Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 18, 2018 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Trading Symbol | thti | |
Entity Registrant Name | THT Heat Transfer Technology, Inc. | |
Entity Central Index Key | 1,375,686 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 20,453,500 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well Known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 5,146,222 | $ 6,297,546 |
Restricted cash, current | 516,203 | 571,918 |
Trade receivables, net | 40,488,348 | 46,311,537 |
Trade receivables - related party | 4,660 | 27,676 |
Bills receivable | 2,849,946 | 394,242 |
Other receivables, prepayments and deposits, net | 8,863,077 | 7,371,301 |
Due from related parties | 1,886,161 | 2,192,446 |
Inventories, net | 30,015,176 | 28,521,552 |
Total Current Assets | 89,769,793 | 91,688,218 |
Restricted cash, non-current | 1,313,330 | 1,112,408 |
Retention receivables | 3,559,839 | 3,200,117 |
Property, plant and equipment, net | 9,310,889 | 8,825,346 |
Land use rights, net | 5,485,316 | 5,325,127 |
Deferred tax assets | 165,322 | 159,574 |
TOTAL ASSETS | 109,604,489 | 110,310,790 |
Current Liabilities | ||
Accounts payable | 8,922,656 | 8,954,475 |
Other payables and accrued liabilities | 25,663,068 | 25,305,594 |
Income tax payable | 57,765 | 55,756 |
Short-term loans | 5,095,379 | 4,918,234 |
Due to related parties | 3,817,640 | 7,207,603 |
Total Current Liabilities | 43,556,508 | 46,441,662 |
TOTAL LIABILITIES | 43,556,508 | 46,441,662 |
EQUITY | ||
Preferred stock, $.001 par value, 10,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $.001 par value, 190,000,000 shares authorized, 20,453,500 shares issued and outstanding at March 31, 2018 and December 31, 2017 | 20,454 | 20,454 |
Additional paid-in capital | 27,136,310 | 27,136,310 |
Statutory reserve | 4,270,861 | 4,270,861 |
Retained earnings | 29,358,741 | 29,486,561 |
Accumulated other comprehensive income | 4,484,016 | 2,202,886 |
Total THT Heat Transfer Technology, Inc. shareholders' equity | 65,270,382 | 63,117,072 |
Non-controlling interest | 777,599 | 752,056 |
TOTAL EQUITY | 66,047,981 | 63,869,128 |
TOTAL LIABILITIES AND EQUITY | $ 109,604,489 | $ 110,310,790 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Preferred Stock, Par Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | ||
Preferred Stock, Shares Outstanding | ||
Common Stock, Par Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 190,000,000 | 190,000,000 |
Common Stock, Shares, Issued | 20,453,500 | 20,453,500 |
Common Stock, Shares, Outstanding | 20,453,500 | 20,453,500 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income (Loss) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
REVENUES | ||
Sales revenue | $ 7,211,275 | $ 3,998,106 |
Sales revenue - related party | 8,603 | 8,215 |
Total Revenues | 7,219,878 | 4,006,321 |
COST OF REVENUES: | ||
Total Cost of Revenues | (5,446,817) | (2,167,826) |
Gross Profit | 1,773,061 | 1,838,495 |
Operating expenses | ||
General and administrative expenses | 198,144 | 822,601 |
Research and development expenses | 253,122 | 317,998 |
Selling expenses | 1,520,301 | 2,222,048 |
Total Operating Expenses | 1,971,567 | 3,362,647 |
Loss from operations | (198,506) | (1,524,152) |
Other income (expenses) | ||
Interest income | 3,108 | 3,270 |
Other income | 114,870 | 42,985 |
Finance costs | (63,887) | (58,212) |
Investment income | 16,642 | 23,474 |
Other expenses | (1,573) | 0 |
Total Other Income | 69,160 | 11,517 |
Loss before income taxes | (129,346) | (1,512,635) |
Income tax benefits | 0 | 151,422 |
Net Loss | (129,346) | (1,361,213) |
Net loss attributable to non-controlling interest | (1,526) | 0 |
Net loss attributable to THT Heat Transfer Technology, Inc. common shareholders | (127,820) | (1,361,213) |
Comprehensive Income (Loss) | ||
Net Loss | (129,346) | (1,361,213) |
Other Comprehensive Income | ||
Foreign currency translation adjustments | 2,308,199 | 465,600 |
Comprehensive Income (Loss) | 2,178,853 | (895,613) |
Less: Comprehensive income attributable to non-controlling interest | 25,543 | 0 |
Comprehensive income (loss) attributable to THT Heat Transfer Technology, Inc. common shareholders | $ 2,153,310 | $ (895,613) |
Loss per common share attributable to THT Heat Transfer Technology, Inc. common shareholders | ||
Basic and diluted | $ (0.01) | $ (0.07) |
Weighted average number of shares outstanding | ||
Weighted average number of shares outstanding Basic and diluted | 20,453,500 | 20,453,500 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Shareholders' Equity - 3 months ended Mar. 31, 2018 | USD ($) |
Beginning Balance at Dec. 31, 2017 | $ 63,869,128 |
Net loss | (129,346) |
Ending Balance at Mar. 31, 2018 | $ 66,047,981 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (129,346) | $ (1,361,213) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 320,467 | 287,962 |
Deferred tax assets | 0 | (151,422) |
Allowance for doubtful accounts | (656,483) | (323,617) |
Inventory write-down | 398,805 | 0 |
Changes in operating assets and liabilities: | ||
Trade receivables, net | 8,169,832 | 5,716,769 |
Trade receivables - related party | 23,724 | 1,128,239 |
Bills receivable | (2,412,160) | (2,437,857) |
Other receivables, prepayments and deposits | (1,323,688) | (166,481) |
Inventories, net | (859,536) | (1,758,545) |
Retention receivables | (241,521) | (2,105) |
Due from related parties | 0 | 2,573 |
Accounts payable | (544,032) | (947,520) |
Other payables and accrued liabilities | (547,323) | (234,471) |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 2,198,739 | (247,688) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Payments to acquire property, plant and equipment | (260,943) | (8,096) |
Proceeds from disposal of property, plant and equipment | 280,844 | 0 |
Loans made to others | 0 | (1,742,110) |
Loans made to related party | 0 | (173,950) |
Repayments from others | 0 | 579,251 |
Repayments from related party | 99,778 | 332,452 |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 119,679 | (1,012,453) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from related parties | 0 | 20,585 |
Repayments to related parties | (3,605,701) | (30,901) |
NET CASH USED IN FINANCING ACTIVITIES | (3,605,701) | (10,316) |
Effect of foreign currency translation on cash, cash equivalents, and restricted cash | 281,166 | 54,421 |
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | (1,006,117) | (1,216,036) |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD | 7,981,872 | 8,098,630 |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | 6,975,755 | 6,882,594 |
Supplementary Disclosures of Cash Flow Information: | ||
Interest paid | 58,031 | 55,573 |
Income taxes paid | 0 | 0 |
Non-cash investing and financing activities: | ||
Operating expense paid by related parties | 0 | 41,646 |
Liabilities assumed in connection with purchase of property, plant and equipment | 193,950 | 6,396 |
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets | ||
Cash and cash equivalents | 5,146,222 | 5,179,069 |
Restricted cash, current | 516,203 | 596,187 |
Restricted cash, non-current | 1,313,330 | 1,107,338 |
Total cash, cash equivalents, and restricted cash at end of period | $ 6,975,755 | $ 6,882,594 |
Corporate information
Corporate information | 3 Months Ended |
Mar. 31, 2018 | |
Corporate information [Text Block] | 1. Corporate information THT Heat Transfer Technology, Inc. (the “Company” or “THT” or the “Surviving Corporation”) is a Nevada corporation with major operations in the People's Republic of China (the "PRC"). |
Description of business
Description of business | 3 Months Ended |
Mar. 31, 2018 | |
Description of business [Text Block] | 2. Description of business The Company is a holding company whose primary business are conducted through its subsidiaries, namely SipingJuyuan which is located in the Jilin Province and Beijing Juyuan which is located in Beijing City of the PRC. The Company is engaged in the manufacturing and trading of plate heat exchangers and various related products. SipingJuyuan was established in the PRC on May 31, 2006 following the division (the “Division”) of Siping City Juyuan Heat Exchange Equipment Co., Ltd. (“Old Juyuan Company”) into three companies, namely SipingJuyuan, Siping City Juyuan Heat Exchange Equipment Co., Ltd. (“New Juyuan Company”) and Siping City JuyuanHanyang Pressure Vessels Co., Ltd (“JuyuanHanyang Pressure Vessels”). |
Summary of significant accounti
Summary of significant accounting policies | 3 Months Ended |
Mar. 31, 2018 | |
Summary of significant accounting policies [Text Block] | 3. Summary of significant accounting policies Basis of presentation and consolidation and going concern The accompanying unaudited consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with the Company’s consolidated financial statements and accompanying notes thereto for the year ended December 31, 2017 filed with the SEC in the Company’s Form 10-K on April 17, 2018. In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three-month period have been made. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year. The Company has short term loans borrowed from banks and related parties for an aggregated amount of $8.9 million, which requires the Company to secure additional funds given the Company’s current cash position. The Company’s available liquidity as of March 31, 2018 was approximately $8.5 million including cash and cash equivalents, restricted cash, current, and bills receivable. The Company has taken various actions to conserve cash, procure additional financing and improve the liquidity, including reducing capital spending. The Company's ability in meeting future cash flow requirements is dependent on many events outside of its direct control, including, among other things, successful renewal of bank borrowings and additional financing from the banks and related parties. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. Certain amounts from prior period have been reclassified to conform to the current year presentation. This reclassification has resulted in no change to the Company’s retained earnings or net income presented. The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions have been eliminated on consolidation. Fair value of financial instruments Accounting Standards Codification (“ASC”) Topic 820 requires the disclosure of the estimated fair value of financial instruments including those financial instruments for which fair value option was not elected. As of March 31, 2018 and December 31, 2017, the carrying amounts of the Company’s financial assets and liabilities approximated their fair values due to short maturities or the applicable interest rates approximated the current market rates. Recent accounting pronouncements Recently adopted accounting pronouncements In May 2014, the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers (ASC 606)” and issued subsequent amendments to the initial guidance or implementation guidance between August 2015 and November 2017 within ASU 2015-04, ASU 2016-08, ASU 2016-10, ASU 2016-12, ASU 2016-20, ASU 2017-13, and ASU 2017-14 (collectively, including ASU 2014-09, “ASC 606”). Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Effective January 1, 2018, the Company adopted the standard using the modified retrospective method, which result in an immaterial impact. See Note – 4 Revenue Recognition for further details. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (ASC 230): Restricted Cash” update on the presentation of restricted cash in the statement of cash flows. The new guidance requires an entity to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows, and an entity will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. The Company adopted this new accounting standard retrospectively during the three months ended March 31, 2018. As a result of the adoption, net cash provided by investing activities was adjusted to exclude the changes in restricted cash, resulting in a decrease of $203,146 in net cash used in investing activities in the previously-reported amount for the three months ended March 31, 2017. The Company's restricted cash represents cash deposits in bank to pledge the performance bonds issued by the banks when requested by the Company’s customers under their sales contracts, separately from cash and cash equivalents. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2018 | |
Revenue Recognition [Text Block] | 4. Revenue Recognition Adoption of ASU 2014-09 "Revenue from Contracts with Customers (ASC 606)" On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method applied to those contracts that were not completed or substantially complete as of January 1, 2018. Results for the reporting period beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company's historic accounting under Topic 605. Management has determined that the impact of the transition to the new standard is immaterial to the Company’s revenue recognition model since the Company’s revenue recognition is based on point in time transfer of control. Accordingly, the Company has not made any adjustment to opening retained earnings. Revenue for sale of products is derived from contracts with customers, which primarily include the sale of heat exchanger products. The Company’s sales arrangements do not contain variable consideration and are short-term in nature. The Company recognizes revenue at a point in time based on management’s evaluation of when all performance obligations under the terms of a contract with the customer are satisfied and control of the products has been transferred to the customer. For vast majority of the Company’s product sales, the performance obligations and control of the products transfer to the customer when products are delivered and customer acceptance is made. Management has determined after-sale expense was immaterial to the Company’s operations. Accordingly, the Company does not establish provision for estimated warranty liabilities. Disaggregation of Revenue In accordance with ASC 606, the Company disaggregates revenue from contracts with customers by products. The Company determined that disaggregating revenue into these categories meets the disclosure objective in ASC 606 which is to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors. Refer to Note 11 for information regarding revenue disaggregation by product. Contract Assets and Liabilities Contract assets, such as costs to obtain or fulfill contracts, are an insignificant component of the Company’s revenue recognition process. Contract liabilities are mainly receipt in advance from customers. As of March 31, 2018, receipt in advance from customers was $16.6 million. $2.3 million was recognized as net revenues in the three months ended March 31, 2018 that was include in the balance of receipt in advance from customers as of December 31, 2017. Receipt in advance from customers is include in other payables and accrued liabilities in the consolidated balance sheets. |
Trade receivables, net
Trade receivables, net | 3 Months Ended |
Mar. 31, 2018 | |
Trade receivables, net [Text Block] | 5. Trade receivables, net March 31, December 31, 2018 2017 (Unaudited) Trade receivables $ 51,673,883 $ 57,859,135 Less: Allowance for doubtful accounts (11,185,535 ) (11,547,598 ) $ 40,488,348 $ 46,311,537 An analysis of the allowance for doubtful accounts for the three months ended March 31, 2018 and 2017 is as follows: Three months ended March 31, (Unaudited) 2018 2017 Balance at beginning of period $ 11,547,598 $ 7,976,427 Adjustment of bad debt expense (768,633 ) (461,563 ) Translation adjustments 406,570 61,738 Balance at end of period $ 11,185,535 $ 7,576,602 |
Inventories, net
Inventories, net | 3 Months Ended |
Mar. 31, 2018 | |
Inventories, net [Text Block] | 6. Inventories, net March 31, December 31, 2018 2017 (Unaudited) Raw materials $ 11,479,513 $ 9,368,647 Work-in-progress 4,720,825 4,229,841 Finished goods 15,844,296 16,492,343 32,044,634 30,090,831 Allowance for obsolete inventories (2,029,458 ) (1,569,279 ) $ 30,015,176 $ 28,521,552 The Company recognized inventory write-down of $398,805 and $nil for the three months ended March 31, 2018 and 2017, respectively. |
Income tax
Income tax | 3 Months Ended |
Mar. 31, 2018 | |
Income tax [Text Block] | 7. Income tax The effective tax rate is nil% and - 10% for the three months period ended March 31, 2018 and 2017, respectively. In December 2017, the Tax Cuts and Jobs Act (the “2017 Act”) was enacted into law and the new legislation contains several key tax provisions that affected the Company, including, among others, a reduction of the federal corporate income tax rate to 21% effective January 1, 2018, and a recognition of the U.S. corporate income tax based on the deemed repatriation to the United States of the Company’s share of previously deferred earnings of certain non-U.S. subsidiaries of the Company upon enactment of the 2017 Act. The Company is required to recognize the effect of the 2017 Act in the period of enactment. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the 2017 Act, which allows the Company to recognize the provisional amounts during a measurement period not to extend beyond one year of the enactment date. The Company recognized provisional tax impacts related to the revaluation of deferred tax assets and liabilities and corresponding valuation allowances in its consolidated financial statements for the three months ended March 31, 2018. The ultimate impact may differ from those provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the 2017 Act. The Company’s management is in the process of gathering information and evaluating the amount of the one-time transition tax mandated by the 2017 Act, and a reasonable estimate cannot be determined at this point in time. Any adjustments are expected to b e |
Property, plant and equipment,
Property, plant and equipment, net | 3 Months Ended |
Mar. 31, 2018 | |
Property, plant and equipment, net [Text Block] | 8. Property, plant and equipment, net As of March 31, 2018 and December 31, 2017, property, plant and equipment with net book values of $3,160,046 and $3,112,380, respectively, were pledged as collateral under certain loan arrangements (see Note 10). During the three months ended March 31, 2018 and 2017, amount recognized for depreciation of property, plant and equipment was $289,236 and $259,142, respectively. |
Land use rights
Land use rights | 3 Months Ended |
Mar. 31, 2018 | |
Land use rights [Text Block] | 9. Land use rights, net As of March 31, 2018 and December 31, 2017, land use rights with net book values of $891,355 and $865,825, respectively, were pledged as collateral under certain loan arrangements (see Note 10). During the three months ended March 31, 2018 and 2017, amount recognized for amortization of land use rights were $31,231 and $28,820, respectively. |
Short-term loans
Short-term loans | 3 Months Ended |
Mar. 31, 2018 | |
Short-term loans [Text Block] | 10. Short-term loans Short-term bank loans On August 10, 2017, the Company entered into a one-year loan agreement with Industrial and Commercial Bank of China, pursuant to which the Company obtained a loan in the amount of RMB32,000,000 (approximately $4,806,000), payable on August 9, 2018. The loan carries an interest rate of 4.611% per annum and the interest is payable monthly. The secured bank loan was secured by the following assets of the Company: March 31, December 31, 2018 2017 (Unaudited) Property, plant and equipment (Note 8) $ 3,160,046 $ 3,112,380 Land use rights (Note 9) 891,355 865,825 $ 4,051,401 $ 3,978,205 Short-term loans from unrelated party During the three months ended March 31, 2017, the Company advanced additional funds to a third party individual in the amount of RMB12,000,000 (approximately $1,742,000) and received repayment of RMB3,990,000 (approximately $579,000). The advance bears no interest and is due on demand. The advance was included in other receivables, prepayments and deposits, net. For the three months ended March 31, 2018 and 2017, the Company included interest expense related to short-term loans of $58,031 and $55,573, respectively, in finance costs. |
Segment information
Segment information | 3 Months Ended |
Mar. 31, 2018 | |
Segment information [Text Block] | 11. Segment information The Company is solely engaged in the manufacturing and trading of plate heat exchangers and various related products. Since the nature of the products, their production processes, and their distribution methods are substantially similar, they are considered as a single reportable segment under ASC 280 “Segment Reporting”. The Company’s sales revenues by products for the three months ended March 31, 2018 and 2017 were as follows: Three months ended March 31, 2018 % 2017 % (Unaudited) (Unaudited) Plate heat exchanger $ 3,459,461 48 $ 2,399,254 60 Heat exchange unit 2,562,215 36 854,242 21 Shell-and-tube heat exchanger 44,264 1 2,817 - Others 1,153,938 15 750,008 19 $ 7,219,878 100 $ 4,006,321 100 All of the Company’s long-lived assets and revenues classified based on the customers are located in the PRC. |
Related party transactions
Related party transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related party transactions [Text Block] | 12. Related party transactions The related parties consist of the following: Name of Related Party Nature of Relationship Guohong Zhao Chairman, Chief Executive Officer and President Zhigang Xu Interim Chief Financial Officer, Treasurer and Secretary Fucai Zhan Vice President of R&D and Director Kai Liu Chief Engineer, Manager of Market development Others Individuals who have significant influence on the Company Jilin Tongda Heat Transfer System Integration, Ltd The Company has significant influence on Tongda Liaoning Hongsheng Heat Energy Technology, Ltd The Company has significant influence on Hongsheng Siping Juyuan Heat Exchange Service Technology, Co., Ltd. The Company has significant influence on Fuwu Trade receivables – related party During the three months ended March 31, 2018 and 2017, the Company sold products to Tongda in the amount of $8,603 and $8,215, respectively. The corresponding costs of the related party sales were $4,836 and $3,742, respectively. As of March 31, 2018 and December 31, 2017, the Company had trade receivables from Tongda in the amount of $4,660 and $27,676, respectively. Due from related parties As of March 31, 2018 and December 31, 2017, respectively, the Company advanced $14,582 and $14,075 to Guohong Zhao for handling selling and logistic activities for the Company in the ordinary course of business. As of March 31, 2018 and December 31, 2017, respectively, the Company advanced $12,165 and $11,742 to Kai Liu for handling selling and logistic activities for the Company in the ordinary course of business. As of March 31, 2018 and December 31, 2017, the Company had advance to Hongsheng in the amount of $248,334 and $239,701, which was included in due from related parties in the accompanying consolidation balance sheets. During the three months ended March 31, 2018 and 2017, the Company made loans to Tongda in the amount of $nil and $101,362, and Tongda repaid to the Company in the amount of $nil and $232,281, respectively. The loans were non-secured, non-interest bearing and due on demand. On December 28, 2016, the Company sold certain used equipment with original cost and net book value of $977,650 and $121,307, respectively, to Tongda in exchange for $1,315,958 including VAT. During the three months ended March 31, 2018, the Company collected $280,843 from Tongda for the equipment sold. As of March 31, 2018 and December 31, 2017, the Company had loans to Tongda in the amount of $506,340 and $488,737, and receivable from Tongda regarding sale of equipment in the amount of $1,104,740 and $1,340,710, respectively, both of which were included in due from related parties in the accompanying consolidation balance sheets. During the three months ended March 31, 2018 and 2017, the Company advanced $nil and $72,588, and received repayment of $99,778 and $100,171, respectively, from Fuwu. In addition, Fuwu paid operating expense on behalf of the Company in the amount of $nil and $27,586, respectively. As of March 31, 2018 and December 31, 2017, the amounts due from Fuwu was $nil and $97,481, respectively, which were included in due from related parties in the accompanying consolidation balance sheets. Due to related parties Due to related parties consist of the following: March 31, December 31, 2018 2017 (Unaudited) Others $ 3,678,522 $ 7,050,268 Fucai Zhan 119,423 138,325 Guohong Zhao 19,695 19,010 $ 3,817,640 $ 7,207,603 Amounts owed by the Company represent non-secured and non-interest bearing loans obtained from related parties which are due on demand. During the three months ended March 31, 2018, the Company repaid $3,605,701 to related parties in relation to advances made in the year ended December 31, 2017. During the three months ended March 31, 2017, Guohong Zhao paid $14,060 operating expense on behalf of the Company. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Basis of presentation and consolidation [Policy Text Block] | Basis of presentation and consolidation and going concern The accompanying unaudited consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with the Company’s consolidated financial statements and accompanying notes thereto for the year ended December 31, 2017 filed with the SEC in the Company’s Form 10-K on April 17, 2018. In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three-month period have been made. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year. The Company has short term loans borrowed from banks and related parties for an aggregated amount of $8.9 million, which requires the Company to secure additional funds given the Company’s current cash position. The Company’s available liquidity as of March 31, 2018 was approximately $8.5 million including cash and cash equivalents, restricted cash, current, and bills receivable. The Company has taken various actions to conserve cash, procure additional financing and improve the liquidity, including reducing capital spending. The Company's ability in meeting future cash flow requirements is dependent on many events outside of its direct control, including, among other things, successful renewal of bank borrowings and additional financing from the banks and related parties. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. Certain amounts from prior period have been reclassified to conform to the current year presentation. This reclassification has resulted in no change to the Company’s retained earnings or net income presented. The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions have been eliminated on consolidation. |
Fair value of financial instruments [Policy Text Block] | Fair value of financial instruments Accounting Standards Codification (“ASC”) Topic 820 requires the disclosure of the estimated fair value of financial instruments including those financial instruments for which fair value option was not elected. As of March 31, 2018 and December 31, 2017, the carrying amounts of the Company’s financial assets and liabilities approximated their fair values due to short maturities or the applicable interest rates approximated the current market rates. |
Recently issued accounting pronouncements [Policy Text Block] | Recent accounting pronouncements Recently adopted accounting pronouncements In May 2014, the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers (ASC 606)” and issued subsequent amendments to the initial guidance or implementation guidance between August 2015 and November 2017 within ASU 2015-04, ASU 2016-08, ASU 2016-10, ASU 2016-12, ASU 2016-20, ASU 2017-13, and ASU 2017-14 (collectively, including ASU 2014-09, “ASC 606”). Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Effective January 1, 2018, the Company adopted the standard using the modified retrospective method, which result in an immaterial impact. See Note – 4 Revenue Recognition for further details. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (ASC 230): Restricted Cash” update on the presentation of restricted cash in the statement of cash flows. The new guidance requires an entity to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows, and an entity will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. The Company adopted this new accounting standard retrospectively during the three months ended March 31, 2018. As a result of the adoption, net cash provided by investing activities was adjusted to exclude the changes in restricted cash, resulting in a decrease of $203,146 in net cash used in investing activities in the previously-reported amount for the three months ended March 31, 2017. The Company's restricted cash represents cash deposits in bank to pledge the performance bonds issued by the banks when requested by the Company’s customers under their sales contracts, separately from cash and cash equivalents. |
Trade receivables, net (Tables)
Trade receivables, net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Schedule of Accounts Receivable [Table Text Block] | March 31, December 31, 2018 2017 (Unaudited) Trade receivables $ 51,673,883 $ 57,859,135 Less: Allowance for doubtful accounts (11,185,535 ) (11,547,598 ) $ 40,488,348 $ 46,311,537 |
Schedule of Allowance for Doubtful Account [Table Text Block] | Three months ended March 31, (Unaudited) 2018 2017 Balance at beginning of period $ 11,547,598 $ 7,976,427 Adjustment of bad debt expense (768,633 ) (461,563 ) Translation adjustments 406,570 61,738 Balance at end of period $ 11,185,535 $ 7,576,602 |
Inventories, net (Tables)
Inventories, net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Schedule of Inventories, net [Table Text Block] | March 31, December 31, 2018 2017 (Unaudited) Raw materials $ 11,479,513 $ 9,368,647 Work-in-progress 4,720,825 4,229,841 Finished goods 15,844,296 16,492,343 32,044,634 30,090,831 Allowance for obsolete inventories (2,029,458 ) (1,569,279 ) $ 30,015,176 $ 28,521,552 |
Short-term loans (Tables)
Short-term loans (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Schedule of Assets Used to Secure Short-Term Bank Loans [Table Text Block] | March 31, December 31, 2018 2017 (Unaudited) Property, plant and equipment (Note 8) $ 3,160,046 $ 3,112,380 Land use rights (Note 9) 891,355 865,825 $ 4,051,401 $ 3,978,205 |
Segment information (Tables)
Segment information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Schedule of Segment Reporting Information, by Products [Table Text Block] | Three months ended March 31, 2018 % 2017 % (Unaudited) (Unaudited) Plate heat exchanger $ 3,459,461 48 $ 2,399,254 60 Heat exchange unit 2,562,215 36 854,242 21 Shell-and-tube heat exchanger 44,264 1 2,817 - Others 1,153,938 15 750,008 19 $ 7,219,878 100 $ 4,006,321 100 |
Related party transactions (Tab
Related party transactions (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Schedule of Related Party Transactions- Due to related parties [Table Text Block] | March 31, December 31, 2018 2017 (Unaudited) Others $ 3,678,522 $ 7,050,268 Fucai Zhan 119,423 138,325 Guohong Zhao 19,695 19,010 $ 3,817,640 $ 7,207,603 |
Summary of significant accoun25
Summary of significant accounting policies (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Summary Of Significant Accounting Policies 1 | $ 8,900,000 |
Summary Of Significant Accounting Policies 2 | 8,500,000 |
Summary Of Significant Accounting Policies 3 | $ 203,146 |
Revenue Recognition (Narrative)
Revenue Recognition (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Revenue Recognition 1 | $ 16,600,000 |
Revenue Recognition 2 | $ 2,300,000 |
Inventories, net (Narrative) (D
Inventories, net (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Inventories, Net 1 | $ 398,805 |
Inventories, Net 2 | $ 0 |
Income tax (Narrative) (Details
Income tax (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax 1 | 10.00% |
Income Tax 2 | 21.00% |
Property, plant and equipment29
Property, plant and equipment, net (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Property, Plant And Equipment, Net 1 | $ 3,160,046 |
Property, Plant And Equipment, Net 2 | 3,112,380 |
Property, Plant And Equipment, Net 3 | 289,236 |
Property, Plant And Equipment, Net 4 | $ 259,142 |
Land use rights (Narrative) (De
Land use rights (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Land Use Rights, Net 1 | $ 891,355 |
Land Use Rights, Net 2 | 865,825 |
Land Use Rights, Net 3 | 31,231 |
Land Use Rights, Net 4 | $ 28,820 |
Short-term loans (Narrative) (D
Short-term loans (Narrative) (Details) | 3 Months Ended | |
Mar. 31, 2018USD ($) | Mar. 31, 2018CNY (¥) | |
Short-term Loans 1 | ¥ | ¥ 32,000,000 | |
Short-term Loans 2 | $ 4,806,000 | |
Short-term Loans 3 | 4.611% | 4.611% |
Short-term Loans 4 | ¥ | ¥ 12,000,000 | |
Short-term Loans 5 | $ 1,742,000 | |
Short-term Loans 6 | ¥ | ¥ 3,990,000 | |
Short-term Loans 7 | 579,000 | |
Short-term Loans 8 | 58,031 | |
Short-term Loans 9 | $ 55,573 |
Related party transactions (Nar
Related party transactions (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Related Party Transactions 1 | $ 8,603 |
Related Party Transactions 2 | 8,215 |
Related Party Transactions 3 | 4,836 |
Related Party Transactions 4 | 3,742 |
Related Party Transactions 5 | 4,660 |
Related Party Transactions 6 | 27,676 |
Related Party Transactions 7 | 14,582 |
Related Party Transactions 8 | 14,075 |
Related Party Transactions 9 | 12,165 |
Related Party Transactions 10 | 11,742 |
Related Party Transactions 11 | 248,334 |
Related Party Transactions 12 | 239,701 |
Related Party Transactions 13 | 0 |
Related Party Transactions 14 | 101,362 |
Related Party Transactions 15 | 0 |
Related Party Transactions 16 | 232,281 |
Related Party Transactions 17 | 977,650 |
Related Party Transactions 18 | 121,307 |
Related Party Transactions 19 | 1,315,958 |
Related Party Transactions 20 | 280,843 |
Related Party Transactions 21 | 506,340 |
Related Party Transactions 22 | 488,737 |
Related Party Transactions 23 | 1,104,740 |
Related Party Transactions 24 | 1,340,710 |
Related Party Transactions 25 | 0 |
Related Party Transactions 26 | 72,588 |
Related Party Transactions 27 | 99,778 |
Related Party Transactions 28 | 100,171 |
Related Party Transactions 29 | 0 |
Related Party Transactions 30 | 27,586 |
Related Party Transactions 31 | 0 |
Related Party Transactions 32 | 97,481 |
Related Party Transactions 33 | 3,605,701 |
Related Party Transactions 34 | $ 14,060 |
Schedule of Accounts Receivable
Schedule of Accounts Receivable (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Trade receivables | $ 51,673,883 | $ 57,859,135 |
Allowance for doubtful accounts | (11,185,535) | (11,547,598) |
Trade receivables, net | $ 40,488,348 | $ 46,311,537 |
Schedule of Allowance for Doubt
Schedule of Allowance for Doubtful Account (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Balance at beginning of year | $ 11,547,598 | $ 7,976,427 |
Addition of bad debt expense, net | (768,633) | (461,563) |
Translation adjustments | 406,570 | 61,738 |
Balance at end of year | $ 11,185,535 | $ 7,576,602 |
Schedule of Inventories, net (D
Schedule of Inventories, net (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Raw materials | $ 11,479,513 | $ 9,368,647 |
Work-in-progress | 4,720,825 | 4,229,841 |
Finished goods | 15,844,296 | 16,492,343 |
Inventory, Gross | 32,044,634 | 30,090,831 |
Allowance for obsolete inventories | (2,029,458) | (1,569,279) |
Inventory, Net | $ 30,015,176 | $ 28,521,552 |
Schedule of Assets Used to Secu
Schedule of Assets Used to Secure Short-Term Bank Loans (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument, Collateral Amount | $ 4,051,401 | $ 3,978,205 |
Property, plant and equipment [Member] | ||
Debt Instrument, Collateral Amount | 3,160,046 | 3,112,380 |
Land use rights [Member] | ||
Debt Instrument, Collateral Amount | $ 891,355 | $ 865,825 |
Schedule of Segment Reporting I
Schedule of Segment Reporting Information, by Products (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues | $ 7,219,878 | $ 4,006,321 |
Segment reporting, percentage of revenue | 100.00% | 100.00% |
Plate heat exchanger [Member] | ||
Revenues | $ 3,459,461 | $ 2,399,254 |
Segment reporting, percentage of revenue | 48.00% | 60.00% |
Heat exchange unit [Member] | ||
Revenues | $ 2,562,215 | $ 854,242 |
Segment reporting, percentage of revenue | 36.00% | 21.00% |
Shell-and-tube heat exchanger [Member] | ||
Revenues | $ 44,264 | $ 2,817 |
Segment reporting, percentage of revenue | 1.00% | 0.00% |
Others [Member] | ||
Revenues | $ 1,153,938 | $ 750,008 |
Segment reporting, percentage of revenue | 15.00% | 19.00% |
Schedule of Related Party Trans
Schedule of Related Party Transactions- Due to related parties (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Due to related parties | $ 3,817,640 | $ 7,207,603 |
Others [Member] | ||
Due to related parties | 3,678,522 | 7,050,268 |
Fucai Zhan [Member] | ||
Due to related parties | 119,423 | 138,325 |
Guohong Zhao [Member] | ||
Due to related parties | $ 19,695 | $ 19,010 |