Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 09, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | NF Energy Saving Corp | |
Entity Central Index Key | 1,213,660 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Trading Symbol | NFEC | |
Entity Common Stock, Shares Outstanding | 7,573,289 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 201,749 | $ 282,154 |
Accounts receivable, net | 6,474,060 | 12,217,790 |
Retention receivable, current | 567,038 | 545,940 |
Inventories | 4,439,780 | 2,064,231 |
Prepayments and other receivables | 3,910,458 | 3,645,652 |
Total current assets | 15,593,085 | 18,755,767 |
Non-current assets: | ||
Property, plant and equipment, net | 18,294,398 | 19,987,116 |
Land use rights, net | 2,479,244 | 2,664,054 |
Construction in progress | 24,758 | 26,128 |
TOTAL ASSETS | 36,391,485 | 41,433,065 |
Current liabilities: | ||
Accounts payable, trade | 3,984,604 | 3,976,334 |
Short-term bank borrowings | 5,825,354 | 7,223,681 |
Amount due to a related party | 149,204 | 431,682 |
Other payables and accrued liabilities | 2,552,756 | 2,504,556 |
Total current liabilities | 12,511,918 | 14,136,253 |
TOTAL LIABILITIES | 12,511,918 | 14,136,253 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 50,000,000 shares authorized; 7,573,289 and 7,073,289 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 7,573 | 7,073 |
Additional paid-in capital | 12,555,325 | 12,055,825 |
Statutory reserve | 2,227,634 | 2,227,634 |
Accumulated other comprehensive income | 1,162,137 | 2,613,829 |
Retained earnings | 7,884,086 | 10,343,407 |
Total NFEC stockholders' equity | 23,836,755 | 27,247,768 |
Non-controlling interest | 42,812 | 49,044 |
Total equity | 23,879,567 | 27,296,812 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 36,391,485 | $ 41,433,065 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 7,573,289 | 7,073,289 |
Common stock, shares outstanding | 7,573,289 | 7,073,289 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
REVENUE, NET: | ||||
Total revenues, net | $ 1,102,693 | $ 1,141,920 | $ 1,814,111 | $ 3,855,365 |
COST OF REVENUES: | ||||
Total cost of revenues | 956,694 | 1,099,971 | 1,344,884 | 3,393,804 |
GROSS PROFIT | 145,999 | 41,949 | 469,227 | 461,561 |
OPERATING EXPENSES: | ||||
Sales and marketing | 6,153 | 4,181 | 22,542 | 82,257 |
General and administrative | 364,550 | 378,107 | 2,631,731 | 1,224,637 |
Total operating expenses | 370,703 | 382,288 | 2,654,273 | 1,306,894 |
LOSS FROM OPERATIONS | (224,704) | (340,339) | (2,185,046) | (845,333) |
Other (expense) income: | ||||
Other income | 2,594 | 2,691 | 3,818 | 2,691 |
Other expense | 4 | (15) | (59) | (15) |
Interest income | 128 | 13 | 324 | 133 |
Interest expense | (92,897) | (89,214) | (290,477) | (267,240) |
Total other expense | (90,171) | (86,525) | (286,394) | (264,431) |
LOSS BEFORE INCOME TAXES | (314,875) | (426,864) | (2,471,440) | (1,109,764) |
Income tax expense | (16) | (51) | (114) | (2,723) |
NET LOSS | (314,891) | (426,915) | (2,471,554) | (1,112,487) |
Less: net loss attributable to non-controlling interest | (4,776) | (7,956) | (12,233) | (7,956) |
Net loss attributable to the Company | $ (310,115) | $ (418,959) | $ (2,459,321) | $ (1,104,531) |
Net loss income per share:– Basic and diluted | $ (0.04) | $ (0.06) | $ (0.33) | $ (0.16) |
Weighted average common shares outstanding – Basic and diluted | 7,573,289 | 7,073,289 | 7,445,084 | 7,073,289 |
Product [Member] | ||||
REVENUE, NET: | ||||
Revenue from Contract with Customer, Including Assessed Tax | $ 1,052,130 | $ 1,103,952 | $ 1,550,119 | $ 3,678,341 |
COST OF REVENUES: | ||||
Cost of Goods and Services Sold | 937,586 | 1,082,652 | 1,148,581 | 3,207,838 |
Service [Member] | ||||
REVENUE, NET: | ||||
Revenue from Contract with Customer, Including Assessed Tax | 50,563 | 37,968 | 263,992 | 177,024 |
COST OF REVENUES: | ||||
Cost of Goods and Services Sold | $ 19,108 | $ 17,319 | $ 196,303 | $ 185,966 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
NET LOSS | $ (314,891) | $ (426,915) | $ (2,471,554) | $ (1,112,487) |
Other comprehensive (loss) income: | ||||
– Foreign currency adjustment (loss) gain | (1,049,846) | 489,771 | (1,445,691) | 1,175,800 |
Total other comprehensive (loss) income | (1,049,846) | 489,771 | (1,445,691) | 1,175,800 |
COMPREHENSIVE (LOSS) INCOME | (1,364,737) | 62,856 | (3,917,245) | 63,313 |
Less: Comprehensive income attributable to non-controlling interests | (7,001) | (7,956) | (6,232) | (7,956) |
Comprehensive (loss) income attributable to NF Energy Saving Corporation | $ (1,357,736) | $ 70,812 | $ (3,911,013) | $ 71,269 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (2,471,554) | $ (1,112,487) |
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities | ||
Allowance for doubtful accounts | 1,462,898 | 0 |
Depreciation and amortization | 695,162 | 613,797 |
Gain on disposal of property, plant and equipment | (730) | 0 |
Stock based compensation | 0 | 290,700 |
Change in operating assets and liabilities: | ||
Accounts and retention receivable | 3,637,343 | (340,330) |
Inventories | (2,506,962) | (334,574) |
Amount due from a related company | (282,478) | 0 |
Prepayments and other receivables | (459,222) | (1,205,686) |
Accounts payable | 218,853 | 1,126,355 |
Other payables and accrued liabilities | 162,723 | 829,762 |
Net cash provided by/(used in) operating activities | 456,033 | (132,463) |
Cash flows from investing activities: | ||
Proceeds from disposal of plant and equipment | 1,441 | 0 |
Payments on construction in progress | 0 | 3,908 |
Net cash provided by investing activities | 1,441 | 3,908 |
Cash flows from financing activities: | ||
Issuance of share from placement | 500,000 | 0 |
Repayment to bank demand notes | (1,028,935) | 0 |
Advance from non-controlling interest | 0 | 16,385 |
Proceeds from short-term bank borrowings | 6,614,583 | 5,877,397 |
Repayment on short-term bank borrowings | (6,614,583) | (5,877,397) |
Net cash (used in)/provided by financing activities | (528,935) | 16,385 |
Effect on exchange rate change on cash and cash equivalents | (8,944) | 8,361 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (80,405) | (103,809) |
BEGINNING OF PERIOD | 282,154 | 124,637 |
END OF PERIOD | 201,749 | 20,828 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 290,477 | 267,240 |
Cash paid for tax | $ 114 | $ 2,723 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2018 - USD ($) | Total | Common stock | Additional paid-in capital | Statutory Reserve | Accumulated other comprehensive income | Retained earnings | Total NFEC stockholders' equity | Non-controlling Interest |
Balance at Dec. 31, 2017 | $ 27,296,812 | $ 7,073 | $ 12,055,825 | $ 2,227,634 | $ 2,613,829 | $ 10,343,407 | $ 27,247,768 | $ 49,044 |
Balance (in shares) at Dec. 31, 2017 | 7,073,289 | |||||||
Issuance of common stocks from placement | 500,000 | $ 500 | 499,500 | 0 | 0 | 0 | 500,000 | 0 |
Issuance of common stocks from placement (in shares) | 500,000 | |||||||
Foreign currency translation adjustment | (1,445,691) | $ 0 | 0 | 0 | (1,451,692) | 0 | (1,451,692) | 6,001 |
Net loss for the period | (2,471,554) | 0 | 0 | 0 | 0 | (2,459,321) | (2,459,321) | (12,233) |
Balance at Sep. 30, 2018 | $ 23,879,567 | $ 7,573 | $ 12,555,325 | $ 2,227,634 | $ 1,162,137 | $ 7,884,086 | $ 23,836,755 | $ 42,812 |
Balance (in shares) at Sep. 30, 2018 | 7,573,289 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2018 | |
Basis Of Presentation [Abstract] | |
BASIS OF PRESENTATION | NOTE — 1 BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. In the opinion of management, the consolidated balance sheet as of December 31, 2017 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended September 30, 2018 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2018 or for any future period. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2017. |
ORGANIZATION AND BUSINESS BACKG
ORGANIZATION AND BUSINESS BACKGROUND | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS BACKGROUND | NOTE — 2 ORGANIZATION AND BUSINESS BACKGROUND NF Energy Saving Corporation (the “Company” or “NFEC”) was incorporated in the State of Delaware on October 31, 2000. The Company, through its subsidiaries, mainly operates in the energy technology business in the People’s Republic of China (the “PRC”). The Company specializes in the provision of energy saving technology consulting, optimization design services, energy saving reconstruction of pipeline networks and contractual energy management services to China’s electric power, petrochemical, coal, metallurgy, construction, and municipal infrastructure development industries. The Company also engages in the manufacturing and sales of the energy-saving flow control equipment. All the customers are located in PRC. Description of subsidiaries Name Place of incorporation and kind of legal entity Principal activities and place of operation Particulars of issued/ registered share capital Effective interest held Liaoning Nengfa Weiye Energy Technology Co. Ltd (“Nengfa Energy”) The PRC, a limited liability company Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC US$ 5,000,000 100 % Liaoning Nengfa Tiefa Import & Export Co. Ltd (“Nengfa Tiefa Import & Export”) The PRC, a limited liability company Development and production of hi-tech and automatic-intelligence valve products RMB 877,192 57 % NFEC and its subsidiaries are hereinafter referred to as (the “Company”) . |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE — 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes. Use of estimates In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates. Basis of consolidation The condensed consolidated financial statements include the financial statements of NFEC and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation. Cash and cash equivalents Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. Cash equivalents consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. Accounts receivable Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from shipment. Credit is extended based on evaluation of a customer's financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of September 30, 2018 and December 31, 2017, the allowance for doubtful accounts was $2,169,687 and $760,164, respectively. Retention receivable Retention receivable is the amount withheld by a customer based upon 5-10% of the contract value, until a product warranty is expired. The warranty period is usually 12 months. Inventories Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a weighted average method. Costs include material, labor and manufacturing overhead costs. Quarterly, the Company reviews historical sales activity to determine excess, slow moving items and potentially obsolete items and also evaluates the impact of any anticipated changes in future demand. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. As of September 30, 2018, the Company did not record an allowance for obsolete inventories, nor have there been any write-offs. Land use rights All land in the PRC is owned by the PRC government. The government in the PRC, according to the relevant PRC law, may sell the right to use the land for a specified period of time. Thus, the Company’s land purchase in the PRC is considered to be leasehold land and is stated at cost less accumulated amortization and any recognized impairment loss. Amortization is provided over the term of the land use right agreement on a straight-line basis, which is 50 years and will expire in 2059. Amortization expense for the three months ended September 30, 2018 and 2017 was $15,166 and $15,463, respectively. Amortization expense for the nine months ended September 30, 2018 and 2017 was $47,578 and $45,480, respectively. The estimated annual amortization expense on the land use right in the next five years and thereafter is as follows: Period ending September 30: 2019 $ 60,103 2020 60,103 2021 60,103 2022 60,103 2023 60,103 Thereafter 2,178,729 Total: $ 2,479,244 Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values: Expected useful life Residual value Building 30 – 50 years 5 % Plant and machinery 10 – 20 years 5 % Furniture, fixture and equipment 5 – 8 years 5 % Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations. Depreciation expense for the three months ended September 30, 2018 and 2017 was $184,199 and $193,171, respectively. Depreciation expense for the nine months ended September 30, 2018 and 2017 was $647,584 and $568,317, respectively. Impairment of long-lived assets In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property, plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment charge for the three and nine months ended September 30, 2018. Revenue recognition The Company offers the following products and service to its customers: (a) Energy saving flow control equipment; and (b) Energy project management and sub-contracting service Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: • identify the contract with a customer; • identify the performance obligations in the contract; • determine the transaction price; • allocate the transaction price to performance obligations in the contract; and • recognize revenue as the performance obligation is satisfied. (a) Sale of products The Company derives a majority of its revenues from the sale of energy saving flow control equipment. Generally, these products are manufactured and configured to customer requirements. The Company typically produces and builds the energy saving flow control equipment for customers in a period from 1 to 6 months. When the Company completes the production in accordance with the customer’s specification, the customer is required to inspect the finished products for quality and product conditions, to its full satisfaction, then the Company makes delivery to the customer. The Company recognizes revenue from the sale of such finished products upon delivery to the customer, whereas the title and risk of loss are fully transferred to the customers. The Company records its revenues, net of value added taxes (“VAT”). The Company is subject to VAT which is levied on the majority of the products at the rate of 17% on the invoiced value of sales. The Company experienced no product returns and recorded no reserve for sales returns for the three and nine months ended September 30, 2018 and 2017. (b) Service revenue Service revenue is primarily derived from energy-saving technical services or project management or sub-contracting services that are not an element of an arrangement for the sale of products. These services are generally billed on a time-cost plus basis, for a period of service time from 2 to 3 months. Revenue is recognized, net of business taxes when the service is rendered and accepted by the customer. (c) Interest income Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable. Comprehensive income ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit. Income taxes Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any 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. ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. For the three and nine months ended September 30, 2018 and 2017, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2018, the Company did not have any significant unrecognized uncertain tax positions. The Company conducts the majority of its businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by a foreign tax authority. Product warranty Under the terms of the contracts, the Company offers its customers with a free product warranty on a case-by-case basis, depending upon the type of customers, nature and size of the infrastructure projects. Under such arrangements, a portion of the project contract balance (usually 5-10% of contract value) is withheld by a customer from 12 to 24 months, until the product warranty has expired. The Company has not experienced any material returns or claims where it was under obligation to honor this standard warranty provision. As such, no reserve for product warranty has been provided in the result of operations for the three and nine months ended September 30, 2018 and 2017. Net loss per share The Company calculates net loss per share in accordance with ASC Topic 260, “ Earnings per Share .” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive. Foreign currencies translation Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations. The reporting currency of the Company is the United States Dollar ("US$"). The Company's subsidiaries in the PRC maintain their books and records in their local currency, Renminbi Yuan ("RMB"), which is the functional currency as being the primary currency of the economic environment in which these entities operate. In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “ Translation of Financial Statement ”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity. Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective period: September 30, 2018 September 30, 2017 Period-end RMB:US$1 exchange rate 6.86653 6.65450 Average period RMB:US$1 exchange rate 6.80315 6.80573 Related parties Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence. Segment reporting ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. For the nine months ended September 30, 2018 and 2017, the Company operates in one reportable operating segment in the PRC. Fair value of financial instruments The carrying value of the Company’s financial instruments (excluding short-term bank borrowing and note payable): cash and cash equivalents, accounts and retention receivable, prepayments and other receivables, accounts payable, income tax payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments. Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of short-term bank borrowings and note payable approximate the carrying amount. The Company also follows the guidance of the ASC Topic 820-10, “ Fair Value Measurements and Disclosures ” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows: ● Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; ● Level 2 : Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and ● Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Recent accounting pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update ("ASU") 2014-09, “Revenue from Contracts with Customers (Topic 606).” The FASB also issued a series of other ASUs, which update ASU 2014-09 (collectively, the “new revenue recognition standard”). This new standard replaces all previous U.S. GAAP guidance on this topic and eliminates all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The impact of the adoption of the new standard was not material to the Company’s condensed consolidated financial statements for the quarter ended September 30, 2018. The Company expects the impact to be immaterial on an ongoing basis. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard provides guidance on how certain cash receipts and payments are presented and classified in the statement of cash flows. For public entities, ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those annual periods, and requires a retrospective approach. The Company adopted this standard effective January 1, 2018 and the adoption did not have a material effect on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (“ASC 842”)”. The guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. ASC 842 is effective for fiscal years beginning after December 15, 2018. The Company is evaluating the adoption of ASC 842, but has not determined the effects it may have on the Company’s consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” The standard requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents (collectively, "restricted cash"). Therefore, restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new guidance is effective for interim and annual periods beginning after December 15, 2017. The Company adopted this standard retrospectively effective January 1, 2018 and the adoption did not have a material effect on the Company’s consolidated financial statements. Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements. |
ACCOUNTS AND RETENTION RECEIVAB
ACCOUNTS AND RETENTION RECEIVABLES | 9 Months Ended |
Sep. 30, 2018 | |
Accounts And Retention Receivable [Abstract] | |
ACCOUNTS AND RETENTION RECEIVABLES | NOTE — 4 ACCOUNTS AND RETENTION RECEIVABLES The majority of the Company’s sales are on open credit terms and in accordance with terms specified in the contracts governing the relevant transactions. The Company evaluates the need of an allowance for doubtful accounts based on specifically identified amounts that management believes to be uncollectible. If actual collections experience changes, revisions to the allowance may be required. September 30, 2018 December 31, 2017 (Unaudited) (Audited) Accounts receivable, cost $ 8,643,747 $ 12,977,954 Retention receivable, cost 567,038 545,940 9,210,785 13,523,894 Less: allowance for doubtful accounts (2,169,687 ) (760,164 ) Accounts and retention receivable, net $ 7,041,098 $ 12,763,730 Up to October 26, 2018, the Company has subsequently recovered from approximately 2% of accounts and retention receivable as of September 30, 2018. During the three and nine months ended September 30, 2018, the Company made $23,557 and $2,169,687 allowance for doubtful accounts to the potentially impaired balances, respectively. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2018 | |
Inventory, Net [Abstract] | |
INVENTORIES | NOTE — 5 INVENTORIES September 30, 2018 December 31, 2017 (Unaudited) (Audited) Raw materials $ 1,287,791 $ 499,213 Work-in-process 217,153 555,694 Finished goods 2,934,836 1,009,324 $ 4,439,780 $ 2,064,231 For the three and nine months ended September 30, 2018 and 2017, no allowance for obsolete inventories was recorded by the Company. Finished goods are expected to be delivered to the customers in the next twelve months. |
SHORT-TERM BANK BORROWINGS
SHORT-TERM BANK BORROWINGS | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
SHORT-TERM BANK BORROWINGS | NOTE — 6 SHORT-TERM BANK BORROWINGS Short-term bank borrowings consist of the following: September 30, 2018 December 31, 2017 (Unaudited) (Audited) Payable to financial institutions in the PRC: Demand bank notes: Equivalent to RMB7,000,000, due on March 19, 2018, which is guaranteed by its vendor $ - $ 1,075,867 Short-term borrowing: Equivalent to RMB40,000,000 with interest rate at 1.28 times of the Bank of China Benchmark Lending Rate, monthly payable, due on March 19, 2019, which is guaranteed by its vendor 5,825,354 6,147,814 Total short-term bank borrowings $ 5,825,354 $ 7,223,681 The effective Bank of China Benchmark Lending rate is 6% and 6% per annum for the nine months ended September 30, 2018 and 2017. |
AMOUNT DUE TO A RELATED PARTY
AMOUNT DUE TO A RELATED PARTY | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
AMOUNT DUE TO A RELATED PARTY | NOTE — 7 AMOUNT DUE TO A RELATED PARTY As of September 30, 2018, the amount due to a related party represented temporary advances made by the Company’s major stockholder, Pelaris International Ltd, which is controlled by Ms. Li Hua Wang (the Company’s CFO) and Mr. Gang Li (the Company’s CEO), which was unsecured, interest-free and no fixed term of repayment. Imputed interest is considered not significant. |
OTHER PAYABLES AND ACCRUED LIAB
OTHER PAYABLES AND ACCRUED LIABILITIES | 9 Months Ended |
Sep. 30, 2018 | |
Payables and Accruals [Abstract] | |
OTHER PAYABLES AND ACCRUED LIABILITIES | NOTE — 8 OTHER PAYABLES AND ACCRUED LIABILITIES Other payables and accrued liabilities consisted of the following: September 30, 2018 December 31, 2017 (Unaudited) (Audited) Customer deposits $ 656,315 $ 513,382 Value added tax payable 402,628 627,290 Accrued operating expenses 642,164 506,944 Other payable 851,649 856,940 $ 2,552,756 $ 2,504,556 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE — 9 INCOME TAXES NFEC is the State of Delaware and is subject to the tax laws of United States of America. As of September 30, 2018, the operation in the United States of America incurred $4,087,926 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2038, if unutilized. The Company has provided for a full valuation allowance against the deferred tax assets of $858,464 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future. The Company’s subsidiaries operating in the PRC are subject to the Corporate Income Tax Law of the People’s Republic of China at a unified income tax rate of 25%. The reconciliation of income tax rate to the effective income tax rate for the nine months ended September 30, 2018 and 2017 is as follows: Nine Months ended September 30, 2018 2017 Loss before income taxes from PRC operation $ (2,305,577 ) $ (709,663 ) Statutory income tax rate 25 % 25 % Income tax expense at statutory rate (576,394 ) (177,416 ) Effect from non-deductible items 576,508 180,139 Income tax expense $ 114 $ 2,723 The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of September 30, 2018 and December 31, 2017: September 30, 2018 December 31, 2017 (Unaudited) (Audited) Deferred tax assets: Net operating loss carryforwards - United States – current rate $ 858,464 $ 1,333,501 - United States – effect of change in statutory rate - (509,868 ) Less: valuation allowance (858,464 ) (823,633 ) Deferred tax assets $ - $ - |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE — 10 STOCKHOLDERS’ EQUITY On March 12, 2018, the Company issued 500,000 shares of its Common Stock, at the price of $1.00 per share for aggregate consideration of $500,000, to an independent third party. As of September 30, 2018 and December 31, 2017, the Company had a total of 7,573,289 and 7,073,289 shares of its common stock issued and outstanding, respectively. |
CONCENTRATIONS OF RISK
CONCENTRATIONS OF RISK | 9 Months Ended |
Sep. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS OF RISK | NOTE — 11 CONCENTRATIONS OF RISK The Company is exposed to the following concentrations of risk: (a) Major customer For the three and nine months ended September 30, 2018, the customers who accounted for 10% or more of the Company’s revenues and its outstanding account receivable balances as at year-end dates, are presented as follows: Three months ended September 30, 2018 September 30, 2018 Customer Sales Percentage of sales Accounts receivable Customer A $ 913,530 83 % $ 8,482,625 Nine months ended September 30, 2018 September 30, 2018 Customer Sales Percentage of sales Accounts receivable Customer A $ 1,027,561 57 % $ 8,482,625 For the three and nine months ended September 30, 2017, the customers who accounted for 10% or more of the Company’s revenues and its outstanding account receivable balances as at year-end dates, are presented as follows: Three months ended September 30, 2017 September 30, 2017 Customers Sales Percentage of sales Accounts and retention receivable Customer A $ 828,573 73 % $ 7,889,415 Nine Months ended September 30, 2017 September 30, 2017 Customers Sales Percentage of sales Accounts and retention receivable Customer A $ 2,460,866 64 % $ 7,889,415 Customer B 448,519 12 % 461,557 Total: $ 2,909,385 76 % Total: $ 8,350,972 All customers are located in the PRC. (b) Major vendors For the three and nine months ended September 30, 2018, no vendor accounted for 10% of the Company’s purchase. For the three and nine months ended September 30, 2017, the vendor who accounts for 10% or more of the Company’s purchases and its outstanding balances as at period-end dates, are presented as follows: Three months ended September 30, 2017 September 30, 2017 Vendors Purchases Percentage of purchases Accounts payable Vendor D $ 74,550 37 % $ - Vendor E 84,261 42 % 147,035 Total $ 158,811 79 % Total: $ 147,035 Nine months ended September 30, 2017 September 30, 2017 Vendors Purchases Percentage of purchases Accounts payable Vendor D $ 453,965 45 % $ - Vendor E 179,586 18 % 147,035 Total: $ 633,551 63 % Total: $ 147,035 All vendors are located in the PRC. (c) Credit risk Financial instruments that are potentially subject to credit risk consist principally of trade receivables. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. (d) Interest rate risk As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are substantially independent of changes in market interest rates. The Company’s interest-rate risk arises from borrowing under notes and bank borrowings. The Company manages interest rate risk by varying the issuance and maturity dates variable rate debt, limiting the amount of variable rate debt, and continually monitoring the effects of market changes in interest rates. As of September 30, 2018, borrowings under related party notes were at fixed rates and short-term bank borrowings were at variable rates. (e) Exchange rate risk The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in RMB and a significant portion of the assets and liabilities are denominated in RMB. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and RMB. If RMB depreciates against US$, the value of RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk. (f) Economic and political risks The Company's operations are conducted in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy. The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE — 12 SUBSEQUENT EVENTS The Company evaluated subsequent events through the date the financial statements were issued and filed with this Form 10-Q. There were no subsequent events that required recognition or disclosure. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Use of estimates | Use of estimates In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates. |
Basis of consolidation | Basis of consolidation The condensed consolidated financial statements include the financial statements of NFEC and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. Cash equivalents consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. |
Accounts receivable | Accounts receivable Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from shipment. Credit is extended based on evaluation of a customer's financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of September 30, 2018 and December 31, 2017, the allowance for doubtful accounts was $2,169,687 and $760,164, respectively. |
Retention receivable | Retention receivable Retention receivable is the amount withheld by a customer based upon 5-10% of the contract value, until a product warranty is expired. The warranty period is usually 12 months. |
Inventories | Inventories Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a weighted average method. Costs include material, labor and manufacturing overhead costs. Quarterly, the Company reviews historical sales activity to determine excess, slow moving items and potentially obsolete items and also evaluates the impact of any anticipated changes in future demand. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. As of September 30, 2018, the Company did not record an allowance for obsolete inventories, nor have there been any write-offs. |
Land use rights | Land use rights All land in the PRC is owned by the PRC government. The government in the PRC, according to the relevant PRC law, may sell the right to use the land for a specified period of time. Thus, the Company’s land purchase in the PRC is considered to be leasehold land and is stated at cost less accumulated amortization and any recognized impairment loss. Amortization is provided over the term of the land use right agreement on a straight-line basis, which is 50 years and will expire in 2059. Amortization expense for the three months ended September 30, 2018 and 2017 was $15,166 and $15,463, respectively. Amortization expense for the nine months ended September 30, 2018 and 2017 was $47,578 and $45,480, respectively. The estimated annual amortization expense on the land use right in the next five years and thereafter is as follows: Period ending September 30: 2019 $ 60,103 2020 60,103 2021 60,103 2022 60,103 2023 60,103 Thereafter 2,178,729 Total: $ 2,479,244 |
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. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values: Expected useful life Residual value Building 30 – 50 years 5 % Plant and machinery 10 – 20 years 5 % Furniture, fixture and equipment 5 – 8 years 5 % Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations. Depreciation expense for the three months ended September 30, 2018 and 2017 was $184,199 and $193,171, respectively. Depreciation expense for the nine months ended September 30, 2018 and 2017 was $647,584 and $568,317, respectively. |
Impairment of long-lived assets | Impairment of long-lived assets In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property, plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment charge for the three and nine months ended September 30, 2018. |
Revenue recognition | Revenue recognition The Company offers the following products and service to its customers: (a) Energy saving flow control equipment; and (b) Energy project management and sub-contracting service Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: • identify the contract with a customer; • identify the performance obligations in the contract; • determine the transaction price; • allocate the transaction price to performance obligations in the contract; and • recognize revenue as the performance obligation is satisfied. (a) Sale of products The Company derives a majority of its revenues from the sale of energy saving flow control equipment. Generally, these products are manufactured and configured to customer requirements. The Company typically produces and builds the energy saving flow control equipment for customers in a period from 1 to 6 months. When the Company completes the production in accordance with the customer’s specification, the customer is required to inspect the finished products for quality and product conditions, to its full satisfaction, then the Company makes delivery to the customer. The Company recognizes revenue from the sale of such finished products upon delivery to the customer, whereas the title and risk of loss are fully transferred to the customers. The Company records its revenues, net of value added taxes (“VAT”). The Company is subject to VAT which is levied on the majority of the products at the rate of 17% on the invoiced value of sales. The Company experienced no product returns and recorded no reserve for sales returns for the three and nine months ended September 30, 2018 and 2017. (b) Service revenue Service revenue is primarily derived from energy-saving technical services or project management or sub-contracting services that are not an element of an arrangement for the sale of products. These services are generally billed on a time-cost plus basis, for a period of service time from 2 to 3 months. Revenue is recognized, net of business taxes when the service is rendered and accepted by the customer. (c) Interest income Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable. |
Comprehensive income | Comprehensive income ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit. |
Income taxes | Income taxes Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any 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. ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. For the three and nine months ended September 30, 2018 and 2017, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2018, the Company did not have any significant unrecognized uncertain tax positions. The Company conducts the majority of its businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by a foreign tax authority. |
Product warranty | Product warranty Under the terms of the contracts, the Company offers its customers with a free product warranty on a case-by-case basis, depending upon the type of customers, nature and size of the infrastructure projects. Under such arrangements, a portion of the project contract balance (usually 5-10% of contract value) is withheld by a customer from 12 to 24 months, until the product warranty has expired. The Company has not experienced any material returns or claims where it was under obligation to honor this standard warranty provision. As such, no reserve for product warranty has been provided in the result of operations for the three and nine months ended September 30, 2018 and 2017. |
Net income per share | Net loss per share The Company calculates net loss per share in accordance with ASC Topic 260, “ Earnings per Share .” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive. |
Foreign currencies translation | Foreign currencies translation Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations. The reporting currency of the Company is the United States Dollar ("US$"). The Company's subsidiaries in the PRC maintain their books and records in their local currency, Renminbi Yuan ("RMB"), which is the functional currency as being the primary currency of the economic environment in which these entities operate. In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “ Translation of Financial Statement ”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity. Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective period: September 30, 2018 September 30, 2017 Period-end RMB:US$1 exchange rate 6.86653 6.65450 Average period RMB:US$1 exchange rate 6.80315 6.80573 |
Related parties | Related parties Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence. |
Segment reporting | Segment reporting ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. For the nine months ended September 30, 2018 and 2017, the Company operates in one reportable operating segment in the PRC. |
Fair value of financial instruments | Fair value of financial instruments The carrying value of the Company’s financial instruments (excluding short-term bank borrowing and note payable): cash and cash equivalents, accounts and retention receivable, prepayments and other receivables, accounts payable, income tax payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments. Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of short-term bank borrowings and note payable approximate the carrying amount. The Company also follows the guidance of the ASC Topic 820-10, “ Fair Value Measurements and Disclosures ” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows: ● Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; ● Level 2 : Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and ● Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
Recent accounting pronouncements | Recent accounting pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update ("ASU") 2014-09, “Revenue from Contracts with Customers (Topic 606).” The FASB also issued a series of other ASUs, which update ASU 2014-09 (collectively, the “new revenue recognition standard”). This new standard replaces all previous U.S. GAAP guidance on this topic and eliminates all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The impact of the adoption of the new standard was not material to the Company’s condensed consolidated financial statements for the quarter ended September 30, 2018. The Company expects the impact to be immaterial on an ongoing basis. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard provides guidance on how certain cash receipts and payments are presented and classified in the statement of cash flows. For public entities, ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those annual periods, and requires a retrospective approach. The Company adopted this standard effective January 1, 2018 and the adoption did not have a material effect on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (“ASC 842”)”. The guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. ASC 842 is effective for fiscal years beginning after December 15, 2018. The Company is evaluating the adoption of ASC 842, but has not determined the effects it may have on the Company’s consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” The standard requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents (collectively, "restricted cash"). Therefore, restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new guidance is effective for interim and annual periods beginning after December 15, 2017. The Company adopted this standard retrospectively effective January 1, 2018 and the adoption did not have a material effect on the Company’s consolidated financial statements. Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements. |
ORGANIZATION AND BUSINESS BAC_2
ORGANIZATION AND BUSINESS BACKGROUND (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Subsidiaries | Description of subsidiaries Name Place of incorporation and kind of legal entity Principal activities and place of operation Particulars of issued/ registered share capital Effective interest held Liaoning Nengfa Weiye Energy Technology Co. Ltd (“Nengfa Energy”) The PRC, a limited liability company Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC US$ 5,000,000 100 % Liaoning Nengfa Tiefa Import & Export Co. Ltd (“Nengfa Tiefa Import & Export”) The PRC, a limited liability company Development and production of hi-tech and automatic-intelligence valve products RMB 877,192 57 % |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Estimated Amortization Expense on Land Use Right | The estimated annual amortization expense on the land use right in the next five years and thereafter is as follows: Period ending September 30: 2019 $ 60,103 2020 60,103 2021 60,103 2022 60,103 2023 60,103 Thereafter 2,178,729 Total: $ 2,479,244 |
Expected Useful Lives | Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values: Expected useful life Residual value Building 30 – 50 years 5 % Plant and machinery 10 – 20 years 5 % Furniture, fixture and equipment 5 – 8 years 5 % |
Exchange Rates | Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective period: September 30, 2018 September 30, 2017 Period-end RMB:US$1 exchange rate 6.86653 6.65450 Average period RMB:US$1 exchange rate 6.80315 6.80573 |
ACCOUNTS AND RETENTION RECEIV_2
ACCOUNTS AND RETENTION RECEIVABLES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounts And Retention Receivable [Abstract] | |
ACCOUNTS AND RETENTION RECEIVABLES | September 30, 2018 December 31, 2017 (Unaudited) (Audited) Accounts receivable, cost $ 8,643,747 $ 12,977,954 Retention receivable, cost 567,038 545,940 9,210,785 13,523,894 Less: allowance for doubtful accounts (2,169,687 ) (760,164 ) Accounts and retention receivable, net $ 7,041,098 $ 12,763,730 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventory, Net [Abstract] | |
INVENTORIES | September 30, 2018 December 31, 2017 (Unaudited) (Audited) Raw materials $ 1,287,791 $ 499,213 Work-in-process 217,153 555,694 Finished goods 2,934,836 1,009,324 $ 4,439,780 $ 2,064,231 |
SHORT-TERM BANK BORROWINGS (Tab
SHORT-TERM BANK BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Short-Term Bank Borrowings | Short-term bank borrowings consist of the following: September 30, 2018 December 31, 2017 (Unaudited) (Audited) Payable to financial institutions in the PRC: Demand bank notes: Equivalent to RMB7,000,000, due on March 19, 2018, which is guaranteed by its vendor $ - $ 1,075,867 Short-term borrowing: Equivalent to RMB40,000,000 with interest rate at 1.28 times of the Bank of China Benchmark Lending Rate, monthly payable, due on March 19, 2019, which is guaranteed by its vendor 5,825,354 6,147,814 Total short-term bank borrowings $ 5,825,354 $ 7,223,681 |
OTHER PAYABLES AND ACCRUED LI_2
OTHER PAYABLES AND ACCRUED LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Payables and Accruals [Abstract] | |
Other Payables and Accrued Liabilities | Other payables and accrued liabilities consisted of the following: September 30, 2018 December 31, 2017 (Unaudited) (Audited) Customer deposits $ 656,315 $ 513,382 Value added tax payable 402,628 627,290 Accrued operating expenses 642,164 506,944 Other payable 851,649 856,940 $ 2,552,756 $ 2,504,556 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of Income Tax Rate to Effective Income Tax Rate | The reconciliation of income tax rate to the effective income tax rate for the nine months ended September 30, 2018 and 2017 is as follows: Nine Months ended September 30, 2018 2017 Loss before income taxes from PRC operation $ (2,305,577 ) $ (709,663 ) Statutory income tax rate 25 % 25 % Income tax expense at statutory rate (576,394 ) (177,416 ) Effect from non-deductible items 576,508 180,139 Income tax expense $ 114 $ 2,723 |
Schedule of Deferred Tax Asset and Liabilities | The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of September 30, 2018 and December 31, 2017: September 30, 2018 December 31, 2017 (Unaudited) (Audited) Deferred tax assets: Net operating loss carryforwards - United States – current rate $ 858,464 $ 1,333,501 - United States – effect of change in statutory rate - (509,868 ) Less: valuation allowance (858,464 ) (823,633 ) Deferred tax assets $ - $ - |
CONCENTRATIONS OF RISK (Tables)
CONCENTRATIONS OF RISK (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Customers Account for Ten Percent or More of Revenues and its Outstanding Accounts Receivable | For the three and nine months ended September 30, 2018, the customers who accounted for 10% or more of the Company’s revenues and its outstanding account receivable balances as at year-end dates, are presented as follows: Three months ended September 30, 2018 September 30, 2018 Customer Sales Percentage of sales Accounts receivable Customer A $ 913,530 83 % $ 8,482,625 Nine months ended September 30, 2018 September 30, 2018 Customer Sales Percentage of sales Accounts receivable Customer A $ 1,027,561 57 % $ 8,482,625 Three months ended September 30, 2017 September 30, 2017 Customers Sales Percentage of sales Accounts and retention receivable Customer A $ 828,573 73 % $ 7,889,415 Nine Months ended September 30, 2017 September 30, 2017 Customers Sales Percentage of sales Accounts and retention receivable Customer A $ 2,460,866 64 % $ 7,889,415 Customer B 448,519 12 % 461,557 Total: $ 2,909,385 76 % Total: $ 8,350,972 |
Schedule Of Counterparty Credit Concentration Risk | For the three and nine months ended September 30, 2017, the vendor who accounts for 10% or more of the Company’s purchases and its outstanding balances as at period-end dates, are presented as follows: Three months ended September 30, 2017 September 30, 2017 Vendors Purchases Percentage of purchases Accounts payable Vendor D $ 74,550 37 % $ - Vendor E 84,261 42 % 147,035 Total $ 158,811 79 % Total: $ 147,035 Nine months ended September 30, 2017 September 30, 2017 Vendors Purchases Percentage of purchases Accounts payable Vendor D $ 453,965 45 % $ - Vendor E 179,586 18 % 147,035 Total: $ 633,551 63 % Total: $ 147,035 |
ORGANIZATION AND BUSINESS BAC_3
ORGANIZATION AND BUSINESS BACKGROUND (Detail) - 9 months ended Sep. 30, 2018 | USD ($) | CNY (¥) |
Liaoning Nengfa Weiye Energy Technology Co Ltd [Member] | ||
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | ||
Subsidiary of Limited Liability Company or Limited Partnership, Business Purpose | Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC | Production of a variety of industrial valve components which are widely used in water supply and sewage system, coal and gas fields, power generation stations, petroleum and chemical industries in the PRC |
Stock Issued During Periods Value Issued For Cash | $ | $ 5,000,000 | |
Entity Incorporation, State Country Name | The PRC, a limited liability company | The PRC, a limited liability company |
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage | 100.00% | 100.00% |
Liaoning Nengfa Tiefa Import And Export Co.Ltd [Member] | ||
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | ||
Subsidiary of Limited Liability Company or Limited Partnership, Business Purpose | Development and production of hi-tech and automatic-intelligence valve products | Development and production of hi-tech and automatic-intelligence valve products |
Stock Issued During Periods Value Issued For Cash | ¥ | ¥ 877,192 | |
Entity Incorporation, State Country Name | The PRC, a limited liability company | The PRC, a limited liability company |
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage | 57.00% | 57.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Summary Of Significant Accounting Policies [Line Items] | |||||
Value added tax rate levied on majority of products | 17.00% | ||||
Minimum likelihood of tax benefits being realized upon settlement | 50.00% | 50.00% | |||
Depreciation expense | $ 184,199 | $ 193,171 | $ 647,584 | $ 568,317 | |
Warrant Period | 12 months | ||||
Allowance for Doubtful Accounts Receivable | 2,169,687 | $ 2,169,687 | $ 760,164 | ||
Accounts Receivable | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Customers billing period | 90 days | ||||
Use Rights | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Finite lived intangible assets, useful Life | 50 years | ||||
Finite lived intangible assets amortization period | 2,059 | ||||
Land Use Rights [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Amortization expense | $ 15,166 | $ 15,463 | $ 47,578 | $ 45,480 | |
Minimum | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Retention receivable percentage | 5.00% | 5.00% | |||
Portion of project contract balance withheld period | 12 months | ||||
Product Control Equipment Period | 1 month | ||||
Billing Period | 2 months | ||||
Minimum | Accounts Receivable | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Customers billing period | 30 days | ||||
Maximum | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Retention receivable percentage | 10.00% | 10.00% | |||
Portion of project contract balance withheld period | 24 months | ||||
Product Control Equipment Period | 6 months | ||||
Billing Period | 3 months | ||||
Maximum | Accounts Receivable | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Customers billing period | 90 days |
Estimated Amortization Expense
Estimated Amortization Expense on Land Use Right (Detail) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Land Use Right [Line Items] | ||
2,019 | $ 60,103 | |
2,020 | 60,103 | |
2,021 | 60,103 | |
2,022 | 60,103 | |
2,023 | 60,103 | |
Thereafter | 2,178,729 | |
Total: | $ 2,479,244 | $ 2,664,054 |
Property, Plant and Equipment E
Property, Plant and Equipment Expected Useful Lives and Estimated Residual Values (Detail) | 9 Months Ended |
Sep. 30, 2018 | |
Building | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment, residual value | 5.00% |
Building | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment, useful life | 30 years |
Building | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment, useful life | 50 years |
Plant and machinery | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment, residual value | 5.00% |
Plant and machinery | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment, useful life | 10 years |
Plant and machinery | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment, useful life | 20 years |
Furniture, fixture and equipment | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment, residual value | 5.00% |
Furniture, fixture and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment, useful life | 5 years |
Furniture, fixture and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property plant and equipment, useful life | 8 years |
Exchange Rates (Detail)
Exchange Rates (Detail) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Financial Statement Line Items with Differences in Reported Amount and Reporting Currency Denominated Amounts [Line Items] | ||
Period-end RMB:US$1 exchange rate | 6.86653 | 6.65450 |
Average period RMB:US$1 exchange rate | 6.80315 | 6.80573 |
ACCOUNTS AND RETENTION RECEIV_3
ACCOUNTS AND RETENTION RECEIVABLES - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Oct. 26, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Provision for Doubtful Accounts | $ 23,557 | $ 1,462,898 | $ 0 | |
Subsequent Event [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Percentage Of Accounts Receivable Recovered | 2.00% |
ACCOUNTS AND RETENTION RECEIV_4
ACCOUNTS AND RETENTION RECEIVABLES (Detail) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounts receivable, cost | $ 8,643,747 | $ 12,977,954 | |
Retention receivable, cost | 567,038 | 545,940 | |
Accounts And Retention Receivable Gross | 9,210,785 | 13,523,894 | |
Less: allowance for doubtful accounts | (2,169,687) | (760,164) | |
Accounts and retention receivable, net | $ 7,041,098 | $ 12,763,730 | $ 8,350,972 |
INVENTORIES (Detail)
INVENTORIES (Detail) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory [Line Items] | ||
Raw materials | $ 1,287,791 | $ 499,213 |
Work-in-process | 217,153 | 555,694 |
Finished goods | 2,934,836 | 1,009,324 |
Total inventory | $ 4,439,780 | $ 2,064,231 |
SHORT-TERM BANK BORROWINGS - Ad
SHORT-TERM BANK BORROWINGS - Additional Information (Detail) | Sep. 30, 2018 | Sep. 30, 2017 |
China Benchmark Lending Rate [Member] | ||
Short-term Debt [Line Items] | ||
Effective interest rate, per annum | 6.00% | 6.00% |
SHORT-TERM BANK BORROWINGS (Det
SHORT-TERM BANK BORROWINGS (Detail) | Sep. 30, 2018USD ($) | Sep. 30, 2018CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) |
Short-term Debt [Line Items] | ||||
Total short-term bank borrowings | $ 5,825,354 | $ 7,223,681 | ||
Guarantee Type, Other | Short Term Loan One | ||||
Short-term Debt [Line Items] | ||||
Total short-term bank borrowings | 5,825,354 | ¥ 40,000,000 | 6,147,814 | |
Vendor Guarantee One | Collateralized Loans | ||||
Short-term Debt [Line Items] | ||||
Total short-term bank borrowings | $ 0 | $ 1,075,867 | ¥ 7,000,000 |
SHORT-TERM BANK BORROWINGS (Par
SHORT-TERM BANK BORROWINGS (Parenthetical) (Detail) | 9 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2018CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | |
Short-term Debt [Line Items] | ||||
Short-term bank borrowings | $ 5,825,354 | $ 7,223,681 | ||
Percentage of face value as handling fee | 1.28% | 1.28% | ||
Guarantee Type, Other | Short Term Loan One | ||||
Short-term Debt [Line Items] | ||||
Short-term bank borrowings | $ 5,825,354 | ¥ 40,000,000 | 6,147,814 | |
Debt Instrument, Maturity Date | Mar. 19, 2018 | |||
Vendor Guarantee One | Collateralized Loans | ||||
Short-term Debt [Line Items] | ||||
Short-term bank borrowings | $ 0 | $ 1,075,867 | ¥ 7,000,000 | |
Debt Instrument, Maturity Date | Mar. 19, 2019 |
OTHER PAYABLES AND ACCRUED LI_3
OTHER PAYABLES AND ACCRUED LIABILITIES (Detail) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts Payable and Accrued Liabilities [Line Items] | ||
Customer deposits | $ 656,315 | $ 513,382 |
Value added tax payable | 402,628 | 627,290 |
Accrued operating expenses | 642,164 | 506,944 |
Other payable | 851,649 | 856,940 |
Other payables and accrued liabilities | $ 2,552,756 | $ 2,504,556 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Income Taxes [Line Items] | ||
Unified income tax rate | 25.00% | 25.00% |
United States of America | ||
Income Taxes [Line Items] | ||
Expiration date | 2,038 | |
Operating Loss Carryforwards | $ 4,087,926 | |
Operating Loss Carryforwards, Valuation Allowance | $ 858,464 |
Reconciliation of Income Tax Ra
Reconciliation of Income Tax Rate to Effective Income Tax Rate (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Reconciliation of Effective Income Tax Rate [Line Items] | ||||
Loss before income taxes from PRC operation | $ (2,305,577) | $ (709,663) | ||
Statutory income tax rate | 25.00% | 25.00% | ||
Income tax expense at statutory rate | $ (576,394) | $ (177,416) | ||
Effect from non-deductible items | 576,508 | 180,139 | ||
Income tax expense | $ 16 | $ 51 | $ 114 | $ 2,723 |
Components of Aggregate Deferre
Components of Aggregate Deferred Tax Assets (Detail) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Net operating loss carryforwards - United States – current rate | $ 858,464 | $ 1,333,501 |
Net operating loss carryforwards - United States – effect of change in statutory rate | 0 | (509,868) |
Less: valuation allowance | (858,464) | (823,633) |
Deferred tax assets | $ 0 | $ 0 |
STOCKHOLDERS' EQUITY - Addition
STOCKHOLDERS' EQUITY - Additional Information (Detail) - USD ($) | Mar. 12, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Schedule of Capitalization, Equity [Line Items] | |||
Common Stock, Shares, Issued | 7,573,289 | 7,073,289 | |
Common stock, shares outstanding | 7,573,289 | 7,073,289 | |
Stock Issued During Period, Shares, New Issues | 500,000 | ||
Common Stock, Par or Stated Value Per Share | $ 1 | $ 0.001 | $ 0.001 |
Stock Issued During Period, Value, New Issues | $ 500,000 | $ 500,000 |
CONCENTRATIONS OF RISK - Additi
CONCENTRATIONS OF RISK - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Concentration Risk [Line Items] | ||||
Percentage of purchases | 79.00% | 63.00% | ||
Sales Revenue Net | ||||
Concentration Risk [Line Items] | ||||
Percentage of purchases | 10.00% | 10.00% | 10.00% | 10.00% |
Accounts Payable | ||||
Concentration Risk [Line Items] | ||||
Percentage of purchases | 10.00% | 10.00% | 10.00% | 10.00% |
Customers Account for Ten Perce
Customers Account for Ten Percent or More of Revenues and its Outstanding Accounts Receivable Balances (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Concentration Risk [Line Items] | |||||
Percentage of sales | 79.00% | 63.00% | |||
Accounts receivable | $ 7,041,098 | $ 8,350,972 | $ 7,041,098 | $ 8,350,972 | $ 12,763,730 |
Sales | |||||
Concentration Risk [Line Items] | |||||
Sales | $ 2,909,385 | ||||
Percentage of sales | 76.00% | ||||
Customer A | Sales | |||||
Concentration Risk [Line Items] | |||||
Sales | $ 913,530 | $ 828,573 | $ 1,027,561 | $ 2,460,866 | |
Percentage of sales | 83.00% | 73.00% | 57.00% | 64.00% | |
Accounts receivable | $ 8,482,625 | $ 7,889,415 | $ 8,482,625 | $ 7,889,415 | |
Customer B | Sales | |||||
Concentration Risk [Line Items] | |||||
Sales | $ 448,519 | ||||
Percentage of sales | 12.00% | ||||
Accounts receivable | $ 461,557 | $ 461,557 |
Concentrations Risk of Company'
Concentrations Risk of Company's Purchases and Outstanding Accounts Payable Balances (Detail) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($) | |
Cost Of Good Sold | $ 158,811 | $ 633,551 |
Concentration Risk, Percentage | 79.00% | 63.00% |
Accounts Payable, Current | $ 147,035 | $ 147,035 |
Vendor D | ||
Cost Of Good Sold | $ 74,550 | $ 453,965 |
Concentration Risk, Percentage | 37.00% | 45.00% |
Accounts Payable, Current | $ 0 | $ 0 |
Vendor E | ||
Cost Of Good Sold | $ 84,261 | $ 179,586 |
Concentration Risk, Percentage | 42.00% | 18.00% |
Accounts Payable, Current | $ 147,035 | $ 147,035 |