Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2017shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | Lianluo Smart Ltd |
Entity Central Index Key | 1,474,627 |
Trading Symbol | LLIT |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2017 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2,017 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 17,312,586 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 6,809,485 | $ 10,792,823 |
Accounts receivable, net | 9,705 | 78,113 |
Other receivables and prepayments, net | 128,423 | 89,520 |
Advances to suppliers (third parties) and a related party | 386,241 | 238,776 |
Inventories, net | 2,217,802 | 136,916 |
Other taxes receivable | 281,373 | |
Total Current Assets | 9,833,029 | 11,336,148 |
Property and equipment, net | 531,467 | 1,406,140 |
Intangible assets, net | 3,698,569 | 3,809,849 |
Available-for-sale investments | 1,500,043 | |
Total Assets | 15,563,108 | 16,552,137 |
CURRENT LIABILITIES: | ||
Accounts payable | 47,888 | 72,451 |
Advances from customers | 313,167 | 106,521 |
Accrued expenses and other current liabilities | 762,873 | 643,324 |
Warranty obligation | 20,234 | 146,271 |
Due to related parties - trade | 475 | |
Due to related parties - short-term borrowings | 1,536,720 | |
Due to related parties - consideration payable to BTL | 146,032 | |
Total Current Liabilities | 2,680,882 | 1,115,074 |
OTHER LIABILITIES | ||
Warrants liability | 1,729,111 | 1,499,362 |
Total Liabilities | 4,409,993 | 2,614,436 |
Commitments and contingency | ||
Shareholders' equity | ||
Common shares, $0.002731 par value, 50,000,000 shares authorized, 17,312,586 shares issued and outstanding at December 31, 2017 and 2016 | 47,281 | 47,281 |
Additional paid-in capital | 39,233,137 | 37,261,366 |
Accumulated deficit | (31,246,202) | (26,109,768) |
Accumulated other comprehensive income | 3,118,899 | 2,738,822 |
Total Equity | 11,153,115 | 13,937,701 |
Total liabilities and equity | $ 15,563,108 | $ 16,552,137 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.002731 | $ 0.002731 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 17,312,586 | 17,312,586 |
Common stock, shares outstanding | 17,312,586 | 17,312,586 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | |||
Revenues | $ 882,011 | $ 13,062,373 | $ 738,301 |
Costs of revenue | (1,655,970) | (17,179,060) | (1,094,124) |
Gross loss | (773,959) | (4,116,687) | (355,823) |
Service income | 56,030 | 14,587 | 1,600,012 |
Service expenses | (1,289) | (21,130) | (1,234,257) |
Selling expenses | (1,170,378) | (927,243) | (2,815,609) |
General and administrative expenses | (3,192,030) | (4,183,775) | (4,089,592) |
Recovery from (provision for) doubtful accounts | 23,608 | 150,280 | (8,544) |
Operating loss | (5,058,018) | (9,083,968) | (6,903,813) |
Financial income (expenses) | 57,077 | (125,127) | (194,773) |
Other Income | 146,623 | 68,436 | |
Other expenses | (52,367) | (2,586) | |
Loss from warrant redemption | (1,091,719) | ||
Change in fair value of warrants liability | (229,749) | 527,617 | 390,324 |
Loss before provision for income tax and non-controlling interest | (5,136,434) | (9,704,761) | (6,710,848) |
Income tax benefit | 95,026 | 11,978 | |
Net loss from continuing operations | (5,136,434) | (9,609,735) | (6,698,870) |
Discontinued operations: | |||
Loss from operations of discontinued operations, net of taxes | (168,574) | (3,663,465) | |
Loss from disposal of discontinued operations, net of taxes | (82,579) | ||
Net loss | (5,136,434) | (9,860,888) | (10,362,335) |
Less: net loss attributable to non-controlling interest | (129,020) | (139,205) | |
Net loss attributable to Lianluo Smart Limited | (5,136,434) | (9,731,868) | (10,223,130) |
Other comprehensive income (loss): | |||
Foreign currency translation gain (loss) | 380,077 | (567,162) | (461,548) |
Comprehensive loss | (4,756,357) | (10,428,050) | (10,823,883) |
-less comprehensive loss attributable to non-controlling interest | (230,838) | (189,670) | |
Comprehensive loss attributable to Lianluo Smart Limited | $ (4,756,357) | $ (10,197,212) | $ (10,634,213) |
Weighted average number of common shares used in computation | |||
-Basic | 17,312,586 | 10,422,765 | 5,990,552 |
-Diluted | 17,312,586 | 10,422,765 | 5,990,552 |
Loss from continuing operations per share of common stock | |||
-Basic | $ (0.3) | $ (0.92) | $ (1.12) |
-Diluted | (0.3) | (0.92) | (1.12) |
Loss from discontinued operations per share of common stock | |||
-Basic | (0.01) | (0.59) | |
-Diluted | (0.01) | (0.59) | |
Net loss per share of common stock | |||
-Basic | (0.3) | (0.93) | (1.71) |
-Diluted | $ (0.3) | $ (0.93) | $ (1.71) |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Non-controlling Interests |
Balance at Dec. 31, 2014 | $ 17,038,754 | $ 15,864 | $ 18,719,965 | $ (6,154,770) | $ 3,400,199 | $ 1,057,496 |
Balance, shares at Dec. 31, 2014 | 5,808,675 | |||||
Issuance of shares upon excise of share-based awards | 36,250 | $ 68 | 36,182 | |||
Issuance of shares upon excise of share-based awards, shares | 25,000 | |||||
Issuance of shares to non-employee | 32,340 | $ 33 | 32,307 | |||
Issuance of shares to non-employee, shares | 12,000 | |||||
Issuance of shares to employees | 666,208 | $ 953 | 665,255 | |||
Issuance of shares to employees, shares | 348,800 | |||||
Issuance of options to an employee | 113,771 | 113,771 | ||||
Stock based compensation | 243,425 | 243,425 | ||||
Foreign currency translation | (461,548) | (411,083) | (50,465) | |||
Net loss | (10,362,335) | (10,223,130) | (139,205) | |||
Balance at Dec. 31, 2015 | 7,306,865 | $ 16,918 | 19,810,905 | 16,377,900 | 2,989,116 | 867,826 |
Balance, shares at Dec. 31, 2015 | 6,194,475 | |||||
Issuance of shares upon excise of share-based awards | 10,150 | $ 19 | 10,131 | |||
Issuance of shares upon excise of share-based awards, shares | 7,000 | |||||
Proceeds from issuance of shares and warrants for capital contribution | 16,523,193 | $ 30,344 | 16,492,849 | |||
Proceeds from issuance of shares and warrants for capital contribution, shares | 11,111,111 | |||||
Stock based compensation | 947,481 | 947,481 | ||||
Foreign currency translation | (567,162) | (465,344) | (101,818) | |||
Disposal of a subsidiary | (421,938) | 215,050 | (636,988) | |||
Net loss | (9,860,888) | (9,731,868) | (129,020) | |||
Balance at Dec. 31, 2016 | 13,937,701 | $ 47,281 | 37,261,366 | (26,109,768) | 2,738,822 | |
Balance, shares at Dec. 31, 2016 | 17,312,586 | |||||
Settlement of subscription receivable | 1,492,538 | 1,492,538 | ||||
Stock based compensation | 479,233 | 479,233 | ||||
Foreign currency translation | 380,077 | 380,077 | ||||
Net loss | (5,136,434) | (5,136,434) | ||||
Balance at Dec. 31, 2017 | $ 11,153,115 | $ 47,281 | $ 39,233,137 | $ (31,246,202) | $ 3,118,899 | |
Balance, shares at Dec. 31, 2017 | 17,312,586 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||
Net loss | $ (5,136,434) | $ (9,860,888) | $ (10,362,335) |
Net loss from discontinued operations | (251,153) | (3,663,465) | |
Net loss from continuing operations | (5,136,434) | (9,609,735) | (6,698,870) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Stock-based compensation | 479,233 | 947,481 | 1,055,744 |
Depreciation and amortization | 1,328,403 | 1,232,263 | 525,916 |
Loss from disposal of inventories | 202,297 | ||
Loss from warrant redemption | 1,091,719 | ||
Change in fair value of warrants liability | 229,749 | (527,617) | (390,324) |
Loss on disposal of equipment and intangible assets | 18,241 | ||
(Recovery from) provision for doubtful accounts: accounts receivable | (46,831) | (139,716) | 10,014 |
(Recovery from) provision for doubtful accounts: other receivables and prepayments | 32,213 | (41,790) | (1,899) |
(Recovery from) provision for doubtful accounts: advances to suppliers - third parties | (1,095) | 429 | |
Change in warranty obligation | (130,885) | 141,449 | (120,105) |
(Recovery from) provision for inventory obsolescence | (73,860) | 2,450,213 | 16,203 |
Changes in assets and liabilities: | |||
Decrease in accounts receivable | 115,239 | 115,854 | 32,700 |
(Increase) decrease in advances to suppliers - third parties | (341,776) | 547,267 | 1,011,843 |
(Increase) decrease in advances to suppliers - related party | 194,311 | 680,733 | 623,583 |
(Increase) decrease in other receivables and prepayments | (71,117) | 13,272 | 1,588,626 |
(Increase) decrease in inventories | (2,007,026) | 1,185,688 | 41,816 |
Increase in other taxes receivable | (281,373) | ||
Decrease (increase) in long-term prepaid expenses | 290,036 | (148,386) | |
(Decrease) increase in accounts payable | (24,563) | 51,579 | (24,913) |
(Decrease) increase in due to related parties - Trade | (475) | 107,715 | (40,335) |
Increase (decrease) in advances from customers | 206,646 | 63,541 | (18,463) |
Increase (decrease) in accrued expenses and other current liabilities | 119,549 | (1,315,779) | 1,336,906 |
Decrease in other taxes payable | (113,429) | (12,178) | |
Net cash used in operating activities from continuing operations | (5,408,997) | (2,609,813) | (1,211,693) |
Net cash used in operating activities from discontinued operations | (165,345) | (1,133,122) | |
Net cash used in operating activities | (5,408,997) | (2,775,158) | (2,344,815) |
Cash flows from investing activities | |||
Capital expenditures and other additions | (40,780) | (636,130) | (27,477) |
Loan to a related party | (3,000,000) | (2,000,000) | |
Repayment from a related party | 3,000,000 | 2,000,000 | |
Considerations paid to BTL | (146,032) | ||
Available-for-sale investments | (1,500,043) | ||
Net cash used in investing activities from continuing operations | (1,686,855) | (636,130) | (27,477) |
Net cash used in investing activities from discontinued operations | (384) | ||
Net cash used in investing activities | (1,686,855) | (636,130) | (27,861) |
Cash flows from financing activities | |||
Loans from related parties | 1,480,320 | 733,688 | 3,867,859 |
Repayments of related party loans | (2,858,748) | (1,603,590) | |
Proceeds from bank loans | 4,008,975 | ||
Repayments of bank loans | (1,505,000) | (4,810,770) | |
Net proceeds from option exercises | 10,150 | 36,250 | |
Payment of warrant redemption | (1,116,744) | ||
Net proceeds from issuance of common stock, net of issuance costs | 1,492,538 | 18,412,462 | |
Net cash provided by financing activities from continuing operations | 2,972,858 | 13,675,808 | 1,498,724 |
Net cash provided by financing activities from discontinued operations | |||
Net cash provided by financing activities | 2,972,858 | 13,675,808 | 1,498,724 |
Effect of exchange rate fluctuations on cash and cash equivalents | 139,656 | (96,421) | (229,087) |
Net (decrease) increase in cash and cash equivalents | (3,983,338) | 10,168,099 | (1,103,039) |
Cash and cash equivalents at beginning of year | 10,792,823 | 624,724 | 1,727,763 |
Cash and cash equivalents at end of year | 6,809,485 | 10,792,823 | 624,724 |
-less cash and cash equivalents at end of year from discontinued operations | (9,207) | ||
Cash and cash equivalents at end of year from continuing operations | 6,809,485 | 10,792,823 | 624,724 |
Supplemental cash flow information | |||
Income tax paid | |||
Interest paid | $ 3,812 | $ 128,537 | $ 196,220 |
Organization and Principal Acti
Organization and Principal Activities | 12 Months Ended |
Dec. 31, 2017 | |
Organization and Principal Activities [Abstract] | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES Lianluo Smart Limited (“Lianluo Smart” or the “Company”) (previously known as “Dehaier Medical Systems Limited”) was incorporated as an international business company under the International Business Companies Act, 1984, in the British Virgin Islands on July 22, 2003. On November 21, 2016, the Company changed its name from Dehaier Medical Systems Limited to Lianluo Smart Limited, and its NASDAQ stock ticker from DHRM to LLIT. Lianluo Smart distributed and provided after-sale services for medical equipment in China mainly through its wholly-owned subsidiary, Beijing Dehaier Medical Technology Co., Limited (“BDL”). BDL was formed as a joint venture on September 24, 2003 as a joint venture between a Chinese entity, Beijing Dehaier Technology Co., Limited (“BTL”), and a foreign invested enterprise, Lianluo Smart. BDL has been focused on the development and distribution of medical devices since its inception and began developing its respiratory and oxygen homecare business in 2006. The Company’s founder and chief executive office, Mr. Ping Chen, founded BTL, a PRC company. He currently owns approximately 91% of BTL, and his wife and several former employees of Lianluo Smart Limited own the remaining 9% of BTL. BTL previously leased some of its property to the Company and provided certain transportation and repair services to medical devices for which the Company is not obligated to perform warranty services, either because the warranty is expired or because the product was sold by another company. On April 22, 2010, the Company completed an initial public offering of 1,500,000 common shares. The offering was completed at an issuance price of $8.00 per share. Prior to the offering, the Company had 3,000,000 issued and outstanding shares, and after the offering, the Company had 4,500,000 issued and outstanding shares. On November 9, 2011, Lianluo Smart established a wholly-owned subsidiary in the United States, Breathcare LLC (“Breathcare”). Breathcare was dissolved on June 30, 2017. On February 21, 2014, the Company and certain institutional investors entered into a securities purchase agreement in connection with an offering (Note 16). On January 14, 2016, the Company completed an acquisition of 0.8% equity interest of BDL from BTL. The Company now holds 100% of the equity interest of BDL. This change reflects BDL’s reduced reliance on business with BTL in providing repair and maintenance services. Upon the execution of the Loss Absorption Agreement Termination (“VIE Termination”), we stopped all business activities with BTL as well. On February 1, 2016, LCL was formed in Beijing, the PRC, for the business development in the portable health device market. During the late 2015, BDL intended to discontinue part of its product lines among the traditional medical device business, which has been approved by the Board of Resolution on February 22, 2016. The results of operations of the traditional medical device business were reflected in the Company’s consolidated financial statements as discontinued operations (Note 22). On April 28, 2016, the Company entered into a definitive securities purchase agreement (the “SPA”) with Hangzhou Lianluo Interactive Information Technology Co., Ltd. (“Lianluo Interactive” or “HLI”) to sell 11,111,111 of its common shares and warrants to purchase common shares to Lianluo Interactive for an aggregate purchase price of $20 million (Note 15). On July 31, 2016, BDL entered into a Loss Absorption Agreement Termination (“VIE Termination”) with the BTL. According to the VIE Termination, the Loss Absorption Agreement (the “VIE Agreement”) among BDL, BTL and its shareholders Ping Chen, Bao Xian, Weibing Yang, Jian Sun, Zheng Liu and Yong Wang dated as of March 3, 2010 was terminated effective July 31, 2016. There is no relationship between BTL and the Company and its other subsidiaries after the effectiveness of the VIE Termination. The results of BTL’s operations were reflected in the Company’s consolidated financial statements as discontinued operations (Note 22). Lianluo Smart, through its subsidiaries, now distributes branded, proprietary medical equipment, such as sleep apnea machines, ventilator air compressors, and laryngoscope. Standard product registration, product certification and quality management system have been established; ISO13485 industry standard has also already been passed. It also has the distribution rights for a number of international medical equipment suppliers for products including ventilator, laryngoscope, sleep apnea machines and other medical equipment accessories. “Lianluo Smart” and the “Company” collectively refer to Lianluo Smart, a BVI registered company, and its subsidiaries, BDL and LCL. The “Company” may also from time to time in these Notes include the Company’s former VIE, BTL and former subsidiary, Breathcare. |
Restatement of Previously Issue
Restatement of Previously Issued Consolidated Financial Statements | 12 Months Ended |
Dec. 31, 2017 | |
Restatement of Previously Issued Consolidated Financial Statements [Abstract] | |
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS | 2. RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS During the preparation of our Annual Report on Form 20-F for the fiscal year of 2017, the Company has discovered error in the accounting treatment of the warrants issued in connection with the SPA with HLI (Note 15), which resulted in misstatements in its previously issued consolidated financial statements for the year ended December 31, 2016. The Company is amending and restating its 2016 financial statements to reclassify the warrants to HLI as derivative liabilities and to report any changes in their fair value up to the earlier of the date of the exercise or the reporting date in earnings. The Company has performed a thorough reassessment of the terms of its warrants with reference to the provisions of ASC Topic 815-40-15-7I, regarding its exposure to changes in currency exchange rates. This reassessment has led to the management’s conclusion that the Company’s warrants issued to HLI should not be considered indexed to the Company’s own stock because the warrants are denominated in U.S. dollar, which is different from the Company’s functional currency, Renminbi The consolidated financial statements for the year ended December 31, 2016 have been restated to reflect the correction of the misstatements. The Company has also corrected certain related disclosures to the consolidated financial statements. As a result, the Company has restated its consolidated financial statements in accordance with ASC 250, Accounting Changes and Error Corrections (the “restated consolidated The impact of these restatements on the consolidated financial statements as previously reported is summarized below: As of December 31, 2016 As previously reported Restated OTHER LIABILITIES Warrants liability $ - $ 1,499,362 Total Liabilities $ 1,115,074 $ 2,614,436 Additional paid-in capital 39,150,635 37,261,366 Accumulated deficit (26,499,675 ) (26,109,768 ) Total Equity $ 15,437,063 $ 13,937,701 For the year ended December 31, 2016 As previously reported Restated Change in fair value of warrants liability $ 137,710 $ 527,617 Loss before provision for income tax and non-controlling interest (10,094,668 ) (9,704,761 ) Net loss from continuing operations (9,999,642 ) (9,609,735 ) Net loss (10,250,795 ) (9,860,888 ) Net loss attributable to Lianluo Smart Limited (10,121,775 ) (9,731,868 ) Comprehensive loss (10,817,957 ) (10,428,050 ) Comprehensive loss attributable to Lianluo Smart Limited (10,587,119 ) (10,197,212 ) Loss per share - Basic $ (0.97 ) $ (0.93 ) - Diluted (0.97 ) (0.93 ) |
Relassifications and Revisions
Relassifications and Revisions | 12 Months Ended |
Dec. 31, 2017 | |
Reclassifications and Revisions [Abstract] | |
RELASSIFICATIONS AND REVISIONS | 3. RECLASSIFICATIONS AND REVISIONS Certain comparative amounts included in the 2016 and 2015 financial statements have been reclassified to conform to the current year’s presentation. In addition, certain previously reported numbers and amounts for the years ended December 31, 2016 and 2015 have been revised. Such revisions were immaterial. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Basis of Consolidation The consolidated financial statements include the accounts of Lianluo Smart and its wholly-owned subsidiaries and variable interest entity for which the Company is the primary beneficiary (“VIE”) (collectively, the “Company”). All inter-company transactions and balances are eliminated in consolidation. The results of subsidiaries and consolidated VIEs acquired or disposed of are recorded in the consolidated statements of operations A subsidiary is an entity in which (i) the Company directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the meeting of the board of directors or to govern the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders. A VIE is required to be consolidated by the primary beneficiary of the entity if the equity holders in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A group of shareholders, including the Chief Executive Officer, originally held more than 50% of the voting ownership interest of Lianluo Smart, Beijing Dehaier Medical Technology Company Limited, a PRC company (“BDL”) and Beijing Dehaier Technology Co., Limited (“BTL”). Before July 31, 2016, BTL’s building was pledged as collateral for BDL’s bank loans. In exchange, BDL loaned money to BTL to finance its operations. BTL’s primary operation is to provide repairs and transportation services to BDL’s customers. In accordance, BDL is the primary beneficiary of BTL, as the entity that was most closely associated with BTL. BTL was considered a variable interest entity of BDL. Upon execution of the VIE Termination on July 31, 2016, BTL was deconsolidated from Lianluo Smart and its subsidiaries. The results of BTL’s operations were reflected in the Company’s consolidated financial statements as discontinued operations (Note 22). For the Company's majority-owned subsidiaries and consolidated VIEs, a noncontrolling interest is recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Company. Termination of the VIE Agreement with BTL In accordance with ASC 810-10-40-4, a parent shall deconsolidate a subsidiary or derecognize a group of assets specified in the preceding paragraph as of the date the parent ceases to have a controlling financial interest in that subsidiary or group of assets. ASC 810-10-55-4A also states that all of the following are circumstances that result in deconsolidation of a subsidiary under ASC 810-10-40-4: a. A parent sells all or part of its ownership interest in its subsidiary, and as a result, the parent no longer has a controlling financial interest in the subsidiary. b. The expiration of a contractual agreement that gave control of the subsidiary to the parent. c. The subsidiary issues shares, which reduces the parent’s ownership interest in the subsidiary so that the parent no longer has a controlling financial interest in the subsidiary. d. The subsidiary becomes subject to the control of a government, court, administrator, or regulator. As the result, on July 31, 2016, the Company deconsolidated BTL from its consolidated financial statements upon termination of the VIE Agreement with BTL. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates are adjusted to reflect actual experience when necessary. Significant accounting estimates reflected in the Company’s consolidated financial statements include revenue recognition, allowance for doubtful accounts, valuation of inventories, impairment testing of long term assets, warranty obligation, warrants liability, stock-based compensation, useful lives of intangible assets, and property and equipment, and realization of deferred tax assets. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and highly liquid investments which are unrestricted as to withdrawal or use, and which have maturities of three months or less when purchased. The Company maintains uninsured cash and cash equivalents with various financial institutions mainly in the PRC and the United States. Accounts Receivable, net Accounts receivable are initially recorded at invoiced amount. Accounts receivable terms typically are net 60-180 days from the end of the month in which the services were provided, or when goods were delivered. The Company generally does not require collateral or other security to support accounts receivable. An allowance, if required, is based on a combination of historical experience, aging analysis, and an evaluation of the collectability of specific accounts. Management considers that receivables over 1 year to be past due. Accounts receivable balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Other Receivables and Prepayments, net Other receivables and prepayments primarily include advances to employees, prepaid rentals and deposits to landlords and service providers. Management regularly reviews aging of receivables and changes in payment trends and records a reserve when management believes collection of amounts due are at risk. Accounts considered uncollectible are written off after exhaustive efforts at collection. Advances to Suppliers, net The Company, as is the common practice in the PRC, often makes advance payments to suppliers for unassembled parts. Advances to suppliers are reviewed periodically to determine whether their carrying value has become impaired. Fair Value of Financial Instruments ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The carrying amounts reported in the consolidated financial statements for current assets and current liabilities approximate fair value due to the short-term nature of these financial instruments. The fair value of warrants was determined using the Black Scholes Model, with level 3 inputs (Note 16). Warrant Liability For warrants that are not indexed to the Company’s stock, the Company records the fair value of the issued warrants as a liability at each balance sheet date and records changes in the estimated fair value as a non-cash gain or loss in the consolidated statement of operations and comprehensive income. The warrant liability is recognized in the balance sheet at the fair value (level 3). The fair value of these warrants have been determined using the Black-Scholes pricing mode. The Black-Scholes pricing model provides for assumptions regarding volatility, call and put features and risk-free interest rates within the total period to maturity. Inventories Inventories are stated at the lower of cost or net realizable value and consist of assembled and unassembled parts relating to medical devices. Cost is determined on a weighted-average basis. Management compares the cost of inventories with the net realizable value and an allowance is made for writing down their inventories to market value, if lower. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation and impairment losses, if any. Depreciation is calculated on a straight-line basis over the following estimated useful lives before July 31, 2016: Leasehold improvements Shorter of the useful lives or the lease term Building and land use rights 20-40 years Machinery and equipment 10-15 years Furniture and office equipment 5 years Motor vehicles 5 years Estimated useful lives of property and equipment after July 31, 2016 were shortened and depreciation thereafter is calculated on a straight-line basis over the following estimated useful lives: Leasehold improvements Shorter of the useful lives or the lease term Machinery and equipment 3 years Furniture and office equipment 3 years Motor vehicles 3 years Intangible Assets Intangible assets are recorded at cost less accumulated amortization and impairment losses, if any. Amortization is calculated on a straight-line basis over the following estimated useful lives: Software copyrights 20 years Other software 5 years Impairment of Long-Lived Assets The Company reviews the long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company compares the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the asset and eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair value of the asset, is recognized. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. Based on its review, the Company believes that, as of December 31, 2017 and 2016, there was no significant impairment of its long-lived assets. Available-for-sale investments Available-for-sale investments represent the Company's investments in a privately held company. The investments are accounted for using the cost method, as they do not have readily determinable fair values and over which the Company neither has significant influence nor control through investment in common stock or in-substance common stock. Under the cost method, the Company carries the investment at cost and recognizes income to the extent of dividends received from the distribution of the equity investee's post-acquisition profits. Revenue Recognition The Company recognizes revenues when all the followings conditions have been satisfied: ● ● Delivery and/or installation have occurred (e.g., risks and rewards of ownership have passed); ● The sales price is fixed or determinable, and ● Collectability is reasonably assured. All revenues are based on firm customer orders with fixed terms and conditions. Because the products are assembled to the customers’ specification, there is no right of return. The Company does not provide its customers with price protection or cash rebates. For products that include software, the software is an off-the-shelf package and an integral part of the products being delivered. The Company does not provide any significant post-sale customer support services and does not provide customers with upgrades. The software is incidental to the product as a whole. For products that do not require installation, revenues are recognized when the products are delivered. For products that require installation, revenues are recognized when the installation is completed. For all service income, the Company recognizes the revenues upon the completion of the repairs when the equipment has been returned to and accepted by the customers. In the PRC, value added tax (“VAT”) of 17% of the invoice amount is collected in respect of the sales of goods on behalf of tax authorities. The VAT collected is not revenue of the Company; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the authorities. Cost of Revenues Cost of revenues primarily includes wages to assemble parts and the costs of unassembled parts, handling charges, and other expenses associated with the assembly and distribution of products. Service Income and Expenses Service income and expense represent activities related to repair services provided to the customers by BDL, and the commission fee from customers. Advertising Expenses Advertising expenses are expensed as incurred. For the years ended December 31, 2017, 2016 and 2015, advertising and promotional expenses from continuing operations recognized in the consolidated statements of comprehensive loss were $76,592, $56,338 and $1,417,243 respectively. During the years ended December 31, 2016 and 2015, advertising expenses from discontinued operations were $nil and $190,715, respectively. Foreign Currency Translation The accounts of Lianluo Smart, BDL, LCL, BTL and Breathcare are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The accompanying consolidated financial statements are presented in US dollars. Foreign currency transactions are translated into the functional currency using exchange rates in effect at the time of the transaction. Generally, foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated statements of operations and comprehensive loss. The financial statements of the Company’s foreign operations are translated USD in accordance with ASC 830-10, “Foreign Currency Matters”. Assets and liabilities are translated at applicable exchange rates quoted by the People’s Bank of China at the balance sheet dates and revenues, expenses and cash flow items are translated at average exchange rates in effect during the periods. Equity is translated at the historical exchange rates. Resulting translation adjustments are recorded as other comprehensive income (loss) and accumulated as a separate component of equity Warranty Costs The Company typically sells its branded products with warranty terms covering 12 months after purchase. The warranty requires the Company to repair all mechanical malfunctions and, if necessary, replace defective components. The Company provides for the estimated cost of product warranties at the time revenue is recognized. The Company's warranty obligation is affected by product failure rates and material usage and service delivery costs incurred in correcting product failure. Should actual product failure rates, material usage or service delivery costs differ from the Company's estimates, the Company may revise its estimated product warranty liability. Warranty expense (recovery gain from warranty expense) accrued from continuing operations for the years ended December 31, 2017, 2016 and 2015 was $(130,885), $141,449, $(120,105), respectively. Warranty expense from discontinued operations for the years ended December 31, 2016 and 2015 was $0 and $5,118, respectively. Research and Development Costs Research and development costs relating to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred, and included in general and administrative expenses. Research and development costs from continuing operations were $344,575, $1,192,930 and $1,902,638 for the years ended December 31, 2017, 2016 and 2015, respectively. Research and development costs from discontinued operations were $0 and $596,025 for the years ended December 31, 2016 and 2015, respectively. Government Subsidies Government subsidies primarily consist of financial subsidies received from provincial and local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the local governments. For certain government subsidies, there are no defined rules and regulations to govern the criteria necessary for companies to receive such benefits, and the amount of government subsidy is determined at the discretion of the relevant government authorities. The government subsidies of non-operating nature with no further conditions to be met are recorded as non-operating income in “Other income” when received. The government subsidies with certain operating conditions are recorded as “deferred income” when received and will be recorded as operating income when the conditions are met. During the years ended December 31, 2017, 2016 and 2015, government subsidies from continuing operations with no further conditions to be met of $17,394, $0 and $0, respectively, were recorded. There were no government subsidies from discontinued operations for the years ended December 31, 2016 and 2015. Earnings (Loss) per Share The Company follows the provisions of ASC 260-10, “Earnings per Share”. Basic earnings (loss) per share is computed by dividing net income (loss) attributable to holders of common shares by the weighted average number of common shares outstanding during the years. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares. Common stock equivalents having an anti-dilutive effect on earnings per share are excluded from the calculation of diluted earnings per share. Value Added Tax Stock-Based Compensation The Company accounts for stock-based share-based compensation awards to employees at fair value on the grant date and recognizes the expense over the employee’s requisite service period. The Company’s expected volatility assumption is based on the historical volatility of Company’s stock or the expected volatility of similar entities. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend is based on the Company’s current and expected dividend policy. Segment Information The Company operates and manages its business as one reporting and operating segment, which is the business of developing, commercializing and distribution of proprietary medical equipment, such as sleep apnea machines, ventilator air compressors, and laryngoscope. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance. Income Taxes The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of available positive and negative evidence. Based on management’s estimate, it is more likely than not that all of the deferred tax assets will not be realized. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken on a tax return. Under ASC 740, a tax benefit from an uncertain tax position taken or expected to be taken may be recognized only if it is “more likely than not” that the position is sustainable upon examination, based on its technical merits. The tax benefit of a qualifying position under ASC 740 would equal the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all the relevant information. A liability (including interest and penalties, if applicable) is established in the financial statements to the extent a current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain tax position. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable. The implementation of ASC 740 resulted in no material liability for unrecognized tax benefits. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statements of income and comprehensive income. During the years ended December 31, 2017, 2016 and 2015, the Company did not incur any interest or penalties. Recently Issued Accounting Standards In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory (Topic 330) – Simplifying the Measurement of Inventory,” which requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company adopted ASU No. 2015-11 effective January 1, 2017 and it did not have a material effect on the Company’s consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU No. 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In July 2015, the FASB approved a one-year deferral of the effective date of the new revenue recognition standard. The amendments in ASU No. 2014-09 are effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The standard permits the use of either the retrospective or cumulative effect transition method. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net). In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. In May 2016, the FASB issued ASU No. 2016-11, Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) - Rescission of SEC Guidance Because of ASU No.2014-09 and 2014-16, and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606) - Narrow Scope Improvements and Practical Expedients. These ASUs clarify the implementation guidance on a few narrow areas and adds some practical expedients to the guidance Topic 606. In the fourth quarter of 2017, the Company completed the evaluation of its adoption of ASU 2014-09 (including those subsequently issued updates that clarify ASU 2014-09’s provisions) and finalized its determination of the impact of the guidance on revenue recognition. The Company does not expect the new revenue standard to have a material impact on the consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The update requires equity investments (except those accounted for under the equity method or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. It eliminated the requirement for public entities to disclose the method(s) and significant assumptions used to estimate the fair value that is require to be disclosed for financial instruments measured at amortized cost on the balance sheet. For public entities, the ASU is effective for the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This update requires lessee to recognize the assets and liability (the lease liability) arising from operating leases on the balance sheet for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Within a twelve month or less lease term, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. If a lessee makes this election, it should recognize lease expense on a straight-line basis over the lease term. In transition, this update will be effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is evaluating the effect, if any, on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU No. 2016-15 clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This ASU is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. In October 2016, the FASB issued ASU No. 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This ASU improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2017. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. In November 2016, the FASB issued ASU No, 2016-18, Statement of Cash Flows: Restricted Cash. This ASU provides guidance on the classification of restricted cash in the statement of cash flows. The amendments in this ASU are effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The amendments in the ASU should be adopted on a retrospective basis. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The standard should be applied prospectively on or after the effective date. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis for the annual or any interim goodwill impairment tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company currently intends to adopt this guidance for the fiscal year beginning January 1, 2020, and does not anticipate that the adoption of this guidance will have a material impact on its financial statements or disclosures because the Company does not currently have any recorded goodwill. In February 2017, the FASB issued ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments in this update are effective at the same time as the amendments in ASU No. 2014-09. The Company does not expect the new revenue standard to have a material impact on the consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting,” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC 718. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. For all entities, the ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Receivable, Net [Abstract] | |
ACCOUNTS RECEIVABLE, NET | 5. ACCOUNTS RECEIVABLE, NET Accounts receivable as of December 31, 2017 and 2016 consist of the following: 2017 2016 Accounts receivable $ 34,021 $ 146,449 Less: allowance for doubtful accounts (24,316 ) (68,336 ) Accounts receivable, net $ 9,705 $ 78,113 During the years ended December 31, 2017, 2016 and 2015, (recovery of bad debts)/bad debts from continuing operations were ($46,831), ($139,716) and $10,014, respectively. During the years ended December 31, 2016 and 2015, bad debts from discontinued operations were $nil and $154,025, respectively. |
Other Receivables and Prepaymen
Other Receivables and Prepayments, Net | 12 Months Ended |
Dec. 31, 2017 | |
Other Receivables And Prepayments Net [Abstract] | |
OTHER RECEIVABLES AND PREPAYMENTS, NET | 6. OTHER RECEIVABLES AND PREPAYMENTS, NET Other receivables and prepayments as of December 31, 2017 and 2016 consist of the following: 2017 2016 Rental deposits $ 33,178 $ 14,442 Prepaid expenses 129,286 - Advances to employees - 343 Others - 75,297 Other receivables 162,464 90,082 Less: allowance for doubtful accounts (34,041 ) (562 ) Other receivables, net $ 128,423 $ 89,520 During the years ended December 31, 2017, 2016 and 2015, bad debts/(recovery of bad debts) on other receivables from continuing operations were $32,213, ($41,790) and ($1,899), respectively. During the years ended December 31, 2016 and 2015, bad debts on other receivables from discontinued operations were $nil and $153,275, respectively. |
Advances to Suppliers - Third P
Advances to Suppliers - Third Parties and A Related Party, Net | 12 Months Ended |
Dec. 31, 2017 | |
Advances to Suppliers - Third Parties and Related Party, Net [Abstract] | |
ADVANCES TO SUPPLIERS - THIRD PARTIES AND A RELATED PARTY, NET | 7. ADVANCES TO SUPPLIERS – THIRD PARTIES AND A RELATED PARTY, NET Advances to suppliers – third parties and a related party as of December 31, 2017 and 2016 consist of the following: 2017 2016 Advances to suppliers - third parties $ 386,241 $ 44,465 Advances to a related party (prepaid compensation) – Mr. Ping Chen 194,311 Less: Impairment - - $ 386,241 $ 238,776 During the years ended December 31, 2017, 2016 and 2015, impairment charges on advances to suppliers from continuing operations were $nil, $(1,095) and $429, respectively. During the years ended December 31, 2016 and 2015, impairment charges on advances to suppliers from discontinued operations were $32,321 and $310,991, respectively. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2017 | |
Inventories [Abstract] | |
INVENTORIES | 8. INVENTORIES Inventories as of December 31, 2017 and 2016 consist of the following: 2017 2016 Raw materials $ 184,490 $ 80,839 Work in progress 127,530 33,012 Finished goods 1,905,782 23,065 Total inventories $ 2,217,802 $ 136,916 During the years ended December 31, 2017, 2016 and 2015, (reversals of write-downs) and write-downs of inventories to lower of cost or net realizable value of $(73,860), $2,450,213 and $16,203, respectively, were (credited against) charged to costs of revenue in relation to its continuing operations. During the years ended December 31, 2016 and 2015, the Company recorded write-own of inventories in relation to its discontinued operations amounted to $nil and $1,934,836 respectively. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment, Net [Abstract] | |
PROPERTY AND EQUIPMENT, NET | 9. PROPERTY AND EQUIPMENT, NET Property and equipment as of December 31, 2017 and 2016 consist of the following: 2017 2016 Plant and machinery $ 2,461,719 $ 2,288,059 Automobiles 147,310 138,029 Office and computer equipment 51,034 26,713 Total property and equipment 2,660,063 2,452,801 Less: Accumulated depreciation (2,128,596 ) (1,046,661 ) Property and equipment, net $ 531,467 $ 1,406,140 Depreciation from the Company’s continuing operations were $974,432, $869,073 and $213,095 for the years ended December 31, 2017, 2016, and 2015, respectively. Depreciation from the Company’s discontinued operations were $51,056 and $281,202 for the years ended December 31, 2016 and 2015, respectively. The Company did not record any impairment on its property and equipment from its continuing and discontinued operations for the years ended December 31, 2017, 2016, and 2015. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets, Net [Abstract] | |
INTANGIBLE ASSETS, NET | 10. INTANGIBLE ASSETS, NET Intangible assets from continuing operations as of December 31, 2017 and 2016 consist of the following: 2017 2016 Software copyright $ 1,794,981 $ 1,681,890 Patent and others 3,191,300 2,990,234 Total intangible assets $ 4,986,281 4,672,124 Less: Accumulated amortization (1,287,712 ) (862,275 ) Intangible assets, net $ 3,698,569 $ 3,809,849 Amortization expense from the Company’s continuing operations was $353,971, $363,190 and $312,821 for the years ended December 31, 2017, 2016, and 2015, respectively. No amortization expense was recorded from the Company’s discontinued operations for the years ended December 31, 2016, and 2015, respectively. The Company did not record any impairment on its intangible assets from its continuing operations for the years ended December 31, 2017, 2016 and 2015. The Company recorded impairment of $18,447 and $nil from its discontinued operations for the years ended December 31, 2016, and 2015. Annual future amortization expense is expected as follows: For the years ended: 2018 $ 365,340 2019 365,340 2020 365,340 2021 365,340 2022 365,340 2023 and thereafter 1,871,869 $ 3,698,569 |
Available-for-Sale Financial As
Available-for-Sale Financial Assets | 12 Months Ended |
Dec. 31, 2017 | |
Available-for-Sale Financial Assets [Abstract] | |
AVAILABLE-FOR-SALE FINANCIAL ASSETS | 11. AVAILABLE-FOR-SALE FINANCIAL ASSETS On November 3, 2017 (the “Effective Date”), the Company completed a purchase of an aggregate of 1,304,348 shares of common stock, par value $0.001 per share (the “Shares”) of Guardion Health Sciences, Inc., a Delaware corporation (“GHSI” or the “Seller”), at a purchase price of $1.15 per Share (or a purchase price of $1,500,043 in the aggregate) in a private placement, pursuant to a Stock Purchase Agreement dated November 3, 2017 (the "Purchase Agreement") by and among GHSI as Seller and (i) LLIT and (ii) Digital Grid (Hong Kong) Technology Co., Limited (“DGHKT”; and together with LLIT, “Purchasers”), as purchasers of, in aggregate, 4,347,827 Shares for aggregate purchase price of $5,000,001. Until the one year anniversary of the Effective Date, or earlier in the event that the Purchasers hold less than three percent (3%) of the issued and outstanding shares of common stock of the Seller, GHSI may not undertake a reverse stock split or equivalent reclassification of GHSI’s shares of common stock without the prior written consent of the Purchasers holding a majority of the Shares issued pursuant to the Purchase Agreement which are then outstanding. Pursuant to the Purchase Agreement, each Purchaser will have customary preemptive rights to participate in future equity and equity-linked issuances by the Seller up to the extent necessary to maintain such Purchaser’s pro rata ownership percentage in GHSI’s securities, subject to customary exceptions. The preemptive rights shall terminate at the earlier of (i) 18 months from the Effective Date, (ii) such time as the Purchasers in aggregate hold less than five percent (5%) of the issued and outstanding shares of the Seller’s common stock, or (iii) such time as the shares of common stock of GHSI shall become listed or approved for listing on a national securities exchange. Additionally, pursuant to the Purchase Agreement, the Seller is obligated to file a registration statement (the "Registration Statement") with the SEC within thirty (30) days of the Effective Date to register the Shares for resale. The requested Registration Statement was filed on November 30, 2017 and was declared effective on December 27, 2017. GHSI is specialty health sciences company formed to develop, formulate and distribute condition-specific medical foods with an initial medical food product on the market under the brand name Lumega-Z® that replenishes and restores the macular protective pigment. GSHI has had limited commercial operations to date, and has primarily been engaged in research, development, commercialization, and capital raising. As of December 31, 2017, the Company and DGHKT respectively held 3.23% and 7.55% of GHSI’s outstanding common stock. |
Short-Term Borrowings
Short-Term Borrowings | 12 Months Ended |
Dec. 31, 2017 | |
Short-Term Borrowings [Abstract] | |
SHORT-TERM BORROWINGS | 12. SHORT-TERM BORROWINGS December 31, 2017 2016 Loans from Hangzhou Lianluo Interactive Information Technology Co., Ltd. $ 1,536,720 $ - Interest expense on short-term borrowings amounted to $6,246, $128,537 and $196,220 for the years ended December 31, 2017, 2016, and 2015, respectively. Loans from Hangzhou Lianluo Interactive Information Technology Co., Ltd. (“HLI”) Pursuant to various loan agreements between the Company and HLI in 2017, the Company obtained the following unsecured loans from HLI, which bear fixed interest at 5% per annum: - a loan of $296,064 (RMB2,000,000), repayable by August 28, 2018; - a loan of $296,064 (RMB2,000,000), repayable by December 14, 2018; and - a loan of $888,192 (RMB6,000,000), repayable by December 27, 2018. Interest expense paid to HLI amounted to $3,812 for the year ended December 31, 2017. Loans from Mr. Ping Chen On March 27, 2015, the Company entered into a new loan agreement with Mr. Ping Chen (“Mr. Chen), who is the CEO and a major shareholder of the Company, pursuant to which the Company obtained from Mr. Chen an unsecured loan of $660,679 (RMB4,120,000), which bore interest at a fixed rate of 6.955% per annum in 2015. The loan was extended in March 2016 at a fixed interest rate of 5.655% and had been repaid on October 24, 2016. On December 2, 2015, the Company obtained from Mr. Chen an unsecured, interest-free loan of $3,207,180 (RMB20,000,000). On December 18, 2015, the Company repaid half of the loan in the amount of $1,603,590 (RMB10,000,000). The remaining balance was repaid on October 21, 2016. During the year ended December 31, 2016, the Company obtained unsecured, interest-free loans from Mr. Ping Chen in an aggregate amount of $718,638 (RMB4,775,000) which had been fully repaid on October 24, 2016. Interest expense paid to Mr. Ping Chen amounted to $29,207 and $33,569 for the years ended December 31, 2016 and 2015, respectively. Bank borrowings In 2015 and 2014, the Company obtained a line of credit for RMB10,000,000 ($1,541,000) and RMB15,000,000, respectively, from Nanjing Bank Company Limited (Beijing Branch) to finance its working capital and was renewed annually. Interest rate for the credit line was fixed at 7.20% per annum during the years ended December 31, 2016 and 2015. The line of credit was secured by BTL’s land use rights and buildings and guaranteed by Mr. Chen and another shareholder of BTL. The loan balance of $2,405,385 (RMB15,000,000) outstanding as of December 31, 2014 were fully repaid in 2015. On March 3, 2015, the Company entered into a new loan agreement with Nanjing Bank Company Limited (Beijing Branch) in the amount of $2,405,385 (RMB15,000,000) with a fixed interest rate which was 7.811% per annum. In 2015, the Company fully repaid this loan. On December 18, 2015, the Company entered into a new loan agreement with Nanjing Bank Company Limited (Beijing Branch) in the amount of $1,603,590 (RMB10,000,000) with a fixed interest rate which was 7.20% per annum. The loan had been fully repaid on November 14, 2016. Interest expense paid on bank borrowings amounted to $99,330 and $162,651 for the years ended December 31, 2016 and 2015, respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 13. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Other payables and other current liabilities as of December 31, 2017 and 2016 from continuing operations consist of the following: 2017 2016 Accrued salaries and social welfare $ 345,710 $ 118,835 Accrued expenses 291,043 418,989 Reimbursed employee's expense 34,212 14,971 Deposits from customers 89,382 86,106 Others 2,526 4,423 Total accrued expenses and other current liabilities $ 762,873 $ 643,324 |
Commitments and Contingency
Commitments and Contingency | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingency [Abstract] | |
COMMITMENTS AND CONTINGENCY | 14. COMMITMENTS AND CONTINGENCY Leases The lease commitments are for office premises which are classified as operating leases. These non-cancelable leases have lease terms expiring through December 2018. Future minimum lease payments under these leases as of December 31, 2017 are $96,386 for the twelve months ending December 31, 2018. Rent expense from continuing operations for the years ended December 31, 2017, 2016 and 2015 was $244,860, $101,012 and $98,329, respectively. Rental expense incurred in relation to the Company’s discontinued operations for the years ended December 31 2016 and 2015 was $nil and $13,223 respectively. Employment Contracts Under the PRC labor law, all employees have signed employment contracts with the Company. Management employees have employment contracts with terms up to three years and non-management employees have a three year employment contract renewable on an annual basis. Contingency The Labor Contract Law of the People’s Republic of China requires employers to assure the liability of the severance payments if employees are terminated and have been working for the employers for at least two years prior to January 1, 2008. The Company has estimated its possible severance payments of approximately $663,069 and $429,256 as of December 31, 2017 and 2016, respectively, which have not been reflected in its consolidated financial statements, because it is more likely than not that this will not be paid or incurred. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
EQUITY | 15. EQUITY Common Shares On January 20, 2015, the Company issued 25,000 ordinary shares to individuals upon exercise of share-based awards. On February 26, 2015, Lianluo Smart issued 12,000 ordinary shares to independent consultants in connection with investment relationship advisory services rendered for the Company. The fair value of the shares on the grant date based on the closing price was approximately $32,340. On July 29, 2015, Lianluo Smart issued 348,800 ordinary shares to Mr. Ping Chen under the Company’s incentive plan. The fair value of the shares on the grant date based on the closing price was approximately $666,208, and was recognized as an expense in the year ended December 31, 2015. In 2016, the Company issued an aggregate of 7,000 ordinary shares to individuals upon exercise of share-based awards. On April 28, 2016, the Company entered into a definitive securities purchase agreement with HLI pursuant to which HLI has agreed to purchase 11,111,111 restricted common shares of the Company for an aggregate of $20,000,000. The purchase price is $1.80 per share, which represents a 35% premium to the Company’s closing price of $1.33 on April 27, 2016. In August 2016, the Company closed the securities purchase agreement (the “Securities Purchase Agreement”) with HLI and HLI completed the purchase of $20 million of the Company’s common shares and warrants to purchase common shares (Note 16). As of December 31, 2016, the Company reported a subscription receivable of $1,492,538 from HLI which had been collected on April 13, 2017. Statutory Surplus Reserves A PRC company is required to make appropriations to statutory surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve is required to be at least 10% of the after tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s’ registered capital. The statutory surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of shares currently held by them, provided that the remaining statutory surplus reserve balance after such issue is not less than 25% of the registered capital. No amount was allocated to the statutory surplus reserve account as both the subsidiaries in China had incurred accumulated losses as of December 31, 2017 and 2016. Stock Option Plan Under the employee stock option plan, the Company’s stock options generally expire ten years from the date of grant. On December 29, 2011, the Company entered into five-year agreements with its employees and directors, pursuant to which, the Company issued an aggregate of 450,000 options at an exercise price of $1.45 per share. The options vest in equal annual installments over the five years of the agreements ending December 31, 2016. On October 7, 2013, pursuant to the Company’s Share Incentive Plan, the Company granted a non-statutory option to acquire 94,000 of the Company’s common shares at an exercise price of $2.30 per share to Mr. Ping Chen, the CEO of the Company. The options vest in equal annual installments over the five years of the agreement ending October 7, 2018. On August 20, 2014, pursuant to the Company’s Share Incentive Plan, the Company granted additional option to acquire 131,000 of the Company’s common shares at an exercise price of $5.31 per share to Mr. Ping Chen. The options vest in equal annual installments over the five years of the agreement ending August 20, 2019. On August 7, 2015, the Company entered into two-year agreements with its employees and directors, pursuant to which, the Company issued an aggregate of 349,000 options at an exercise price of $1.64 per share. The options vest in equal annual installments over the two years of the agreements ending August 7, 2017. On March 21, 2016, the Company entered into two-year agreements with its employees and directors, pursuant to which, the Company issued an aggregate of 580,867 options at an exercise price of $1.88 per share. The options vest in equal annual installments over the two years of the agreements ending March 21, 2018. As of December 31, 2017, 294,133 options have not been vested. The Company valued the stock options using the Black-Scholes model with the following assumptions: Expected Expected Dividend Risk Free Grant Date 10 126%-228% 0% 0.73%-1.65% $1.22-$5.15 The following is a summary of the option activity: Stock options Shares Weighted average Aggregate intrinsic (1) Outstanding as of January 1, 2016 720,000 $ 2.36 Granted 580,867 1.88 Forfeited (56,000 ) - Expired - Exercised (7,000 ) - Outstanding as of December 31, 2016 1,237,867 $ 2.17 Granted - - Forfeited (221,000 ) Expired - Exercised - Outstanding as of December 31, 2017 1,016,867 $ 2.26 $ 59,340 (1) The intrinsic value of the stock options at December 31, 2017 is the amount by which the market value of the Company’s common stock of $1.75 as of December 31, 2017 exceeds the exercise price of the options. Following is a summary of the status of options outstanding and exercisable at December 31, 2017: Outstanding options Exercisable options Average Number Average Average Number Average $ 1.45 112,000 4.00 $ 1.45 112,000 4.00 $ 2.30 94,000 5.77 $ 2.30 75,200 5.77 $ 5.31 131,000 6.64 $ 5.31 78,600 6.64 $ 1.64 234,000 7.60 $ 1.64 234,000 7.60 $ 1.88 445,867 8.22 $ 1.88 222,934 8.22 1,016,867 722,734 For the years ended December 31, 2017, 2016, and 2015, the Company recognized $479,233, $947,481, and $357,196, respectively, as compensation expense under its stock option plan. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Warrants [Abstract] | |
WARRANTS | 16. WARRANTS On April 21, 2010, the Company issued to Anderson & Strudwick Incorporated (“A&S”) 150,000 warrants, as a portion of the placement commission for the IPO. On the same day, the Company granted a total of 7,500 warrants to Hawk Associates Inc. (“Hawk”), the Company’s investor relations consultancy. On January 10, 2012, the Company issued 100,000 warrants to FirsTrust Group, Inc., (“FirsTrust”), the Company’s financial advisor. The warrants were redeemed at December 31, 2016. In connection with the stock offering in February 2014, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional investors for the sale of 734,700 common shares in a registered offering at the price of $9.12 per common share. In addition, the Company issued 220,410 warrants to the institutional investors aggregately and issued 73,470 warrants to FT Global Capital, Inc. (“FT Global”), as a portion of the placement commission. These warrants will be exercisable immediately as of the date of issuance at an exercise price of $11.86 per common share and expire forty-two months from the date of issuance. The exercise price of the warrants is subject to customary adjustment in the case of future issuances or deemed issuances of common shares, stock splits, stock dividends, combinations of shares and similar recapitalization transactions. On April 21, 2016, the Company signed Warrants Repurchase Agreements with those institutional investors and FT Global who signed the “Securities Purchase Agreement” with the Company in 2014. The Company repurchased the outstanding warrants to purchase in aggregate 293,880 shares of its common shares, and paid an aggregate cash purchase price of $1,116,744 ($3.80 per share underlying the warrants). On April 28, 2016, the Company signed Share Purchase Agreement (“SPA”) with HLI. In this SPA, HLI is entitled with 1,000,000 warrants to acquire from the Company 1,000,000 common shares at purchase price of $2.20 per share. The new warrants will be exercisable at any time. There were a total of 1,000,000 warrants issued and outstanding as of December 31, 2017 and 2016. The fair value of the outstanding warrants was calculated using the Black Scholes Model with the following assumptions: As of December 31, As of April 28, Stock options 2017 2016 2016 Market price per share (USD/share) $ 1.73 $ 1.50 $ 1.89 Exercise price (USD/share) 2.20 2.20 2.20 Risk free rate 2.36 % 2.40 % 1.84 % Dividend yield 0 % 0 % 0 % Expected term/Contractual life (years) 8.3 9.3 10.0 Expected volatility 241.20 % 232.20 % 224.19 % The following is a reconciliation of the beginning and ending balances of warrants liability measured at fair value on a recurring basis using Level 3 inputs: December 31, 2017 2016 2015 Beginning balance $ 1,499,362 $ 162,736 $ 553,060 Warrants issued to HLI - 1,889,269 - Warrants redeemed - (25,026 ) - Fair value change of the issued warrants included in earnings 229,749 (527,617 ) (390,324 ) Ending balance $ 1,729,111 $ 1,499,362 $ 162,736 The following is a summary of the warrants activity: Number Weighted Weighted Average Outstanding as of January 1, 2016 551,380 $ 9.86 1.49 Granted 1,000,000 2.20 Forfeited - Exercised - Redeemed (551,380 ) 9.86 Outstanding as of December 31, 2016 1,000,000 $ 2.20 Granted - Forfeited - Exercised - Redeemed - Outstanding as of December 31, 2017 1,000,000 $ 2.20 |
Loss per Share
Loss per Share | 12 Months Ended |
Dec. 31, 2017 | |
Loss Per Share [Abstract] | |
LOSS PER SHARE | 17. LOSS PER SHARE The following is a reconciliation of the basic and diluted loss per share computation for the years ended December 31, 2017, 2016, and 2015: Year ended December 31, 2017 2016 2015 Net loss attributable to the Company’s common shareholders - from continuing operations $ (5,136,434 ) $ (9,609,735 ) $ (6,698,870 ) - from discontinued operations, net of tax - (122,133 ) (3,524,260 ) Net loss attributable to the Company’s common shareholders $ (5,136,434 ) $ (9,731,868 ) $ (10,223,130 ) Weighted average shares outstanding – Basic and diluted 17,312,586 10,422,765 5,990,552 Loss per share – Basic and diluted - from continuing operations $ (0.30 ) $ (0.92 ) $ (1.12 ) - from discontinued operations - (0.01 ) (0.59 ) Loss per share – Basic and diluted $ (0.30 ) $ (0.93 ) $ (1.71 ) For the years ended December 31, 2017, 2016 and 2015, all the outstanding warrants and options were anti-dilutive. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes [Abstract] | |
INCOME TAXES | 18 INCOME TAXES British Virgin Islands Lianluo Smart is a tax-exempt company incorporated in the British Virgin Islands. United States Breathcare is a limited liability company and, such as, is not subject to federal income tax, instead any income would be taxable to Breathcare’s sole owner. Moreover, as of December 31, 2017, 2016 and 2015, Breathcare was inactive and generated no revenue. PRC PRC enterprise income tax is calculated based on the Enterprise Income Tax Law (the “EIT Law”). Under the EIT Law, a unified enterprise income tax rate of 25% and unified tax deduction standards will be applied equally to both domestic-invested enterprises and foreign-invested enterprises. Under the current PRC laws, PRC government grants a preferential income tax rate of 15% to government-certified high technology companies, and under the new standard the period of validity for the certification of high technology companies is three years. In 2009, 2012 and 2015, BDL updated its certification for “high technology” company. Therefore, BDL used a 15% income tax rate to calculate the income tax expense for the years ended December 31, 2017, 2016 and 2015. The tax rate for LCL and BTL is 25% in 2017, 2016 and 2015. Benefit (provision) for income taxes consists of: Year Ended December 31 2017 2016 2015 Current income taxes benefit $ - $ 95,870 $ 240,806 Deferred income taxes provision - - (228,828 ) Total benefit for income taxes - 95,870 11,978 Less: provision for income tax expenses from discontinued operations - (844 ) - Benefit for income taxes from continuing operations $ - $ 95,026 $ 11,978 A reconciliation of the provision for income taxes determined at the statutory income tax rate to the Company's income taxes is as follows: Years ended December 31, 2017 2016 2015 Loss before provision for income tax and non-controlling interests $ (5,136,434 ) $ (9,704,761 ) $ (6,710,848 ) PRC corporate income tax rate 25 % 25 % 25 % Income tax benefit computed at PRC statutory corporate income tax rate (1,284,108 ) (2,426,190 ) (1,677,712 ) Reconciling items: Non-deductible expenses 597,189 691,298 1,331,524 Valuation allowance on deferred tax assets 686,919 1,734,892 346,188 Over-provision in prior years - (95,026 ) - Others - - (11,978 ) Income tax benefit $ - $ (95,026 ) $ (11,978 ) Deferred taxes assets Deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2017 and 2016 are presented below: 2017 2016 Deferred tax assets Net operating loss carried forward $ 2,386,069 1,798,009 Valuation allowance (2,386,069 ) (1,798,009 ) Deferred tax assets, non-current $ - $ - Deferred tax assets, non-current $ - $ - As of December 31, 2017, the Company’s PRC subsidiaries had net operating loss carry forwards of $9,544,276, which will expire in various years through year 2022. Management believes it is more likely than not that the Company will not realize these potential tax benefits as these operations will not generate any operating profits in the foreseeable future. As a result, a valuation allowance was provided against the full amount of the potential tax benefits. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or its withholding agent. The statute of limitations extends to five years under special circumstances, which are not clearly defined. In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. |
Related Party Transactions and
Related Party Transactions and Balance | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions and Balance [Abstract] | |
RELATED PARTY TRANSACTIONS AND BALANCE | 19. RELATED PARTY TRANSACTIONS AND BALANCE In addition to the transactions and balances disclosed elsewhere in these financial statements, the Company had the following material related party transactions: (1) For the years ended December 31, 2017, 2016 and 2015, the Company purchased inventory of $0 and $1,728,676 from HuNan Zhong Yi High-tech Development Co., Ltd. (“Zhong Yi”) which is partially owned by the CEO of the Company. As of December 31, 2017 and 2016, the Company did not record any outstanding payable to Zhong Yi. (2) During the years ended December 31, 2017, 2016 and 2015, the Company purchased inventory of $3,760, $497 and $0 from HLI, respectively. At the same time, goods amounted to $3,037 were sold to HLI for the year ended December 31, 2017. As of December 31, 2017 and 2016, the Company reported an outstanding payable of $nil and $475, respectively, to HLI. (3) On December 20, 2016, the Company entered into a $2 million loan agreement with DGHKT, one of HLI’s subsidiaries, with a fixed annual interest rate 3.5%. On December 30, 2016, the Company received the repayment of the loan and related interest in total of $2,002,110 from DGHKT. (4) On June 13, 2017, the Company entered into a $3 million loan agreement with DGHKT for a term of 6 months and with a fixed annual interest rate of 3.5%. Before December 31, 2017, the Company received the repayment of the loan and the related interest in total of $52,932 from DGHKT. (5) On January 14, 2016, the Company completed an acquisition of 0.8% equity interest of BDL from BTL, who terminated the VIE relationship with the Company and deconsolidated from the Company’s financial statements on July 31, 2016, for a purchase price of $146,032 or RMB 920,000. As of December 31, 2017 and 2016, the Company reported an outstanding payable of $nil and $146,032, respectively, to BTL. (6) Before the Company terminated the VIE agreement with BTL on July 31, 2016, the Company had various transactions with BTL. During the year ended December 31, 2016, the Company had the following transactions with BTL: 1. The Company repaid loans of $69,253 or RMB460,151 in total to BTL, including various expenses paid by BTL on behalf of the Company and loans from BTL from prior years. Those loans were no interest free loans. As of December 31, 2017 and 2016, no outstanding balance was reported in the Company’s consolidated financial statements. 2. The Company reported a technical support expense of $9,027 or RMB59,981 to BTL for its product maintenance. As of December 31, 2017 and 2016, no outstanding balance was reported in the Company’s consolidated financial statements. 3. The Company leased an office space from BTL with an annual rental of $36,120 or RMB240,000. The leasing agreement had been terminated in 2016. As of December 31, 2017 and 2016, no outstanding balance was reported in the Company’s consolidated financial statements. During the year ended December 31, 2015, the Company leased an office space from BTL with an annual rental of $38,496 or RMB240,000. The leasing agreement had been terminated in 2016. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2017 | |
Concentrations [Abstract] | |
CONCENTRATIONS | 20. CONCENTRATIONS Major Customers For the years ended December 31, 2017, 2016, and 2015, approximately 56%, 94%, and 7% of the Company’s revenues from continuing operations were derived from two major customers. For the years ended December 31, 2016, and 2015, approximately 96%, and 61% of the Company’s total revenues from discontinued operations were derived from two major customers. Major Suppliers For the years ended December 31, 2017, 2016 and 2015, purchases from three major suppliers were approximately 65%, 98% and 87% of the total purchase from continuing operations, respectively. For the years ended December 31, 2016, and 2015, purchases from three major suppliers were approximately 94 % and 78% of the total purchase from discontinued operations, respectively. Revenues by products The following represents the revenues by product line, all derived from China: For the years ended December 31, 2017 2016 2015 Products Line Medical Devices $ 827,032 $ 1,305,372 $ 1,500,957 Respiratory and Oxygen Homecare - 5,956 20,573 Mobile Medicine (sleep apnea diagnostic products) 54,979 12,080,164 164,503 Total Revenues 882,011 13,391,492 1,686,033 Less: revenues from discontinued operations - (329,119 ) (947,732 ) Revenues from continuing operations $ 882,011 $ 13,062,373 $ 738,301 |
Other Income
Other Income | 12 Months Ended |
Dec. 31, 2017 | |
Other Income [Abstract] | |
OTHER INCOME | 21. OTHER INCOME For the years ended December 31, 2017 2016 2015 Gain on settlement of payables (a) $ 125,312 $ - $ - Government subsidy 17,394 - - Exchange gain - 68,436 - Others 3,917 - - Total other income $ 146,623 $ 68,436 $ - (a) In 2014, the Company entered into a Morpheus software licence agreement with a third-party service provider for a total consideration of $200,000. The service has been provided and charged as selling expenses in 2016. As of December 31, 2016, an amount of $125,000 remained unpaid. In 2017, the service provider has agreed to waive its entitlement to the remaining balance and the accrued amount was written back as other income. |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2017 | |
Discontinued Operations [Abstract] | |
DISCONTINUED OPERATIONS | 22. DISCONTINUED OPERATIONS In accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as a component of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45. Reconciliation of the Carrying Amounts of Major Classes of Net Income (Loss) from Operations to be Disposed Classified as discontinued operations in the Consolidated Statements of Operations and Comprehensive Loss. For the Years Ended 2017 2016 2015 Revenues $ - $ 329,119 $ 947,732 Costs of revenue - (338,110 ) (2,698,808 ) Gross loss - (8,991 ) (1,751,076 ) Service income - 3,244 208,303 Service expenses - (5,497 ) (198,745 ) Selling expenses - (63,089 ) (456,852 ) General and administrative expenses - ( 43,703 ) (866,260 ) Provision for doubtful accounts - ( 32,321 ) (618,290 ) Impairment loss on intangible assets - (18,447 ) - Financial expenses - 88 88 Other income - 1,261 19,553 Other expenses (275 ) (186 ) Provision for income tax expense - (844 ) - Loss on disposal of discontinued operations - (82,579 ) - Net loss from discontinued operations $ - $ (251,153 ) $ (3,663,465 ) |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 23. SUBSEQUENT EVENTS On March 15, 2018, Lianluo Smart Limited (the “Company”) received a resignation notice from Mr. Ke Cai, the Chief Financial Officer of the Company, effective immediately. Mr. Cai’s resignation is not due to any disagreement with the Company. On March 15, 2018, the Board of the Directors of the Company (the “Board”) appointed Ms. Yingmei Yang as the interim Chief Financial Officer, effective immediately. Ms. Yang has been serving as the Vice President of Hangzhou Lianluo Interactive Information Technology Co., Ltd. (“Lianluo Interactive”), a major shareholder of the Company since February, 2018. Between January, 2015 and February, 2018, Ms. Yang has served as Chief Financial Officer and Vice President of Lianluo Interactive. From February, 2013 to January, 2015, Ms. Yang was the Chief Financial Officer and Secretary of Board of Beijing Digit Horizon Technology Limited., the predecessor of Lianluo Interactive. There is no arrangement or understanding between Yingmei Yang and any other persons pursuant to which she was appointed as discussed above. Nor are there any family relationships between Yingmei Yang and any executive officers and directors of the Company. Further, there are no transactions involving the Company which transaction would be reportable pursuant to Item 404(a) of Regulation S-K promulgated under the Securities Act of 1933, as amended. |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Basis of Consolidation | Basis of Consolidation The consolidated financial statements include the accounts of Lianluo Smart and its wholly-owned subsidiaries and variable interest entity for which the Company is the primary beneficiary (“VIE”) (collectively, the “Company”). All inter-company transactions and balances are eliminated in consolidation. The results of subsidiaries and consolidated VIEs acquired or disposed of are recorded in the consolidated statements of operations and comprehensive loss from the effective date of acquisition or up to the effective date of disposal, as appropriate. A subsidiary is an entity in which (i) the Company directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the meeting of the board of directors or to govern the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders. A VIE is required to be consolidated by the primary beneficiary of the entity if the equity holders in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A group of shareholders, including the Chief Executive Officer, originally held more than 50% of the voting ownership interest of Lianluo Smart, Beijing Dehaier Medical Technology Company Limited, a PRC company (“BDL”) and Beijing Dehaier Technology Co., Limited (“BTL”). Before July 31, 2016, BTL’s building was pledged as collateral for BDL’s bank loans. In exchange, BDL loaned money to BTL to finance its operations. BTL’s primary operation is to provide repairs and transportation services to BDL’s customers. In accordance, BDL is the primary beneficiary of BTL, as the entity that was most closely associated with BTL. BTL was considered a variable interest entity of BDL. Upon execution of the VIE Termination on July 31, 2016, BTL was deconsolidated from Lianluo Smart and its subsidiaries. The results of BTL’s operations were reflected in the Company’s consolidated financial statements as discontinued operations (Note 22). For the Company's majority-owned subsidiaries and consolidated VIEs, a noncontrolling interest is recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Company. Termination of the VIE Agreement with BTL In accordance with ASC 810-10-40-4, a parent shall deconsolidate a subsidiary or derecognize a group of assets specified in the preceding paragraph as of the date the parent ceases to have a controlling financial interest in that subsidiary or group of assets. ASC 810-10-55-4A also states that all of the following are circumstances that result in deconsolidation of a subsidiary under ASC 810-10-40-4: a. A parent sells all or part of its ownership interest in its subsidiary, and as a result, the parent no longer has a controlling financial interest in the subsidiary. b. The expiration of a contractual agreement that gave control of the subsidiary to the parent. c. The subsidiary issues shares, which reduces the parent’s ownership interest in the subsidiary so that the parent no longer has a controlling financial interest in the subsidiary. d. The subsidiary becomes subject to the control of a government, court, administrator, or regulator. As the result, on July 31, 2016, the Company deconsolidated BTL from its consolidated financial statements upon termination of the VIE Agreement with BTL. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates are adjusted to reflect actual experience when necessary. Significant accounting estimates reflected in the Company’s consolidated financial statements include revenue recognition, allowance for doubtful accounts, valuation of inventories, impairment testing of long term assets, warranty obligation, warrants liability, stock-based compensation, useful lives of intangible assets, and property and equipment, and realization of deferred tax assets. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and highly liquid investments which are unrestricted as to withdrawal or use, and which have maturities of three months or less when purchased. The Company maintains uninsured cash and cash equivalents with various financial institutions mainly in the PRC and the United States. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable are initially recorded at invoiced amount. Accounts receivable terms typically are net 60-180 days from the end of the month in which the services were provided, or when goods were delivered. The Company generally does not require collateral or other security to support accounts receivable. An allowance, if required, is based on a combination of historical experience, aging analysis, and an evaluation of the collectability of specific accounts. Management considers that receivables over 1 year to be past due. Accounts receivable balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
Other Receivables and Prepayments, net | Other Receivables and Prepayments, net Other receivables and prepayments primarily include advances to employees, prepaid rentals and deposits to landlords and service providers. Management regularly reviews aging of receivables and changes in payment trends and records a reserve when management believes collection of amounts due are at risk. Accounts considered uncollectible are written off after exhaustive efforts at collection. |
Advances to Suppliers, net | Advances to Suppliers, net The Company, as is the common practice in the PRC, often makes advance payments to suppliers for unassembled parts. Advances to suppliers are reviewed periodically to determine whether their carrying value has become impaired. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The carrying amounts reported in the consolidated financial statements for current assets and current liabilities approximate fair value due to the short-term nature of these financial instruments. The fair value of warrants was determined using the Black Scholes Model, with level 3 inputs (Note 16). |
Warrant Liability | Warrant Liability For warrants that are not indexed to the Company’s stock, the Company records the fair value of the issued warrants as a liability at each balance sheet date and records changes in the estimated fair value as a non-cash gain or loss in the consolidated statement of operations and comprehensive income. The warrant liability is recognized in the balance sheet at the fair value (level 3). The fair value of these warrants have been determined using the Black-Scholes pricing mode. The Black-Scholes pricing model provides for assumptions regarding volatility, call and put features and risk-free interest rates within the total period to maturity. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value and consist of assembled and unassembled parts relating to medical devices. Cost is determined on a weighted-average basis. Management compares the cost of inventories with the net realizable value and an allowance is made for writing down their inventories to market value, if lower. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost less accumulated depreciation and impairment losses, if any. Depreciation is calculated on a straight-line basis over the following estimated useful lives before July 31, 2016: Leasehold improvements Shorter of the useful lives or the lease term Building and land use rights 20-40 years Machinery and equipment 10-15 years Furniture and office equipment 5 years Motor vehicles 5 years Estimated useful lives of property and equipment after July 31, 2016 were shortened and depreciation thereafter is calculated on a straight-line basis over the following estimated useful lives: Leasehold improvements Shorter of the useful lives or the lease term Machinery and equipment 3 years Furniture and office equipment 3 years Motor vehicles 3 years |
Intangible Assets | Intangible Assets Intangible assets are recorded at cost less accumulated amortization and impairment losses, if any. Amortization is calculated on a straight-line basis over the following estimated useful lives: Software copyrights 20 years Other software 5 years |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews the long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company compares the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the asset and eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair value of the asset, is recognized. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. Based on its review, the Company believes that, as of December 31, 2017 and 2016, there was no significant impairment of its long-lived assets. |
Available-for-sale investments | Available-for-sale investments Available-for-sale investments represent the Company's investments in a privately held company. The investments are accounted for using the cost method, as they do not have readily determinable fair values and over which the Company neither has significant influence nor control through investment in common stock or in-substance common stock. Under the cost method, the Company carries the investment at cost and recognizes income to the extent of dividends received from the distribution of the equity investee's post-acquisition profits. |
Revenue Recognition | Revenue Recognition The Company recognizes revenues when all the followings conditions have been satisfied: ● Persuasive evidence of an arrangement exists; ● Delivery and/or installation have occurred (e.g., risks and rewards of ownership have passed); ● The sales price is fixed or determinable, and ● Collectability is reasonably assured. All revenues are based on firm customer orders with fixed terms and conditions. Because the products are assembled to the customers’ specification, there is no right of return. The Company does not provide its customers with price protection or cash rebates. For products that include software, the software is an off-the-shelf package and an integral part of the products being delivered. The Company does not provide any significant post-sale customer support services and does not provide customers with upgrades. The software is incidental to the product as a whole. For products that do not require installation, revenues are recognized when the products are delivered. For products that require installation, revenues are recognized when the installation is completed. For all service income, the Company recognizes the revenues upon the completion of the repairs when the equipment has been returned to and accepted by the customers. In the PRC, value added tax (“VAT”) of 17% of the invoice amount is collected in respect of the sales of goods on behalf of tax authorities. The VAT collected is not revenue of the Company; instead, the amount is recorded as a liability on the balance sheet until such VAT is paid to the authorities. |
Cost of Revenues | Cost of Revenues Cost of revenues primarily includes wages to assemble parts and the costs of unassembled parts, handling charges, and other expenses associated with the assembly and distribution of products. |
Service Income and Expenses | Service Income and Expenses Service income and expense represent activities related to repair services provided to the customers by BDL, and the commission fee from customers. |
Advertising Expenses | Advertising Expenses Advertising expenses are expensed as incurred. For the years ended December 31, 2017, 2016 and 2015, advertising and promotional expenses from continuing operations recognized in the consolidated statements of comprehensive loss were $76,592, $56,338 and $1,417,243 respectively. During the years ended December 31, 2016 and 2015, advertising expenses from discontinued operations were $nil and $190,715, respectively. |
Foreign Currency Translation | Foreign Currency Translation The accounts of Lianluo Smart, BDL, LCL, BTL and Breathcare are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The accompanying consolidated financial statements are presented in US dollars. Foreign currency transactions are translated into the functional currency using exchange rates in effect at the time of the transaction. Generally, foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated statements of operations and comprehensive loss. The financial statements of the Company’s foreign operations are translated USD in accordance with ASC 830-10, “Foreign Currency Matters”. Assets and liabilities are translated at applicable exchange rates quoted by the People’s Bank of China at the balance sheet dates and revenues, expenses and cash flow items are translated at average exchange rates in effect during the periods. Equity is translated at the historical exchange rates. Resulting translation adjustments are recorded as other comprehensive income (loss) and accumulated as a separate component of equity |
Warranty Costs | Warranty Costs The Company typically sells its branded products with warranty terms covering 12 months after purchase. The warranty requires the Company to repair all mechanical malfunctions and, if necessary, replace defective components. The Company provides for the estimated cost of product warranties at the time revenue is recognized. The Company's warranty obligation is affected by product failure rates and material usage and service delivery costs incurred in correcting product failure. Should actual product failure rates, material usage or service delivery costs differ from the Company's estimates, the Company may revise its estimated product warranty liability. Warranty expense (recovery gain from warranty expense) accrued from continuing operations for the years ended December 31, 2017, 2016 and 2015 was $(130,885), $141,449, $(120,105), respectively. Warranty expense from discontinued operations for the years ended December 31, 2016 and 2015 was $0 and $5,118, respectively. |
Research and Development Costs | Research and Development Costs Research and development costs relating to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred, and included in general and administrative expenses. Research and development costs from continuing operations were $344,575, $1,192,930 and $1,902,638 for the years ended December 31, 2017, 2016 and 2015, respectively. Research and development costs from discontinued operations were $0 and $596,025 for the years ended December 31, 2016 and 2015, respectively. |
Government Subsidies | Government Subsidies Government subsidies primarily consist of financial subsidies received from provincial and local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the local governments. For certain government subsidies, there are no defined rules and regulations to govern the criteria necessary for companies to receive such benefits, and the amount of government subsidy is determined at the discretion of the relevant government authorities. The government subsidies of non-operating nature with no further conditions to be met are recorded as non-operating income in “Other income” when received. The government subsidies with certain operating conditions are recorded as “deferred income” when received and will be recorded as operating income when the conditions are met. During the years ended December 31, 2017, 2016 and 2015, government subsidies from continuing operations with no further conditions to be met of $17,394, $0 and $0, respectively, were recorded. There were no government subsidies from discontinued operations for the years ended December 31, 2016 and 2015. |
Earnings (Loss) per Share | Earnings (Loss) per Share The Company follows the provisions of ASC 260-10, “Earnings per Share”. Basic earnings (loss) per share is computed by dividing net income (loss) attributable to holders of common shares by the weighted average number of common shares outstanding during the years. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares. Common stock equivalents having an anti-dilutive effect on earnings per share are excluded from the calculation of diluted earnings per share. |
Value Added Tax | Value Added Tax |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based share-based compensation awards to employees at fair value on the grant date and recognizes the expense over the employee’s requisite service period. The Company’s expected volatility assumption is based on the historical volatility of Company’s stock or the expected volatility of similar entities. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend is based on the Company’s current and expected dividend policy. |
Segment Information | Segment Information The Company operates and manages its business as one reporting and operating segment, which is the business of developing, commercializing and distribution of proprietary medical equipment, such as sleep apnea machines, ventilator air compressors, and laryngoscope. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance. |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of available positive and negative evidence. Based on management’s estimate, it is more likely than not that all of the deferred tax assets will not be realized. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken on a tax return. Under ASC 740, a tax benefit from an uncertain tax position taken or expected to be taken may be recognized only if it is “more likely than not” that the position is sustainable upon examination, based on its technical merits. The tax benefit of a qualifying position under ASC 740 would equal the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all the relevant information. A liability (including interest and penalties, if applicable) is established in the financial statements to the extent a current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain tax position. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable. The implementation of ASC 740 resulted in no material liability for unrecognized tax benefits. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statements of income and comprehensive income. During the years ended December 31, 2017, 2016 and 2015, the Company did not incur any interest or penalties. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory (Topic 330) – Simplifying the Measurement of Inventory,” which requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company adopted ASU No. 2015-11 effective January 1, 2017 and it did not have a material effect on the Company’s consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU No. 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In July 2015, the FASB approved a one-year deferral of the effective date of the new revenue recognition standard. The amendments in ASU No. 2014-09 are effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The standard permits the use of either the retrospective or cumulative effect transition method. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net). In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. In May 2016, the FASB issued ASU No. 2016-11, Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) - Rescission of SEC Guidance Because of ASU No.2014-09 and 2014-16, and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606) - Narrow Scope Improvements and Practical Expedients. These ASUs clarify the implementation guidance on a few narrow areas and adds some practical expedients to the guidance Topic 606. In the fourth quarter of 2017, the Company completed the evaluation of its adoption of ASU 2014-09 (including those subsequently issued updates that clarify ASU 2014-09’s provisions) and finalized its determination of the impact of the guidance on revenue recognition. The Company does not expect the new revenue standard to have a material impact on the consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The update requires equity investments (except those accounted for under the equity method or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. It eliminated the requirement for public entities to disclose the method(s) and significant assumptions used to estimate the fair value that is require to be disclosed for financial instruments measured at amortized cost on the balance sheet. For public entities, the ASU is effective for the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This update requires lessee to recognize the assets and liability (the lease liability) arising from operating leases on the balance sheet for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Within a twelve month or less lease term, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. If a lessee makes this election, it should recognize lease expense on a straight-line basis over the lease term. In transition, this update will be effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is evaluating the effect, if any, on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU No. 2016-15 clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This ASU is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. In October 2016, the FASB issued ASU No. 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This ASU improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2017. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. In November 2016, the FASB issued ASU No, 2016-18, Statement of Cash Flows: Restricted Cash. This ASU provides guidance on the classification of restricted cash in the statement of cash flows. The amendments in this ASU are effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The amendments in the ASU should be adopted on a retrospective basis. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The standard should be applied prospectively on or after the effective date. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis for the annual or any interim goodwill impairment tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company currently intends to adopt this guidance for the fiscal year beginning January 1, 2020, and does not anticipate that the adoption of this guidance will have a material impact on its financial statements or disclosures because the Company does not currently have any recorded goodwill. In February 2017, the FASB issued ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments in this update are effective at the same time as the amendments in ASU No. 2014-09. The Company does not expect the new revenue standard to have a material impact on the consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting,” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC 718. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. For all entities, the ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption. |
Restatement of Previously Iss31
Restatement of Previously Issued Consolidated Financial Statements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Restatement of Previously Issued Consolidated Financial Statements [Abstract] | |
Schedule of restatements on consolidated financial statements | As of December 31, 2016 As previously reported Restated OTHER LIABILITIES Warrants liability $ - $ 1,499,362 Total Liabilities $ 1,115,074 $ 2,614,436 Additional paid-in capital 39,150,635 37,261,366 Accumulated deficit (26,499,675 ) (26,109,768 ) Total Equity $ 15,437,063 $ 13,937,701 For the year ended December 31, 2016 As previously reported Restated Change in fair value of warrants liability $ 137,710 $ 527,617 Loss before provision for income tax and non-controlling interest (10,094,668 ) (9,704,761 ) Net loss from continuing operations (9,999,642 ) (9,609,735 ) Net loss (10,250,795 ) (9,860,888 ) Net loss attributable to Lianluo Smart Limited (10,121,775 ) (9,731,868 ) Comprehensive loss (10,817,957 ) (10,428,050 ) Comprehensive loss attributable to Lianluo Smart Limited (10,587,119 ) (10,197,212 ) Loss per share - Basic $ (0.97 ) $ (0.93 ) - Diluted (0.97 ) (0.93 ) |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of estimated useful lives of property and equipment | Leasehold improvements Shorter of the useful lives or the lease term Building and land use rights 20-40 years Machinery and equipment 10-15 years Furniture and office equipment 5 years Motor vehicles 5 years Leasehold improvements Shorter of the useful lives or the lease term Machinery and equipment 3 years Furniture and office equipment 3 years Motor vehicles 3 years |
Schedule of estimated useful lives of intangible assets | Software copyrights 20 years Other software 5 years |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Receivable, Net [Abstract] | |
Schedule of accounts receivable | 2017 2016 Accounts receivable $ 34,021 $ 146,449 Less: allowance for doubtful accounts (24,316 ) (68,336 ) Accounts receivable, net $ 9,705 $ 78,113 |
Other Receivables and Prepaym34
Other Receivables and Prepayments, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Receivables And Prepayments Net [Abstract] | |
Schedule of other receivables and prepayments | 2017 2016 Rental deposits $ 33,178 $ 14,442 Prepaid expenses 129,286 - Advances to employees - 343 Others - 75,297 Other receivables 162,464 90,082 Less: allowance for doubtful accounts (34,041 ) (562 ) Other receivables, net $ 128,423 $ 89,520 |
Advances to Suppliers - Third35
Advances to Suppliers - Third Parties and A Related Party, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Advances to Suppliers - Third Parties and Related Party, Net [Abstract] | |
Schedule of advance to suppliers - third parties and a related party | 2017 2016 Advances to suppliers - third parties $ 386,241 $ 44,465 Advances to a related party (prepaid compensation) – Mr. Ping Chen 194,311 Less: Impairment - - $ 386,241 $ 238,776 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventories [Abstract] | |
Schedule of Inventories | 2017 2016 Raw materials $ 184,490 $ 80,839 Work in progress 127,530 33,012 Finished goods 1,905,782 23,065 Total inventories $ 2,217,802 $ 136,916 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment, Net [Abstract] | |
Summary of property and equipment | 2017 2016 Plant and machinery $ 2,461,719 $ 2,288,059 Automobiles 147,310 138,029 Office and computer equipment 51,034 26,713 Total property and equipment 2,660,063 2,452,801 Less: Accumulated depreciation (2,128,596 ) (1,046,661 ) Property and equipment, net $ 531,467 $ 1,406,140 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets, Net [Abstract] | |
Intangible Assets Net (Excluding Goodwill) [Table Text Block] | 2017 2016 Software copyright $ 1,794,981 $ 1,681,890 Patent and others 3,191,300 2,990,234 Total intangible assets $ 4,986,281 4,672,124 Less: Accumulated amortization (1,287,712 ) (862,275 ) Intangible assets, net $ 3,698,569 $ 3,809,849 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | For the years ended: 2018 $ 365,340 2019 365,340 2020 365,340 2021 365,340 2022 365,340 2023 and thereafter 1,871,869 $ 3,698,569 |
Short-Term Borrowings (Tables)
Short-Term Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Short-Term Borrowings [Abstract] | |
Schedule of short-term borrowings | December 31, 2017 2016 Loans from Hangzhou Lianluo Interactive Information Technology Co., Ltd. $ 1,536,720 $ - |
Accrued Expenses and Other Cu40
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Expenses and Other Current Liabilities [Abstract] | |
Schedule of other payables and other current liabilities | 2017 2016 Accrued salaries and social welfare $ 345,710 $ 118,835 Accrued expenses 291,043 418,989 Reimbursed employee's expense 34,212 14,971 Deposits from customers 89,382 86,106 Others 2,526 4,423 Total accrued expenses and other current liabilities $ 762,873 $ 643,324 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Summary of stock options using the black-scholes model | Expected Expected Dividend Risk Free Grant Date 10 126%-228% 0% 0.73%-1.65% $1.22-$5.15 |
Summary of option activity | Stock options Shares Weighted average Aggregate intrinsic (1) Outstanding as of January 1, 2016 720,000 $ 2.36 Granted 580,867 1.88 Forfeited (56,000 ) - Expired - Exercised (7,000 ) - Outstanding as of December 31, 2016 1,237,867 $ 2.17 Granted - - Forfeited (221,000 ) Expired - Exercised - Outstanding as of December 31, 2017 1,016,867 $ 2.26 $ 59,340 |
Summary of options outstanding and exercisable | Outstanding options Exercisable options Average Number Average Average Number Average $ 1.45 112,000 4.00 $ 1.45 112,000 4.00 $ 2.30 94,000 5.77 $ 2.30 75,200 5.77 $ 5.31 131,000 6.64 $ 5.31 78,600 6.64 $ 1.64 234,000 7.60 $ 1.64 234,000 7.60 $ 1.88 445,867 8.22 $ 1.88 222,934 8.22 1,016,867 722,734 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Warrants [Abstract] | |
Schedule of fair value of the outstanding warrants | As of December 31, As of April 28, Stock options 2017 2016 2016 Market price per share (USD/share) $ 1.73 $ 1.50 $ 1.89 Exercise price (USD/share) 2.20 2.20 2.20 Risk free rate 2.36 % 2.40 % 1.84 % Dividend yield 0 % 0 % 0 % Expected term/Contractual life (years) 8.3 9.3 10.0 Expected volatility 241.20 % 232.20 % 224.19 % |
Schedule of reconciliation of the beginning and ending balances of warrants liability | December 31, 2017 2016 2015 Beginning balance $ 1,499,362 $ 162,736 $ 553,060 Warrants issued to HLI - 1,889,269 - Warrants redeemed - (25,026 ) - Fair value change of the issued warrants included in earnings 229,749 (527,617 ) (390,324 ) Ending balance $ 1,729,111 $ 1,499,362 $ 162,736 |
Schedule of of the warrants activity | Number Weighted Weighted Average Outstanding as of January 1, 2016 551,380 $ 9.86 1.49 Granted 1,000,000 2.20 Forfeited - Exercised - Redeemed (551,380 ) 9.86 Outstanding as of December 31, 2016 1,000,000 $ 2.20 Granted - Forfeited - Exercised - Redeemed - Outstanding as of December 31, 2017 1,000,000 $ 2.20 |
Loss per Share (Tables)
Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Loss Per Share [Abstract] | |
Schedule of reconciliation of the basic and diluted loss per share | Year ended December 31, 2017 2016 2015 Net loss attributable to the Company’s common shareholders - from continuing operations $ (5,136,434 ) $ (9,609,735 ) $ (6,698,870 ) - from discontinued operations, net of tax - (122,133 ) (3,524,260 ) Net loss attributable to the Company’s common shareholders $ (5,136,434 ) $ (9,731,868 ) $ (10,223,130 ) Weighted average shares outstanding – Basic and diluted 17,312,586 10,422,765 5,990,552 Loss per share – Basic and diluted - from continuing operations $ (0.30 ) $ (0.92 ) $ (1.12 ) - from discontinued operations - (0.01 ) (0.59 ) Loss per share – Basic and diluted $ (0.30 ) $ (0.93 ) $ (1.71 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes [Abstract] | |
Summary of benefit (provision) for income taxes | Year Ended December 31 2017 2016 2015 Current income taxes benefit $ - $ 95,870 $ 240,806 Deferred income taxes provision - - (228,828 ) Total benefit for income taxes - 95,870 11,978 Less: provision for income tax expenses from discontinued operations - (844 ) - Benefit for income taxes from continuing operations $ - $ 95,026 $ 11,978 |
Summary of reconciliation of the provision for income taxes | Years ended December 31, 2017 2016 2015 Loss before provision for income tax and non-controlling interests $ (5,136,434 ) $ (9,704,761 ) $ (6,710,848 ) PRC corporate income tax rate 25 % 25 % 25 % Income tax benefit computed at PRC statutory corporate income tax rate (1,284,108 ) (2,426,190 ) (1,677,712 ) Reconciling items: Non-deductible expenses 597,189 691,298 1,331,524 Valuation allowance on deferred tax assets 686,919 1,734,892 346,188 Over-provision in prior years - (95,026 ) - Others - - (11,978 ) Income tax benefit $ - $ (95,026 ) $ (11,978 ) |
Summary of deferred tax assets and liabilities | 2017 2016 Deferred tax assets Net operating loss carried forward $ 2,386,069 1,798,009 Valuation allowance (2,386,069 ) (1,798,009 ) Deferred tax assets, non-current $ - $ - Deferred tax assets, non-current $ - $ - |
Concentrations (Tables)
Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Concentrations [Abstract] | |
Schedule of revenues by product line | For the years ended December 31, 2017 2016 2015 Products Line Medical Devices $ 827,032 $ 1,305,372 $ 1,500,957 Respiratory and Oxygen Homecare - 5,956 20,573 Mobile Medicine (sleep apnea diagnostic products) 54,979 12,080,164 164,503 Total Revenues 882,011 13,391,492 1,686,033 Less: revenues from discontinued operations - (329,119 ) (947,732 ) Revenues from continuing operations $ 882,011 $ 13,062,373 $ 738,301 |
Other Income (Tables)
Other Income (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Income [Abstract] | |
Schedule of other income | For the years ended December 31, 2017 2016 2015 Gain on settlement of payables (a) $ 125,312 $ - $ - Government subsidy 17,394 - - Exchange gain - 68,436 - Others 3,917 - - Total other income $ 146,623 $ 68,436 $ - (a) In 2014, the Company entered into a Morpheus software licence agreement with a third-party service provider for a total consideration of $200,000. The service has been provided and charged as selling expenses in 2016. As of December 31, 2016, an amount of $125,000 remained unpaid. In 2017, the service provider has agreed to waive its entitlement to the remaining balance and the accrued amount was written back as other income. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Discontinued Operations [Abstract] | |
Schedule of reconciliation of the carrying amounts of major classes of net income (Loss) from operations | For the Years Ended 2017 2016 2015 Revenues $ - $ 329,119 $ 947,732 Costs of revenue - (338,110 ) (2,698,808 ) Gross loss - (8,991 ) (1,751,076 ) Service income - 3,244 208,303 Service expenses - (5,497 ) (198,745 ) Selling expenses - (63,089 ) (456,852 ) General and administrative expenses - ( 43,703 ) (866,260 ) Provision for doubtful accounts - ( 32,321 ) (618,290 ) Impairment loss on intangible assets - (18,447 ) - Financial expenses - 88 88 Other income - 1,261 19,553 Other expenses (275 ) (186 ) Provision for income tax expense - (844 ) - Loss on disposal of discontinued operations - (82,579 ) - Net loss from discontinued operations $ - $ (251,153 ) $ (3,663,465 ) |
Organization and Principal Ac48
Organization and Principal Activities (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | ||||||
Apr. 28, 2016 | Apr. 22, 2010 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 14, 2016 | Feb. 26, 2015 | Jan. 20, 2015 | |
Organization and Principal Activities (Textual) | |||||||
Common shares outstanding | 17,312,586 | 17,312,586 | |||||
Common shares issued | 17,312,586 | 17,312,586 | 12,000 | 25,000 | |||
Initial public offering [Member] | |||||||
Organization and Principal Activities (Textual) | |||||||
Common shares | 1,500,000 | ||||||
Issuance price per share | $ 8 | ||||||
Common shares outstanding | 4,500,000 | ||||||
Common shares issued | 4,500,000 | ||||||
Issued and outstanding shares | 3,000,000 | ||||||
HLI [Member] | |||||||
Organization and Principal Activities (Textual) | |||||||
Common shares | 11,111,111 | ||||||
Issuance price per share | $ 1.80 | ||||||
Aggregate purchase price | $ 20 | ||||||
BTL [Member] | |||||||
Organization and Principal Activities (Textual) | |||||||
Percentage of equity interest acquisition | 0.80% | ||||||
BTL [Member] | Mr. Ping Chen [Member] | |||||||
Organization and Principal Activities (Textual) | |||||||
Owner percentage | 91.00% | ||||||
BTL [Member] | Lianluo Smart Limited [Member] | |||||||
Organization and Principal Activities (Textual) | |||||||
Owner percentage | 9.00% | ||||||
BDL [Member] | |||||||
Organization and Principal Activities (Textual) | |||||||
Percentage of equity interest acquisition | 100.00% |
Restatement of Previously Iss49
Restatement of Previously Issued Consolidated Financial Statements (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
OTHER LIABILITIES | ||||
Warrants liability | $ 1,729,111 | $ 1,499,362 | ||
Total Liabilities | 4,409,993 | 2,614,436 | ||
Additional paid-in capital | 39,233,137 | 37,261,366 | ||
Accumulated deficit | (31,246,202) | (26,109,768) | ||
Total Equity | 11,153,115 | 13,937,701 | $ 7,306,865 | $ 17,038,754 |
Change in fair value of warrants liability | (229,749) | 527,617 | 390,324 | |
Loss before provision for income tax and non-controlling interest | (5,136,434) | (9,704,761) | (6,710,848) | |
Net loss from continuing operations | (5,136,434) | (9,609,735) | (6,698,870) | |
Net loss | (5,136,434) | (9,860,888) | (10,362,335) | |
Net loss attributable to Lianluo Smart Limited | (5,136,434) | (9,731,868) | (10,223,130) | |
Comprehensive loss | (4,756,357) | (10,428,050) | (10,823,883) | |
Comprehensive loss attributable to Lianluo Smart Limited | $ (4,756,357) | $ (10,197,212) | $ (10,634,213) | |
Loss per share | ||||
-Basic | $ (0.3) | $ (0.93) | $ (1.71) | |
-Diluted | $ (0.3) | $ (0.93) | $ (1.71) | |
As previously reported [Member] | ||||
OTHER LIABILITIES | ||||
Warrants liability | ||||
Total Liabilities | 1,115,074 | |||
Additional paid-in capital | 39,150,635 | |||
Accumulated deficit | (26,499,675) | |||
Total Equity | 15,437,063 | |||
Change in fair value of warrants liability | 137,710 | |||
Loss before provision for income tax and non-controlling interest | (10,094,668) | |||
Net loss from continuing operations | (9,999,642) | |||
Net loss | (10,250,795) | |||
Net loss attributable to Lianluo Smart Limited | (10,121,775) | |||
Comprehensive loss | (10,817,957) | |||
Comprehensive loss attributable to Lianluo Smart Limited | $ (10,587,119) | |||
Loss per share | ||||
-Basic | $ (0.97) | |||
-Diluted | $ (0.97) | |||
Restated [Member] | ||||
OTHER LIABILITIES | ||||
Warrants liability | $ 1,499,362 | |||
Total Liabilities | 2,614,436 | |||
Additional paid-in capital | 37,261,366 | |||
Accumulated deficit | (26,109,768) | |||
Total Equity | 13,937,701 | |||
Change in fair value of warrants liability | 527,617 | |||
Loss before provision for income tax and non-controlling interest | (9,704,761) | |||
Net loss from continuing operations | (9,609,735) | |||
Net loss | (9,860,888) | |||
Net loss attributable to Lianluo Smart Limited | (9,731,868) | |||
Comprehensive loss | (10,428,050) | |||
Comprehensive loss attributable to Lianluo Smart Limited | $ (10,197,212) | |||
Loss per share | ||||
-Basic | $ (0.93) | |||
-Diluted | $ (0.93) |
Summary of Significant Accoun50
Summary of Significant Accounting Policies (Details) | 5 Months Ended | 7 Months Ended |
Dec. 31, 2016 | Jul. 31, 2016 | |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment estimated useful lives | Shorter of the useful lives or the lease term | Shorter of the useful lives or the lease term |
Building and land use rights [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment estimated useful lives, term | 20 years | |
Building and land use rights [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment estimated useful lives, term | 40 years | |
Machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment estimated useful lives, term | 3 years | |
Machinery and equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment estimated useful lives, term | 10 years | |
Machinery and equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment estimated useful lives, term | 15 years | |
Furniture and office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment estimated useful lives, term | 3 years | 5 years |
Motor vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment estimated useful lives, term | 3 years | 5 years |
Summary of Significant Accoun51
Summary of Significant Accounting Policies (Details 1) | 12 Months Ended |
Dec. 31, 2017 | |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Intangible assets estimated useful lives | 20 years |
Other software [Member] | |
Property, Plant and Equipment [Line Items] | |
Intangible assets estimated useful lives | 5 years |
Summary of Significant Accoun52
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies (Textual) | |||
Accounts receivable past due terms | 1 year | ||
Value added tax payable, Percentage | 17.00% | ||
Tax benefit, description | Greater than 50%. | ||
Voting power, description | More than 50%. | ||
Voting ownership interest, description | More than 50%. | ||
Continuing operations [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Warranty expense | $ (130,885) | $ 141,449 | $ (120,105) |
Government subsidies | 17,394 | 0 | 0 |
Research and development costs | 344,575 | 1,192,930 | 1,902,638 |
Advertising expenses | $ 76,592 | 56,338 | 1,417,243 |
Discontinued operations [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Warranty expense | 0 | 5,118 | |
Government subsidies | |||
Research and development costs | 0 | 596,025 | |
Advertising expenses | $ 190,715 | ||
Minimum [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Accounts receivable terms | 60 days | ||
Maximum [Member] | |||
Summary of Significant Accounting Policies (Textual) | |||
Accounts receivable terms | 180 days |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 34,021 | $ 146,449 |
Less: allowance for doubtful accounts | (24,316) | (68,336) |
Accounts receivable, net | $ 9,705 | $ 78,113 |
Accounts Receivable, Net (Det54
Accounts Receivable, Net (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounts Receivable, Net (Textual) | |||
Bad debt | $ (23,608) | $ (150,280) | $ 8,544 |
Allowance for continuing operations [Member] | |||
Accounts Receivable, Net (Textual) | |||
Bad debt | 10,014 | ||
Recovery of bad debt | $ (46,831) | (139,716) | |
Allowance for discontinued operations [Member] | |||
Accounts Receivable, Net (Textual) | |||
Bad debt | $ 154,025 |
Other Receivables and Prepaym55
Other Receivables and Prepayments, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Other Receivables And Prepayments Net [Abstract] | ||
Rental deposits | $ 33,178 | $ 14,442 |
Prepaid expenses | 129,286 | |
Advances to employees | 343 | |
Others | 75,297 | |
Other receivables | 162,464 | 90,082 |
Less: allowance for doubtful accounts | (34,041) | (562) |
Other receivables, net | $ 128,423 | $ 89,520 |
Other Receivables and Prepaym56
Other Receivables and Prepayments, Net (Details Textual) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Discontinued operations [Member] | |||
Other Receivables and Prepayments, Net (Textual) | |||
Bad debts | $ 153,275 | ||
Continuing operations [Member] | |||
Other Receivables and Prepayments, Net (Textual) | |||
Recovery of bad debts | $ 41,790 | $ 1,899 | |
Bad debts | $ 32,213 |
Advances to Suppliers - Third57
Advances to Suppliers - Third Parties and A Related Party, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Advances to Suppliers - Third Parties and Related Party, Net [Abstract] | |||
Advances to suppliers - third parties | $ 386,241 | $ 44,465 | |
Advances to a related party (prepaid compensation) - Mr. Ping Chen | (194,311) | (680,733) | $ (623,583) |
Less: Impairment | |||
Advances to suppliers - third parties | $ 386,241 | $ 386,241 | $ 44,465 |
Advances to Suppliers - Third58
Advances to Suppliers - Third Parties and A Related Party, Net (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Advances To Suppliers - Third Parties and A Related Party, Net (Textual) | |||
Impairment charges on advances to suppliers | |||
Continuing operation [Member] | |||
Advances To Suppliers - Third Parties and A Related Party, Net (Textual) | |||
Impairment charges on advances to suppliers | (1,095) | $ 429 | |
Discontinued operation [Member] | |||
Advances To Suppliers - Third Parties and A Related Party, Net (Textual) | |||
Impairment charges on advances to suppliers | $ 32,321 | $ 310,991 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventories [Abstract] | ||
Raw materials | $ 184,490 | $ 80,839 |
Work in progress | 127,530 | 33,012 |
Finished goods | 1,905,782 | 23,065 |
Total inventories | $ 2,217,802 | $ 136,916 |
Inventories (Details Textual)
Inventories (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Inventories (Textual) | |||
Inventory reversals of write-downs | $ (73,860) | $ 2,450,213 | $ 16,203 |
Inventory write-downs discontinued operations | $ 1,934,836 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property and Equipment, Net [Abstract] | ||
Plant and machinery | $ 2,461,719 | $ 2,288,059 |
Automobiles | 147,310 | 138,029 |
Office and computer equipment | 51,034 | 26,713 |
Total property and equipment | 2,660,063 | 2,452,801 |
Less: Accumulated depreciation | (2,128,596) | (1,046,661) |
Property and equipment, net | $ 531,467 | $ 1,406,140 |
Property and Equipment, Net (62
Property and Equipment, Net (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Continuing operations [Member] | |||
Property and Equipment, Net (Textual) | |||
Depreciation and amortization | $ 974,432 | $ 869,073 | $ 213,095 |
Discontinued operations [Member] | |||
Property and Equipment, Net (Textual) | |||
Depreciation and amortization | $ 51,056 | $ 281,202 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Intangible Assets, Net [Abstract] | ||
Software copyright | $ 1,794,981 | $ 1,681,890 |
Patent and others | 3,191,300 | 2,990,234 |
Total intangible assets | 4,986,281 | 4,672,124 |
Less: Accumulated and amortization | (1,287,712) | (862,275) |
Intangible assets, net | $ 3,698,569 | $ 3,809,849 |
Intangible Assets, Net (Detai64
Intangible Assets, Net (Details 1) | Dec. 31, 2017USD ($) |
For Years Ended [Abstract] | |
2,018 | $ 365,340 |
2,019 | 365,340 |
2,020 | 365,340 |
2,021 | 365,340 |
2,022 | 365,340 |
2023 and thereafter | 1,871,869 |
Total | $ 3,698,569 |
Intangible Assets, Net (Detai65
Intangible Assets, Net (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Continuing operations [Member] | |||
Intangible Assets, Net (Textual) | |||
Amortization expense | $ 353,971 | $ 363,190 | $ 312,821 |
Impairment on intangible assets | |||
Discontinued operations [Member] | |||
Intangible Assets, Net (Textual) | |||
Amortization expense | |||
Impairment on intangible assets | $ 18,447 |
Available-for-Sale Financial 66
Available-for-Sale Financial Assets (Details) - USD ($) | Nov. 03, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Available-for-Sale Financial Assets (Textual) | |||
Common stock, par value | $ 0.002731 | $ 0.002731 | |
Issued and outstanding shares of common stock, percentage | 3.00% | ||
Purchase agreement, description | (i) 18 months from the Effective Date, (ii) such time as the Purchasers in aggregate hold less than five percent (5%) of the issued and outstanding shares of the Seller's common stock, or (iii) such time as the shares of common stock of GHSI shall become listed or approved for listing on a national securities exchange. | ||
GHSI [Member] | |||
Available-for-Sale Financial Assets (Textual) | |||
Aggregate purchase price | $ 1,500,043 | ||
Aggregate common stock shares | 1,304,348 | ||
Purchase price per Share | $ 1.15 | ||
Common stock, par value | $ 0.001 | ||
Minimum [Member] | GHSI [Member] | |||
Available-for-Sale Financial Assets (Textual) | |||
Outstanding common stock percentage held by DGHKT | 3.23% | ||
Maximum [Member] | GHSI [Member] | |||
Available-for-Sale Financial Assets (Textual) | |||
Outstanding common stock percentage held by DGHKT | 7.55% | ||
DGHKT [Member] | GHSI [Member] | |||
Available-for-Sale Financial Assets (Textual) | |||
Aggregate purchase price | $ 5,000,001 | ||
Aggregate common stock shares | 4,347,827 |
Short-Term Borrowings (Details)
Short-Term Borrowings (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Short-term borrowings | $ 1,536,720 |
Short-Term Borrowings (Details
Short-Term Borrowings (Details Textual) | 1 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 18, 2015USD ($) | Dec. 18, 2015CNY (¥) | Mar. 03, 2015USD ($) | Mar. 03, 2015CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2016CNY (¥) | Oct. 24, 2016 | Dec. 31, 2015CNY (¥) | Dec. 18, 2015CNY (¥) | Dec. 02, 2015USD ($) | Dec. 02, 2015CNY (¥) | Mar. 27, 2015USD ($) | Mar. 27, 2015CNY (¥) | Mar. 03, 2015CNY (¥) | Dec. 31, 2014USD ($) | Dec. 31, 2014CNY (¥) | |
Short -Term Borrowings (Textual) | |||||||||||||||||||
Interest rate of credit line | 7.20% | 7.20% | |||||||||||||||||
Interest expense on short-term borrowings | $ 128,537 | $ 196,220 | |||||||||||||||||
Interest expense paid | 29,207 | 33,569 | |||||||||||||||||
Fixed interest rate | 5.655% | ||||||||||||||||||
Loan balance | $ 2,405,385 | ¥ 15,000,000 | |||||||||||||||||
Bank borrowings | 99,330 | $ 162,651 | |||||||||||||||||
August 28, 2018 [Member] | |||||||||||||||||||
Short -Term Borrowings (Textual) | |||||||||||||||||||
Repayments of short-term debt | $ 296,064 | ¥ 2,000,000 | |||||||||||||||||
December 14, 2018 [Member] | |||||||||||||||||||
Short -Term Borrowings (Textual) | |||||||||||||||||||
Repayments of short-term debt | 296,064 | 2,000,000 | |||||||||||||||||
December 27, 2018 [Member] | |||||||||||||||||||
Short -Term Borrowings (Textual) | |||||||||||||||||||
Repayments of short-term debt | 888,192 | ¥ 6,000,000 | |||||||||||||||||
Mr. Ping Chen [Member] | |||||||||||||||||||
Short -Term Borrowings (Textual) | |||||||||||||||||||
Unsecured loan | $ 3,207,180 | ¥ 20,000,000 | $ 660,679 | ¥ 4,120,000 | |||||||||||||||
Fixed interest rate | 6.955% | 6.955% | |||||||||||||||||
Repayments of debt | $ 1,603,590 | ¥ 10,000,000 | |||||||||||||||||
Aggregate amount | $ 718,638 | ¥ 4,775,000 | |||||||||||||||||
Nanjing Bank Company Limited [Member] | |||||||||||||||||||
Short -Term Borrowings (Textual) | |||||||||||||||||||
Line of credit | $ 1,541,000 | ¥ 10,000,000 | $ 15,000,000 | ||||||||||||||||
Interest rate of credit line | 7.20% | 7.20% | |||||||||||||||||
Short-term borrowings | $ 1,603,590 | $ 2,405,385 | ¥ 10,000,000 | ¥ 15,000,000 | |||||||||||||||
Loan agreement | $ 1,603,590 | ¥ 10,000,000 | $ 2,405,385 | ¥ 15,000,000 | |||||||||||||||
HLI [Member] | |||||||||||||||||||
Short -Term Borrowings (Textual) | |||||||||||||||||||
Interest expense paid | $ 3,812 | ||||||||||||||||||
Fixed interest rate | 5.00% | 5.00% |
Accrued Expenses and Other Cu69
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued Expenses And Other Current Liabilities [Line Items] | ||
Accrued salaries and social welfare | $ 345,710 | $ 118,835 |
Accrued expenses | 291,043 | 418,989 |
Reimbursed employee's expense | 34,212 | 14,971 |
Deposits from customers | 89,382 | 86,106 |
Others | 2,526 | 4,423 |
Total accrued expenses and other current liabilities | $ 762,873 | $ 643,324 |
Commitments and Contingency (De
Commitments and Contingency (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingency (Textual) | |||
Future minimum lease payments | $ 96,386 | ||
Rental expense incurred discontinued operations | $ 13,223 | ||
Contingency, description | The Labor Contract Law of the People's Republic of China requires employers to assure the liability of the severance payments if employees are terminated and have been working for the employers for at least two years prior to January 1, 2008. | ||
Severance payments | $ 663,069 | 429,256 | |
Rent expense from continuing operations | $ 244,860 | $ 101,012 | $ 98,329 |
Non-cancelable leases, description | These non-cancelable leases have lease terms expiring through December 2018. | ||
Management Employees [Member] | |||
Commitments and Contingency (Textual) | |||
Employment contracts, terms | 3 years | ||
Non Management Employees [Member] | |||
Commitments and Contingency (Textual) | |||
Employment contracts, terms | 3 years |
Equity (Details)
Equity (Details) - Stock options [Member] | 12 Months Ended |
Dec. 31, 2017$ / shares | |
Option Indexed to Issuers Equity [Line Items] | |
Expected Terms (years) | 10 years |
Dividend Yield | 0.00% |
Minimum [Member] | |
Option Indexed to Issuers Equity [Line Items] | |
Expected Volatility | 126.00% |
Risk Free Interest Rate | 0.73% |
Grant Date Fair Value Per share | $ 1.22 |
Maximum [Member] | |
Option Indexed to Issuers Equity [Line Items] | |
Expected Volatility | 228.00% |
Risk Free Interest Rate | 1.65% |
Grant Date Fair Value Per share | $ 5.15 |
Equity (Details 1)
Equity (Details 1) - Stock options [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
Option Indexed to Issuers Equity [Line Items] | |||
Outstanding, Beginning Balance | 1,237,867 | 720,000 | |
Granted | 580,867 | ||
Forfeited | (221,000) | (56,000) | |
Expired | |||
Exercised | (7,000) | ||
Outstanding, Ending Balance | 1,016,867 | 1,237,867 | |
Weighted average exercise price, Beginning Balance | $ 2.17 | $ 2.36 | |
Weighted average exercise price, Granted | 1.88 | ||
Weighted average exercise price, Exercised | |||
Weighted average exercise price, Ending Balance | $ 2.26 | $ 2.17 | |
Aggregate intrinsic value, Beginning Balance | [1] | ||
Aggregate intrinsic value, Ending Balance | [1] | ||
[1] | The intrinsic value of the stock options at December 31, 2017 is the amount by which the market value of the Company's common stock of $1.75 as of December 31, 2017 exceeds the exercise price of the options. |
Equity (Details 2)
Equity (Details 2) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Option Indexed to Issuers Equity [Line Items] | |
Outstanding options, Number | 1,016,867 |
Exercisable options, Number | 722,734 |
$1.45 [Member] | |
Option Indexed to Issuers Equity [Line Items] | |
Outstanding options, Average exercise price | $ / shares | $ 1.45 |
Outstanding options, Number | 112,000 |
Outstanding options, Average remaining contractual life (years) | 4 years |
Exercisable options, Average exercise price | $ / shares | $ 1.45 |
Exercisable options, Number | 112,000 |
Exercisable options, Average remaining contractual life (years) | 4 years |
$2.30 [Member] | |
Option Indexed to Issuers Equity [Line Items] | |
Outstanding options, Average exercise price | $ / shares | $ 2.30 |
Outstanding options, Number | 94,000 |
Outstanding options, Average remaining contractual life (years) | 5 years 9 months 7 days |
Exercisable options, Average exercise price | $ / shares | $ 2.30 |
Exercisable options, Number | 75,200 |
Exercisable options, Average remaining contractual life (years) | 5 years 9 months 7 days |
$5.31 [Member] | |
Option Indexed to Issuers Equity [Line Items] | |
Outstanding options, Average exercise price | $ / shares | $ 5.31 |
Outstanding options, Number | 131,000 |
Outstanding options, Average remaining contractual life (years) | 6 years 7 months 21 days |
Exercisable options, Average exercise price | $ / shares | $ 5.31 |
Exercisable options, Number | 78,600 |
Exercisable options, Average remaining contractual life (years) | 6 years 7 months 21 days |
$1.64 [Member] | |
Option Indexed to Issuers Equity [Line Items] | |
Outstanding options, Average exercise price | $ / shares | $ 1.64 |
Outstanding options, Number | 234,000 |
Outstanding options, Average remaining contractual life (years) | 7 years 7 months 6 days |
Exercisable options, Average exercise price | $ / shares | $ 1.64 |
Exercisable options, Number | 234,000 |
Exercisable options, Average remaining contractual life (years) | 7 years 7 months 6 days |
$1.88 [Member] | |
Option Indexed to Issuers Equity [Line Items] | |
Outstanding options, Average exercise price | $ / shares | $ 1.88 |
Outstanding options, Number | 445,867 |
Outstanding options, Average remaining contractual life (years) | 8 years 2 months 19 days |
Exercisable options, Average exercise price | $ / shares | $ 1.88 |
Exercisable options, Number | 222,934 |
Exercisable options, Average remaining contractual life (years) | 8 years 2 months 19 days |
Equity (Details Textual)
Equity (Details Textual) - USD ($) | Aug. 07, 2015 | Oct. 07, 2013 | Apr. 28, 2016 | Mar. 21, 2016 | Aug. 20, 2014 | Dec. 29, 2011 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 27, 2016 | Jul. 29, 2015 | Feb. 26, 2015 | Jan. 20, 2015 |
Option Indexed to Issuers Equity [Line Items] | ||||||||||||||
Ordinary shares | 17,312,586 | 17,312,586 | 17,312,586 | 12,000 | 25,000 | |||||||||
Subscription receivable | $ 1,492,538 | |||||||||||||
Statutory surplus reserve | 10.00% | 25.00% | ||||||||||||
Percentage of reserve | 50.00% | |||||||||||||
Options exercise price | $ 1.64 | $ 2.30 | $ 1.88 | $ 1.75 | ||||||||||
Options vested | 294,133 | |||||||||||||
Compensation expenses | $ 479,233 | $ 947,481 | $ 357,196 | |||||||||||
Ping Chen [Member] | ||||||||||||||
Option Indexed to Issuers Equity [Line Items] | ||||||||||||||
Ordinary shares | 94,000 | |||||||||||||
Options exercise price | $ 5.31 | |||||||||||||
HLI [Member] | ||||||||||||||
Option Indexed to Issuers Equity [Line Items] | ||||||||||||||
Restricted common shares | 11,111,111 | |||||||||||||
Aggregate Value | $ 20,000,000 | |||||||||||||
Purchase price | $ 1.80 | $ 1.33 | ||||||||||||
Percentage of premium | 35.00% | |||||||||||||
Lianluo Smart Limited [Member] | ||||||||||||||
Option Indexed to Issuers Equity [Line Items] | ||||||||||||||
Ordinary shares | 348,800 | |||||||||||||
Fair value of grant shares | 666,208 | 32,340 | ||||||||||||
Security Purchase Agreement [Member] | ||||||||||||||
Option Indexed to Issuers Equity [Line Items] | ||||||||||||||
Purchase of common shares | $ 20,000,000 | |||||||||||||
Employee Stock Option [Member] | ||||||||||||||
Option Indexed to Issuers Equity [Line Items] | ||||||||||||||
Options exercise price | $ 1.45 | |||||||||||||
Issued aggregate options | 349,000 | 580,867 | 131,000 | 450,000 | ||||||||||
Option expiry date | P10Y |
Warrants (Details)
Warrants (Details) - Warrants [Member] - $ / shares | 1 Months Ended | 12 Months Ended | |
Apr. 28, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Warrants [Line Items] | |||
Market price per share (USD/share) | $ 1.89 | $ 1.73 | $ 1.5 |
Exercise price (USD/share) | $ 2.20 | $ 2.20 | $ 2.20 |
Risk free rate | 1.84% | 2.36% | 2.40% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Expected term/Contractual life (years) | 10 years | 8 years 3 months 19 days | 9 years 3 months 19 days |
Expected volatility | 224.19% | 241.20% | 232.20% |
Warrants (Details 1)
Warrants (Details 1) - Fair Value, Inputs, Level 2 [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Warrants [Line Items] | |||
Beginning balance | $ 1,499,362 | $ 162,736 | $ 553,060 |
Warrants issued to HLI | 1,889,269 | ||
Warrants redeemed | (25,026) | ||
Fair value change of the issued warrants included in earnings | 229,749 | (527,617) | (390,324) |
Ending balance | $ 1,729,111 | $ 1,499,362 | $ 162,736 |
Warrants (Details 2)
Warrants (Details 2) - Warrants [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Warrants [Line Items] | ||
Outstanding, Beginning Balance | 1,000,000 | 551,380 |
Granted | 1,000,000 | |
Option, Forfeited (in shares) | ||
Option, Exercised (in shares) | ||
Option, Redeemed (in shares) | (551,380) | |
Outstanding, Ending Balance | 1,000,000 | 1,000,000 |
Weighted average exercise price, Beginning Balance | $ 2.20 | $ 9.86 |
Options, Weighted Average Exercise Price, Granted | 2.20 | |
Options, Weighted Average Exercise Price, Redeemed | 9.86 | |
Weighted average exercise price, Ending Balance | $ 2.20 | $ 2.20 |
Options, Weighted Average Remaining Contractual Life (years) | 1 year 5 months 27 days |
Warrants (Details Textual)
Warrants (Details Textual) - $ / shares | 1 Months Ended | 12 Months Ended | ||||
Apr. 21, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Apr. 28, 2016 | Jan. 10, 2012 | Apr. 21, 2010 | |
Warrants [Line Items] | ||||||
Class of warrant or right, outstandingc | 1,000,000 | 1,000,000 | ||||
Warrants repurchased | 293,880 | |||||
Warrant repurchase price | $ 3.80 | |||||
Institutional Investors [Member] | ||||||
Warrants [Line Items] | ||||||
Warrants issued for services | 220,410 | |||||
Share-based compensation arrangement by share-based payment award, fair value assumptions, exercise price (in dollars per share) | $ 11.86 | |||||
Aggregate common stock shares | 734,700 | |||||
Purchase price | $ 9.12 | |||||
Warrant expiration term | 42 months | |||||
Ft Global Capital Inc Member [Member] | ||||||
Warrants [Line Items] | ||||||
Warrants issued for services | 73,470 | |||||
Warrant expiration term | 42 months | |||||
Insitutional Investors, FT Global [Member] | ||||||
Warrants [Line Items] | ||||||
Warrants repurchased | 1,116,744 | |||||
Warrant repurchase price | $ 3.80 | |||||
Hangzhou Lianluo Ltd [Member] | ||||||
Warrants [Line Items] | ||||||
Warrants issued for services | 1,000,000 | |||||
Class of warrant or right, exercise price of warrants or rights | $ 2.20 | |||||
Hawk Associates Inc. [Member] | ||||||
Warrants [Line Items] | ||||||
Warrants issued for services | 7,500 | |||||
Anderson & Strudwick Incorporated [Member] | ||||||
Warrants [Line Items] | ||||||
Warrants issued for services | 150,000 | |||||
Firs Trust Group, Inc. [Member] | ||||||
Warrants [Line Items] | ||||||
Warrants issued for services | 100,000 |
Loss per Share (Details)
Loss per Share (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net loss attributable to the Company's common shareholders | |||
- from continuing operations | $ (5,136,434) | $ (9,609,735) | $ (6,698,870) |
- from discontinued operations, net of tax | (122,133) | (3,524,260) | |
Net loss available to the company's common shareholders | $ (5,136,434) | $ (9,731,868) | $ (10,223,130) |
Weighted average shares outstanding - Basic and diluted | 17,312,586 | 10,422,765 | 5,990,552 |
Loss per share - Basic and diluted | |||
- from continuing operations | $ (0.30) | $ (0.92) | $ (1.12) |
- from discontinued operations | (0.01) | (0.59) | |
Loss per share - Basic and diluted | $ (0.30) | $ (0.93) | $ (1.71) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Line Items] | |||
Current income taxes benefit | $ 95,870 | $ 240,806 | |
Deferred income taxes provision | (228,828) | ||
Total benefit for income taxes | 95,870 | 11,978 | |
Less: provision for income tax expenses from discontinued operations | (844) | ||
Benefit for income taxes from continuing operations | $ (95,026) | $ (11,978) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes [Abstract] | |||
Loss before provision for income tax and non-controlling interests | $ (5,136,434) | $ (9,704,761) | $ (6,710,848) |
PRC corporate income tax rate | 25.00% | 25.00% | 25.00% |
Income tax benefit computed at PRC statutory corporate income tax rate | $ (1,284,108) | $ (2,426,190) | $ (1,677,712) |
Reconciling items: | |||
Non-deductible expenses | 597,189 | 691,298 | 1,331,524 |
Valuation allowance on deferred tax assets | 686,919 | 1,734,892 | 346,188 |
Over-provision in prior years | (95,026) | ||
Others | (11,978) | ||
Income tax benefit | $ (95,026) | $ (11,978) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets | ||
Net operating loss carried forward | $ 2,386,069 | $ 1,798,009 |
Valuation allowance | 2,386,069 | 1,798,009 |
Deferred tax assets, non-current | ||
Deferred tax assets, non-current |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes (Textual) | |||
Tax rate for LCL and BTL | 25.00% | 25.00% | 25.00% |
Income tax rate for BDL | 15.00% | 15.00% | 15.00% |
Unified enterprise income tax rate | 25.00% | ||
Preferential income tax rate | 15.00% | ||
Net operating loss carry forwards | $ 9,544,276 | ||
Net operating loss expire date | Dec. 31, 2022 |
Related Party Transactions an84
Related Party Transactions and Balance (Details) | Jan. 14, 2016USD ($) | Jul. 31, 2016CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2015CNY (¥) | Jun. 13, 2017USD ($) | Dec. 20, 2016USD ($) |
Related Party Transaction [Line Items] | |||||||||
Purchases of inventory from related party | $ 531,467 | $ 1,406,140 | |||||||
Outstanding payable to related party | 146,032 | ||||||||
Repaid loans | 2,858,748 | $ 1,603,590 | |||||||
Purchase price | ¥ | ¥ 920,000 | ||||||||
Interest-free loans received | 1,480,320 | 733,688 | 3,867,859 | ||||||
Beijing Dehaier Technology Co., Ltd [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Percentage of equity interest acquisition | 0.80% | ||||||||
Purchase price | $ 146,032 | ||||||||
Digital Grid (Hong Kong) Technology Co., Limited [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Outstanding payable to related party | $ 3,000,000 | $ 2,000,000 | |||||||
Fixed annual interest rate | 3.50% | 3.50% | |||||||
Repayment of the loan and related interest | 52,932,000 | 2,002,110 | |||||||
HLI [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Purchases of inventory from related party | 3,760 | 497 | 0 | ||||||
Outstanding payable to related party | 475 | ||||||||
Beijing Dehaier Technology Limited [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Outstanding payable to related party | 146,032 | ||||||||
Repaid loans | 69,253 | ¥ 460,151 | |||||||
Technical support expense | 9,027 | 59,981 | |||||||
Annual rental | 36,120 | ¥ 240,000 | 38,496 | ¥ 240,000 | |||||
Interest-free loans received | ¥ | ¥ 1,150,000 | ||||||||
Zhong Yi [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Purchases of inventory from related party | $ 0 | $ 0 | $ 1,728,676 |
Concentrations (Details)
Concentrations (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Concentration Risk [Line Items] | |||
Total Revenues | $ 882,011 | $ 13,391,492 | $ 1,686,033 |
Less: revenues from discontinued operations | (329,119) | (947,732) | |
Revenues from continuing operations | 882,011 | 13,062,373 | 738,301 |
Medical Devices [Member] | |||
Concentration Risk [Line Items] | |||
Total Revenues | 827,032 | 1,305,372 | 1,500,957 |
Respiratory and Oxygen Homecare [Member] | |||
Concentration Risk [Line Items] | |||
Total Revenues | 5,956 | 20,573 | |
Mobile Medicine (sleep apnea diagnostic products) [Member] | |||
Concentration Risk [Line Items] | |||
Total Revenues | $ 54,979 | $ 12,080,164 | $ 164,503 |
Concentrations (Details Textual
Concentrations (Details Textual) - Customers | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Major Customers [Member] | Revenues [Member] | Continuing operations [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 56.00% | 94.00% | 7.00% |
Number of major customers | 2 | 2 | 2 |
Major Customers [Member] | Revenues [Member] | Discontinued operations [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 96.00% | 61.00% | |
Number of major customers | 2 | 2 | |
Major Suppliers [Member] | Purchases [Member] | Continuing operations [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 65.00% | 98.00% | 87.00% |
Major Suppliers [Member] | Purchases [Member] | Discontinued operations [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 94.00% | 78.00% |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | $ 329,119 | $ 947,732 | |
Costs of revenue | (338,110) | (2,698,808) | |
Gross loss | (8,991) | (1,751,076) | |
Service income | 3,244 | 208,303 | |
Service expenses | (5,497) | (198,745) | |
Selling expenses | (63,089) | (456,852) | |
General and administrative expenses | (43,703) | (866,260) | |
Provision for doubtful accounts | (32,321) | (618,290) | |
Impairment loss on intangible assets | (18,447) | ||
Financial expenses | 88 | 88 | |
Other income | 1,261 | 19,553 | |
Other expenses | (275) | (186) | |
Provision for income tax expense | (844) | ||
Loss on disposal of discontinued operations | (82,579) | ||
Net loss from discontinued operations | $ (251,153) | $ (3,663,465) |
Other Income (Details)
Other Income (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Other Income [Abstract] | ||||
Gain on settlement of payables | [1] | $ 125,312 | ||
Government subsidy | 17,394 | |||
Exchange gain | 68,436 | |||
Others | 3,917 | |||
Total other income | $ 146,623 | $ 68,436 | ||
[1] | In 2014, the Company entered into a Morpheus software licence agreement with a third-party service provider for a total consideration of $200,000. The service has been provided and charged as selling expenses in 2016. As of December 31, 2016, an amount of $125,000 remained unpaid. In 2017, the service provider has agreed to waive its entitlement to the remaining balance and the accrued amount was written back as other income. |
Other Income (Details Textual)
Other Income (Details Textual) | 7 Months Ended | 12 Months Ended | ||
Jul. 31, 2016CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Other Income (Textual) | ||||
Selling expense | $ 1,170,378 | $ 927,243 | $ 2,815,609 | |
Total consideration | ¥ | ¥ 920,000 | |||
Morpheus software licence agreement [Member] | ||||
Other Income (Textual) | ||||
Unpaid amount | $ 125,000 | |||
Morpheus software licence agreement [Member] | 2014 [Member] | ||||
Other Income (Textual) | ||||
Total consideration | $ 200,000 |