2019 and 2018, the amortization of consulting expense was $591,377 and $679,925, respectively. For the six months ended June 30, 2019 and 2018, the amortization of consulting expense was $1,105,046 and $1,268,460, respectively. |
Advance to Suppliers
Advance to Suppliers | 6 Months Ended |
Jun. 30, 2019 | |
Advance To Suppliers | |
Advance to Suppliers | 6. Advance to suppliers Advance to suppliers are mainly funds deposited for future raw material and finished goods purchases. The Company’s major vendors require deposits with them as a guarantee that the Company will complete its purchases on a timely basis as well as securing the current agreed upon purchase price. Since the Company anticipated the price of raw materials continues to be on the rise, the Company agreed to make large amount of advances to suppliers. As of June 30, 2019 and December 31, 2018, advance to suppliers consisted of the following: June 30, 2019 December 31, 2018 Advance to suppliers $ 23,233,227 $ 6,751,113 Less: provisions for advance to suppliers (225,763 ) - Advance to suppliers, net $ 23,007,464 $ 6,751,113 |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory | 7. Inventory Inventory consisted of the following: June 30, 2019 December 31, 2018 Raw materials $ - $ 1,358,384 Finished goods 83,252 253,331 Packing materials 31,366 31,318 Total $ 114,618 $ 1,643,033 |
Property, Plant and Equipment
Property, Plant and Equipment | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | 8. Property, Plant and Equipment Property, plant and equipment, net consisted of the following: June 30, 2018 December 31, 2018 Property, Plant and Equipment Office equipment $ 17,470 $ 17,451 Furniture 31,335 27,312 Leasehold improvement 165,012 130,357 Construction in progress 25,344 25,305 Others 292 1,047 Property, plant and equipment - total $ 239,453 $ 201,472 Less: accumulated depreciation (121,668 ) (108,291 ) Property, plant and equipment - net $ 117,785 $ 93,181 Depreciation expense was $4,904 and $4,817 for the three months ended June 30, 2019 and 2018, and $10,588 and $20,451 for the six months ended June 30, 2019 and 2018, respectively. |
Deposit for Long-Term Investmen
Deposit for Long-Term Investment | 6 Months Ended |
Jun. 30, 2019 | |
Investments Schedule [Abstract] | |
Deposit for Long-Term Investment | 9. Deposit for Long-Term Investment On June 8, 2017, Kiwa Hebei entered an equity purchase agreement with the shareholders of Yantai Peng Hao New Materials Technology Co. Ltd. (“Peng Hao”) to acquire 100% interest in Peng Hao for approximately RMB 15,000,000 (approximately US$ 2.2 million). As of June 30, 2019, Kiwa Hebei has made deposit payment of RMB 5,000,000 (approximately $0.7 million). Due to certain administrative approval process from the Chinese government and the establishment of Yangling base in October 2018, the closing of the equity purchase agreement has been delayed. RMB 6,500,000 (approximately $0.9 million) will be paid upon completion of the land use rights ownership transfer and RMB 3,500,000 (approximately $0.5 million) will be paid upon completion of the business licenses transfer. The Company estimated the completion of the transfer will be in December 2019. |
Salaries Payable
Salaries Payable | 6 Months Ended |
Jun. 30, 2019 | |
Compensation Related Costs [Abstract] | |
Salaries Payable | 10. Salaries payable June 30, 2019 December 31, 2018 Ms. Yvonne Wang (“Ms. Wang”) $ 301,000 $ 259,000 Hon Man Yun (“Mr. Yun”) 119,589 60,702 Other Employees 839,086 705,257 Total $ 1,259,675 $ 1,024,959 Ms. Wang served as Chairman of the Board since November 2015 and served as CEO since August 2016. No salary was paid to Ms. Wang since December 2015. Mr. Yun was the Chief Financial Officer of the Company since April 2018. The Company expects to be in negotiations with Mr. Yun and Ms. Wang to settle these obligations. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 11. Related Party Transactions Due from related parties – non-trade Amounts due from related parties consisted of the following as of June 30, 2019 and December 31, 2018: Item Nature Notes June 30, 2019 December 31, 2018 Mr. Xiaoqiang Yu Non-trade (1) 18,244 12,108 Total $ 18,244 $ 12,108 (1) Mr. Xiaoqiang Yu During the year ended December 31, 2018, Mr. Xiaoqiang Yu, the COO of the Company, obtained a cash advance from the Company for operational purpose. As of June 30, 2019, and December 31, 2018, the amount due from Mr. Xiaoqiang Yu was $18,244 and $12,108, respectively. Due to related parties– non-trade Amounts due to related parties consisted of the following as of June 30, 2019 and December 31, 2018: Item Nature Notes June 30, 2019 December 31, 2018 Ms. Wang Non-trade (1) 281,844 534,563 Ms. Feng Li (“Ms. Li”) Non-trade (2) 9,467 36,358 Total amount due to related parties $ 291,311 $ 570,921 (1) Ms. Wang Effective November 20, 2015, the Company appointed Ms. Wang as the Chairman of the Board and effective August 11, 2016, the Company’s Board of Directors has assigned Ms. Wang the additional titles of Acting President, Acting Chief Executive Officer and Acting Chief Financial Officer. On April 15, 2018, Ms. Wang turned over the Acting Chief Financial Officer to her successor. During the six months ended June 30, 2019 and 2018, Ms. Wang paid various expenses on behalf of the Company. As of June 30, 2019 and December 31, 2018, the amount due to Ms. Wang was $281,844 and $534,563, respectively. (2) Ms. Feng Li Ms. Feng Li is a member of the Company’s board of directors and shareholder of the Company. Ms. Li held approximately 11% of the Company’s Common Stock and 50% of the Company’s Series A Preferred Stock. Ms. Feng Li paid various expenses on behalf of the Company. As of June 30, 2019 and December 31, 2018, the amount due to Ms. Feng Li was $9,467 and $36,358, respectively. |
Convertible Notes Payable
Convertible Notes Payable | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | 12. Convertible Notes Payable Convertible notes payable consisted of the following: June 30, 2019 December 31, 2018 6% secured convertible notes – FirsTrust Group Inc. (1) $ 132,762 $ 125,692 15% convertible notes- Mr. Geng Liu (2) 145,655 145,431 15% convertible notes- Mr. Junwei Zheng (3) 801,101 799,870 12% convertible notes- Labrys (4) 1,213,250 - 12% convertible notes- TFK (5) 150,000 - Less: notes discount (631,050 ) (99,907 ) Convertible notes payable - total $ 1,811,718 $ 971,086 Convertible notes payable consists of $132,762 of 6% secured convertible notes issued to FirsTrust Group Inc. on June 29, 2006, $145,655 of 15% convertible note issued to Mr. Geng Liu on January 17, 2017, $801,101 of 15% convertible note issued to Mr. Junwei Zheng on May 9, 2017, $1,213,250 of 12% convertible note issued to Labrys on February 27, 2019, and $150,000 of 12% convertible note issued to TFK on March 21, 2019. (1) 6% secured convertible notes – FirsTrust Group Inc. On June 29, 2006, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with six institutional investors (collectively, the “Purchasers”) for the issuance and sale of 6% secured convertible notes, due three years from the date of issuance, in the aggregate principal amount of $2,450,000 (the “6% Convertible Notes”), convertible into shares of the Company’s common stock. On June 29, 2009, the 6% Notes were due. The Company informed the Purchasers of its inability to repay the outstanding balance on the due date. Therefore, the 6% Notes are in default and the default interest rate of 15% per annum is being charged on the 6% Notes. On August 12, 2013, the Company, entered into a Settlement Agreement and Release (the “Release”) with the holders (the “Holders”) of the “6% Convertible Notes” in the aggregate principal amount of $2,000,000. Pursuant to the terms of the Release, the Company paid the Holders $75,000 for a full release, including the forgiveness of past defaults of unpaid principal amounts, interests and penalties. On March 18, 2008, FirsTrust Group, Inc. (“FirsTrust”) purchased the three remaining 6% Convertible Notes, totaling $168,000 ($59,100, $50,400 and $59,100 respectively), from Nite Capital, one of the six institutional investors which purchased a total of $300,000 of the Note in three tranches ($105,000, $90,000, $105,000 respectively), for a cash payment of $100,000. After the Release and conversion, FirsTrust is the only holder of the outstanding 6% Convertible Note with outstanding principal amount of $150,250. The Company also incurs a financial liquidated damages in cash or shares at the option of the Company (equal to 2% of the outstanding amount of the Notes per month plus accrued and unpaid interest on the Notes, prorated for partial months) if it breaches any affirmative covenants in the Purchase Agreement, including a covenant to maintain a sufficient number of authorized shares under its Certificate of Incorporation to cover at least 110% of the stock issuable upon full conversion of the Notes. Pursuant to the relevant provisions for liquidated damages in Purchase Agreement, the Company has accrued the amounts of $17,759 and $16,801 for liquidated damages for the three months ended June 30, 2019 and 2018, respectively, and the Company has accrued the amounts of $42,120 and $35,246 for liquidated damages for the six months ended June 30, 2019 and 2018, respectively. The Company also accrued $4,965 and $4,092 for interest at the rate of 15% per annum for the three months ended June 30, 2019 and 2018, respectively, and the Company accrued $9,900 and $8,588 for interest at the rate of 15% per annum for the six months ended June 30, 2019 and 2018, respectively. The total 15% accrued interests were $164,872 and $177,179 at June 30, 2019 and December 31, 2018, respectively. The total accrued liquidated damages were $555,658 and $555,538 at June 30, 2019 and December 31, 2018, respectively. The Company’s obligations under the Notes are secured by a first priority security interest in the Company’s intellectual property pursuant to an Intellectual Property Security Agreement with the Holders. In addition, Mr. Li, the Company’s former Chief Executive Officer, has pledged all of his common stock of the Company as collateral for the Company’s obligations under the 6% Convertible Notes. On October 19, 2017, the Company issued total 14,151 common shares at $1.04 per share price to FirsTrust Group, Inc. for the conversion of convertible note. According to the convertible note agreement, the conversion price is based on a 40% discount to the average of the lowest three days trading price of the Company’s common stock on the OTC Bulletin Board over a 20-day trading period per the convertible notes agreement. As the carrying value of the notes and the intrinsic value of that conversion feature equaled to the fair value of the 14,151 common shares at $2.25 per share, no gain or loss were recognized upon this conversion. On December 13, 2017, the Company issued total 105,095 common shares at $0.75 per share price to FirsTrust Group, Inc. for the conversion of convertible note. According to the convertible note agreement, the conversion price is based on a 40% discount to the average of the lowest three days trading price of the Company’s common stock on the OTC Bulletin Board over a 20-day trading period per the convertible notes agreement. As the carrying value of the notes and the intrinsic value of that conversion feature equaled to the fair value of the 105,095 common shares at $2.3 per share, no gain or loss were recognized upon this conversion. On April 27, 2018, the Company issued total 126,045 common shares to FirsTrust Group, Inc. for the conversion of convertible note. According to the convertible note agreement, the conversion price is based on a 40% discount to the average of the lowest three days trading price of the Company’s common stock on the OTC Bulletin Board over a 20-day trading period per the convertible notes agreement. On September 19, 2018, the Company has entered a Settlement Agreement and Release (“Settlement Agreement”) with FirsTrust to settle the 6% secured convertible notes and interest and penalties. The Company has agreed to allow FirsTrust to effect a conversion in accordance with the terms of the 6% Note by October 18, 2018, and to make a cash payment of $500,000 by December 17, 2018. If the payment is not timely made, then FirsTrust shall be permitted to immediately effect further conversion in accordance with the terms of the 6% Notes into the Company’s shares, and the Company shall make a final cash payment of $340,000 by February 28, 2019. The Settlement Agreement has not been carried out by the Company as agreed as of December 31, 2018. The interest and penalties on this Note are continuously accrued in accordance with the original terms. On October 18, 2018, FirsTrust requested a conversion in accordance with the terms of the 6% Notes into the Company’s shares. The Company had failed to convert and thus incurred a financial liquidated damage at $245 per day for a total of $18,130 as of December 31, 2018, which had been added to the principle amount of the Note. On March 26, 2019, the Company issued 395,959 shares to FirsTrust for the conversion. According to the convertible note agreement, the conversion price is based on a 40% discount to the average of the lowest three days trading price of the Company’s common stock on the OTC Bulletin Board over a 20-day trading period per the convertible notes agreement. On March 26, 2019, the Company has entered into a First Amendment to Settlement Agreement and Release (“First Amendment Agreement”) with FirsTrust to settle the 6% secured convertible notes together with the promissory notes as disclosed under Note 12 plus interest and penalties with a total payable of approximately $2.3 million as of the date of the First Amendment Agreement was entered. The Company has agreed to make a payment of approximately $29,789 (RMB200,000), which has been paid on April 1, 2019, to enter into this Amendment and settled with the total outstanding balance of $1.3 million to be due under the terms of the First Amendment Agreement by June 30, 2019. If such settled outstanding balance was not made by June 30, 2019, it will deem the First Amendment Agreement to be ineffective and the Company will need to continue to pay FirsTrust the amount set forth in the Settlement Agreement. As of this date, the Company remains in default of the Settlement Agreement and Release and is in the process of raising funds to retire these obligations. Notwithstanding, there is no guarantee that the Company will be successful in these efforts and that FirsTrust will not exercise all rights available to it under the applicable agreements between the parties. On July 30, 2019, the Company received a notice of default and formal demand for payment and performance, which was followed by correspondence from FirsTrust’s lawyers that the commencement of legal action was imminent. As of this date, the Company has not received the service of any formal legal papers related to the matter. Since this matter is in its early stages, the final outcome cannot be predicted at this time and is largely dependent on the Company’s ability to raise funding to retire these obligations. If FirsTrust is successful in pursuing its legal action, the result could have a material adverse impact on the Company and its operations. (2) 15% convertible notes- Mr. Geng Liu On January 17, 2017, the Company entered a Convertible Note Agreement with Mr. Geng Liu and received principal of RMB 1 million, approximately $146,000. The note bears interest at 15% per annum and matured on January 16, 2018. Before the maturity date, the Note holder has an option to convert partial or all of the outstanding principal to the Company’s common shares with a conversion price of $0.90 per share. The maturity date of the note has been extended to June 30, 2020. The notes are convertible into shares of the common stock, at conversion price is $0.90 which is lower than the price of the Company’s common stock on the date of issue. Therefore, the conversion feature embedded in the convertible note meet the definition of beneficial conversion feature (“BCF”). The Company evaluated the intrinsic value of the BCF as $45,094 at the issue date. The relative fair values of the BCF were recorded into additional paid in capital, and the remainder proceeds of $99,850 from issuance of the convertible note was allocated to convertible notes payable. For the six months ended June 30, 2019 and 2018, the Company recorded interest expense of $10,965 and $13,661 on the note, including the amortization of the debt discount resulting from the value of beneficial conversion feature, and the carrying value of the note as at June 30, 2019 was $145,655. (3) 15% convertible notes- Mr. Junwei Zheng On May 9, 2017, the Company entered a Convertible Note Agreement with Mr. Junwei Zheng with principal of RMB 30 million. The note bears interest at 15% per annum and will mature on May 8, 2019. Before the maturity date, the Note holder has an option to convert partial or all of the outstanding principal and accrued interest to the Company’s common shares with a conversion price of $3.5 per share. On August 17, 2018, the Company does not expect that the remaining funds will ever be so advanced. As of June 30, 2019, the Company has received principal totaled RMB 5.5 million ($801,101 equivalent USD at June 30, 2019) out of the RMB 30 million Convertible Note Agreement. On May 7, 2019, the Company reached an agreement with Mr. Junwei Zheng that the maturity date will be extended to June 30, 2020. The notes are convertible into shares of the common stock, at conversion price is $3.5 which is higher than the price of the Company’s common stock on the date of issue, therefore the conversion feature embedded in the note did not meet the definition of BCF. The Company determined that conversion option embedded in the note meet the definition of a derivative instrument. Since the embedded conversion price of the conversion feature is denominated in U.S. dollar, a currency other than the convertible note payable currency. As a result, the embedded conversion feature is not considered indexed to the Company’s own stock due to the variable exchange rate between U.S. Dollar and RMB, and as such, the Company determined that the embedded conversion feature to be carried as a liability and re-measured at fair value at each financial reporting date until such time as the conversion feature is exercised or expired. The Company evaluated the fair value of the embedded conversion feature at the issue date and recorded the amount into as discount to convertible note payable. The discount to convertible note payable is being amortized to interest expense over the life of the note using the straight-line method, which approximates the effective interest method. On May 7, 2019, due to the extension of the convertible notes and embedded conversion feature continued to be considered as a derivative instrument, the Company determined that the embedded conversion feature to be carried as a liability and re-measured at fair value at each financial reporting date until such time as the conversion feature is exercised or expired. The Company evaluated the fair value of the embedded conversion feature at the renewal date and recorded the amount into as discount to convertible note payable. The discount to convertible note payable is being amortized to interest expense over the life of the note using the straight-line method, which approximates the effective interest method. The fair value of embedded conversion feature were calculated using the BlackScholesMerton model based on the following variables at inception on May 9, 2017: ● Strike price of $3.5, for the conversion options ● Expected volatility of 260.8% calculated using the Company’s historical price of its common stock ● Expected dividend yield of 0% ● Risk-free interest rate of 1.37%, for the conversion options ● Expected lives of 2.0 years ● Market price at issuance date of $2.7 The fair value of embedded conversion feature was calculated using the BlackScholesMerton model based on the following variables on December 31, 2018: ● Strike price of $3.5, for the conversion options ● Expected volatility of 204.73% calculated using the Company’s historical price of its common stock ● Expected dividend yield of 0% ● Risk-free interest rate of 2.49%, for the conversion options ● Expected lives of 0.33 years ● Market price at re-measurement date of $0.50 The fair value of embedded conversion feature were calculated using the BlackScholesMerton model based on the following variables on May 7, 2019: ● Strike price of $3.5, for the conversion options ● Expected volatility of 192.48% calculated using the Company’s historical price of its common stock ● Expected dividend yield of 0% ● Risk-free interest rate of 2.37%, for the conversion options ● Expected lives of 1.00 years ● Market price at re-measurement date of $0.95 The fair value of embedded conversion feature were calculated using the BlackScholesMerton model based on the following variables on June 30, 2019: ● Strike price of $3.5, for the conversion options ● Expected volatility of 214.79% calculated using the Company’s historical price of its common stock ● Expected dividend yield of 0% ● Risk-free interest rate of 1.95%, for the conversion options ● Expected lives of 0.83 years ● Market price at re-measurement date of $0.75 For the three months ended June 30, 2019 and 2018, the Company recorded interest expense of $74,074 and $103,304, respectively, and for the six months ended June 30, 2019 and 2018, the Company recorded interest expense of $174,474 and $205,540, respectively, on the note, including the amortization of the debt discount resulting from the value of the embedded conversion feature, and the carrying value of the note was $720,215 and $699,963 as of June 30, 2019 and December 31, 2018, respectively. (4) 12% convertible notes- Labrys On February 27, 2019, the Company entered into a Convertible Note Agreement with Labrys Fund, LP (“Labrys”), for the principal amount of $1,365,000 (the “Note”). The Note carries an Original Issue Discount of $102,375, bears interest at the rate of 12% per annum and must be repaid on or before 180 calendar days after the funding date of the respective tranche. The amounts advanced under the Note may be converted by Labrys at any time after 180 days from the date of the Note into shares of Company common stock at a conversion price equal to 70% of the lowest trading price during the 20 trading day period prior to the date of any notice of conversion. As of June 30, 2019, the Company has received principal totaled $1,213,250 out of the $1,365,000 Convertible Note Agreement. In addition, the Company issued 50,000 shares of the Company’s common stock with a fair value of $40,000, determined using the closing price of the issuance date of $0.80 per shares in connection with these issuances along with the original issue discount of $90,994 were recognized as discounts from the principal amount to be amortized over 180 days. Furthermore, the notes are convertible into shares of the common stock, at conversion price equal to 70% of the lowest trading price during the 20 trading day period prior to the date of any notice of conversion, which is lower than the price of the Company’s common stock on the date of issue. Therefore, the conversion feature embedded in the convertible note meet the definition of beneficial conversion feature (“BCF”). The Company evaluated the intrinsic value of the BCF as $1,071,506 at the issue date. The relative fair values of the BCF were recorded into additional paid in capital. For the three and six months ended June 30, 2019, the Company recorded interest expense of $644,229 and $764,203 on the note, including the amortization of the debt discount of $607,931 and $721,503 resulting from the value of beneficial conversion feature, and the carrying value of the note as at June 30, 2019 was $732,253. (5) 12% convertible notes- TFK On March 21, 2019, the Company entered into a Convertible Note Agreement with TFK Investments Inc. (“TFK”), for the principal amount of $300,000 (the “Note”). The Note carries an Original Issue Discount of 28,500, bears interest at the rate of 12% per annum and must be repaid on or before 180 calendar days after the funding date of the respective tranche. The amounts advanced under the Note may be converted by TFK at any time after 180 days from the date of the Note into shares of Company common stock at a conversion price equal to 70% of the lowest trading price during the 20 trading day period prior to the date of any notice of conversion. As of June 30, 2019, the Company has received principal totaled $150,000 out of the $300,000 Convertible Note Agreement. In addition, the Company issued 7,500 shares of the Company’s common stock with a fair value of $6,975, determined using the closing price of the issuance date of $0.93 per shares in connection with these issuances along with the original issue discount of $14,250 were recognized as discounts from the principal amount to be amortized over 180 days. Furthermore, the notes are convertible into shares of the common stock, at conversion price equal to 70% of the lowest trading price during the 20 trading day period prior to the date of any notice of conversion, which is lower than the price of the Company’s common stock on the date of issue. Therefore, the conversion feature embedded in the convertible note meet the definition of beneficial conversion feature (“BCF”). The Company evaluated the intrinsic value of the BCF as $128,775 at the issue date. The relative fair values of the BCF were recorded into additional paid in capital. For the three and six months ended June 30, 2019, the Company recorded interest expense of $80,321 and $85,568 on the note, including the amortization of the debt discount of $75,833 and $80,833 resulting from the value of beneficial conversion feature, and the carrying value of the note as at June 30, 2019 was $80,833. |
Note Payable
Note Payable | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Note Payable | 13. Note Payable On May 29, 2007, the Company issued a $360,000 promissory note (the “Promissory Note”) to an unrelated individual (the “Original Note holder”). This note bears interest at 18% per annum and was due on July 27, 2007. This note is currently in default and bears interest of 25% per annum (the “Default rate”) until paid in full. This note is secured by a pledge of shares of the Company’s common stock owned by Investlink (China) Limited (the “Pledged Shares”). In 2016, the Original Note holder informed the Company that all right, title and interests in the Promissory Note has been assigned and transferred to FirsTrust. On September 19, 2018, the Company has entered a Settlement Agreement and Release with Firs Trust to settle the Notes and interest. The Company has agreed to make a cash payment of $200,000 and to issue 300,000 Shares to FirsTrust by October 18, 2018 and to make a final cash payment of $260,000 by February 28, 2019. However, the Company has not performed its obligations in the Settlement Agreement as of December 31, 2018, and considered the payment terms as default and continued to accrue its interest after September 19, 2018. On March 21, 2019, the Company issued 300,000 shares of common stock with fair value of $222,000, determined using the closing prices of $0.74 on March 21, 2018, to repay $222,000 of the note payable. As a result, no gain or loss were recognized upon this conversion. On March 26, 2019, the Company has entered into the First Amendment Agreement with FirsTrust to settle the promissory notes together with the 6% secured convertible notes as disclosed under Note 11 plus interest and penalties with a total payable of approximately $2.3 million as of the date of the First Amendment Agreement was entered. The Company has agreed to make a payment of $29,789 (RMB200,000) , which has been paid on April 1, 2019, to enter into this Amendment, and settled with the total outstanding balance of $1.3 million to be due under the terms of the First Amendment Agreement by June 30, 2019. If such settled outstanding balance was not made by June 30, 2019, it will deem the First Amendment Agreement to be ineffective and the Company will need to continue to pay FirsTrust the amount set forth in the Settlement Agreement. As of June 30, 2019 and December 31, 2018, $138,000 and $360,000 of Promissory Note to FirsTrust is still outstanding. The Company accrued $8,625 and $22,500 interest expense on note payable for the three months ended June 30, 2019 and 2018, respectively. The Company accrued $31,125 and $45,000 interest expense on note payable for the six months ended June 30, 2019 and 2018, respectively. As of this date, the Company remains in default of the Settlement Agreement and Release and is in the process of raising funds to retire these obligations. Notwithstanding, there is no guarantee that the Company will be successful in these efforts and that FirsTrust will not exercise all rights available to it under the applicable agreements between the parties. On July 30, 2019, the Company received a notice of default and formal demand for payment and performance, which was followed by correspondence from FirsTrust’s lawyers that the commencement of legal action was imminent. As of this date, the Company has not received the service of any formal legal papers related to the matter. Since this matter is in its early stages, the final outcome cannot be predicted at this time and is largely dependent on the Company’s ability to raise funding to retire these obligations. If FirsTrust is successful in pursuing its legal action, the result could have a material adverse impact on the Company and its operations. |
Other Payables and Accruals
Other Payables and Accruals | 6 Months Ended |
Jun. 30, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Other Payables and Accruals | 14. Other Payables and accruals Other payable consisted of the following: Notes June 30, 2019 December 31, 2018 Stock subscription proceeds received in advance (1) $ 1,693,167 $ 1,692,454 Accrued expenses 289,002 219,033 R&D expense payable 431,009 431,009 Others 427,306 597,592 $ 2,840,484 $ 2,940,088 (1). The Company received RMB 3.2 million ($466,092 equivalent as at June 30, 2019) in 2016 from two unrelated potential investors, and additionally received RMB 8 million ($1,227,075 equivalent as at June 30, 2019) in 2017 from one unrelated potential investor pending for stock issuances. The Company is in the process of negotiating the issuance price per shares of these stock subscriptions with the investors. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | 15. Stockholders’ Equity Preferred stock On December 14, 2015, the Company issued 500,000 shares of preferred stock series A for the aggregate amount of $1,000,000 as debt cancellation owed to two related party individuals. These shares of Series A Preferred Stock shall have voting rights equal to aggregate of 75% of total shares entitled to vote by both (i) the holders of all of the then outstanding shares of Common Stock (whether or not such holders vote) and (ii) the holders of all of the then outstanding shares of the Company. The holders of preferred stock are entitled to receive noncumulative dividends, when and if declared by the board of directors. Dividends are not mandatory and shall not accrue. The Company shall have the right to redeem the Series A Preferred Stock, plus any accrued and unpaid dividends at a cash redemption price equal to the aggregate issuance price of $2.0 per share. On December 28, 2017, the Company issued 811,148 shares of preferred stock series B for the aggregate amount of $1,054,492 as debt cancellation owed to one related party individual. These shares of Series B Preferred Stock have a liquidation preference which is same with the Company’s Series A Preferred Stock, and is entitled to vote on an as-converted basis as the holder of common stock, and is convertible into the Company’s common stock on a one-for-one basis at any time at the option of the holder. The holders of preferred stock are entitled to receive noncumulative dividends, when and if declared by the board of directors. Dividends are not mandatory and shall not accrue. The Company shall have the right to redeem the Series B Preferred Stock, plus any accrued and unpaid dividends at a cash redemption price equal to the aggregate issuance price of $1.3 per share. Common stock During the six months ended June 30, 2019, the Company entered into three consulting agreements and issued 784,999 shares of common stocks to consultants for IR and business development services based on market price of the shares at the transaction dates. The valuation of the shares is amounted to an average issuance price of $0.86 per share. During the six months ended June 30, 2018, the Company issued 20,657 common shares to one officer for salary payment based on the average stock price of his service period which valued at $17,665. Conversion of convertible note As disclosed in Note 12(1), on April 27, 2018, the Company issued total 126,045 common shares at $0.62 per share price to FirsTrust Group, Inc. for the conversion of convertible note. As disclosed in Note 12(1), on March 26, 2019, the Company issued total 395,959 common shares at $0.20 per share price to FirsTrust Group, Inc. for the conversion of convertible note. Additional paid-in-capital As disclosed in Note 12, in February and March 2019, the Company issued in the principal amount of $1,363,250 convertible notes with BCF embedded. The Company evaluated the intrinsic value of the BCF as $1,200,281, at the issue date and recorded the amount into additional paid in capital. All other amounts recorded in additional paid in capital are derived from issuance of preferred shares or common shares as disclosed in the above. |
Stock-based Compensation
Stock-based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | 16. Stock-based Compensation On March 15, 2017, the Board of Directors approved a new stock option plan with ten years’ term. As of June 30, 2019, the Company has not granted any incentive compensation under this plan. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 17. Fair Value Measurements The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities recorded at fair value on recurring basis that were accounted for at fair value as of: June 30, 2019 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Derivative liabilities — — $ 68,591 $ 68,591 Total — — $ 68,591 $ 68,591 December 31, 2018 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Derivative liabilities — — $ 6,621 $ 6,621 Total — — $ 6,621 $ 6,621 The following is a reconciliation of the beginning and ending balance of the assets and liabilities measured at fair value on a recurring basis for the six months ended June 30, 2018 and for the year ended December 31, 2017: Six months ended Year ended Beginning balance $ 6,621 $ 247,933 Fair value of derivative liabilities at inception 95,144 - Change in fair value of derivative liabilities (33,174 ) (241,312 ) Ending balance $ 68,591 $ 6,621 |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 18. Earnings per share The following table set forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2019 and 2018. Three months ended Six months ended June 30, 2019 2018 2019 2018 Numerator: Net loss $ (2,245,690 ) $ (635,368 ) $ (1,855,067 ) $ (582,400 ) Denominator: Denominator for basic earnings per share (weighted-average shares) 19,343,881 16,479,316 18,272,950 16,201,020 Diluted effect of stocks – convertible note - - - - Denominator for diluted earnings per share (adjusted weighted-average shares) 19,343,881 16,479,316 18,272,950 16,201,020 Basic earnings per share (0.12 ) (0.04 ) (0.10 ) (0.04 ) Diluted earnings per share (0.12 ) (0.04 ) (0.10 ) (0.04 ) |
Income Tax
Income Tax | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax | 19. Income Tax In accordance with the current tax laws in the U.S., the Company is subject to a corporate tax rate of 21% on its taxable income. No provision for taxes is made for U.S. income tax for the three and six months ended June 30, 2019 and 2018 as it has no taxable income in the U.S. On December 22, 2017, the “Tax Cuts and Jobs Act” (“The 2017 Tax Act”) was enacted in the United States. Under the provisions of the Act, the U.S. corporate tax rate decreased from 34% to 21%. Accordingly, the Company has re-measured its deferred tax assets on net operating loss carry forwards in the U.S at the lower enacted cooperated tax rate of 21%. However, this re-measurement has no effect on the Company’s income tax expenses as the Company has provided a 100% valuation allowance on its deferred tax assets previously. Additionally, the 2017 Tax Act implemented a modified territorial tax system and imposing a tax on previously untaxed accumulated earnings and profits (“E&P”) of foreign subsidiaries (the “Toll Charge”). The Toll Charge is based in part on the amount of E&P held in cash and other specific assets as of December 31, 2017. The Toll Charge can be paid over an eight year period, starting in 2018, and will not accrue interest. The 2017 Tax Act also imposed a global intangible low-taxed income tax (“GILTI”), which is a new tax on certain off-shore earnings at an effective rate of 10.5% for tax years beginning after December 31, 2017 (increasing to 13.125% for tax years beginning after December 31, 2025) with a partial offset for foreign tax credits. The Company has determined that this one-time Toll Charge has no effect on the Company’s income tax expenses for the three months ended June 30, 2018 as the Company has no undistributed foreign earnings at either of the two testing dates of November 2, 2017 and December 31, 2017. For purposes of the inclusion of GILTI, the Company has determined the taxable off-shore earnings in the amount of $3.5 million in the year ended December 31, 2018, which has been fully offset by the current year loss of $3.2 million and NOL carryforwards of $0.3 million of Kiwa US. Therefore, this is no accrual of US income tax for GILTI as of December 31, 2018. The Company will evaluate the GILTI tax effect at the year end for the year ended 31, 2019. In accordance with the current tax laws in China, Kiwa Beijing, Kiwa Shenzhen, Kiwa Xian, Kiwa Hebei, Kiwa Yangling, and Kiwa Institute are subject to a corporate income tax rate of 25% on its taxable income. Kiwa Shenzhen, Kiwa Baiao, Kiwa Hebei, and Kiwa Institute have not provided for any corporate income taxes since each had no taxable income for the year ended June 30, 2019. For the three and six months ended June 30, 2019, Kiwa Yangling recorded income tax provision for approximately $716,352 and $1,225,023 respectively, and Kiwa Xian recorded income tax provision for approximately $(2,350) and $9,887, respectively. In accordance with the relevant tax laws in the British Virgin Islands, Kiwa BVI, as an International Business Company, is exempt from income taxes in the BVI. A reconciliation of the provision for income taxes from continuing operation determined at the local income tax rate to the Company’s effective income tax rate is as follows: Three months ended Six months ended June 30, 2019 2018 2019 2018 Pre-tax income (loss) from continuing operation $ (1,531,688 ) $ (277,302 ) $ (620,157 ) $ 314,809 U.S. federal corporate income tax rate 21 % 21 % 21 % 21 % Income tax expense (benefit) computed at U.S. federal corporation income tax rate (321,654 ) (58,233 ) (130,233 ) 66,110 Reconciling items: Rate differential for PRC earnings 1,020 24,563 83,265 80,270 Change of valuation allowance 1,029,334 385,686 1,256,980 740,369 Effect of tax exempted income in BVI 5,302 6,050 24,898 10,460 Deferred tax used to offset tax liability - - - - Effective tax expenses $ 714,002 $ 385,066 $ 1,234,910 $ 897,209 The Company had deferred tax assets from continuing operation as follows: June 30, 2019 December 31, 2018 Net operating losses carried forward by parent Company in the US $ 2,218,830 $ 1,676,335 Net operating losses carried forward by China Subsidiaries 832,067 821,089 Provision for Deferred COGS 612,191 Allowance for Bad Debt 91,296 Less: Valuation allowance (3,754,384 ) (2,497,424 ) Net deferred tax assets $ - $ - As of June 30, 2019 and December 31, 2018, the Company had approximately $13.9 million and $11.3 million net operating loss carryforwards available to reduce future taxable income. Net operating loss of the parent Company could be carried forward and taken against any taxable income for a period of not more than twenty years from the year of the initial loss pursuant to Section 172 of the Internal Revenue Code of 1986, as amended. The net operating loss of Kiwa Baiao, Kiwa Shenzhen, Kiwa Xian, Kiwa Hebei, and Kiwa Institute could be carried forward for a period of not more than five years from the year of the initial loss pursuant to relevant PRC tax laws and regulations. It is more likely than not that the deferred tax assets cannot be utilized in the future because there will not be significant future earnings from the entity which generated the net operating loss. Therefore, the Company recorded a full valuation allowance on its deferred tax assets. As of June 30, 2019 and December 31, 2018, the Company has no material unrecognized tax benefits which would favorably affect the effective income tax rate in future periods and does not believe that there will be any significant increases or decreases of unrecognized tax benefits within the next twelve months. No interest or penalties relating to income tax matters have been imposed on the Company during the three months ended June 30, 2019 and 2018, and no provision for interest and penalties is deemed necessary as of June 30, 2019 and December 31, 2018. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 20. Commitments and Contingencies As disclosed in Note 9, on June 8, 2017, Kiwa Hebei entered an equity purchase agreement with the shareholders of Yantai Peng Hao New Materials Technology Co. Ltd. (“Peng Hao”) to acquire 100% interest in Peng Hao for approximately RMB 15,000,000 (approximately US$ 2.3 million). As of June 30, 2019, Kiwa Hebei has made deposit payment of RMB 5,000,000 (approximately $0.7 million) and is committed to pay the remaining RMB10,000,000 based on the payment milestone in the equity purchase agreement. RMB 6,500,000 (approximately $1.0 million) will be paid upon completion of the land use rights ownership transfer and RMB 3,500,000 (approximately $0.5 million) will be paid upon completion of the business licenses transfer. |
Concentration of Risk
Concentration of Risk | 6 Months Ended |
Jun. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Concentration of Risk | 21. Concentration of Risk Credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable. As of June 30, 2019, and December 31, 2018, $10,099, and $7,859 were deposited with various major financial institutions located in the PRC, respectively. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness. Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. Customer and vendor concentration risk For the three months ended June 30, 2019, three customers accounted for 57%, 26%, and 17% for the Company’s total sales. For the six months ended June 30, 2019, three customers accounted for 48%, 26%, and 23% for the Company’s total sales. For the three months ended June 30, 2018, one customer accounted for 98% for the Company’s total sales. For the six months ended June 30, 2018, three customers accounted for 51%, 32%, and 15% for the Company’s total sales. As of June 30, 2019, three customers accounted for 40%, 29% and 26% of the Company’s accounts receivable. As of December 31, 2018, three customers accounted for 42%, 30%, and 27% of the Company’s accounts receivable. For the three months ended June 30, 2019, one supplier accounted for 94% of the Company’s total purchases. For the six months ended June 30, 2019, one supplier accounted for 94% of the Company’s total purchases. For the three months ended June 30, 2018, one supplier accounted for 95% of the Company’s total purchases. For the six months ended June 30, 2018, one supplier accounted for 95% of the Company’s total purchases. As of June 30, 2019, one supplier accounted for 89% of the Company’s accounts payable. As of December 31, 2018, one supplier accounted for 84% of the Company’s accounts payable. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 22. Subsequent Events On July 8, 2019, the Board of Directors removed Yongling Song as a member of the Board of Directors of Kiwa Bio-Tech Products Group Corp. On July 8, 2019, the Board of Directors appointed Xiaoqiang Yu as a member of the Board of Directors of Kiwa Bio-Tech Products Group Corp. |
Summaries of Significant Acco_2
Summaries of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for information pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary to give a fair presentation have been included. Interim results are not necessarily indicative of results of a full year. The information in this Form 10-Q should be read in conjunction with information included in the annual report for the fiscal year ended December 31, 2018 on Form 10-K filed with the SEC on April 12, 2019. |
Principle of Consolidation | Principle of Consolidation These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries, Kiwa BVI, Kiwa Asia Holdings Company, Kiwa Beijing, Kiwa Shenzhen, Kiwa Hebei, Kiwa Asia, Kiwa Yangling, and Kiwa Institute. All significant inter-company balances or transactions are eliminated on consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates include the valuation of securities issued, derivative liabilities, deferred tax assets and related valuation allowance. Certain of the Company’s estimates, including evaluating the collectability of accounts receivable and the fair market value of long-lived assets, could be affected by external conditions, including those unique to the Company’s industry, and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates that could cause actual results to differ from its estimates. The Company re-evaluates all of the Company’s accounting estimates annually based on these conditions and record adjustments when necessary. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these investments, the carrying amounts approximate their fair value. Restricted cash is excluded from cash and cash equivalents. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts receivable and allowance for doubtful accounts Accounts receivable represent customer accounts receivables. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience, the economic environment, trends in the microbial fertilizer industry, and a review of the current status of trade accounts receivable. Management reviews its accounts receivable each reporting period to determine if the allowance for doubtful accounts is adequate. Such allowances, if any, would be recorded in the period the impairment is identified. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. Uncollectible accounts receivable are charged against the allowance for doubtful accounts when all reasonable efforts to collect the amounts due have been exhausted. |
Inventory | Inventory Inventories are stated at the lower of cost, determined on the weighted average method, and net realizable value. Work in progress and finished goods are composed of direct materials, direct labor and a portion of manufacturing overhead. Net realizable value is the estimated based on selling price in the ordinary course of business, less estimated costs to complete and dispose. |
Property, Plant and Equipment | Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of property, plant and equipment are capitalized. These capitalized costs may include structural improvements, equipment and fixtures. All ordinary repair and maintenance costs are expensed as incurred. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows: Useful Life (In years) Buildings 30 - 35 Machinery and equipment 5 - 10 Automobiles 8 Office equipment 2 - 5 Computer software 3 Leasehold improvement The shorter of the |
Lease | Lease The Company adopted ASU 2016-02 on January 1, 2019 and determined that the effect of recognizing additional right of use (“ROU”) assets and operating liabilities under current leasing standards for existing operating leases with a term longer than 12 months are immaterial to its consolidated financial statements for the period beginning January 1, 2019. As a result, no such recognition ROU and operating labilities has been made on January 1, 2019. As of June 30, 2019, future lease payments are summarized below: Twelve months ending June 30, 2020 $ 18,556 Twelve months ending June 30, 2021 23,891 Twelve months ending June 30, 2022 18,582 Thereafter - Total minimum lease payment $ 61,029 |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company’s long-lived assets consist of property, plant and equipment. The Company evaluates its investment in long-lived assets, including property and equipment, for recoverability whenever events or changes in circumstances indicate the net carrying amount may not be recoverable. It is possible that these assets could become impaired as a result of legal factors, market conditions, operational performance indicators, technological or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. |
Financial Instruments | Financial Instruments The Company analyzes all financial instruments with features of both liabilities and equity under FASB Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” and FASB ASC Topic 815 “Derivatives and Hedging”. Embedded conversion features of convertible debentures not considered to be derivative instruments The embedded conversion features of convertible debentures not considered to be derivative instruments provide for a rate of conversion that is below market value. Such feature is normally characterized as a “beneficial conversion feature” (“BCF”). The relative fair values of the BCF were recorded as discounts from the face amount of the respective debt instrument. The Company amortized the discount using the straight-line method which approximates the effective interest method through maturity of such instruments. Embedded conversion features of convertible debentures that are classified as derivative liabilities The embedded conversion features of convertible debentures that are classified as derivative liabilities are recorded at fair value as a discount from the face amount of the respective debt instrument. The discount is being amortized to interest expense over the life of the note using the straight-line method, which approximates the effective interest method. These instruments are accounted for as derivative liabilities and marked-to-market each reporting period. The change in the value of the derivative liabilities is charged against or credited to income in the captioned “change in fair value of derivative liabilities” in the accompanying consolidated statements of operations and comprehensive income. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value with U.S. GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: ● Level 1: quoted market prices available in active markets for identical assets or liabilities as of the reporting date. ● Level 2: pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. ● Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalent, prepaid expenses, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments. Derivative instruments are carried at fair value, estimated using the Black Scholes Merton model. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not however practical to determine the fair value of advances from stockholders, if any, due to their related party nature. |
Revenue Recognition | Revenue Recognition On January 1, 2018 we adopted Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (FASB ASC Topic 606) using the modified retrospective method for contracts that were not completed as of January 1, 2018. This did not result in an adjustment to the retained earnings upon adoption of this new guidance as the Company’s revenue was recognized based on the amount of consideration we expect to receive in exchange for satisfying the performance obligations. The core principle underlying the revenue recognition ASU is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company’s revenue streams are recognized at a point in time. The ASU requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. Upon adoption, the Company evaluated its revenue recognition policy for all revenue streams within the scope of the ASU under previous standards and using the five-step model under the new guidance and confirmed that there were no differences in the pattern of revenue recognition. The Company continues to derive its revenues from sales contracts with its customers with revenues being recognized upon delivery of products. Persuasive evidence of an arrangement is demonstrated via sales contract and invoice; and the sales price to the customer is fixed upon acceptance of the sales contract and there is no separate sales rebate, discount, or volume incentive. The Company recognizes revenue when title and ownership of the goods are transferred upon shipment to the customer by the Company to consider control of goods are transferred to its customer and collectability of payment is reasonably assured. The Company’s revenues are recognized at a point in time after all performance obligations are satisfied. The Company’s customers are mainly agricultural cooperative company and distributors who then resell the Company’s products to individual farmers. Because the crop growing cycle usually takes approximately 3 to 9 months in the agricultural industry, for some co-ops and distributors, it will take approximately similar time frame of 3 to 9 months for farmers to harvest crops and to realize profits to repay them. As a result, for the sales contracts with these customers, the collectability of payment is highly dependent on the successful harvest of corps and the customers’ ability to collect money from farmers. The Company deemed the collectability of payment may not be reasonably assured until after the Company get paid. Collectability is a necessary condition for the contract to be accounted for to meet the criteria of the first step “identifying the contract with the customer” under the new revenue guidance in ASC 606. As a result, these sales contracts are not considered a contract under ASC 606, thus the shipments under these contracts are not recognized as revenue until all criteria for “identifying the contract with the customer” and revenue recognition are met using the five-step model. |
Deferred Revenue and Deferred Cost of Goods Sold | Deferred Revenue and Deferred Cost of Goods Sold Deferred revenue and deferred cost of goods sold result from transactions where the Company has shipped product for which all revenue recognition criteria under the five-step model have not yet been met. Though these contracts are not considered a contract under ASC 606, they are legally enforceable, and the Company has an unconditional and immediate right to payment after the Company has shipped products, therefore, the Company recognizes a receivable and a corresponding deferred revenue upon shipment. Deferred cost of goods sold includes direct inventory costs. Once all revenue recognition criteria under the five-step model have been met, the deferred revenues and associated cost of goods sold are recognized. The Company’s provision for deferred cost of goods sold is made based on historical collection experience on such related accounts receivable and realizability of deferred revenue . The Company made provision of $2,448,764 and nil for deferred cost of goods sold for the six months ended June 30, 2019 and 2018, respectively. |
Income Taxes | Income Taxes The Company accounts for income taxes under the provisions of FASB ASC Topic 740, “Income Tax,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the difference between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company establishes a valuation allowance when it is more likely than not that the assets will not be recovered. FASB ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes,” defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. United States federal, state and local income tax returns prior to 2015 are not subject to examination by any applicable tax authorities. PRC tax returns filed for 2015, 2016 and 2017 are subject to examination by any applicable tax authorities. |
Stock Based Compensation | Stock Based Compensation The Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that share-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period. The Company records stock-based compensation expense at fair value on the grant date and recognizes the expense over the employee’s requisite service period. The Company’s expected volatility assumption is based on the historical volatility of Company’s stock. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the Company’s current and expected dividend policy. The Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, “Equity-Based Payments to Non-employees”. Under FASB ASC Topic 718 and FASB ASC Subtopic 505-50, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received. |
Foreign Currency Translation and Other Comprehensive Income | Foreign Currency Translation and Other Comprehensive Income The Company uses United States dollars (“US Dollar” or “US$” or “$”) for financial reporting purposes. However, the Company maintains the books and records in its functional currency, Chinese Renminbi (“RMB”) and Hong Kong Dollar (“HKD”), being the functional currency of the economic environment in which its operations are conducted. In general, the Company translates its assets and liabilities into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statement of comprehensive loss and the statement of cash flow are translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income. Other comprehensive income for the three and six months ended June 30, 2019 and 2018 represented foreign currency translation adjustments and were included in the unaudited condensed consolidated statements of operations and comprehensive income. The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the unaudited condensed consolidated financial statements were as follows: As of As of Balance sheet items, except for equity accounts 6.8656 6.8761 Three months ended June 30, 2019 2018 Items in the statements of comprehensive income 6.8210 6.3726 Six months ended June 30, 2019 2018 Items in the statements of comprehensive income 6.7839 6.3659 The exchange rates used to translate amounts in HKD into U.S. Dollars for the purposes of preparing the consolidated financial statements were as follows: As of As of Balance sheet items, except for equity accounts 7.8121 7.8297 Three months ended June 30, 2019 2018 Items in the statements of comprehensive income 7.8396 7.8476 Six months ended June 30, 2019 2018 Items in the statements of comprehensive income 7.8426 7.8372 |
Earnings Per Common Share | Earnings Per Common Share Net income per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. Common stock equivalents having an anti-dilutive effect on earnings per share are excluded from the calculation of diluted earnings per share. |
Commitments and Contingencies | Commitments and Contingencies The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unassured claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unassured claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. |
Cash Flow Reporting | Cash Flow Reporting The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of : (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments; (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this Update affect any entity that is required to apply the provisions of Topic 220, Income Statement – Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company does not believe the adoption of this ASU would have a material effect on the Company’s consolidated financial statements. In August 2018, the FASB Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company does not expect this guidance will have a material impact on its condensed consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s consolidated financial statement presentation or disclosures. |
Summaries of Significant Acco_3
Summaries of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Lives of Assets | Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows: Useful Life (In years) Buildings 30 - 35 Machinery and equipment 5 - 10 Automobiles 8 Office equipment 2 - 5 Computer software 3 Leasehold improvement The shorter of the |
Schedule of Future Lease Payment | As of June 30, 2019, future lease payments are summarized below: Twelve months ending June 30, 2020 $ 18,556 Twelve months ending June 30, 2021 23,891 Twelve months ending June 30, 2022 18,582 Thereafter - Total minimum lease payment $ 61,029 |
Schedule of Foreign Currency Exchange Rate | The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the unaudited condensed consolidated financial statements were as follows: As of As of Balance sheet items, except for equity accounts 6.8656 6.8761 Three months ended June 30, 2019 2018 Items in the statements of comprehensive income 6.8210 6.3726 Six months ended June 30, 2019 2018 Items in the statements of comprehensive income 6.7839 6.3659 The exchange rates used to translate amounts in HKD into U.S. Dollars for the purposes of preparing the consolidated financial statements were as follows: As of As of Balance sheet items, except for equity accounts 7.8121 7.8297 Three months ended June 30, 2019 2018 Items in the statements of comprehensive income 7.8396 7.8476 Six months ended June 30, 2019 2018 Items in the statements of comprehensive income 7.8426 7.8372 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable consisted of the following: June 30, 2019 December 31, 2018 Accounts receivable $ 3,523,166 $ 6,751,113 Less: Allowance for doubtful accounts - - Accounts receivable, net $ 3,523,166 $ 6,751,113 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Prepaid Expense - Schedule Of Prepaid Expenses Details | |
Schedule of Prepaid Expenses | Prepaid expenses consisted of the following: Notes June 30, 2019 December 31, 2018 Prepaid office rent $ 2,457 $ 4,921 Prepaid Packaging Expense 10,009 Prepaid government filing expense 12,000 7,000 Prepaid consulting expenses (1) 1,798,356 2,230,553 Others 17,118 17,091 Total $ 1,839,940 $ 2,259,565 (1) Prepaid consulting expenses represent issuance of common stock for prepaid services. As of June 30, 2019, the Company evaluated the performance of the consultants and concluded all the contracts were on schedule of delivery. The company amortized the consulting fee over the service periods per agreements based on the progress of services delivered. For the three months ended June 30, 2019 and 2018, the amortization of consulting expense was $591,377 and $679,925, respectively. For the six months ended June 30, 2019 and 2018, the amortization of consulting expense was $1,105,046 and $1,268,460, respectively. |
Advance to Suppliers (Tables)
Advance to Suppliers (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Advance To Suppliers | |
Schedule of Advance to Suppliers | As of June 30, 2019 and December 31, 2018, advance to suppliers consisted of the following: June 30, 2019 December 31, 2018 Advance to suppliers $ 23,233,227 $ 6,751,113 Less: provisions for advance to suppliers (225,763 ) - Advance to suppliers, net $ 23,007,464 $ 6,751,113 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consisted of the following: June 30, 2019 December 31, 2018 Raw materials $ - $ 1,358,384 Finished goods 83,252 253,331 Packing materials 31,366 31,318 Total $ 114,618 $ 1,643,033 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property Plant and Equipment | Property, plant and equipment, net consisted of the following: June 30, 2018 December 31, 2018 Property, Plant and Equipment Office equipment $ 17,470 $ 17,451 Furniture 31,335 27,312 Leasehold improvement 165,012 130,357 Construction in progress 25,344 25,305 Others 292 1,047 Property, plant and equipment - total $ 239,453 $ 201,472 Less: accumulated depreciation (121,668 ) (108,291 ) Property, plant and equipment - net $ 117,785 $ 93,181 |
Salaries Payable (Tables)
Salaries Payable (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Compensation Related Costs [Abstract] | |
Schedule of Salaries Payable | June 30, 2019 December 31, 2018 Ms. Yvonne Wang (“Ms. Wang”) $ 301,000 $ 259,000 Hon Man Yun (“Mr. Yun”) 119,589 60,702 Other Employees 839,086 705,257 Total $ 1,259,675 $ 1,024,959 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Mr. Xiaoqiang Yu [Member] | |
Schedule of Related Party Transactions | Due from related parties – non-trade Amounts due from related parties consisted of the following as of June 30, 2019 and December 31, 2018: Item Nature Notes June 30, 2019 December 31, 2018 Mr. Xiaoqiang Yu Non-trade (1) 18,244 12,108 Total $ 18,244 $ 12,108 (1) Mr. Xiaoqiang Yu During the year ended December 31, 2018, Mr. Xiaoqiang Yu, the COO of the Company, obtained a cash advance from the Company for operational purpose. As of June 30, 2019, and December 31, 2018, the amount due from Mr. Xiaoqiang Yu was $18,244 and $12,108, respectively. |
Ms. Wang, Ms. Feng Li [Member] | |
Schedule of Related Party Transactions | Due to related parties– non-trade Amounts due to related parties consisted of the following as of June 30, 2019 and December 31, 2018: Item Nature Notes June 30, 2019 December 31, 2018 Ms. Wang Non-trade (1) 281,844 534,563 Ms. Feng Li (“Ms. Li”) Non-trade (2) 9,467 36,358 Total amount due to related parties $ 291,311 $ 570,921 (1) Ms. Wang Effective November 20, 2015, the Company appointed Ms. Wang as the Chairman of the Board and effective August 11, 2016, the Company’s Board of Directors has assigned Ms. Wang the additional titles of Acting President, Acting Chief Executive Officer and Acting Chief Financial Officer. On April 15, 2018, Ms. Wang turned over the Acting Chief Financial Officer to her successor. During the six months ended June 30, 2019 and 2018, Ms. Wang paid various expenses on behalf of the Company. As of June 30, 2019 and December 31, 2018, the amount due to Ms. Wang was $281,844 and $534,563, respectively. (2) Ms. Feng Li Ms. Feng Li is a member of the Company’s board of directors and shareholder of the Company. Ms. Li held approximately 11% of the Company’s Common Stock and 50% of the Company’s Series A Preferred Stock. Ms. Feng Li paid various expenses on behalf of the Company. As of June 30, 2019 and December 31, 2018, the amount due to Ms. Feng Li was $9,467 and $36,358, respectively. |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes Payable | Convertible notes payable consisted of the following: June 30, 2019 December 31, 2018 6% secured convertible notes – FirsTrust Group Inc. (1) $ 132,762 $ 125,692 15% convertible notes- Mr. Geng Liu (2) 145,655 145,431 15% convertible notes- Mr. Junwei Zheng (3) 801,101 799,870 12% convertible notes- Labrys (4) 1,213,250 - 12% convertible notes- TFK (5) 150,000 - Less: notes discount (631,050 ) (99,907 ) Convertible notes payable - total $ 1,811,718 $ 971,086 |
Other Payables and Accruals (Ta
Other Payables and Accruals (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Payables | Other payable consisted of the following: Notes June 30, 2019 December 31, 2018 Stock subscription proceeds received in advance (1) $ 1,693,167 $ 1,692,454 Accrued expenses 289,002 219,033 R&D expense payable 431,009 431,009 Others 427,306 597,592 $ 2,840,484 $ 2,940,088 (1). The Company received RMB 3.2 million ($466,092 equivalent as at June 30, 2019) in 2016 from two unrelated potential investors, and additionally received RMB 8 million ($1,227,075 equivalent as at June 30, 2019) in 2017 from one unrelated potential investor pending for stock issuances. The Company is in the process of negotiating the issuance price per shares of these stock subscriptions with the investors. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities recorded at fair value on recurring basis that were accounted for at fair value as of: June 30, 2019 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Derivative liabilities — — $ 68,591 $ 68,591 Total — — $ 68,591 $ 68,591 December 31, 2018 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Derivative liabilities — — $ 6,621 $ 6,621 Total — — $ 6,621 $ 6,621 |
Schedule of Liabilities Measured at Fair Value on Recurring Basis | The following is a reconciliation of the beginning and ending balance of the assets and liabilities measured at fair value on a recurring basis for the six months ended June 30, 2018 and for the year ended December 31, 2017: Six months ended Year ended Beginning balance $ 6,621 $ 247,933 Fair value of derivative liabilities at inception 95,144 - Change in fair value of derivative liabilities (33,174 ) (241,312 ) Ending balance $ 68,591 $ 6,621 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings Per Share | The following table set forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2019 and 2018. Three months ended Six months ended June 30, 2019 2018 2019 2018 Numerator: Net loss $ (2,245,690 ) $ (635,368 ) $ (1,855,067 ) $ (582,400 ) Denominator: Denominator for basic earnings per share (weighted-average shares) 19,343,881 16,479,316 18,272,950 16,201,020 Diluted effect of stocks – convertible note - - - - Denominator for diluted earnings per share (adjusted weighted-average shares) 19,343,881 16,479,316 18,272,950 16,201,020 Basic earnings per share (0.12 ) (0.04 ) (0.10 ) (0.04 ) Diluted earnings per share (0.12 ) (0.04 ) (0.10 ) (0.04 ) |
Income Tax (Tables)
Income Tax (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Reconciliation of U.S. Tax Rate | A reconciliation of the provision for income taxes from continuing operation determined at the local income tax rate to the Company’s effective income tax rate is as follows: Three months ended Six months ended June 30, 2019 2018 2019 2018 Pre-tax income (loss) from continuing operation $ (1,531,688 ) $ (277,302 ) $ (620,157 ) $ 314,809 U.S. federal corporate income tax rate 21 % 21 % 21 % 21 % Income tax expense (benefit) computed at U.S. federal corporation income tax rate (321,654 ) (58,233 ) (130,233 ) 66,110 Reconciling items: Rate differential for PRC earnings 1,020 24,563 83,265 80,270 Change of valuation allowance 1,029,334 385,686 1,256,980 740,369 Effect of tax exempted income in BVI 5,302 6,050 24,898 10,460 Deferred tax used to offset tax liability - - - - Effective tax expenses $ 714,002 $ 385,066 $ 1,234,910 $ 897,209 |
Schedule of Deferred Tax Assets | The Company had deferred tax assets from continuing operation as follows: June 30, 2019 December 31, 2018 Net operating losses carried forward by parent Company in the US $ 2,218,830 $ 1,676,335 Net operating losses carried forward by China Subsidiaries 832,067 821,089 Provision for Deferred COGS 612,191 Allowance for Bad Debt 91,296 Less: Valuation allowance (3,754,384 ) (2,497,424 ) Net deferred tax assets $ - $ - |
Description of Business and O_2
Description of Business and Organization (Details Narrative) | Jun. 30, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Percentage of ownership | 89.00% |
Going Concern (Details Narrativ
Going Concern (Details Narrative) | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2019CNY (¥) | Jun. 30, 2018USD ($) | Feb. 28, 2019USD ($) | Dec. 31, 2018USD ($) | |
Accumulated deficit | $ (16,658,597) | $ (16,658,597) | $ (14,803,530) | ||||||
Net loss | (2,245,690) | $ 390,623 | $ (635,368) | $ 52,968 | (1,855,067) | $ (582,400) | |||
Net cash used in operating activities | (1,530,963) | $ 3,758,521 | |||||||
Working capital | 12,300,000 | 12,300,000 | |||||||
Cash and cash equivalents | $ 10,099 | $ 10,099 | $ 7,859 | ||||||
Convertible Promissory Note [Member] | |||||||||
Debt instrument principal amount | $ 1,665,000 | $ 1,665,000 | |||||||
Equity Purchase Agreement [Member] | Kiwa Hebei [Member] | RMB [Member] | |||||||||
Payment of purchase agreement | ¥ | ¥ 10,000,000 |
Summaries of Significant Acco_4
Summaries of Significant Accounting Policies (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Accounting Policies [Abstract] | ||
Income tax largest amount of benefit, description | greater than 50 percent | |
Provision of deferred cost of goods sold | $ 2,448,764 |
Summaries of Significant Acco_5
Summaries of Significant Accounting Policies - Schedule of Estimated Useful Lives of Assets (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Buildings [Member] | Minimum [Member] | |
Property, plant and equipment useful life (In years) | 30 years |
Buildings [Member] | Maximum [Member] | |
Property, plant and equipment useful life (In years) | 35 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Property, plant and equipment useful life (In years) | 5 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Property, plant and equipment useful life (In years) | 10 years |
Automobiles [Member] | |
Property, plant and equipment useful life (In years) | 8 years |
Office Equipment [Member] | Minimum [Member] | |
Property, plant and equipment useful life (In years) | 2 years |
Office Equipment [Member] | Maximum [Member] | |
Property, plant and equipment useful life (In years) | 5 years |
Computer Software [Member] | |
Property, plant and equipment useful life (In years) | 3 years |
Leasehold Improvements [Member] | |
Property, plant and equipment useful life, description | The shorter of the lease term and useful life |
Summaries of Significant Acco_6
Summaries of Significant Accounting Policies - Schedule of Future Lease Payment (Details) | Jun. 30, 2019USD ($) |
Accounting Policies [Abstract] | |
Twelve months ending June 30, 2020 | $ 18,556 |
Twelve months ending June 30, 2021 | 23,891 |
Twelve months ending June 30, 2022 | 18,582 |
Thereafter | |
Total minimum lease payment | $ 61,029 |
Summaries of Significant Acco_7
Summaries of Significant Accounting Policies - Schedule of Foreign Currency Exchange Rate (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Balance Sheet Items, Except for Equity Accounts [Member] | RMB [Member] | |||||
Foreign currency exchange rate, translation | 6.8656 | 6.8761 | |||
Balance Sheet Items, Except for Equity Accounts [Member] | HKD [Member] | |||||
Foreign currency exchange rate, translation | 7.8121 | 7.8297 | |||
Items in the Statements of Comprehensive Income [Member] | RMB [Member] | |||||
Foreign currency exchange rate, translation | 6.8210 | 6.3726 | 6.7839 | 6.3659 | |
Items in the Statements of Comprehensive Income [Member] | HKD [Member] | |||||
Foreign currency exchange rate, translation | 7.8396 | 7.8476 | 7.8426 | 7.8372 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details Narrative) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||
Accounts receivable, net | $ 3,500,000 | $ 6,800,000 |
Accounts Receivable, Net - Sche
Accounts Receivable, Net - Schedule of Accounts Receivable (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||
Accounts receivable | $ 3,523,166 | $ 6,751,113 |
Less: Allowance for doubtful debt | ||
Accounts receivable, net | $ 3,523,166 | $ 6,751,113 |
Prepaid Expense - Schedule of P
Prepaid Expense - Schedule of Prepaid Expenses (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 | |
Prepaid Expense - Schedule Of Prepaid Expenses Details | |||
Prepaid office rent | $ 2,457 | $ 4,921 | |
Prepaid Packaging Expense | 10,009 | ||
Prepaid government filing expense | 12,000 | 7,000 | |
Prepaid consulting expenses | [1] | 1,798,356 | 2,230,553 |
Others | 17,118 | 17,091 | |
Total | $ 1,839,940 | $ 2,259,565 | |
[1] | Prepaid consulting expenses represent issuance of common stock for prepaid services. As of June 30, 2019, the Company evaluated the performance of the consultants and concluded all the contracts were on schedule of delivery. The company amortized the consulting fee over the service periods per agreements based on the progress of services delivered. For the three months ended June 30, 2019 and 2018, the amortization of consulting expense was $591,377 and $679,925, respectively. For the six months ended June 30, 2019 and 2018, the amortization of consulting expense was $1,105,046 and $1,268,460, respectively. |
Prepaid Expense - Schedule of_2
Prepaid Expense - Schedule of Prepaid Expenses (Details) (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Prepaid Expense - Schedule Of Prepaid Expenses Details | ||||
Amortization of consulting expenses | $ 591,377 | $ 679,925 | $ 1,105,046 | $ 1,268,460 |
Advance to Suppliers - Schedule
Advance to Suppliers - Schedule of Advance to Suppliers (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Advance To Suppliers | ||
Advance to suppliers | $ 23,233,227 | $ 6,751,113 |
Less: provisions for advance to suppliers | (225,763) | |
Advance to suppliers, net | $ 23,007,464 | $ 15,763,198 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,358,384 | |
Finished goods | 83,252 | 253,331 |
Packing materials | 31,366 | 31,318 |
Total | $ 114,618 | $ 1,643,033 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 4,904 | $ 4,817 | $ 10,588 | $ 20,451 |
Property, Plant and Equipment -
Property, Plant and Equipment - Schedule of Property Plant and Equipment (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Property, plant and equipment - total | $ 239,453 | $ 201,472 |
Less: accumulated depreciation | (121,668) | (108,291) |
Property, plant and equipment - net | 117,785 | 93,181 |
Office Equipment [Member] | ||
Property, plant and equipment - total | 17,470 | 17,451 |
Furniture [Member] | ||
Property, plant and equipment - total | 31,335 | 27,312 |
Leasehold Improvement [Member] | ||
Property, plant and equipment - total | 165,012 | 130,357 |
Construction in Progress [Member] | ||
Property, plant and equipment - total | 25,344 | 25,305 |
Others [Member] | ||
Property, plant and equipment - total | $ 292 | $ 1,047 |
Deposit for Long-Term Investm_2
Deposit for Long-Term Investment (Details Narrative) - Equity Purchase Agreement [Member] | Jun. 08, 2017USD ($) | Jun. 08, 2017CNY (¥) | Jun. 30, 2019USD ($) | Jun. 30, 2019CNY (¥) |
Payments to acquire new factory | $ | $ 700,000 | |||
Payment to acquire land use rights | $ | 900,000 | |||
Payment made upon business licenses transfer | $ | $ 500,000 | |||
RMB [Member] | ||||
Payments to acquire new factory | ¥ | ¥ 5,000,000 | |||
Payment to acquire land use rights | ¥ | 6,500,000 | |||
Payment made upon business licenses transfer | ¥ | ¥ 3,500,000 | |||
Yantai Peng Hao New Materials Technology Co. Ltd [Member] | ||||
Ownership interest | 100.00% | 100.00% | ||
Payments to acquire new factory | $ | $ 2,200,000 | |||
Yantai Peng Hao New Materials Technology Co. Ltd [Member] | RMB [Member] | ||||
Payments to acquire new factory | ¥ | ¥ 15,000,000 |
Salaries Payable - Schedule of
Salaries Payable - Schedule of Salaries Payable (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Salary payable | $ 1,259,675 | $ 1,024,959 |
Ms. Yvonne Wang [Member] | ||
Salary payable | 301,000 | 259,000 |
Hon Man Yun [Member] | ||
Salary payable | 119,589 | 60,702 |
Other Employees [Member] | ||
Salary payable | $ 839,086 | $ 705,257 |
Related Party Transactions - Sc
Related Party Transactions - Schedule of Related Party Transactions (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 | |
Related Party Transaction [Line Items] | |||
Due to related parties | $ 291,311 | $ 570,921 | |
Non-Trade Transaction [Member] | |||
Related Party Transaction [Line Items] | |||
Due from related parties | 18,244 | 12,108 | |
Due to related parties | 291,311 | 570,921 | |
Mr. Xiaoqiang Yu [Member] | Non-Trade Transaction [Member] | |||
Related Party Transaction [Line Items] | |||
Due from related parties | [1] | 18,244 | 12,108 |
Ms. Wang [Member] | Non-Trade Transaction [Member] | |||
Related Party Transaction [Line Items] | |||
Due to related parties | [2] | 281,844 | 534,563 |
Ms. Feng Li [Member] | Non-Trade Transaction [Member] | |||
Related Party Transaction [Line Items] | |||
Due to related parties | [3] | $ 9,467 | $ 36,358 |
[1] | During the year ended December 31, 2018, Mr. Xiaoqiang Yu, the COO of the Company, obtained a cash advance from the Company for operational purpose. As of June 30, 2019, and December 31, 2018, the amount due from Mr. Xiaoqiang Yu was $18,244 and $12,108, respectively. | ||
[2] | Effective November 20, 2015, the Company appointed Ms. Wang as the Chairman of the Board and effective August 11, 2016, the Company's Board of Directors has assigned Ms. Wang the additional titles of Acting President, Acting Chief Executive Officer and Acting Chief Financial Officer. On April 15, 2018, Ms. Wang turned over the Acting Chief Financial Officer to her successor.During the six months ended June 30, 2019 and 2018, Ms. Wang paid various expenses on behalf of the Company. As of June 30, 2019 and December 31, 2018, the amount due to Ms. Wang was $281,844 and $534,563, respectively. | ||
[3] | Ms. Feng Li is a member of the Company's board of directors and shareholder of the Company. Ms. Li held approximately 11% of the Company's Common Stock and 50% of the Company's Series A Preferred Stock. Ms. Feng Li paid various expenses on behalf of the Company. As of June 30, 2019 and December 31, 2018, the amount due to Ms. Feng Li was $9,467 and $36,358, respectively. |
Related Party Transactions - _2
Related Party Transactions - Schedule of Related Party Transactions (Details) (Parenthetical) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Ownership interest | 89.00% | |
Mr. Xiaoqiang [Member] | ||
Due from related parties | $ 18,244 | $ 12,108 |
Ms. Wang [Member] | ||
Due to related parties | 281,844 | 534,563 |
Ms. Feng Li [Member] | ||
Due to related parties | $ 9,467 | $ 36,358 |
Ms. Feng Li [Member] | Common Stock [Member] | ||
Ownership interest | 11.00% | |
Ms. Feng Li [Member] | Series A Preferred Stock [Member] | ||
Ownership interest | 50.00% |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) | May 07, 2019$ / shares | Mar. 26, 2019USD ($)$ / sharesshares | Mar. 21, 2019USD ($)shares | Feb. 28, 2019USD ($) | Feb. 28, 2019USD ($) | Feb. 27, 2019USD ($) | Feb. 27, 2019USD ($) | Dec. 17, 2018USD ($) | Oct. 18, 2018USD ($) | Sep. 19, 2018USD ($)shares | Apr. 27, 2018$ / sharesshares | Dec. 13, 2017USD ($)$ / sharesshares | Oct. 19, 2017USD ($)$ / sharesshares | May 09, 2017USD ($)$ / shares | Jan. 17, 2017USD ($)$ / shares | Aug. 12, 2013USD ($) | Mar. 18, 2008USD ($) | Jun. 29, 2006USD ($) | Feb. 28, 2019USD ($) | Jun. 30, 2019USD ($)$ / shares | Mar. 31, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2019CNY (¥)shares | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($)$ / shares | Mar. 24, 2018$ / shares | Jan. 17, 2017CNY (¥) |
Convertible notes payable | $ 1,811,718 | $ 1,811,718 | $ 971,086 | |||||||||||||||||||||||||
Accrued interest expense | 137,601 | $ 307,927 | ||||||||||||||||||||||||||
Fair value of beneficial conversion feature | $ 1,200,281 | $ 1,200,281 | ||||||||||||||||||||||||||
Proceeds from convertible notes payable | $ 1,363,250 | $ 1,363,250 | $ 1,247,256 | |||||||||||||||||||||||||
Number of common stock shares issued, value | $ 235,600 | |||||||||||||||||||||||||||
Former Chief Executive Officer [Member] | ||||||||||||||||||||||||||||
Percentage of secured convertible notes issued | 6.00% | 6.00% | ||||||||||||||||||||||||||
6% Secured Convertible Note [Member] | ||||||||||||||||||||||||||||
Notes beard interest | 15.00% | |||||||||||||||||||||||||||
FirsTrust Group, Inc [Member] | ||||||||||||||||||||||||||||
Convertible notes payable | $ 150,250 | |||||||||||||||||||||||||||
Percentage of secured convertible notes issued | 6.00% | |||||||||||||||||||||||||||
Notes beard interest | 6.00% | 15.00% | 15.00% | 15.00% | 15.00% | |||||||||||||||||||||||
Cash payment | $ 500,000 | |||||||||||||||||||||||||||
Conversion of debt upon stock issued percentage | 40.00% | 110.00% | 110.00% | |||||||||||||||||||||||||
Penalty damage expense | $ 17,759 | $ 16,801 | $ 42,120 | $ 35,246 | ||||||||||||||||||||||||
Accrued interest expense | 4,965 | 4,092 | 9,900 | 8,588 | ||||||||||||||||||||||||
Interest expense | 164,872 | 177,179 | ||||||||||||||||||||||||||
Accrued liquidated damages | 555,658 | 555,538 | ||||||||||||||||||||||||||
Incurred financial liquidated damages | $ 245 | 18,130 | ||||||||||||||||||||||||||
Debt instrument conversion shares | shares | 395,959 | |||||||||||||||||||||||||||
FirsTrust Group [Member] | ||||||||||||||||||||||||||||
Conversion of debt upon stock issued percentage | 40.00% | 40.00% | 40.00% | |||||||||||||||||||||||||
Stock issued for conversion, shares | shares | 395,959 | 126,045 | 105,095 | 14,151 | ||||||||||||||||||||||||
Shares issued price per share | $ / shares | $ 0.20 | $ 0.62 | $ 0.75 | $ 1.04 | ||||||||||||||||||||||||
Securities Purchase Agreement [Member] | Purchasers [Member] | ||||||||||||||||||||||||||||
Convertible notes payable | $ 2,450,000 | |||||||||||||||||||||||||||
Percentage of secured convertible notes issued | 6.00% | |||||||||||||||||||||||||||
Notes beard interest | 6.00% | |||||||||||||||||||||||||||
Securities Purchase Agreement [Member] | Holders [Member] | ||||||||||||||||||||||||||||
Convertible notes payable | $ 2,000,000 | |||||||||||||||||||||||||||
Notes beard interest | 6.00% | |||||||||||||||||||||||||||
Payment of debt | $ 75,000 | |||||||||||||||||||||||||||
Convertible Note Agreement [Member] | ||||||||||||||||||||||||||||
Convertible notes payable | 720,215 | 720,215 | $ 699,963 | |||||||||||||||||||||||||
Accrued interest expense | 74,074 | 103,304 | 174,474 | 205,540 | ||||||||||||||||||||||||
Convertible Note Agreement [Member] | FirsTrust Group [Member] | ||||||||||||||||||||||||||||
Shares issued price per share | $ / shares | $ 2.3 | $ 2.25 | ||||||||||||||||||||||||||
Fair value of beneficial conversion feature | $ 105,095 | $ 14,151 | ||||||||||||||||||||||||||
Convertible Note Agreement [Member] | Geng Liu [Member] | 15% Convertible Notes [Member] | ||||||||||||||||||||||||||||
Convertible notes payable | $ 145,655 | 145,655 | ||||||||||||||||||||||||||
Notes beard interest | 15.00% | 15.00% | ||||||||||||||||||||||||||
Accrued interest expense | $ 10,965 | 13,661 | ||||||||||||||||||||||||||
Fair value of beneficial conversion feature | $ 45,094 | |||||||||||||||||||||||||||
Debt instruments face amount | $ 146,000 | |||||||||||||||||||||||||||
Debt instruments maturity date | Jan. 16, 2018 | |||||||||||||||||||||||||||
Debt conversion price | $ / shares | $ 0.90 | |||||||||||||||||||||||||||
Proceeds from convertible notes payable | $ 99,850 | |||||||||||||||||||||||||||
Convertible Note Agreement [Member] | Geng Liu [Member] | 15% Convertible Notes [Member] | Extended Maturity [Member] | ||||||||||||||||||||||||||||
Debt instruments maturity date | Jun. 30, 2020 | |||||||||||||||||||||||||||
Convertible Note Agreement [Member] | Geng Liu [Member] | 15% Convertible Notes [Member] | RMB [Member] | ||||||||||||||||||||||||||||
Debt instruments face amount | ¥ | ¥ 1,000,000 | |||||||||||||||||||||||||||
Convertible Note Agreement [Member] | Mr. Junwei Zheng [Member] | RMB [Member] | ||||||||||||||||||||||||||||
Partial principal | ¥ | ¥ 30,000,000 | |||||||||||||||||||||||||||
Convertible Note Agreement [Member] | Mr. Junwei Zheng [Member] | 15% Convertible Notes [Member] | ||||||||||||||||||||||||||||
Notes beard interest | 15.00% | |||||||||||||||||||||||||||
Debt instruments maturity date | May 8, 2019 | |||||||||||||||||||||||||||
Debt conversion price | $ / shares | $ 3.5 | |||||||||||||||||||||||||||
Strike price of conversion options | $ / shares | $ 3.5 | 3.5 | $ 3.5 | $ 3.5 | ||||||||||||||||||||||||
Partial principal | $ 801,101 | |||||||||||||||||||||||||||
Market price | $ / shares | $ 0.95 | $ 2.7 | $ 0.75 | $ 0.75 | $ 0.50 | |||||||||||||||||||||||
Convertible Note Agreement [Member] | Mr. Junwei Zheng [Member] | 15% Convertible Notes [Member] | Expected Term Volatility [Member] | ||||||||||||||||||||||||||||
Fair value assumptions, measurement input, percentages | 192.48% | 260.80% | 214.79% | 214.79% | 204.73% | |||||||||||||||||||||||
Convertible Note Agreement [Member] | Mr. Junwei Zheng [Member] | 15% Convertible Notes [Member] | Expected Dividend Rate [Member] | ||||||||||||||||||||||||||||
Fair value assumptions, measurement input, percentages | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | |||||||||||||||||||||||
Convertible Note Agreement [Member] | Mr. Junwei Zheng [Member] | 15% Convertible Notes [Member] | Risk Free Interest Rate [Member] | ||||||||||||||||||||||||||||
Fair value assumptions, measurement input, percentages | 2.37% | 1.37% | 1.95% | 1.95% | 2.49% | |||||||||||||||||||||||
Convertible Note Agreement [Member] | Mr. Junwei Zheng [Member] | 15% Convertible Notes [Member] | Expected Term [Member] | ||||||||||||||||||||||||||||
Fair value assumptions, measurement input, term | 1 year | 2 years | 9 months 29 days | 9 months 29 days | 3 months 29 days | |||||||||||||||||||||||
Convertible Note Agreement [Member] | Mr. Junwei Zheng [Member] | 15% Convertible Notes [Member] | RMB [Member] | ||||||||||||||||||||||||||||
Debt instruments face amount | $ 30,000,000 | |||||||||||||||||||||||||||
Partial principal | ¥ | ¥ 5,500,000 | |||||||||||||||||||||||||||
Convertible Note Agreement [Member] | Labrys [Member] | 12% Convertible Notes [Member] | ||||||||||||||||||||||||||||
Convertible notes payable | $ 732,253 | $ 732,253 | ||||||||||||||||||||||||||
Notes beard interest | 12.00% | 12.00% | ||||||||||||||||||||||||||
Conversion of debt upon stock issued percentage | 70.00% | |||||||||||||||||||||||||||
Accrued interest expense | $ 644,229 | $ 764,203 | ||||||||||||||||||||||||||
Shares issued price per share | $ / shares | $ 0.80 | $ 0.80 | ||||||||||||||||||||||||||
Fair value of beneficial conversion feature | $ 1,071,506 | |||||||||||||||||||||||||||
Debt instruments face amount | 1,365,000 | $ 1,365,000 | ||||||||||||||||||||||||||
Partial principal | $ 1,213,250 | |||||||||||||||||||||||||||
Original issue discount | 102,375 | 102,375 | $ 90,994 | $ 90,994 | ||||||||||||||||||||||||
Number of common stock shares issued, shares | shares | 50,000 | 50,000 | ||||||||||||||||||||||||||
Number of common stock shares issued, value | $ 40,000 | |||||||||||||||||||||||||||
Amortization of debt discount | 607,931 | 721,503 | ||||||||||||||||||||||||||
Settlement Agreement [Member] | ||||||||||||||||||||||||||||
Payment of debt | $ 222,000 | |||||||||||||||||||||||||||
Cash payment | $ 260,000 | |||||||||||||||||||||||||||
Shares issued price per share | $ / shares | $ 0.74 | |||||||||||||||||||||||||||
Number of common stock shares issued, shares | shares | 300,000 | 300,000 | ||||||||||||||||||||||||||
Number of common stock shares issued, value | $ 222,000 | $ 200,000 | ||||||||||||||||||||||||||
Settlement Agreement [Member] | FirsTrust Group, Inc [Member] | ||||||||||||||||||||||||||||
Cash payment | $ 340,000 | |||||||||||||||||||||||||||
Conversion of debt upon stock issued percentage | 6.00% | 6.00% | ||||||||||||||||||||||||||
First Amendment Agreement [Member] | FirsTrust Group, Inc [Member] | April 1, 2019 [Member] | ||||||||||||||||||||||||||||
Payment for secured convertible debt | 29,789 | |||||||||||||||||||||||||||
First Amendment Agreement [Member] | FirsTrust Group, Inc [Member] | April 1, 2019 [Member] | RMB [Member] | ||||||||||||||||||||||||||||
Payment for secured convertible debt | ¥ | ¥ 200,000 | |||||||||||||||||||||||||||
FirsTrust Group, Inc [Member] | ||||||||||||||||||||||||||||
Convertible notes payable | $ 132,762 | |||||||||||||||||||||||||||
Percentage of secured convertible notes issued | 6.00% | |||||||||||||||||||||||||||
Interest expense | 8,625 | $ 22,500 | $ 31,125 | $ 45,000 | ||||||||||||||||||||||||
Number of common stock shares issued, shares | shares | 300,000 | 300,000 | ||||||||||||||||||||||||||
FirsTrust Group, Inc [Member] | 6% Convertible Note [Member] | ||||||||||||||||||||||||||||
Percentage of secured convertible notes issued | 6.00% | |||||||||||||||||||||||||||
Payment acquire debt | $ 168,000 | |||||||||||||||||||||||||||
Cash payment | 100,000 | |||||||||||||||||||||||||||
FirsTrust Group, Inc [Member] | 6% Convertible Note [Member] | Share-based Compensation Award, Tranche One [Member] | ||||||||||||||||||||||||||||
Payment acquire debt | 59,100 | |||||||||||||||||||||||||||
FirsTrust Group, Inc [Member] | 6% Convertible Note [Member] | Share-based Compensation Award, Tranche Two [Member] | ||||||||||||||||||||||||||||
Payment acquire debt | 50,400 | |||||||||||||||||||||||||||
FirsTrust Group, Inc [Member] | 6% Convertible Note [Member] | Share-based Compensation Award, Tranche Three [Member] | ||||||||||||||||||||||||||||
Payment acquire debt | 59,100 | |||||||||||||||||||||||||||
FirsTrust Group, Inc [Member] | First Amendment Agreement [Member] | ||||||||||||||||||||||||||||
Percentage of secured convertible notes issued | 6.00% | |||||||||||||||||||||||||||
Total payable | $ 2,300,000 | |||||||||||||||||||||||||||
Debt instruments face amount | $ 1,300,000 | |||||||||||||||||||||||||||
Debt instruments maturity date | Jun. 30, 2019 | |||||||||||||||||||||||||||
FirsTrust Group, Inc [Member] | First Amendment Agreement [Member] | April 1, 2019 [Member] | ||||||||||||||||||||||||||||
Payment for secured convertible debt | $ 29,789 | |||||||||||||||||||||||||||
FirsTrust Group, Inc [Member] | First Amendment Agreement [Member] | April 1, 2019 [Member] | RMB [Member] | ||||||||||||||||||||||||||||
Payment for secured convertible debt | ¥ | ¥ 200,000 | |||||||||||||||||||||||||||
Mr. Geng Liu [Member] | ||||||||||||||||||||||||||||
Convertible notes payable | $ 145,655 | |||||||||||||||||||||||||||
Percentage of secured convertible notes issued | 15.00% | |||||||||||||||||||||||||||
Mr. Junwei Zheng [Member] | ||||||||||||||||||||||||||||
Convertible notes payable | $ 801,101 | |||||||||||||||||||||||||||
Percentage of secured convertible notes issued | 15.00% | |||||||||||||||||||||||||||
Labryz [Member] | ||||||||||||||||||||||||||||
Convertible notes payable | $ 1,213,250 | $ 1,213,250 | ||||||||||||||||||||||||||
Percentage of secured convertible notes issued | 12.00% | |||||||||||||||||||||||||||
TFK Investments Inc [Member] | ||||||||||||||||||||||||||||
Convertible notes payable | $ 150,000 | |||||||||||||||||||||||||||
Percentage of secured convertible notes issued | 12.00% | |||||||||||||||||||||||||||
TFK Investments Inc [Member] | Convertible Note Agreement [Member] | 12% Convertible Notes [Member] | ||||||||||||||||||||||||||||
Convertible notes payable | 80,833 | 80,833 | ||||||||||||||||||||||||||
Notes beard interest | 12.00% | |||||||||||||||||||||||||||
Conversion of debt upon stock issued percentage | 70.00% | |||||||||||||||||||||||||||
Accrued interest expense | $ 80,321 | $ 85,568 | ||||||||||||||||||||||||||
Shares issued price per share | $ / shares | $ 0.93 | $ 0.93 | ||||||||||||||||||||||||||
Fair value of beneficial conversion feature | $ 128,775 | |||||||||||||||||||||||||||
Debt instruments face amount | 300,000 | |||||||||||||||||||||||||||
Partial principal | $ 150,000 | |||||||||||||||||||||||||||
Original issue discount | $ 28,500 | $ 14,250 | $ 14,250 | |||||||||||||||||||||||||
Number of common stock shares issued, shares | shares | 7,500 | 7,500 | ||||||||||||||||||||||||||
Number of common stock shares issued, value | $ 6,975 | |||||||||||||||||||||||||||
Amortization of debt discount | $ 75,833 | $ 80,833 | ||||||||||||||||||||||||||
Nite Capital LP [Member] | Six Institutional Investors [Member] | 6% Secured Convertible Note [Member] | ||||||||||||||||||||||||||||
Payment acquire debt | 300,000 | |||||||||||||||||||||||||||
Nite Capital LP [Member] | Six Institutional Investors [Member] | 6% Secured Convertible Note [Member] | Share-based Compensation Award, Tranche One [Member] | ||||||||||||||||||||||||||||
Payment acquire debt | 105,000 | |||||||||||||||||||||||||||
Nite Capital LP [Member] | Six Institutional Investors [Member] | 6% Secured Convertible Note [Member] | Share-based Compensation Award, Tranche Two [Member] | ||||||||||||||||||||||||||||
Payment acquire debt | 90,000 | |||||||||||||||||||||||||||
Nite Capital LP [Member] | Six Institutional Investors [Member] | 6% Secured Convertible Note [Member] | Share-based Compensation Award, Tranche Three [Member] | ||||||||||||||||||||||||||||
Payment acquire debt | $ 105,000 |
Convertible Notes Payable - Sch
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 | |
Less: notes discount | $ (631,050) | $ (99,907) | |
Convertible notes payable - total | 1,811,718 | 971,086 | |
6% Secured Convertible Notes [Member] | FirsTrust Group [Member] | |||
Convertible notes payable, gross | [1] | 132,762 | 125,692 |
15% Convertible Notes [Member] | Geng Liu [Member] | |||
Convertible notes payable, gross | 145,655 | 145,431 | |
15% Convertible Notes [Member] | Junwei Zheng [Member] | |||
Convertible notes payable, gross | [2] | 801,101 | 799,870 |
12% Convertible Notes [Member] | TFK Investments Inc [Member] | |||
Convertible notes payable, gross | [3] | 150,000 | |
12% Convertible Notes [Member] | Labrys [Member] | |||
Convertible notes payable, gross | [4] | $ 1,213,250 | |
[1] | On June 29, 2006, the Company entered into a securities purchase agreement (the Purchase Agreement) with six institutional investors (collectively, the Purchasers) for the issuance and sale of 6% secured convertible notes, due three years from the date of issuance, in the aggregate principal amount of $2,450,000 (the 6% Convertible Notes), convertible into shares of the Company's common stock. On June 29, 2009, the 6% Notes were due. The Company informed the Purchasers of its inability to repay the outstanding balance on the due date. Therefore, the 6% Notes are in default and the default interest rate of 15% per annum is being charged on the 6% Notes. On August 12, 2013, the Company, entered into a Settlement Agreement and Release (the Release) with the holders (the Holders) of the 6% Convertible Notes in the aggregate principal amount of $2,000,000. Pursuant to the terms of the Release, the Company paid the Holders $75,000 for a full release, including the forgiveness of past defaults of unpaid principal amounts, interests and penalties. On March 18, 2008, FirsTrust Group, Inc. (FirsTrust) purchased the three remaining 6% Convertible Notes, totaling $168,000 ($59,100, $50,400 and $59,100 respectively), from Nite Capital, one of the six institutional investors which purchased a total of $300,000 of the Note in three tranches ($105,000, $90,000, $105,000 respectively), for a cash payment of $100,000. After the Release and conversion, FirsTrust is the only holder of the outstanding 6% Convertible Note with outstanding principal amount of $150,250. The Company also incurs a financial liquidated damages in cash or shares at the option of the Company (equal to 2% of the outstanding amount of the Notes per month plus accrued and unpaid interest on the Notes, prorated for partial months) if it breaches any affirmative covenants in the Purchase Agreement, including a covenant to maintain a sufficient number of authorized shares under its Certificate of Incorporation to cover at least 110% of the stock issuable upon full conversion of the Notes. Pursuant to the relevant provisions for liquidated damages in Purchase Agreement, the Company has accrued the amounts of $17,759 and $16,801 for liquidated damages for the three months ended June 30, 2019 and 2018, respectively, and the Company has accrued the amounts of $42,120 and $35,246 for liquidated damages for the six months ended June 30, 2019 and 2018, respectively. The Company also accrued $4,965 and $4,092 for interest at the rate of 15% per annum for the three months ended June 30, 2019 and 2018, respectively, and the Company accrued $9,900 and $8,588 for interest at the rate of 15% per annum for the six months ended June 30, 2019 and 2018, respectively. The total 15% accrued interests were $164,872 and $177,179 at June 30, 2019 and December 31, 2018, respectively. The total accrued liquidated damages were $555,658 and $555,538 at June 30, 2019 and December 31, 2018, respectively. The Company's obligations under the Notes are secured by a first priority security interest in the Company's intellectual property pursuant to an Intellectual Property Security Agreement with the Holders. In addition, Mr. Li, the Company's former Chief Executive Officer, has pledged all of his common stock of the Company as collateral for the Company's obligations under the 6% Convertible Notes. On October 19, 2017, the Company issued total 14,151 common shares at $1.04 per share price to FirsTrust Group, Inc. for the conversion of convertible note. According to the convertible note agreement, the conversion price is based on a 40% discount to the average of the lowest three days trading price of the Company's common stock on the OTC Bulletin Board over a 20-day trading period per the convertible notes agreement. As the carrying value of the notes and the intrinsic value of that conversion feature equaled to the fair value of the 14,151 common shares at $2.25 per share, no gain or loss were recognized upon this conversion. On December 13, 2017, the Company issued total 105,095 common shares at $0.75 per share price to FirsTrust Group, Inc. for the conversion of convertible note. According to the convertible note agreement, the conversion price is based on a 40% discount to the average of the lowest three days trading price of the Company's common stock on the OTC Bulletin Board over a 20-day trading period per the convertible notes agreement. As the carrying value of the notes and the intrinsic value of that conversion feature equaled to the fair value of the 105,095 common shares at $2.3 per share, no gain or loss were recognized upon this conversion. On April 27, 2018, the Company issued total 126,045 common shares to FirsTrust Group, Inc. for the conversion of convertible note. According to the convertible note agreement, the conversion price is based on a 40% discount to the average of the lowest three days trading price of the Company's common stock on the OTC Bulletin Board over a 20-day trading period per the convertible notes agreement. On September 19, 2018, the Company has entered a Settlement Agreement and Release (Settlement Agreement) with FirsTrust to settle the 6% secured convertible notes and interest and penalties. The Company has agreed to allow FirsTrust to effect a conversion in accordance with the terms of the 6% Note by October 18, 2018, and to make a cash payment of $500,000 by December 17, 2018. If the payment is not timely made, then FirsTrust shall be permitted to immediately effect further conversion in accordance with the terms of the 6% Notes into the Company's shares, and the Company shall make a final cash payment of $340,000 by February 28, 2019. The Settlement Agreement has not been carried out by the Company as agreed as of December 31, 2018. The interest and penalties on this Note are continuously accrued in accordance with the original terms. On October 18, 2018, FirsTrust requested a conversion in accordance with the terms of the 6% Notes into the Company's shares. The Company had failed to convert and thus incurred a financial liquidated damage at $245 per day for a total of $18,130 as of December 31, 2018, which had been added to the principle amount of the Note. On March 26, 2019, the Company issued 395,959 shares to FirsTrust for the conversion. According to the convertible note agreement, the conversion price is based on a 40% discount to the average of the lowest three days trading price of the Company's common stock on the OTC Bulletin Board over a 20-day trading period per the convertible notes agreement. On March 26, 2019, the Company has entered into a First Amendment to Settlement Agreement and Release (First Amendment Agreement) with FirsTrust to settle the 6% secured convertible notes together with the promissory notes as disclosed under Note 12 plus interest and penalties with a total payable of approximately $2.3 million as of the date of the First Amendment Agreement was entered. The Company has agreed to make a payment of approximately $29,789 (RMB200,000), which has been paid on April 1, 2019, to enter into this Amendment and settled with the total outstanding balance of $1.3 million to be due under the terms of the First Amendment Agreement by June 30, 2019. If such settled outstanding balance was not made by June 30, 2019, it will deem the First Amendment Agreement to be ineffective and the Company will need to continue to pay FirsTrust the amount set forth in the Settlement Agreement. | ||
[2] | On January 17, 2017, the Company entered a Convertible Note Agreement with Mr. Geng Liu and received principal of RMB 1 million, approximately $146,000. The note bears interest at 15% per annum and matured on January 16, 2018. Before the maturity date, the Note holder has an option to convert partial or all of the outstanding principal to the Company's common shares with a conversion price of $0.90 per share. The maturity date of the note has been extended to June 30, 2020. The notes are convertible into shares of the common stock, at conversion price is $0.90 which is lower than the price of the Company's common stock on the date of issue. Therefore, the conversion feature embedded in the convertible note meet the definition of beneficial conversion feature ("BCF"). The Company evaluated the intrinsic value of the BCF as $45,094 at the issue date. The relative fair values of the BCF were recorded into additional paid in capital, and the remainder proceeds of $99,850 from issuance of the convertible note was allocated to convertible notes payable. For the six months ended June 30, 2019 and 2018, the Company recorded interest expense of $10,965 and $13,661 on the note, including the amortization of the debt discount resulting from the value of beneficial conversion feature, and the carrying value of the note as at June 30, 2019 was $145,655. | ||
[3] | On February 27, 2019, the Company entered into a Convertible Note Agreement with Labrys Fund, LP ("Labrys"), for the principal amount of $1,365,000 (the "Note"). The Note carries an Original Issue Discount of $102,375, bears interest at the rate of 12% per annum and must be repaid on or before 180 calendar days after the funding date of the respective tranche. The amounts advanced under the Note may be converted by Labrys at any time after 180 days from the date of the Note into shares of Company common stock at a conversion price equal to 70% of the lowest trading price during the 20 trading day period prior to the date of any notice of conversion. As of June 30, 2019, the Company has received principal totaled $1,213,250 out of the $1,365,000 Convertible Note Agreement. In addition, the Company issued 50,000 shares of the Company's common stock with a fair value of $40,000, determined using the closing price of the issuance date of $0.80 per shares in connection with these issuances along with the original issue discount of $90,994 were recognized as discounts from the principal amount to be amortized over 180 days. Furthermore, the notes are convertible into shares of the common stock, at conversion price equal to 70% of the lowest trading price during the 20 trading day period prior to the date of any notice of conversion, which is lower than the price of the Company's common stock on the date of issue. Therefore, the conversion feature embedded in the convertible note meet the definition of beneficial conversion feature ("BCF"). The Company evaluated the intrinsic value of the BCF as $1,071,506 at the issue date. The relative fair values of the BCF were recorded into additional paid in capital. For the three and six months ended June 30, 2019, the Company recorded interest expense of $644,229 and $764,203 on the note, including the amortization of the debt discount of $607,531 and $721,503 resulting from the value of beneficial conversion feature, and the carrying value of the note as at June 30, 2019 was $732,253. | ||
[4] | On May 9, 2017, the Company entered a Convertible Note Agreement with Mr. Junwei Zheng with principal of RMB 30 million. The note bears interest at 15% per annum and will mature on May 8, 2019. Before the maturity date, the Note holder has an option to convert partial or all of the outstanding principal and accrued interest to the Company's common shares with a conversion price of $3.5 per share. On August 17, 2018, the Company does not expect that the remaining funds will ever be so advanced. As of June 30, 2019, the Company has received principal totaled RMB 5.5 million ($801,101 equivalent USD at June 30, 2019) out of the RMB 30 million Convertible Note Agreement. On May 7, 2019, the Company reached an agreement with Mr. Junwei Zheng that the maturity date will be extended to June 30, 2020. The notes are convertible into shares of the common stock, at conversion price is $3.5 which is higher than the price of the Company's common stock on the date of issue, therefore the conversion feature embedded in the note did not meet the definition of BCF. The Company determined that conversion option embedded in the note meet the definition of a derivative instrument. Since the embedded conversion price of the conversion feature is denominated in U.S. dollar, a currency other than the convertible note payable currency. As a result, the embedded conversion feature is not considered indexed to the Company's own stock due to the variable exchange rate between U.S. Dollar and RMB, and as such, the Company determined that the embedded conversion feature to be carried as a liability and re-measured at fair value at each financial reporting date until such time as the conversion feature is exercised or expired. The Company evaluated the fair value of the embedded conversion feature at the issue date and recorded the amount into as discount to convertible note payable. The discount to convertible note payable is being amortized to interest expense over the life of the note using the straight-line method, which approximates the effective interest method. On May 7, 2019, due to the extension of the convertible notes and embedded conversion feature continued to be considered as a derivative instrument, the Company determined that the embedded conversion feature to be carried as a liability and re-measured at fair value at each financial reporting date until such time as the conversion feature is exercised or expired. The Company evaluated the fair value of the embedded conversion feature at the renewal date and recorded the amount into as discount to convertible note payable. The discount to convertible note payable is being amortized to interest expense over the life of the note using the straight-line method, which approximates the effective interest method. The fair value of embedded conversion feature were calculated using the BlackScholesMerton model based on the following variables at inception on May 9, 2017: Strike price of $3.5, for the conversion options Expected volatility of 260.8% calculated using the Company's historical price of its common stock Expected dividend yield of 0% Risk-free interest rate of 1.37%, for the conversion options Expected lives of 2.0 years Market price at issuance date of $2.7 The fair value of embedded conversion feature was calculated using the BlackScholesMerton model based on the following variables on December 31, 2018: Strike price of $3.5, for the conversion options Expected volatility of 204.73% calculated using the Company's historical price of its common stock Expected dividend yield of 0% Risk-free interest rate of 2.49%, for the conversion options Expected lives of 0.33 years Market price at re-measurement date of $0.50 The fair value of embedded conversion feature were calculated using the BlackScholesMerton model based on the following variables on May 7, 2019: Strike price of $3.5, for the conversion options Expected volatility of 214.79% calculated using the Company's historical price of its common stock Expected dividend yield of 0% Risk-free interest rate of 2.37%, for the conversion options Expected lives of 1.00 years Market price at re-measurement date of $0.95 The fair value of embedded conversion feature were calculated using the BlackScholesMerton model based on the following variables on June 30, 2019: Strike price of $3.5, for the conversion options Expected volatility of 192.48% calculated using the Company's historical price of its common stock Expected dividend yield of 0% Risk-free interest rate of 1.95%, for the conversion options Expected lives of 0.83 years Market price at re-measurement date of $0.75 For the three months ended June 30, 2019 and 2018, the Company recorded interest expense of $59,815 and $103,304, respectively, and for the six months ended June 30, 2019 and 2018, the Company recorded interest expense of $160,215 and $205,540, respectively, on the note, including the amortization of the debt discount resulting from the value of the embedded conversion feature, and the carrying value of the note was $720,215 and $699,963 as of June 30, 2019 and December 31, 2018, respectively. |
Note Payable (Details Narrative
Note Payable (Details Narrative) | Mar. 26, 2019USD ($) | Mar. 21, 2019USD ($)shares | Feb. 28, 2019USD ($) | Sep. 19, 2018USD ($)shares | May 29, 2007USD ($) | Jun. 29, 2006 | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)shares | Jun. 30, 2019CNY (¥)shares | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Mar. 24, 2018$ / shares |
Promissory note | $ 138,000 | $ 138,000 | $ 360,000 | ||||||||||
Number of shares cash payment | $ 235,600 | ||||||||||||
FirsTrust Group, Inc [Member] | |||||||||||||
Promissory note | 138,000 | $ 138,000 | $ 360,000 | ||||||||||
Number of common stock shares issued, shares | shares | 300,000 | 300,000 | |||||||||||
Percentage of secured convertible notes issued | 6.00% | ||||||||||||
Interest expense | $ 8,625 | $ 22,500 | $ 31,125 | $ 45,000 | |||||||||
Settlement Agreement [Member] | |||||||||||||
Number of shares cash payment | $ 222,000 | $ 200,000 | |||||||||||
Number of common stock shares issued, shares | shares | 300,000 | 300,000 | |||||||||||
Cash payment | $ 260,000 | ||||||||||||
Shares issued price per share | $ / shares | $ 0.74 | ||||||||||||
Repayment of note payable | $ 222,000 | ||||||||||||
First Amendment Agreement [Member] | FirsTrust Group, Inc [Member] | |||||||||||||
Note maturity date | Jun. 30, 2019 | ||||||||||||
Percentage of secured convertible notes issued | 6.00% | ||||||||||||
Total payable | $ 2,300,000 | ||||||||||||
Debt instruments face amount | $ 1,300,000 | ||||||||||||
First Amendment Agreement [Member] | April 1, 2019 [Member] | FirsTrust Group, Inc [Member] | |||||||||||||
Payment for secured convertible debt | $ 29,789 | ||||||||||||
First Amendment Agreement [Member] | April 1, 2019 [Member] | FirsTrust Group, Inc [Member] | RMB [Member] | |||||||||||||
Payment for secured convertible debt | ¥ | ¥ 200,000 | ||||||||||||
Unrelated Individual [Member] | |||||||||||||
Promissory note | $ 360,000 | ||||||||||||
Note interest rate | 18.00% | ||||||||||||
Note maturity date | Jul. 27, 2007 | ||||||||||||
Note default rate | 25.00% |
Other Payables and Accruals - S
Other Payables and Accruals - Schedule of Other Payables (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 | |
Other Liabilities Disclosure [Abstract] | |||
Stock subscription proceeds received in advance | [1] | $ 1,693,167 | $ 1,692,454 |
Accrued expenses | 289,002 | 219,033 | |
R&D expense payable | 431,009 | 431,009 | |
Others | 427,306 | 597,592 | |
Other payable | $ 2,840,484 | $ 2,940,088 | |
[1] | The Company received RMB 3.2 million ($466,092 equivalent as at June 30, 2019) in 2016 from two unrelated potential investors, and additionally received RMB 8 million ($1,227,075 equivalent as at June 30, 2019) in 2017 from one unrelated potential investor pending for stock issuances. The Company is in the process of negotiating the issuance price per shares of these stock subscriptions with the investors. |
Other Payables and Accruals -_2
Other Payables and Accruals - Schedule of Other Payables (Details) (Parenthetical) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016CNY (¥) | |
Stock subscription received | [1] | $ 1,693,167 | $ 1,692,454 | ||
Two Unrelated Potential Investors [Member] | |||||
Stock subscription received | 466,092 | ||||
Two Unrelated Potential Investors [Member] | RMB [Member] | |||||
Stock subscription received | ¥ | ¥ 3,200,000 | ||||
One Unrelated Potential Investors [Member] | |||||
Stock subscription received | $ 1,227,075 | ||||
One Unrelated Potential Investors [Member] | RMB [Member] | |||||
Stock subscription received | $ 8,000,000 | ||||
[1] | The Company received RMB 3.2 million ($466,092 equivalent as at June 30, 2019) in 2016 from two unrelated potential investors, and additionally received RMB 8 million ($1,227,075 equivalent as at June 30, 2019) in 2017 from one unrelated potential investor pending for stock issuances. The Company is in the process of negotiating the issuance price per shares of these stock subscriptions with the investors. |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Mar. 26, 2019 | Apr. 27, 2018 | Dec. 28, 2017 | Dec. 13, 2017 | Oct. 19, 2017 | Dec. 14, 2015 | Feb. 28, 2019 | Mar. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2018 |
Proceeds from issuance of common stock | $ 235,600 | |||||||||
Proceeds from convertible notes | $ 1,363,250 | $ 1,363,250 | $ 1,247,256 | |||||||
Intrinsic value of beneficial conversion feature | $ 1,200,281 | $ 1,200,281 | ||||||||
One Officer [Member] | ||||||||||
Number of common stock shares issued, shares | 20,657 | |||||||||
Proceeds from issuance of common stock | $ 17,665 | |||||||||
Three Consulting Agreements [Member] | Consultants [Member] | ||||||||||
Shares issued price per share | $ 0.86 | |||||||||
Series A Preferred Stock [Member] | ||||||||||
Preferred stock, voting rights | These shares of Series A Preferred Stock shall have voting rights equal to aggregate of 75% of total shares entitled to vote by both (i) the holders of all of the then outstanding shares of Common Stock (whether or not such holders vote) and (ii) the holders of all of the then outstanding shares of the Company. | |||||||||
Shares issued price per share | $ 2 | |||||||||
Series B Preferred Stock [Member] | ||||||||||
Preferred stock, voting rights | These shares of Series B Preferred Stock have a liquidation preference which is same with the Company's Series A Preferred Stock, and is entitled to vote on an as-converted basis as the holder of common stock, and is convertible into the Company's common stock on a one-for-one basis at any time at the option of the holder. | |||||||||
Shares issued price per share | $ 1.3 | |||||||||
Two Related Party Individuals [Member] | Series A Preferred Stock [Member] | ||||||||||
Stock issued during period cancelled | 500,000 | |||||||||
Stock issued during period cancelled, value | $ 1,000,000 | |||||||||
One Related Party Individuals [Member] | Series B Preferred Stock [Member] | ||||||||||
Issuance of shares of preferred stock as debt cancellation, shares | 811,148 | |||||||||
Issuance of shares of preferred stock as debt cancellation | $ 1,054,492 | |||||||||
FirsTrust Group [Member] | ||||||||||
Shares issued price per share | $ 0.20 | $ 0.62 | $ 0.75 | $ 1.04 | ||||||
Common stock issued for conversion | 395,959 | 126,045 | 105,095 | 14,151 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Derivative liabilities | $ 68,591 | $ 6,621 | $ 247,933 |
Total | 68,591 | 6,621 | |
Fair Value, Inputs, Level 1 [Member] | |||
Derivative liabilities | |||
Total | |||
Fair Value, Inputs, Level 2 [Member] | |||
Derivative liabilities | |||
Total | |||
Fair Value, Inputs, Level 3 [Member] | |||
Derivative liabilities | 68,591 | 6,621 | |
Total | $ 68,591 | $ 6,621 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | ||
Beginning balance | $ 6,621 | $ 247,933 |
Fair value of derivative liabilities at inception | 95,144 | |
Change in fair value of derivative liabilities | (33,174) | (241,312) |
Ending balance | $ 68,591 | $ 6,621 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||||||
Net loss | $ (2,245,690) | $ 390,623 | $ (635,368) | $ 52,968 | $ (1,855,067) | $ (582,400) |
Denominator for basic earnings per share (weighted-average shares) | 19,343,881 | 16,479,316 | 18,272,950 | 16,201,020 | ||
Diluted effect of stocks - convertible note | ||||||
Denominator for diluted earnings per share (adjusted weighted-average shares) | 19,343,881 | 16,479,316 | 18,272,950 | 16,201,020 | ||
Basic earnings per share | $ (0.12) | $ (0.04) | $ (0.10) | $ (0.04) | ||
Diluted earnings per share | $ (0.12) | $ (0.04) | $ (0.10) | $ (0.04) |
Income Tax (Details Narrative)
Income Tax (Details Narrative) - USD ($) | Dec. 22, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Effective income tax rate | 34.00% | ||||||
Corporate tax rate decreased percentage | 21.00% | ||||||
Effective income tax change in enacted tax rate | 21.00% | ||||||
Effective income tax of valuation allowance percentage | 100.00% | ||||||
Operating loss carry forwards | $ 13,900,000 | $ 13,900,000 | $ 11,300,000 | ||||
Income tax provision | 714,002 | $ 358,066 | 1,234,910 | $ 897,209 | |||
Unrecognized tax benefits | |||||||
Provision for interest and penalties | |||||||
Interest and penalties | |||||||
China, Kiwa Beijing, Kiwa Shenzhen, Kiwa Xian, Kiwa Hebei, Kiwa Yangling, Kiwa Shanxi, and Kiwa Institute [Member] | |||||||
Effective income tax rate | 25.00% | ||||||
Kiwa Yangling [Member] | |||||||
Income tax provision | 716,352 | $ 1,225,023 | |||||
Kiwa Xian [Member] | |||||||
Income tax provision | $ (2,350) | $ 9,887 | |||||
United States [Member] | |||||||
Effective income tax rate | 21.00% | ||||||
Operating loss carry forwards | 300,000 | ||||||
Global Intangible Low-Taxed Income Tax [Member] | |||||||
Effective income tax rate | 10.50% | ||||||
Global Intangible Low-Taxed Income Tax [Member] | Maximum [Member] | December 31, 2025 [Member] | |||||||
Effective income tax rate | 13.125% | ||||||
Foreign [Member] | |||||||
Taxable off-shore earnings | 3,500,000 | ||||||
Operating loss carry forwards | $ 3,200,000 |
Income Tax - Schedule of Reconc
Income Tax - Schedule of Reconciliation of U.S. Tax Rate (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Pre-tax income (loss) from continuing operation | $ (1,531,688) | $ (277,302) | $ (620,157) | $ 314,809 |
U.S. federal corporate income tax rate | 21.00% | 21.00% | 21.00% | 21.00% |
Income tax expense (benefit) computed at U.S. federal corporation income tax rate | $ (321,654) | $ (58,233) | $ (130,233) | $ 66,110 |
Rate differential for PRC earnings | 1,020 | 24,563 | 83,265 | 80,270 |
Change of valuation allowance | 1,029,334 | 385,686 | 1,256,980 | 740,369 |
Effect of tax exempted income in BVI | 5,302 | 6,050 | 24,898 | 10,460 |
Deferred tax used to offset tax liability | ||||
Provision for income taxes | $ 714,002 | $ 358,066 | $ 1,234,910 | $ 897,209 |
Income Tax - Schedule of Deferr
Income Tax - Schedule of Deferred Tax Assets (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Provision for Deferred COGS | $ 612,191 | |
Allowance for Bad Debt | 91,296 | |
Less: Valuation allowance | (3,754,384) | $ (2,497,424) |
Net deferred tax assets | ||
US [Member] | ||
Net operating losses carried forward | 2,218,830 | 1,676,335 |
China Subsidiaries [Member] | ||
Net operating losses carried forward | $ 832,067 | $ 821,089 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - Equity Purchase Agreement [Member] | Jun. 08, 2017USD ($) | Jun. 08, 2017CNY (¥) | Jun. 30, 2019USD ($) | Jun. 30, 2019CNY (¥) |
First Payment [Member] | ||||
Acquisition of purchase price | $ | $ 1,000,000 | |||
Payment of purchase agreement | $ | 700,000 | |||
Second Payment [Member] | ||||
Acquisition of purchase price | $ | $ 500,000 | |||
RMB [Member] | First Payment [Member] | ||||
Acquisition of purchase price | ¥ 6,500,000 | |||
Payment of purchase agreement | 5,000,000 | |||
RMB [Member] | Second Payment [Member] | ||||
Acquisition of purchase price | 3,500,000 | |||
Payment of purchase agreement | ¥ 10,000,000 | |||
Peng Hao [Member] | ||||
Acquisition percentage | 100.00% | 100.00% | ||
Acquisition of purchase price | $ | $ 2,300,000 | |||
Peng Hao [Member] | RMB [Member] | ||||
Acquisition of purchase price | ¥ 15,000,000 |
Concentration of Risk (Details
Concentration of Risk (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Cash and cash equivalents | $ 10,099 | $ 10,099 | $ 7,859 | ||
Customer One [Member] | Sales [Member] | |||||
Concentration risk percentage | 57.00% | 98.00% | 48.00% | 51.00% | |
Customer Two [Member] | Sales [Member] | |||||
Concentration risk percentage | 26.00% | 26.00% | 32.00% | ||
Customer Three [Member] | Sales [Member] | |||||
Concentration risk percentage | 17.00% | 23.00% | 15.00% | ||
Supplier One [Member] | Cost of Goods, Total [Member] | |||||
Concentration risk percentage | 94.00% | 95.00% | 94.00% | ||
One Supplier [Member] | Accounts Payable [Member] | |||||
Concentration risk percentage | 89.00% | 84.00% |